Gulf Business | May 2011

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No other watch is engineered quite like a Rolex. The Datejust, introduced in 1945, was the first wristwatch to display the date through an aperture on the dial. Its unique magnifying Cyclops eye, added a few years later, became recognised as a Rolex design standard. Admired for its classic design, the Datejust became an iconic symbol of style. The 36 mm Datejust is presented here in Rolex signature Rolesor, a unique combination of 904L steel and 18 ct yellow gold.

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“Danglars’ watch, a masterpiece by Breguet which he had rewound with care (...), chimed half past five in the morning.” Alexandre Dumas, “The Count of Monte Cristo”, 1845

L e R é v e i l d u Ts a r - S e c o n d Ti m e - Z o n e a n d A l a r m - 5 7 0 7 B A w w w. b r e g u e t .c o m Breguet Boutiques – Dubai Mall, Dubai ( UAE ), +971 4 339 87 56 – Mall of the Emirates, Dubai ( UAE ) +971 4 395 18 62

It’s time to achieve. Ibrahim Ahmed Seddiqi, the late Chairman joined the company in 1950 and soon signed the ďŹ rst franchise agreement with the iconic Swiss watch brand Rolex. Along side his father, he played a major role in expanding the brand portfolio for the family business. seddiqi.com

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REGIONAL NEWS, PEOPLE, NUMBERS AND EVENTS

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MATEIN KHALID Middle East revolutions won’t cure sluggish state capitalism.

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PAUL COOPER How regional turmoil will affect investment choices.

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TOMMY WEIR What’s more important in a leader – charisma or substance?

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TELECOMS Failed takeovers dash hopes of a regional M&A revival.

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REAL ESTATE Will Saudi’s mortgage laws cure the Kingdom’s housing shortage?

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INVESTMENT How Dubai created a billion-dollar international art hub.

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LAW Qatar mulls permanent residency for highly-skilled expats.

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MARKETS S&P’s ethical index could boost regional market transparency.

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JOINING FORCES How private public partnerships are set to transform the region’s economic and physical landscape. SPECIAL REPORT: ISLAMIC FINANCE As Sharia’ah finance booms globally, Andrew White analyses the industry’s challenges as it grows. NOT JUST THE TECH GUY Today’s chief information technology officer is integral to the company’s leadership strategy and future. PROFILE: NOE VAN HULST, IEA Secretary General of the International Energy Forum on oil consumer and supplier relations.

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STATS Regional mergers and acquisitions.

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ART The world’s most expensive paintings. TRAVEL Barcelona still tops the lists for a cultural weekend. CRUISE Nick Cooper tests out the Jaguar XJ’s growl.

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EVENTS The Gulf’s top business conferences.

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GULF BUSINESS PREFERRED HOTELS A selection of the region’s top rooms.

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IN YOUR SHOES Louis Vuitton’s Philippe Schaus

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On the Radar

Egypt to replace KSA as largest Arab economy Egypt will surpass Saudi Arabia as the region’s largest economy by 2050 and emerge as the 19th largest economy in the world, according to an HSBC report, The World In 2050, which makes predictions about future economic trends. According to HSBC estimates, by 2050 Egypt’s economy will reach $1,165 billion, surpassing

Saudi Arabia’s $1,128 billion. Iran will be the only other Middle East state in the world’s 30-largest economies, with $732 billion. The massive shift in the global economy will be due to rapid demographic shifts, huge improvements in emerging market infrastructure, education and spending patterns.

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HXkXi YXebj kf cfn\i `ek\i\jk iXk\j fe Zfejld\i c\e[`e^ Qatar Central Bank’s (QCB) restrictions on consumer lending have dealt a blow to Qatar’s small but thriving financial services sector as companies will be forced to limit their financing which will affect their profitability. Last month, QCB asked all financial institutions to reduce interest rates on consumer lending to 6.5 per cent. Financial services companies have been charging relatively higher margins on their financing and providing millions of riyals of consumer financing mainly to Qatari families for cars, furniture, jewellery and travel, among other things. Many borrowers have been increasingly unable to repay.

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Dubai to allow private participation in power

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The private sector will be allowed to invest in the Hessyan Power and Desalination Complex – the biggest project of its kind in the region, Saeed Mohammad Al Tayer, vice-chairman of the Supreme Council for Energy, managing director and chief executive of the Dubai Electricity and Water Authority (Dewa), told media. “Dewa has paved the way for the private sector to enter the power

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generation and utility businesses through a private-public partnership in the Hessyan project,” Al Tayer said. Upon completion, the Hessyan Power and Desalination Complex will produce 9,000 megawatts of power and 720 million gallons of water each day. The plant is being built on a four square kilometre site, 60 kilometres southwest of Dubai on the shores of the Arabian Gulf.

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project focus

On the Radar

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Manara to build over 3,800 homes in Bahrain by 2015 Manara Developments has completed strategic plans to construct 3,845 housing units in different areas in Bahrain over the next five years, in a number of investment projects that the company is currently undertaking, said Dr. Hasan Al Bastaki, managing director. “Manara is seeking to conclude an agreement with government and semigovernment organisations to launch its housing projects with them,� he said, explaining the move is part of a joint effort between the public and private sectors “to meet the rising

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demand for retail housing.� Through its projects, the developer says it is offering many choices for types of affordable housing units to the “middle class segment of the society,� while at the same time “adhering to stringent implemented in the areas design, size, construction quality and finishes,� he said. Al Bastaki added that surveys indicate demand for housing units for personal use continues to rise in Bahrain, as the population continues to grow, and more families choose to live independently.

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$12.8 Trillion

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KSA pharmaceutical industry expands Seven new pharmaceutical companies for humans and animals are now operational in KSA, adding to the 26 currently operating, said Dr. Saleh Bawzir, Deputy Executive President for Pharmaceutical Affairs. Talking to journalists, Bawzir said pharmaceutical industries in KSA face a lack of staff and raw materials. Despite this, he said the percentage of drugs manufactured in the Kingdom will hit 40 per cent within 10 years.

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Customers have been a bit apprehensive due to the continuous price rise. But slowly they’re accepting this is the new price range of gold. If they need to buy it, they B8I@D D<I:?8EK will. There is no wait-andDXeX^`e^ [`i\Zkfi f] watch situation now. However, Gli\ >fc[ a\n\cip Ôid customers are not increasing their budgets in terms of value. If their budget is AED 5,000, they’re not increasing it because gold is more expensive. They’re buying less gold for their budgeted amount of money. So in terms of value our business is the same, but in terms of volume there is a slight drop. 8i\ Ylp\ij klie`e^ kf Xck\ieXk`m\j c`b\ j`cm\i Xe[ gi\Z`flj jkfe\j6

Traditional gold buyers will not go to substitutes because they are investors. If they see their investment appreciate, they don’t go to substitutes. New age gold customers who aren’t traditional gold buyers have slowly been diversifying into diamond jewellery. For them buying gold is not investment-related, its more fashion-related and diamond jewellery has less gold content than gold jewellery. ?Xj k_\ [\dXe[ ]fi ^fc[$gcXk\[ a\n\cc\ip `eZi\Xj\[6

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No, because when you buy 18kt gold, you pay more for the labour and customers know this. If someone is buying 22kt, they’ll buy less and get less volume but they prefer that as they know they’re paying less for labour and more for the gold. ?Xm\ j`cm\i jXc\j `eZi\Xj\[6

There has been an increase in silver jewellery sales in the western market, mainly in the US, but not much here. Most of our customers are originally from the Indian subcontinent or are Arab expats. Both believe that gold is superior – and it is. The only substitute for buying a lot of gold is to buy less gold. N_Xk X[m`Z\ ZXe pfl c\e[ kf gfk\ek`Xc `em\jkfij6

We feel gold prices are still going to rise higher. The advice I would give is don’t hold back your purchases. If you need gold, buy it.

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Dubai’s Emaar Properties Q1 proďŹ t slumps Dubai-based Emaar Properties, the Middle East’s largest real estate firm posted a 45 per cent slump in first quarter profit as the region’s depressed property market continued to crimp earnings. Emaar, in an emailed statement, said net profit in the first three months of the year declined to AED421 million from AED760.6 million in the corresponding period last year. The quarterly profit fell short of analysts’ expectations. Dubaibased Shuaa Capital had forecast a AED531 million result, while Rasmala analysts had predicted a profit of AED585 million. Real-estate companies like Emaar were hit hard by the global financial crisis both at home and overseas. Dubai’s oncebooming property market has slowed sharply over the past two years and home financing has tightened, damaging Emaar’s sales and property prices in the emirate.

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COMMENT

K?< 8I89 JGI@E>1 ;<DF:I8K@: ;8NE# <:FEFD@: KN@C@>?K Matein Khalid is fund manager in a royal investment office and a writer in finance and geopolitics.

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DE FACTO ‘DAVOS CONSENSUS’ was the dominant policy paradigm in the pro-West, ostensibly promarket constellation of Arab states in the past decade. Its salient features were high economic growth, a reliance on offshore credit and FDI, rampant property speculation, the control of privatised assets by a coterie of pro-regime oligarchs, and a tolerance for huge income inequalities. Egypt, Morocco and Tunisia were hailed as the new Arab world’s economic tigers in the past decade. Hosni Mubarak’s regime even used its ex IMF/World Bank technocrats and pro-reform agenda to boost its legitimacy in the diplomatic chancelleries of its Western backers. President Ben Ali’s cronies were often joint venture partners of the French corporate elite in Tunisia. Even Colonel Gaddafi’s Libya set up sovereign wealth funds, offered oil concessions to BP, Shell and Total, licensed private banks and took stakes in ENI and Unibanco, the crown jewels of Italian business. Autocratic regimes desperate for political survival resort to economic populism, not free market reforms and budget discipline. This is the message of Egypt’s Supreme Military Council’s crackdown on the prominent ‘crony capitalists’ of the Mubarak era or the $80 billion fiscal stimulus announced by the princes of the House of Saud. After all, $125 Brent crude oil is a windfall for the oil exporting GCC, Iraq and Algeria, but a public finance black hole for Egypt, Jordan, Morocco, Syria, Lebanon, Tunisia and Yemen. Food inflation, endemic youth unemployment and crony capitalism were the lethal cocktail that led to the overthrew of Mubarak and Ben Ali. These macro risks will only

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be exacerbated by the oil shock. Economic shocks will define the choices made by Arab rulers. Anwar Sadat’s regime was almost swept from power by street protests due to ‘IMF bread riots’ in the 1970’s. It is no coincidence that bread has been heavily subsidised since Pharonic times, a policy choice continued by the later Roman, Byzantine, Arab, Mamluk, Ottoman, British and modern military rulers of Egypt. Inflation rates in the Arab world are set to soar once governments engage in deficit spending, subsidise food (Egypt is the world’s largest importer of wheat) and create make believe jobs in bloated bureaucracies for a younger generation empowered by Facebook, Twitter and Al Jazeera satellite television. The conclusion is as depressing as it is obvious. Populism will generate, not end, economic malaise, social unrest, inflation, deficit and joblessness. The Davos consensus will only survive in the fabulously wealthy petrocurrency enclaves of the Gulf, such as UAE and Qatar, where ruling elites can afford the luxury of pro-market capitalism. The Arab world faces its greatest geopolitical convulsion since the death rattle of the Ottoman empire a century ago. Its impact on Arab economies, banking systems, cross-border trade and FDI will be equally seismic. State capitalism and planned economies are simply no longer formulas for success in the Internet Age, with its networked global economy and unfettered capital markets. Real FDI must create jobs and industrial values, not just add froth to property bubbles or lubricate financial Ponzi schemes. Sadly, the Arab spring will not midwife an economic renaissance. Privatisation is simply too risky for governments, terrified about street protests and mass youth unemployment. Assad’s Syria, Saleh’s Yemen and Gaddafi’s Libya have shed their pro-market flirtation veneer and reverted to their controlled state DNA. Bahrain’s role as the Arab world’s financial centre is at risk. The Arab spring promises a democratic dawn but its volatile geopolitical spasms will dampen appetites for its financial souks.

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COMMENT

?FN @J I<>@FE8C KLIDF@C 8==<:K@E> @EM<JKD<EK :?F@:<J6 Paul Cooper, managing director, Sarasin-Alpen & Partners Ltd

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T IS OFTEN SAID THAT ‘FROM CRISIS comes opportunity’ and if this is true then the opportunities that lie ahead must be significant. While it may appear churlish to consider the investment implications of the Middle East’s unrest when many hundreds of innocent people have died, it does potentially mark a significant change in the investment landscape. Although upheaval has occurred throughout the region, the Gulf has remained relatively calm. In general, GCC countries are characterised by small populations and large oil and gas reserves, which result in high wealth per capita. This wealth allows governments to appease protesters in a way that is simply not possible in the poorer countries of North Africa. In addition, most countries in the Gulf have been ruled by the same family for generations and there is normally respect, rather than distaste, for the incumbent leaderships. This does not apply to the same extent in Bahrain and it is no coincidence that the demonstrations have been more serious on the island than elsewhere in the Gulf. However, even in Bahrain, the majority Shiite population is not unanimously demanding the fall of the Sunni royal family, but rather greater democracy and less discrimination in the workplace. That is not to say that governments in the Gulf have ignored the risks. Substantial financial support has been announced in Saudi Arabia, Oman and Bahrain, where the protests, or at least the threat of protests, were most keenly felt. Saudi has committed more than $120 billion (equivalent to almost 30 per cent of GDP) to alleviate hardship, promote job creation and create more housing. In addition, the GCC is giving $10 billion each to Bahrain and Oman, equivalent to one third of GDP for Bahrain and 20 per cent for Oman.

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Before this, Oman announced that 50,000 jobs would be created and $290 per month would be paid as a jobseeker allowance. Oman also raised the minimum wage for citizens working in the private sector by 43 per cent and introduced a cost of living allowance for all military and public sector workers. The impact of these measures depends on whether they are sufficient to quell protests and demonstrations in the region, allowing businesses to return to normal. If they are, then the outlook for the region’s economy and stock market will be elevated. These packages provide short-term gratification, such as salary increases and bonuses, but they also provide a much needed long-term commitment to tackle unemployment, poverty and poor housing. Disposable income, and hence consumption, will rise, providing an immediate boost to the economy, while the longer-term commitments will ensure economic prosperity for years to come. The beauty, of course, is that it is effectively being paid for by the rest of the world through higher oil prices. A $20 per barrel increase in the oil price generates an additional $60 billion a year for Saudi Arabia. Unfortunately, the same cannot be said for the larger economies in North Africa and the Middle East, like Egypt, Tunisia, Syria, Libya and Yemen. Here, public finances are too weak. Populations are large and per capita income is low. Political change is certain, but the impact of this change is not yet known. Investors are unlikely to turn their backs entirely on the region, but the risk premium associated with investing there will rise. The Gulf markets, by comparison, look attractive. Relatively stable politics, healthy government finances and rapid economic growth will likely attract investment from outside the region. International funds investing in the Middle East and North Africa (MENA) will likely favour the Middle East, especially the Gulf, over North Africa while pure GCC funds are likely to experience strong demand as its unique growth opportunities are recognised. Although the process by which we got here was extremely unpleasant, the result may well be positive for the region.

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COMMENT

N?8KËJ DFI< @DGFIK8EK Æ K?< @EJ@;< FI K?< FLKJ@;<6 Dr Tommy Weir, vice president of leadership solutions at Kenexa and author of The CEO Shift

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N A WHIM, MY WIFE AND I DECIDED to avail ourselves of one of the acclaimed Yas Island weekends to see the legendary guitarist Eric Clapton live at the Yas Arena. The resultant weekend of contrasts can be summarised as “surface or substance”. Of course, renowned musician Clapton was pure substance; but I was shocked that he was apparently not concerned with the curb appeal. He is an artist, and one to be admired, but he was not interested in giving a glossy or entertaining performance. On the other hand, the hotel we selected was all about the attractiveness of the exterior with little or no substance. From the moment we checked in – the rooms, the service and even the food – it was all about the exterior while ignoring what should be on the inside. This experience left me wondering if one (surface or substance) is more important than the other. And can one exist without the other? Which do you think is more important? What is seen on the outside? Or what is experienced on the inside? On the drive back from Yas Island, I began to contemplate what does this inside/outside debate mean for leaders. Does it really matter at all? What characterises great leaders? What is seen, or what is experienced? This past week, while walking through one of the region’s premier business centres, a colleague asked: “How many of these business leaders do you think are ‘fakers’?” I replied: “What do you mean?” And he elaborated: “They give off the perception of success and greatness, but do you think they are all that?”

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Life is full of related clichés: You have two seconds to make a first impression. It’s all about image! You can’t judge a book by its cover. This one in particular is important to every leader. It means that before people can judge you, they need to take a deeper, closer look. What will they see – substance? The value is not always obvious from what is seen on the surface. But, doesn’t charisma matter? According to an acclaimed leadership scholar: “Charisma is the result of effective leadership, not the other way around.” In today’s celebrity-crazed world, much attention is given to the public personification of a leader. Leaders are starting to obsess with their personal brand. But what good is a brand if it is not aligned with the substance? It is easy to fake an image, but you cannot manufacture faux substance. There is another related cliché that you need to be mindful of: substance over surface. What does this mean as a leader? Leadership reputation originates when you add who you are with what you’ve done. It is people’s perception of your identity and achievement. A leader’s reputation is formed by a sequence of experiences that others have with him or her. When people see a pattern over time, they form their view. So if they experience substance (achievement), they may conclude that you are a leader. And if not, you may just be a ‘faker’. Have you ever seen a leader who was all substance with little or no curb appeal (surface)? I can name a few, as I am sure you can. But, have you ever meet a leader who was all surface with no substance? Probably not, unless he or she was a LINO (leader in name only). To be a true leader requires more than just surface, you must have substance. My advice to the hotel where we had our surface-over-substance experience, and to all leaders around the world, if you are going to pick one – pick substance. What people experience is much more important than what they see.

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INCE JANUARY, THE Gulf’s largest telco operators have pursued highprofile buyouts to expand outside their home markets but have struggled to closeout deals. Recent political unrest in the GCC has made the job even harder. The UAE’s Etisalat, which previously withdrew a $12 billion takeover of Kuwaiti rival Zain, last month dumped plans to bid for Syria’s third mobile license, saying it was disappointed with the terms. The deal would have provided Etisalat with operations in Kuwait, Iraq, Bahrain, Jordan, Lebanon and Sudan. Iraq, in

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particular, has been a focus for Etisalat but it has so far been unable to get a foothold there. Meanwhile, the sale of Kuwait-based Zain’s 25 per cent stake in its Saudi operations to a consortium of Bahrain’s Batelco and Saudi’s Kingdom Holding is still some way off, as rumours swirl that talks between the parties aren’t going smoothly. The transactions, Etisalat’s in particular, rank as the Middle East’s biggest in recent years, but misfired M&A attempts are no surprise and are part of a deeper problem for telcos, said Andy Hicks, a research manager for telecommunications at IDC. “The Middle East and Africa are littered with ambitious but failed telecoms M&A attempts. Africa’s MTN was involved in a few, and Vimpelcom’s acquisition of Orascom/Wind [Orascom is a Cairo-listed emerging markets

operator] is still far from a sure thing. “MENA and sub-Saharan Africa present different but equally compelling cases for acquisition, but in both cases the big carrier groups are looking for scale and cross-border efficiency. Both conditions are necessary but probably only sufficient in tandem,” added Hicks. The sector is now facing headwinds from the unstable political situation, which in Bahrain is said to have contributed to the collapse of the Zain sale talks with Batelco and Kingdom. Concerns have been on the rise that Bahrain’s banking sector and its regional status as a financial centre may be adversely affected by ongoing domestic political turmoil. The country’s threemonth state of emergency, declared in mid-March, will do little for confidence. The regional unrest is also making banks twitchy and killing their appetite to lend, according to Edward Bell, from

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the MENA division of the Economist Intelligence Unit, which doesn’t bode well for takeovers in general. “The outlook for M&A activity is pretty negative in light of what’s happening. Financing for big buyout projects will be harder to come by because banks are becoming more credit focused, a trend that accelerated last year. “Banks are not as willing to underwrite projects. In Dubai, this was going to be the year of rebuilding and growth for commercial lending, but industrial borrowers are finding that they’re struggling with the increased attention of banks on credit risk and credit worthiness. Plus, banks will be looking at the current political environment and likely tighten their requirements even more.” Bell adds: “You might see a pick up in syndicated loans, because local banks in particular are keen not to be the single lender on a deal.” Fundamentally, telecoms operators in the GCC are facing increasingly saturated home markets, especially on mobile phone SIM card subscriptions. SIM penetration is around 150 per cent to 200 per cent in the Gulf compared to China, India and Indonesia, which have levels ranging between 41 per cent and 66 per cent. Chandresh Bhatt, the assistant vice president for the research group at Kuwait’s Global Investment House, says: “Expanding operations beyond their home turf is the only way forward, especially for incumbent operators. Since the last few quarters we have also seen that these operators are facing intense competition from second and third operators. They are losing their market share and facing an Average Revenue Per User squeeze in home countries and therefore their revenues and margins are under pressure. So acquisitions are the only way for them to bring growth.”

È=LE;8D<EK8CCP# K<C<:FDJ FG<I8KFIJ @E K?< >:: 8I< =8:@E> @E:I<8J@E>CP J8KLI8K<; ?FD< D8IB<KJ# <JG<:@8CCP FE DF9@C< G?FE< J@D :8I; JL9J:I@GK@FEJ% J@D G<E<KI8K@FE @J 8IFLE; (,' G<I :<EK KF )'' G<I :<EK @E K?< >LC= :FDG8I<; KF :?@E8# @E;@8 8E; @E;FE<J@8# N?@:? ?8M< C<M<CJ I8E>@E> 9<KN<<E +( G<I :<EK 8E; -- G<I :<EK%É The $12 billion failed Zain deal was a major set back for Etisalat and its push to expand its Middle East footprint. The takeover would have been a gamechanger for the telco sector, according to Lindsey McDonald, a consultant in the information and communication technologies practice for Middle-East & North Africa at Frost & Sullivan. “Before this deal, you had Etisalat and Zain as the largest operators in the Middle East, then Qtel and Batelco. But this may have meant that Etisalat was the Middle East and North Africa telco company,” says McDonald. “And in this sense, it changes the dynamic of the region and means that Zain will have to change its agenda, and start thinking more as a Middle East operator rather than a company with an emerging markets focus.” Etisalat, the Middle East’s largest operator by market capitalisation, has a long-term ambition to be a top 10 global operator and is now likely to look increasingly further afield for acquisitions. In the Middle East, Etisalat owns a 25 per cent stake in Saudi Arabia’s Mobily and has the Egypt unit Etisalat Misr. Rejecting the Zain deal, and most recently the Syria license opportunity, has split opinion on Etisalat. Some say

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winning the licence would have given Etisalat greenfield growth in a Middle East market, plus now the Zain deal is dead there are few obvious acquisition opportunities for the UAE firm, with most operators government-controlled. Other analysts say it reflects well on Etisalat because the company is showing discipline in its expansion strategy, sending a good signal to shareholders. Before long though, telco operators will be judged on what deals they do rather than ones they don’t. Most troubling will be that the current unrest shows no signs of easing, something that provides a grim backdrop for economic growth in the region. The propensity of Gulf telco firms, especially Etisalat, to emerge bigger and stronger from the current turmoil could decide their ambitions of becoming a truly global operator.

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AUDI ARABIA’S ANNOUNCEMENT that it will launch a set of five new financing and enforcement laws, addressing the housing shortage, has come as welcome news. Regional unrest since January, and fear of it spilling through neighbouring borders, has inspired leaders across the Arab world to make concessions to their frustrated citizens. After protests reached the Gulf in February, Saudi Arabia quickly put the wheels in motion to resolve the country’s deepening housing issues.

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In March, the King formally established a Ministry of Housing, along with a Real Estate Development Fund, and made what is being described as the biggest capital investment in KSA’s history – a whopping SR250 billion (over $66 billion) and also gave a Royal decree to construct 500,000 housing units, with a goal to create a million new homes by 2014. Of these five planned new laws – which the public hasn’t seen yet – there are two that have become unseen celebrities in their own right: a mortgage law, and a foreclosure law. The Registered Mortgage Law will allow mortgages to be created, while the Enforcement and Execution Law will allow banks to pursue debtors who default on their mortgages through foreclosure. Glenn Lovell,

senior associate, Al Tamimi law firm in Riyadh, explains: “The local police are reluctant to evict people and this law aims to address the situation by having compulsory execution of a judgement or mortgage.” While the laws are being talked about by bank, developer, and citizen alike, the elephant in the room is that things aren’t going to fall into place as soon as they are passed, as lenders will wait to see how courts will handle foreclosures. It’s an important question considering that, until now, evictions haven’t often been permitted and registration on a land title coupled with foreclosure are the defining features of a mortgage. Without the foreclosure mechanism, mortgages are actually just long-term bank loans to buy property. Paul Gamble, head of research at

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young population. Jadwa’s Gamble says the success of the laws boils down to the banks: “If the banks find it profitable, are happy with the legal framework and if it works properly in terms of foreclosure, then they will find the money for it to work. Banks here are very liquid and if they can securitise the mortgage proceeds and bond market activity picks up, financing will not be a problem.” Patrick Gaffney, a real estate analyst with HSBC Middle East, says: “Banks are going to be uncomfortable with lending unless they can foreclose, or if governments can guarantee the loans in some way.” If the mortgage law is passed, Gamble says: “There would be short-term upward pressure on housing prices as it increases the number of people who can buy, but as more government homes become available, it would mean downward pressure on housing prices over the longer term.” But it’s difficult to speculate on a law people haven’t seen yet, and Gamble notes borrowers might not get what they want – “The law may not be able to meet the aspirations of borrowers, as high property prices mean those on low incomes may not be able to borrow the amount necessary to finance the large property that many Saudis aspire to.” @= K?< GI@:< @J I@>?K The underlying demand for housing,

combined with the development of the mortgage law, is set to benefit the broader economy as well as those needing affordable housing. According to a recent Bank Saudi Fransi report, public and private developers will have to create 275,000 units a year until 2015, in order to accommodate the current need. “The affordable housing sector has historically been overlooked by the development community in GCC,” says Burch, noting it’s an area of massive potential. He adds: “Private developers are looking at affordable housing – we can see that demand is in that sector. This is a growth area that will be boosted by the mortgage law.” >FF; K@D<J Stefan Burch, associate director at real estate specialists, Cluttons Middle East in Bahrain, who have recently set up a Jeddah office, says: “There’s massive potential in Saudi Arabia, partly underpinned by great demographics and a young and vibrant population. There’s lots of money being put into job creation and education, and prudence in pursuing counter-cyclical spend policies, infrastructure etc, which is going to serve the country in great stead.” If liquidity can reach the market, Burch says the new ministry, fund and laws will be “nothing but good” – not only for the broader economy but also, “for the larger numbers of people who want to get onto the housing ladder.”

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OR A CITY that has transformed its skyline and established a regional finance hub in only five years, how fitting that Dubai has also emerged as a global hub for contemporary Middle Eastern art – a growing market valued at hundreds of millions of dollars. “What Dubai is doing for contemporary art is what it has done for every one of its business areas, because it acts as a focal point for South Asia, Iran, the Arab world and East Africa. Dubai’s role is to be a meeting point for those cultures and trade between them,” explains Antonia Carver, Director of Art Dubai. “The whole system is almost relentlessly commercial.” In 2005, when times were good,

Dubai’s first two contemporary Middle Eastern art galleries, the Third Line and B1, opened. An entire region brimming with talented yet-to-be-discovered contemporary artists was lacking a regional and international platform. Collectors and investors had no real place to source new regional art. Founded by two seasoned art professionals and Emirati businessman Omar Sabbagh, Third Line is often credited with single-handedly creating Dubai’s art scene. Around the same time, in April 2005, auctioneers Christie’s opened a regional office in Dubai, with the intention of catering to its regional client base of largely wealthy art collectors in Pakistan

and India. However, Christie’s Middle East director, Michael Jeha, says within 18 months of opening the auction house noticed a thirst for more than just historical or Islamic art. Laila Brinbek, director at Third Line, says there’s no single factor driving art investment in the region. “Everything is about being at the right place at the right time. Sheikh Mohammed’s decision about how Dubai is going to be marketed internationally… all of these things happening within a five-year space have been a catalyst.” Since 2006, Christie’s has sold over $200 million worth of art. In 2008, before the financial crisis hit, total sales of contemporary Middle Eastern art reached almost $28 million. In 2009, the total dipped to $12 million, but 2010 was a record year. “Last year we sold $31 million of contemporary Middle Eastern art alone, which is the highest total to date for that category,” says Jeha. “The market is expanding and there are many more players in the market. There are 50 galleries in Dubai today, art fairs throughout the region, and museums opening up throughout the Gulf,” he adds, referring to Abu Dhabi’s Saadiyat Island’s planned museums and galleries, and the Madhaf in Doha. 9@> =@J?# ?L>< GFE; The biggest step towards unifying a collective industry and market for Middle Eastern art was made in 2006, when Art Dubai was co-founded by ex-banker Benedict Floyd and London dealer John Martin. The fair was introduced in 2007, and the rest is history. “The growth of Dubai as a culture and business capital had a big role,” says Carver. “Before that you didn’t have the term ‘Mid-East Art’ “Like so many other areas that were consolidated in Dubai, I think Christie’s and Art Dubai caught a wave. The art

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Ăˆ8IK ;L98@ @J K?< DFEJK<I Ç @KĂ‹J K?< 9@> 9<8JK @E K?< IFFD 8E; @J N?8K D8;< @K 8CC ?8GG<E%É “Back then, artists were at the mercy of collectors and there was no one really looking out for them,â€? says Samawi. “Artists should focus on art, and business people should focus on business.â€? Cuadro Fine Art Gallery, which opened its doors in 2008, is the largest gallery in DIFC Gate Village. Bahraini founder, Bashar Al Shroogi says: “Compared to 2005’s art market in Dubai, you’re seeing a lot more sophistication now. In 2007, everything came into place. Art Dubai is the monster – it’s the big beast in the room and is what made it all happen.â€? Buyers have also become younger. Thanks to healthy disposable incomes, Dubai has witnessed a rise in younger collectors who are not predisposed to certain types of works and are very interested in contemporary art from the region.

was there. They just helped consolidate it,� she says. The Sharjah Biennale, which started in the early 90s, was re-invented in 2003 and is where the “internationalisation� of regional art began, says Carver. This year’s Art Dubai fair featured over 81 galleries and a total of 20,000 visitors to the event, with a 30 per cent increase in international visitors. Rami Farook, owner of Traffic Art gallery, which features multi-disciplinary art, says Dubai’s success as an art hub extends to its resources: “Dubai is a

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This communication is provided in and from the Dubai International Financial Center (DIFC) by Natixis Global Associates Middle East. It is only available to persons who have sufficient financial experience and understanding to participate in financial markets within the DIFC, and qualify as Professional Clients as defined by the Dubai Financial Services Authority (DFSA). This communication should not be delivered to or relied on by any other type of person. Natixis Global Associates Middle East is the trade name for Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is duly licensed and regulated by the DFSA. Registered office: PO Box 118257, 5th Floor, Building 8, Gate Village, DIFC, Dubai, United Arab Emirates. Natixis Global Associates Middle East is a business development unit of Natixis Global Associates, the global distribution organization of Natixis Global Asset Management, the holding company of a diverse line-up of specialized investment management and distribution entities worldwide, including the investment managers referenced herein. The investment management subsidiaries of Natixis Global Asset Management mentioned in this communication conduct any investment management activities only in and from the countries in which they are licensed or authorized. This communication is for information only and does not constitute an offer of financial services, nor a recommendation or offer to purchase or sell shares in any financial instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing. INT193-0411

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ITH MAMMOTH-SCALE infrastructure, construction and education projects underway, it’s clear that Qatar has its heart set on a worldclass knowledge economy. On the heels of this ambition, the government is considering granting permanent residency for highly-skilled expats who meet ‘pre-determined criteria.’ “There are two main challenges in Qatar – creating job opportunities for Qataris and diversifying the economy, away from oil and gas, into a knowledge economy,” says Dr Bassan Fattouh, professor in finance and management for the Middle East at the University of London’s School of Oriental and African Studies. “You need to ask if

this move would help meet any of these objectives. This is what the debate should be in Qatar.” Saxo Bank’s chief economist, Steen Jakobsen, explains that Qatar’s plans to introduce permanent residency for certain expats should be viewed as a natural progression. “Sometime in the near future you need a handoff between the public and private sector. Basically, you need productivity and private sector jobs to replace the high propensity of public sector jobs,” he says. “You need everyone to be more productive, and one way to do that is to allow everyone to establish roots.” But it’s a politically sensitive issue. Maintaining a national identity has been a core aspiration of GCC countries, particularly Qatar and the UAE and other countries where locals already make up a minority. Any further threat to population demographics is not taken lightly. One way to achieve that is to emphasise the importance of assimilation.

In 2005, Qatar amended its nationality law, allowing foreigners who have lived in the country for a minimum of 25 years, speak Arabic, and are willing to revoke their current nationality, the right to gain Qatari nationality. The country does not allow dual citizenship. However, Shahzad Shahbaz, chief executive of Doha-based Qinvest investment bank, says permanent residency has a “very limited bearing” on the future of Qatar and that it’s possible to build the aspired knowledge economy with the currency residency stipulations. “Why not? People come here and work. There are lots of countries where you work on a work permit. “In my opinion it’s a positive initiative, but I think it will only have a marginal impact. This is just a facilitation,” says Shahbaz. Ahmed Jaafir, corporate commercial lawyer at Al-Tamimi, Doha, adds that Qatar’s plans to offer expats permanent residency should be taken with a grain of salt. “This is only a vision,” he says. If Qatar went ahead and offered permanent residency, it would be unlikely to set a precedent in the UAE or other GCC countries, says Fattouh. “I think they would not follow suit – not only for economic reasons, but for political reasons as well.” Jakobsen says if Qatar does offer permanent residency, it will create an example to follow. “Getting the expats to commit themselves to the region will be a positive for everybody,” he says.

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OCIALLY RESPONSIBLE investment is a phrase being bandied about in many financial circles across the region. Environmental, social and corporate governance (ESG) practices are three key criteria institutional investors are now seeking when planting their money in emerging markets, such as the Middle East. And in response to this demand, Standard & Poor’s has teamed up with corporate governance institute Hawkamah to launch its new S&P/Hawkamah Pan Arab ESG Index. The index tracks the performance of companies that have demonstrated superiority in the areas of environmental, social and corporate governance responsibility when compared to other companies in the region. The top 50

companies are ranked on nearly 200 ESG issues, including carbon emissions, water and energy consumption, charitable giving, financial reporting and executive remuneration. And Nasser Saidi, Hawkamah executive director, says the index is “both ambitious and groundbreaking”. He adds: “This index is a result of hundreds of man hours of work. We have researched hundreds of annual reports, engaged companies and investors for their feedback and we have organised awareness raising workshops on the importance of ESG. For the first time in the region these factors can be sensibly quantified and translated into a series of scores measuring the reporting practices for MENA companies.” Saidi says the methodology has been proved and tested with the development of similar ESG indices in Brazil, India and China. The constituents of the index are formed from a universe of 150 largest and most liquid listed companies in 11 GCC markets and will be reshuffled once a year. Top five companies by weight include

Egypt’s MobiNil, Saudi Arabia’s Savola Group, Oman’s Omantel, the UAE’s DP World and Etisalat. Saudi has the largest country weighting with 30.3 per cent, followed by the UAE and Egypt, with 14.7 per cent and 12.2 per cent respectively. “It is now generally accepted that ESG issues can have medium and long-term consequences on a company’s financial performance,” says Saidi. Alluding to the Gulf of Mexico oil spill, which halved BP’s share price in a number of weeks, he says: “The oil spill is a prime illustration of the risks of ignoring ESG. To put it simply, incorporating ESG in the investment decision process is good for the bottom line.” Belinda Scott, National Bank of Abu Dhabi senior manager of corporate sustainability and responsibility, says becoming “environmentally smarter” is top of the bank’s agenda going forward. “Clean technology and renewable technology is growing exponentially. We see sustainability as a way of progressing in the future.”

ÈK?< F@C JG@CC @J 8 GI@D< @CCLJKI8K@FE F= K?< I@JBJ F= @>EFI@E> <J>% KF GLK @K J@DGCP# <J> @J @DG<I8K@M< =FI K?< 9FKKFD C@E<%É Asset management firm Robeco has committed its portfolio to responsible investing. In February last year the firm announced that all its investment capabilities will incorporate ESG in the investment process. Currently 60 per cent of funds have ESG factors integrated, but “after two years we will be at 100 per cent,” says Douglas Hansen-Luke, Robeco Middle East chief executive. “That is 100 per cent over $200 billion and on the ground 150 different funds. It is something that takes time, but it is also something that can be done.” ESG factors Robeco considers include codes of conduct, labour practice indicators, environment reporting, corporate governance and social reporting. “A number of people view ESG as a cost, we do not. We actually view it as a way to reduce risk and a way for companies to improve their performance and meet the competition.

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environment in the region. In 2009 well over one half of the GCC 50 banks recorded lower net profit. Improved returns for the GCC were mainly driven by lower provisioning charges for most banks against both loans and investments. Non-performing loans in the region fell in 2010 following the sharp increase post the global and regional downturn and this led to a

lower cost of risk. Although overall asset quality improved in the region, some banks still recorded higher levels of bad debts. Asset values generally stabilised for both listed and unlisted securities, as well as for real estate, and so there was little need for further asset provisioning. Slightly higher credit demand aided balance sheet growth and, in turn, net interest income. However, credit demand >LC= 9LJ@E<JJ & +,

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economies in the region are reasonably solid in terms of economic growth. The price of oil was at a higher average level throughout the year, underpinning economic and infrastructure growth. Recent strategies by governments of increasing public sector salaries as well as one off payments will mean that the price of oil must remain high for governments, otherwise deficits will grow, placing pressure on fiscal positions. For the first time since 2007, net profit for the top 50 Gulf banks increased in 2010. The GCC’s largest banks achieved a healthy increase of 15.1 per cent in profit last year following falls of 1.5 per cent and 26.0 per cent respectively in the previous two years.

Significant improvements in terms of net profit were seen at a number of banks, including Abu Dhabi Islamic Bank, Saudi Hollandi Bank, Commercial Bank of Kuwait, Commercial Bank International and Bank Al Jazira. Other banks including Abu Dhabi Commercial Bank, Gulf Bank, Gulf International Bank and Kuwait International Bank moved to record good levels of net profit following large losses in the previous year. Gulf International Bank’s profit was its first in four years. The financial positions of nearly all GCC 50 banks strengthened in 2010 with improved capital adequacy helped by higher retained earnings, and moderate loan growth thereby aiding liquidity

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once. Total equity stood at $156 billion at end 2010. This represented a higher 14.0 per cent of total assets against 13.6 per cent in the previous year. The largest bank by assets in the

Gulf region in 2010 remained the UAE’s Emirates NBD with assets of $77.9 billion. The bank’s asset growth was only by two per cent however. Qatari banks once again enjoyed by far

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25 per cent. Following this growth Qatar National Bank moved up two places in ranking to become the third largest bank by assets in the GCC at end 2010. For UAE banks, the fast growing

RAKBANK recorded the highest increase in assets, 25 per cent to $5.8 billion, followed by Abu Dhabi Islamic Bank with asset growth of 17 per cent. Abu Dhabi Commercial Bank

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achieved asset growth of 11 per cent in 2010, to $48.5 billion, and moved up two places to rank seventh largest in the Gulf. Saudi Arabian banks recorded mixed results. The GCC’s second largest bank by assets, National Commercial Bank, achieved good growth of 10 per cent with assets of $75 billion. Riyad Bank and Saudi British Bank saw assets fall slightly, again indicative of a more prudent approach.

Returns for the GCC 50 banks also improved in 2010 for the first time in three years. The return on assets for the top 50 GCC banks in 2010 was 1.61 per cent, up from a level of 1.51 per cent in 2009. By net profit, Saudi Arabia’s Al Rajhi Banking and Investment Corporation recorded the largest net profit in the Gulf. Although barely moving year-on-year, its net profit of $1.8 billion is by some way the largest. The gap was, however,

narrowed by an impressive performance at Qatar National Bank, which saw its net profit grow by 36 per cent to $1.6 billion, overtaking National Commercial Bank, to rank second by net profit despite the flagship Saudi bank also recording a good increase of 16 per cent in net profit. Other good performances included National Bank of Kuwait’s net profit rising by 14 per cent to around $1.1 billion and National Bank of Abu Dhabi’s net profit >LC= 9LJ@E<JJ & ,0

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growing by 22 per cent to $1 billion. Amongst the larger banks in the list, weaker performances were seen at Emirates NBD with profit down by 30 per cent to $637 million, Arab National Bank of Saudi Arabia’s net profit falling by 19 per cent to $509 million, and Mashreqbank’s net profit down by 21 per cent to $228 million. By return on assets, the best profitability -) & D8P )'((

in the GCC 50 list is RAKBANK which achieved an impressive return on assets of 4.69 per cent in 2010. Second ranked is Al Rajhi with a return on assets of 3.66 per cent followed by Al Rayan Bank with 3.49 per cent. These banks also filled the top places in the previous year. By equity, the largest bank is again Emirates NBD with total shareholders’ equity of $9.2 billion at end 2010

following a six per cent increase. National Commercial Bank and Al Rajhi Bank remained second and third respectively. The main movers amongst the largest banks by capital included National Bank of Kuwait which saw its equity increase by 21 per cent to $7.9 billion, moving up to rank fourth from fifth, and Qatar National Bank whose equity grew by 25 per cent to $6.8

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billion, ranking sixth at end 2010 against tenth in the previous year. The largest increase in equity in 2010 was Kuwait’s Boubyan Bank, where National Bank of Kuwait has raised its stake. Its total capital increased to $849 million from $311 million previously. Arab Banking Corporation increased its equity by 50 per cent to $3.9 billion, -+ & D8P )'((

moving up four places. The GCC’s return on equity also improved from 2009 but only marginally to 11.5 per cent. This remains low but is in part driven by the high levels of capitalisation in the sector. Nonetheless, in the previous boom times of the mid 2000s the return on equity was in the twenties. Only 10 banks out of the GCC 50 achieved

a return on equity above 15 per cent, the benchmark for most banks. The largest 20 banks in the Gulf continue to dominate the overall asset base, with the bigger banks comprising 76 per cent of the total asset base of the list. By profit, the largest 20 represented 79 per cent of total net profit. This was however down from 96 per cent in the previous

>:: J KFG

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I`^_k1 <E9;# k_\ cXi^\jk >:: YXeb Yp Xjj\kj% 9\cfn1 E:9# JXl[` 8iXY`XËj cXi^\jk YXeb%

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to date for both banks and corporates have exceeded expectations and market sentiment appears to have improved due to the continued strength of the oil price, and despite the heightened geopolitical risk. 2011 should see GCC banks make further advancements but they are likely to be small and conditions will remain challenging. >LC= 9LJ@E<JJ & -,

GL9C@:$GI@M8K< G8IKE<IJ?@GJ 8I< J<K KF KI8EJ=FID K?< >LC=ËJ 9LJ@E<JJ C8E;J:8G<# NI@K<J IP8E ?8II@JFE%

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here is nothing unusual about GCC governments wanting to involve private companies in the delivery of essential public services likes schools, hospitals and roads. In fact, whether it’s through straightforward outsourcing or privatisation, rulers across the Gulf have overseen countless ambitious infrastructure projects in recent years, the volume of which has outpaced other emerging regions. Yet, the concept of a public-private partnership (PPP), essentially a contract that ties the government to a company during the long-term delivery of a service, is still in its embryonic state. In the European Union, for instance, the term PPP has been in use since 1990 and over the last 20 years more than 1,400 deals worth about $360 billion have been signed. By contrast, in February, Bahrain signed its first ever wastewater PPP for a treatment plant in Muharraq. And in Abu Dhabi, the Mafraq-Ghweifat Highway Project will become the first transportrelated PPP in the Gulf. The Abu Dhabi contract is for a 327-kilometre highway linking the eastern end of the emirate to an area close to the Saudi border. Abraham Akkawi, the head of infrastructure and PPP advisory services for MENA at Ernst & Young, said although the concept is new there is huge appetite as states look to meet the soaring demand for public services in the coming decades. “Governments historically have looked just at the costs of building the infrastructure and not the costs associated with operation,

maintenance and the life of the asset in general. So it instils a certain discipline within the public authority. “It’s a more sustainable way of managing an asset without just simply throwing money at it. In markets like the UK, US and Canada, PPPs are used for up to 20 per cent of infrastructure build, so it’s not the be-all and end-all,” he said. Because a PPP is an umbrella term for many forms of private sector involvement in public provision, it is often difficult to pin down a single definition. But typically it refers to a deal where payments are made over the life of a project by the public sector to the private partner and are linked to the level and quality of services actually delivered. Akkawi says: “Government’s don’t have to pay a penny until the particular service is finished, so it’s cheaper initially. For the private sector it offers continuity, cash flow and government relationships for 10, 20 or 30 years. “PPPs are not the primary pillar of growth for the region, but it brings accelerated development where used properly. You can do more in less time as you don’t have to pay out so much upfront, especially in a region that’s neglected parts of its infrastructure in the past,” he adds. In November 2009, it was reported that Abu Dhabi was planning to spend upwards of $15 billion on infrastructure projects by 2012, a move prompted by the city’s rising population, which is expected to triple to three million by 2020. The Abu Dhabi government will

be looking at the private sector to assist in funding some of the major projects planned, with PPPs leading this development charge in the emirate, say analysts. The UAE Economy Minister, H E Sultan bin Saleed Al Mansouri, said that planned investments to be implemented in Abu Dhabi through PPPs in the infrastructure, real estate and manufacturing sectors over the medium term were expected to reach about $1 trillion. In particular, the Mafraq-Ghweifat Highway Project is expected to be a PPP bellwether over the coming years, with UAE commentators keeping an eye on whether the approach is successful, if the funding is secured, and from which sources that funding is derived. Meanwhile, down the road, Abdul Mohsin Ibrahim Younes, the CEO for strategy and corporate governance at the RTA Dubai said recently that “potentially as much as 30 per cent of Dubai's transport projects would use the PPP framework in the next three to five years”. But the pipeline of PPP projects in Kuwait is perhaps the most significant in the Middle East, with over $25 billion

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È@kËj X ]X`icp e\n ZfeZ\gk `e k_\ D`[[c\ <Xjk Xj g\fgc\ _Xm\ ]fle[ `k [`]ÔZlck kf ^iXjg k_\ `[\X f] j_Xi`e^ k_\ i`jb% K_\ Z_Xcc\e^\ fm\i k_\ e\ok Ôm\ p\Xij fi jf `j kf [\m\cfg k_\ c\^Xc Xe[ i\^lcXkfip ]iXd\nfib Xifle[ GGGj%É worth of projects recently having been announced or started. In particular, there are major opportunities in Kuwait’s developing project market, driven by the $100 billion National Five-Year Plan. Underpinning this appetite for PPPs is the desire to spread the risk on a glut of mega projects that need to be finished in a timely fashion. On a PPP, the private sector contractor accepts the responsibilities and risks of delivering the project (constructing, start up and operating), while the public sector retains strategic control over the service delivery. But in general, across the region the concept of joint ownership is still in its infancy. Simon Leary, who works in the Middle East health industries and government sector advisory division at PwC, says: “In the Gulf, 90 per cent of what we call PPPs are not what we’d call them in a market like Europe. People here are still finding their way around exactly what it means. Privatisation and outsourcing gets put in the PPP hat, and that can be confusing. It’s a fairly new concept in the Middle East as people have found it difficult to

grasp the idea of sharing the risk. The challenge over the next five years or so is to develop the legal and regulatory framework around PPPs.” Leary adds: “We need to be very careful that we’re not assuming that what’s driving PPPs in the UK and US is the same as in the Gulf, which is that it’s being done for primarily financial reasons. The principal motivator is to bring in the appropriate intellectual property, manpower and skill set. The financial factor is not necessarily the most important driver; access to other scarce resources is an essential ingredient.” Areas where governments in the region are making the most headway are the tried and tested transport and utilities sectors. Dubai's RTA recently finalised a draft law regulating PPPs and published a manual for engaging in partnerships, moves that will hopefully improve clarity and security for private and public players in the contracts. Like Europe, in the Gulf PPPs have developed from their traditional base in transport to the areas of public buildings @em\jkd\ek gfk\ek`Xc1 ;lYX` X`dj kf \ok\e[ `kj iX`c e\knfib ]ifd .,bd kf fm\i ),'bd `e k_\ e\ok [\ZX[\%

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and equipment (schools and hospitals) and the environment (water/waste treatment, waste management). Akkawi adds: “Airports lend themselves well to PPPs because there are enough passengers that can generate the money to cover the initial costs. And utilities have proven popular in the Gulf because there are a lot of countries that have neglected their power, water and waste water services in the past, so they need to upgrade facilities. Overall, it has to cost less or why would you do it.� Consultants like Ernst & Young advise governments in the region on how to go out and procure PPP contracts, as well as structuring these deals so they are attractive to investors. For the time being, governments in the region that have indulged their appetite for private sector involvement in their economies are still some way off developing the PPPs track record of more established markets like Europe. But inevitably, as the practice matures in the GCC it offers both public and private players a chance to not only accelerate development through reduced upfront costs, but also spread the risks and meet the huge construction demands. But perhaps, more fundamentally, it could inspire a more rigorous approach to the management of public assets in future.

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Website: http//www.ibcagent.com

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n one way, the rise of Islamic finance has been as predictable as it has been meteoric. There are an estimated 1.6 billion Muslims on earth and the Islamic banking industry, which requires financial products from mortgages to savings accounts to be structured to comply with Shariaáh law under the Quran, has offered this unique customer base the irresistible opportunity to conduct business according to their religious principles. The world’s first private bank to be explicitly based on Shariaáh principles opened in Dubai in 1975. Today the Islamic finance industry is worth close to $1 trillion and spans the globe. International Monetary Fund figures show that between 2007 and 2009, Islamic banks’ assets grew an average of twice as fast as conventional banks’ assets in major Muslim markets. Shariaáh-compliant banking products and services account for around 38 per cent of the banking sector’s assets in Saudi Arabia, the Gulf’s largest economy.

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Moreover, the tendency of Islamic banks to avoid excessive leverage and risktaking has attracted the interest of nonMuslims worldwide, in the wake of a credit crunch caused by off-balance-sheet loans or derivatives, among other things by conventional banks. And yet it has not been all plain sailing for the Islamic finance houses that can be found in every town or city across the Middle East, and beyond. While Islamic financial units were less impacted by the global crisis than the conventional banking industry, confidence in Shariaáhcompliant structures has been dented by Nakheel’s near-default on a $4.1 billion Islamic bond, and growth rates for other key products have dropped for the first time in decades. “If you look at what accelerated the growth in Islamic finance before the slump, the primary driver was the fact that Islamic banking could grow into lots of new areas,” explains Raj Madha, banking analyst at Rasmala Investment Bank.

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“A key area was mortgages – the vast proportion of new mortgages were issued as Islamic lending. But [since the economic downturn] growth in mortgages has obviously been much more limited,” he says. GCC sales of Shariaáh-compliant debt dropped 32 per cent last year to $4.5 billion, according to data compiled by Bloomberg, while global sales fell 15 per cent to $17.1 billion. And before the economic downturn some of the largest sukuk (see box) issuers had been government entities and property companies. The current world record for a single sukuk is the $3.52 billion raised for the Nakheel Group in 2006, but the perilous finances of some Gulf quasigovernment developers mean this is unlikely to be surpassed any time soon. In addition, while US-based thinktank the Pew Research Center forecast in January that the world’s Muslim population will double from 1.1 billion in 1990 to 2.2 billion in 2030, new product development in the Shariaáhcompliant finance sector has been unable to keep pace. There have been some new products, such as credit cards, but the level of new product generation has dropped and so penetration growth rates have suffered. “There is a fixed amount of conventional products, and once you provide a mimic for all of those conventional products, you’re essentially done,” says Madha. “You start off by mimicking the easy products, such as Ijarah, and then you begin to mimic harder products and more niche products. “Gradually, you get declining returns on scale until you’ve got an Islamic equivalent of every product, at which point it becomes pretty much impossible to create new products. Dedicated products for a specific purpose, such as educational loans, will open up more of a niche, but you’re not breaking fresh ground.”

Razi Fakih, deputy CEO of HSBC Amanah, the international bank’s Islamic financing arm, agrees that the industry must invest in research. “[It’s important] to focus on development and innovation so that we can move away from products that look like replicates of their conventional cousins and towards those that conform to the Shariaáh principles behind Islamic finance in letter and in spirit.” In addition, Fakih says that attention must be paid to growing and enhancing the Islamic finance talent pool. “The Islamic banking industry has seen significant growth over the past decade and this has resulted in a shortage of talent. Talent continues to be a challenge and will be one of the key differentiators in the coming years,” he says. “HSBC Amanah has continued to invest in our Islamic talent pool. We are one of the few international Islamic banks in the industry to offer a Global Islamic Finance Graduate programme where potential leaders of the industry are offered cross-country opportunities and given on-the-job training, as well as instructorled training in Shariaáh, products and personal effectiveness courses.” Despite these concerns, if the sector does enjoy a return to high growth, then

the Gulf is likely to be at the centre of that recovery. According to Deloitte & Touche, around 80 per cent of Islamic financial institutions globally are based in the GCC, and 60 per cent of assets held by Islamic financial institutions globally are concentrated in the region. “The potential of the Gulf region is very encouraging, and a rise in Islamic finance activity is set to follow a rise in overall economic activities,” says Dr Mohamad Nedal Alchaar, secretary general of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the international standard-setting organisation for Islamic finance. “Economic growth in both the Gulf and Asia is likely to be among the strongest in the world in the coming

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years and consequently, trading volume between the two regions is likely to increase,” he continues. “This presents a compelling opportunity for the rise of trade financing through Islamic finance. Furthermore, capital flows between the Gulf and Asia are also likely to increase, and Islamic finance can play its role to facilitate them.” Dr Alchaar insists that there are exciting prospects for Islamic finance in the areas of takaful and trade financing, for which demand should increase as the Gulf economies develop their non-oil exports. “Supply of credit will expand as liquidity gradually becomes higher, while demand for credit will grow to support increasing economic activities, including major investments in infrastructure and economic diversification efforts,” he says. “This creates a perfect environment for Islamic

ÈJlggcp f] Zi\[`k n`cc \ogXe[ Xj c`hl`[`kp ^iX[lXccp Y\Zfd\j _`^_\i# n_`c\ [\dXe[ ]fi Zi\[`k n`cc ^ifn kf jlggfik `eZi\Xj`e^ \Zfefd`Z XZk`m`k`\j# `eZcl[`e^ dXafi `em\jkd\ekj `e `e]iXjkilZkli\ Xe[ \Zfefd`Z [`m\ij`ÔZXk`fe \]]fikj%É finance as its financing mechanisms generally require real economic activities as underlying transactions.” At Rasmala, Madha is less convinced that resurgence is imminent. He insists that the Shariaáh-compliant sector needs “momentum in the key areas in which Islamic banking takes place” – and that the recovery of the region’s real estate market would play a major role in

re-establishing Islamic finance as a high-growth industry. “We still have a lot of uncertainty about the property market, which is going to be a key driver of Islamic finance,” he cautions. “We’ve not seen much in the way of salary increases in the public sector, which is a big driver of lending volume, and also the mortgage sector needs to recover.”

Tender No. (36 / 2011) Department of Municipal Affairs - Al Ain City Municipality, invites Consulting firms specialized in providing consulting services in Corporate Social Responsibilities in the U.A.E. & Overseas to submit bids: Project :

“Developing a framework program and strategy for Corporate Social Responsibility”

Tender No.

36 / 2011

Deadline to submit tenders

Sunday, 3.00 pm

Date of opening envelopes:

Monday, 10.00 am, 30/5/2011

According to the following conditions:1. Companies who wish to participate shall check with the management of tenders and contracts on the first floor room No. (119) of the main municipality building to get the tender documents or communicate us by e-mail ( amna.alkuwaiti@am.ae ). 2. The tender shall be valid and irrevocable for a period of (90) ninety days. 3. Tenders shall be submitted (the envelope contains the financial offer with the technical offer) to the secretariat of Envelope Opening Commission, at the Municipality building in Al Jimi (the main building), including all required, and approved documents for the tender inside sealed envelopes with red wax and written from outside, number of tender, opening date, and the name of the facility addressed to the secretariat of the Envelops Opening Commission, office no. (125) on the first floor. am.abudhabi.ae

29/5/2011

4.

5. 6.

7. 8.

Non-registered consultant applicants shall register in Al Ain City Municipality Registry, one week prior to opening. All non-registered bids shall be discarded and returned to facilities. This tender is subject to the law of Tenders, Auctions, and Warehouses, No. (6) for year 2008. Submit a copy of trade license and membership certificate. For the Overseas Companies the trade license should be authorized by the U.A.E. Embassy & send it by e-mail to (amna.alkuwaiti@am.ae). This announcement is an integral part of the tender documents. For inquiries call +97137127132. For more information please visit our website: http://am.abudhabi.ae General Manager of Al Ain City Municipality

Our Vision: Distinctive Municipality and sustainable Development for the Oasis city

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all it what you will – CIO, IT director or information manager – the expectations for the head of IT in many companies are fast changing. Talking in bits, bytes and back-ups has given way to the strategic IT visionary. True to the job title, the chief information officer is expected to understand every facet of the business, from accounts and logistics to marketing and customer assistance, and build integrated systems equally tailored to each department. This is particularly relevant with the growing use of cross-functional applications, such as ERP and CRM systems, over the past few years. The new role requires someone who can not only understand all aspects of the business today, but can also predict the system requirements of the company in the future. Back in Houdini’s day, this person would have been called a contortionist. Today the same role falls to the CIO.

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“Previously, the role of the CIO was all about efficient automation,” says John Kost, group VP for Gartner Research, an IT consulting firm. “Since more sophisticated applications have emerged, you can use the information to change the trajectory of the business. “Today, CIOs are measured by the business results they bring to the company. CIOs are in the best position to see how technology will affect the future of the business. They need to project into the future what technologies will differentiate one company from another and even create new markets.” Bas Wijne, director of information services, OSN – Orbit Showtime Network, concurs: “Business intelligence for management decisions is expected to be far more analytical, with the option of different detailed reports. The CIO needs to produce a different view on the same set of data for different functions across the organisation. “Another aspect is social media, which has completely changed the way that CIOs are required to manage their systems. Previously, you went to IT because you needed a laptop and email account. Now it’s totally integrated – SMS, BlackBerry and the numerous other applications.” K<:? K8:K@:J In today’s environment, the CIO’s role is not simply technical. Many CEOs, for example, are brought in to turn firms around, not because they necessarily have a particular expertise within the industry, but because of their more strategic track record. In an IT environment, staffing the department with technical know-how is one thing, but placing someone at the helm who asks the right questions is completely different. In some respects there might be merits in removing one’s technical cap before heading to the discussion table. The CIO of one particular company felt his job was to

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‘unlearn’ – to ask the question ‘why’, rather than accept or dismiss suggestions based on his own preconceptions. Another challenge is the openness of companies towards change. There are without doubt plenty of innovators waiting to step up to the challenge of the new CIO role, but are companies clear on their own IT strategy and what they want their IT heads to achieve? Sam Alkharrat, MD, SAP Middle East and North Africa, is not convinced. “The role is certainly evolving, but I don’t think the CIO needs to be a generic business leader,” he remarks. “The challenge for CIOs is that business requirements are not always drawn in a master plan fashion. Lack of planning on the business side results in a very reactive situation and puts the CIO in a very difficult situation. Due to this pressure, CIOs end up having to implement point [isolated] solutions that are difficult to integrate. Point solutions cause long-term problems, in terms of cost and lack of understanding of both the business and the customer. If you don’t have integrated systems, you are also seen as a much more difficult company to do business with. “I think CIOs are very aware of these issues, but the business needs to have a better understanding of the CIO. A business is there to make money and IT is seen as a cost, so sometimes CIOs don’t have as much leverage as they should. CIOs need to align with the business, but the business also needs to plan ahead to allow the CIO to put together an integrated architecture to align everybody’s needs.” At a recent Gartner conference held in Dubai, a major bugbear for many CIOs was the frustration that they often did not report directly to the CEO. “If the CEO considers IT as a strategic differential, they ought to be talking directly to the CIO,” remarks Kost.

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In business school speak, the analogy of the new CIO can be compared to the transactional (operational) versus transformational (change) manager. There will always be room for both. For mature industries with a priority on efficiency and cost savings, the transactional paradigm may still come to the fore. For leading edge industries with a focus on finding new markets and increasing market share, the transformational CIO comes into play. Yet, within the current climate, corporate boards are still not convinced about investing in IT. According to Gartner, global IT budgets are limited and will remain so for the next few years. The Middle East, however, is one of the areas where IT budgets are still growing, but only moderately. “The Middle East has more capital resources available,” says Kost. “The environment for innovation exists in the region. It just depends on the organisation.” :?8E>@E> ;PE8D@:J Wijne believes that strategic relationships will be the most predominant trend, allowing CIOs to focus on their core business. In OSN’s case, this has been through its own alliance with Orange Business Services, which handles all its networking requirements. “Handling this function internally would double my department’s costs,” Wijne asserts. “Rolling out services in this way has given us more time to review our internal infrastructure and strategise for the future. There is certainly a trend towards optimisation and controlling costs.”

Lionel Reina, VP Eastern Europe, Middle East and Africa, Orange Business Services, agrees: “Most companies in the GCC are modernising their network through external managed services. For CIOs, it means simplicity and flexibility. They know what they are getting and how much they have to pay for it. The investment trend is towards operational expenditure rather than capital expenditure. A big change for CIOs in choosing managed services is the need for proximity, simplicity and reliability.” Reina believes that the potential for the more transactional CIO is particularly relevant in the Middle East: “Ever since the global crisis, IT management has generally been about cost cutting. In the Middle East, the dynamic has been different. There is still much greater potential for investment in technology in the GCC than elsewhere, which is

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needed to support the huge amount of infrastructural investment here.” Kost believes that the future will also shape the CIO’s role as a divisional manager, referring to what are becoming known as ‘digital natives’ – the computer-savvy younger generation. “In the workforce there will be some very different expectations about hierarchy,” he predicts. “CIOs hiring young talent will have to think about managing them in a very different fashion. You can expect that new talent will solve problems in a much more unstructured way – through their own [social] networks rather than hierarchy. “CIOs will need to foster rather than inhibit creativity. It will be a gradual generational change of organisational structure,” Kost says, referring to the Google culture which revolves around sharing ideas and opinions over the more traditional reporting methods. Intelligent systems increasingly have their place and provide firms with an indispensable source of information. Yet, as Wijne says: “Systems are systems, but it’s people that make them work.” In the Middle East, there is an abundance of CIOs who can transfer their vision into knowledge. But, it remains to be seen how ready Middle East firms are to harness the potential of the new transformational CIO. As data feed and social media trends become more intricate, a more strategic approach to aligning IT with business needs may be the key to competitive advantage – both now and into the future.

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oe van Hulst finds himself at the helm of the world’s only energy producer-consumer organisation after 86 countries approved and signed the IEF charter in Saudi Arabia at the end of February. The International Energy Forum (IEF) has come a long way from its humble beginnings in France 20 years ago and on the occasion of its anniversary, van Hulst has the task of leading it to the next level. There was a time when consumers, represented by the IEF, did not enjoy a civil or productive dialogue with producers and OPEC members. The IEF has been instrumental in changing this situation and facilitating a more informed, frank and sincere dialogue. “There is a new cooperation between /' & D8P )'((

the producers and consumers, the IEA (International Energy Agency), IEF and OPEC,” says van Hulst. “It’s a new era of international energy governance.” It’s that type of governance that will lead to a more open willingness to help understand the differences and the issues between producers and consumers. Van Hulst adds the main goal is to “reduce volatility and uncertainty and thus improve stability” in the oil market. With a background in economic affairs and energy, and having worked for the IEA earlier in his career, van Hulst is acutely aware of the need for closer cooperation between all parties. The Saudi Arabian petroleum minister Ali Al-Naimi says the IEF Charter represents a cooperation in the energy sector, “for the benefit of

future generations.” And van Hulst adds that, “more transparency in the market is vital for improving energy security for producers and consumers.” The political will demonstrated by 86 countries that represent 90 per cent of global oil and gas supply and demand will certainly help foster greater mutual understanding on energy policy issues. Van Hulst hopes it will also serve to build trust in policy intentions. The supply and demand global projections from both OPEC and the IEA are much closer for 2011 than they’ve been before. “This paints a market situation in 2011 characterised by a high level of spare capacity, in both upstream and downstream; relatively high OECD commercial inventories, and an expected slowdown in oil demand growth

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compared to 2010,” van Hulst says. Of the long-term, he says: “There is a consensus that oil will likely remain the main fuel to satisfy the world’s energy needs for the foreseeable future, and that oil resources, both conventional and non-conventional, are sufficient to meet future demand.” As a word of caution, he adds the industry must always watch for shifts in energy and environmental policy, as well as uncertainties in relation to economic growth and technological change. The shared analysis of future energy trends is extremely important to all players in the energy sector. “Sometimes the divergences in energy outlooks between different agencies are not as well understood by market players as one might hope, thus giving rise to additional uncertainty and volatility,” says van Hulst. The IEA, IEF and OPEC jointly organised a symposium in Riyadh in January 2011 on the shared analysis of energy market trends and short and longterm outlooks. All parties also convened in Paris for an in-depth session with international and national oil companies, and attended an Asian ministerial roundtable in Kuwait city, which will host the next major symposium and IEF ministerial gathering in 2012. It’s clear that the industry is engaged at the highest level. As an occasional referee of the world’s producer-consumer dialogue, van Hulst knows the arguments on both sides about rising oil price, supply and demand fundamentals and sufficient capacity very well. He does not want to see a return to 2008 when volatile swings in oil price caused panic on the market. High oil prices have certainly dominated the global economy in recent months, a situation that’s not ideal. Van Hulst says: “Excessive volatility of oil prices, like we experienced in 2008, is bad for producers and consumers alike and devastating for investment.” The IEF plays its role by coordinating the collection of market data from nearly

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the less room there is for unfounded speculation,” says van Hulst. As long-term global energy demand is set to increase over the coming decades, van Hulst recognises that alternative and renewable energy starts from a very low base. “Even though it is growing rapidly, we will still see fossil fuels dominating the global energy mix for decades to come,” he says. >LC= 9LJ@E<JJ & /(

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While always realising the need for more clean energy, the IEF focuses on energy security of both supply and demand, and the links between energy, the environment and economic development. Of even greater importance will be that energy becomes accessible and affordable to a larger share of the world’s population. Population growth and higher living standards in developing countries all contribute to the long-term energy demand growth, a reality that will put pressure on existing supplies. “We need more of all energy sources, both fossil fuels and renewable energy – including nuclear,” he says, adding there are still issues with the practical roll out of renewable energy sources and that “technological breakthroughs will be needed to overcome these barriers to further large-scale deployment of renewable energy.”

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Tender No. (37 / 2011) Department of Municipal Affairs - Al Ain City Municipality, invites Companies Specialized in administrative services & financial studies in the U.A.E. & Overseas to submit bids: Project :

“Scheme for Preparing of Technical Specifications (Standards) and Regulations of Veterinary Activities in Al Ain City Municipality Livestock Market”

Tender No.

37 / 2011

Deadline to submit tenders

Sunday, 3.00 pm

Date of opening envelopes:

Monday, 9.00 am 20 JUNE 2011

According to the following conditions:1. Companies who wish to participate shall check with the management of tenders and contracts on the first floor room No. (119) of the main municipality building to get the tender documents or communicate us by e-mail ( noora.alswaidi@am.ae ). 2. The tender shall be valid and irrevocable for a period of (90) ninety days. 3. Tenders shall be submitted (the envelope contains the financial offer with the technical offer) to the secretariat of Envelope Opening Commission, at the Municipality building in Al Jimi (the main building), including all required, and approved documents for the tender inside sealed envelopes with red wax and written from outside, number of tender, opening date, and the name of the facility addressed to the secretariat of the Envelops Opening Commission, office no. (125) on the first floor. am.abudhabi.ae

4.

5. 6.

7. 8.

19 JUNE 2011

Non-registered consultant applicants shall register in Al Ain City Municipality Registery, one week prior to opening. All non-registered bids shall be discarded and returned to facilities. This tender is subject to the law of Tenders, Auctions, and Warehouses, No. (6) for year 2008. Submit a copy of trade license and membership certificate. For the Overseas Companies the trade license should be authorized by the U.A.E. Embassy & send it by e-mail (noora.alswaidi@am.ae). This announcement is an integral part of the tender documents. For inquiries call +97137084624. For more information please visit our website: http://am.abudhabi.ae General Manager of Al Ain City Municipality

Our Vision: Distinctive Municipality and sustainable Development for the Oasis city

28.05.11 The Hallmark of Luxury

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B<P D 8 KI8EJ8:K@FEJ Deal Value ($m)

Bidder

Target

Deal Description

245

Lutfi El-Zein Group

Mediterranean and Gulf Insurance and Beirut, Lebanon-based insurance and reinsurance provider Lutfi El-Zein Group has agreed to acquire a 51 per cent Reinsurance Co. stake in KSA-based listed Mediterranean and Gulf Insurance and Reinsurance Co. (Medgulf), from KSA-based (51 per cent stake) conglomerate Saudi Oger Limited, for a total consideration of $400m. Lutfi El-Zein Group will acquire 40,800,000 shares of Medgulf representing a 51 per cent stake of the company, at an offer price of $9.80 per share. The offer provides a premium of 23.7 per cent based on Medgulf’s one-day prior closing share price of SAR 29.70 ($7.91) per share as on 10 April 2011. The offer provides a premium of 39.7 per cent based on Medgulf’s one-month prior closing share price closing share price of SAR 26.30 ($7.01) per share as on 09 March 2011. The implied equity value of the transaction is $784.31m. As a part of this transaction, $175m of syndicated term loan facility was funded by BankMed, Emirates Lebanon Bank, Banque Libano-Francaise, CrÊdit Libanais, Banque Misr Liban, Fransabank, IBL Bank, BBAC, Lebanon & Gulf Bank, BLC Bank, Fransa Invest Bank, SociÊtÊ GÊnÊrale de Banque au Liban, IBL Investment Bank, and CSC Bank, in addition to the mandated lead arrangers.

184

Tyco International Ltd

KEF Holdings (75 per cent stake)

Switzerland-based listed manufacturer of security, fire detection and protection, valves, pipes, fittings and electrical and metal products, Tyco International Ltd, has agreed to acquire a 75 per cent stake in UAE-based KEF Holdings, a provider of steel castings for valves and pumps from UAE-based private equity firm Dubai International Capital LLC (DIC), for $300m to be paid in cash. Tyco’s acquisition is intended to strengthen its position in fire and flow control platforms, adding a strategic manufacturing presence in the Middle East. KEF founder and CEO Faizal Kottikollon will retain a 25 per cent stake in the firm and will remain with KEF in a leadership role following the transaction. Analysts predict KEF’s revenue is to be approximately $140 million in the 2011 calendar year. The transaction is expected to close in early summer, subject to customary closing conditions including regulatory approvals.

23

Nordic Group Limited

Multiheight Marine Pte Ltd (100 per cent stake)

Singapore-based listed Nordic Group Limited, engaged in providing automation systems integration solutions to marine and offshore oil and gas industries, has agreed to acquire a 100 per cent stake in Singapore-based companies Multiheight Marine Pte Ltd, Multiheight Scaffolding Pte Ltd, who are engaged in the design, erection, modification and dismantling of scaffold and systems, and an additional 49 per cent stake in Qatar-based company Multiheight International Co. LLC, engaged in the design, erection, modification and dismantling of scaffold and systems, from a group of private investors, for a maximum cash consideration of SGD 47m ($37.37m). The transaction will allow Nordic to increase its product range, expand its business and position in new market areas, and will be funded with the combination of proceeds from IPO, bank borrowings and internally generated funds. The transaction will be earnings accretive for Nordic in financial year 2011, and is subject to Nordic’s shareholders approval, and regulatory and governmental approvals. It is expected to be complete by 1 July 2011.

21

Drake & Scull International PJSC

International Center for Contracting Company

UAE-based listed Drake & Scull International PJSC, which delivers integrated construction services specialising in mechanical, electrical and plumbing services along with infrastructure, water and power and civil construction services, has acquired KSA-based construction company, International Center for Contracting Company, from KSAbased construction company Acwa Holding, for a total consideration of SAR 128m ($34.13m). This acquisition enables Drake & Scull International to tap remote markets and strengthen its market position, enabling them to enter into several prestigious projects. International Center for Contracting will operate under KSA-based civil contracting company and a subsidiary of Drake & Scull International, Drake & Scull Construction.

11

CCL Industries Inc.

Pacman LLC (50 per cent stake)

Listed Canada-based company CCL Industries Inc., developers of label and specialty packaging solutions, has agreed to acquire a 50 per cent stake in UAE-based packaging company Pacman LLC, for a cash consideration of $18.5m. As of 31 December 2010, Pacman generated revenues of $25.8m and earnings of $4.6m. The remaining 50 per cent stake of Pacman is held by Mr. Ali Saeed Juma Albwardy, via his holding company Albwardy Investment. Subsequently, CCL and Albwardy have agreed to make a combined investment of $4m in a new facility currently under construction in Jeddah, KSA, to be financed through a combination of debt and equity. The transaction is subject to completion of certain administrative procedures and is expected to close by the end of May 2011.

-

APM Terminals Management B.V.

Poti Sea Port (80 per cent stake)

Netherlands-based global commercial container terminal operator APM Terminals Management B.V has agreed to acquire an 80 per cent stake in Poti Sea Port, the Georgia-based sea port, from Ras Al Khaimah Investment Authority (RAKIA), the UAE-based nodal government body, for an undisclosed consideration. APM Terminals plans to invest $65m into reconstruction of terminals in the port and development of its infrastructure. In 2008, RAKIA bought a 51 per cent stake in Poti Sea Port for $90m and the remaining 49 per cent.

-

Al Aseel Investments LLC

New National Medical Centre and National Hospital

Al Aseel Investments LLC, the UAE-based investment holding company interested in healthcare facilities and a subsidiary of Al Masah Capital Limited, the UAE-based investment manager that provides services to institution, individuals, and family offices, has acquired UAE-based healthcare facilities New National Medical Centre and National Hospital, from NMC Healthcare LLC, the UAE-based company that owns and operates a network of hospitals, medical centres and pharmacies, for an undisclosed consideration.

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FGHANISTAN IS GENERALLY in the news for all the wrong reasons. In many ways, it is both the country’s curse and good fortune that it lies at a crossroads of cultures, traders, artists and armies. The items in this touring show, whose London leg was opened by Afghan President Hamid Karzai, were thought lost in the destruction of the National Museum of Afghanistan in the 1990s. In fact, they had gone underground, hidden away by museum staff who held them safe during the years of Taliban rule. The exhibition of that heritage features artefacts from four remarkably different ancient societies, all found within the borders of modern-day Afghanistan – a Bronze Age farming civilisation, a classical Greek city, a Silk Road palace and a nomads' cemetery. They attest to the vast range of influences on the strategically located Central Asian land. One room features artefacts from Ai Khanum, a Greek city in

what is now northern Afghanistan, complete with houses, temples, a gymnasium and an amphitheatre. But the most dazzling artefacts are also the most surprising, because they belonged to nomadic steppe dwellers that otherwise left few traces of their civilisation. Uncovered in 1978 at a site aptly known to locals as Tillya Tepe, the Hill of Gold, were 22,000 golden objects – crowns, daggers, bracelets, amulets, earrings and bowls – inside the graves of five women and a man from the 1st century A.D.

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ARCELONA LIKES TO catch people off guard. Gaudi’s massive church, La Sagrada Familia, looks like a Disneyland castle towering over small residential buildings, with spires that pierce the heavens. The ocean is calm, but the buildings and roofs have waves. A tantrum of rain is followed just an hour later by skies so deceptively sunny it is hard to imagine clouds ever crossing them. In the centre of Montjuic, a peaceful hill overlooking the entire city, the showy Palau Nacional appears to be an old palace that watched Barcelona grow, but was actually constructed temporarily for World Exhibition displays in the 1920s and simply never torn down. The area is green and full of couples strolling hand in hand. La Rambla is a long, crowded pedestrian boulevard where everything is sold – from delicious waffles with ice cream to illegal substances. This café-lined street is usually a traveller’s first taste of Barcelona’s happy contradictions – where dimly-lit, posh restaurants are found next to Mercat de la Boqueria, one of the busiest and loudest fresh produce markets in Europe.

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Boutique hotels are never too far from a McDonald’s restaurant, with one of the franchises taking up five floors of a building in the heart of La Rambla. Still, the fast food chain doesn’t take the limelight away from the dozens of tapas bars serving Catalan cuisine and cervecerias, or beer houses, scattered across the strip. After a long day of walking – with umbrella in hand just in case – nothing feels better than choosing a tapas bar humming with the sound of laughter and clinking glasses, finding a free bar stool, and ordering a cold drink to go with hot appetisers. La Rambla spills onto Placa de Catalunya, a large square with a fountain that serves as a meeting point for taxis, red double-decker tour buses and tourists with maps. The next street over, Passeig de Gracia, is a chic address with fewer crowds and more upscale hotels, including the new Mandarin Oriental Hotel. The tree-lined street is known for its proximity to La Rambla, good shopping opportunities, and more of Antoni Gaudi’s other-wordly works. Casa Batllo stands out with blue, green and purple tiles amid more modest buildings on the trendy street. La Pedrera, on the other hand, is

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known for its undulating roof. A modern, inventive architect and urban planner, Gaudi’s touch is apparent all over the city. Park Guell is one of Gaudi’s masterpieces: a colourful park north of Gracia filled with artists carrying sketchpads and musicians singing or strumming guitars. Featured frequently in movies – including Woody Allen’s film Vicky Cristina Barcelona most recently – the park offers stunning views and an escape from the city without straying too far from the action. The characters in the film, mainly actors, painters and photographers, also devote much of their time to Barrio Gotic, Barcelona’s old town. Small alleyways, brown buildings, black wrought-iron balconies and graffiti give this part of Barcelona an old-world yet very urban feel. Walking all the way through the old town will eventually lead to Port Olympic and Port Vell. Dotted with bars and clubs, the marinas are calm by day and busy hot-spots by night. Make sure to finish your meal by midnight at beachside Asian-fusion restaurant Shoko before the music builds to clubbing levels. Then all that’s left is to enjoy the music, the starry sky and the ocean breeze.

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Networkers Can you afford to waste any more time at events hoping to meet the right person? We organise over 80 business events each year. Our booking system shows you who is attending events in advance; there are no chance meetings at BBG events. Some of the most influential companies in the UAE are BBG members. The BBG, you don’t have to be a member to attend.

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F SOMETHING AIN’T broke, then don’t fix it, a wise man once said. The boffins at Jaguar’s HQ in the UK sort of heeded this advice. A firm favourite with its target audience of alpha achievers since its first incarnation back in 1968, captains of industry around the world have been drawn time and time again to the XJ model by its luxurious interiors and silky ride quality. While the new XJ has undergone a few cosmetic changes since then, the essence of what makes Jag’s biggest cat great thankfully remains in this latest edition. Positioned as the carmaker’s four-door flagship, Jaguar is aiming to extend its timeless appeal to a new generation of customers. The 5.0-litre XJ model I tested is described by Jaguar as “all new”. The new panaromic glass roof is an integral part of the updated design concept and the engineers certainly achieved their aim, giving a more streamlined roofline while enhancing the feeling of space and light inside the cabin. The new look also lowers drag, giving a respectable coefficient of 0.29, the same as its XF sister model. This makes both models the most aerodynamic Jaguars ever. The car is constructed using aerospace-inspired aluminium body technology, meaning the XJ is lighter than its rivals by 150kgs. Meanwhile, underneath the pretty exterior, Jaguar has planted one of its most powerful and efficient powertrains. The 5.0-litre, V8 lump offers 385bhp and will skip to 100 km/h in a surprisingly quick 5.7 seconds. Not too shabby for a kerbweight of just under 1.8 tonnes. Sat behind the beautifully crafted steering wheel, the lower driving position seems more suited to an offering from a sportier stable. And I promise you will never grow tired of turning the engine on and off to witness the rise of the chrome gear selector from the centre console. Traditionalists will be glad to note the old XJ hallmarks of unabashed luxury that comes from using the best materials haven’t gone anywhere, and the cabin is an extremely pleasant environment in which to sit for extended periods of time. Chrome, soft cow hides and polished hardwood veneers work perfectly well together. Long journeys can be attacked with an impressive array

of gadgetry, including satnav, 1,200-watt Bowers & Wilkins audio kit, as well as a Dual View technology 8-inch screen that can project movies or TV programmes to passengers, and comprehensive connectivity for portable audio and video devices via the Media Hub. Having the car during a week when Dubai to Abu Dhabi runs were a work necessity, I really got to appreciate what the XJ does best: eat up kilometre after kilometre of tarmac effortlessly and comfortably. Customers of the XJ will buy it because it harks back to an era of oceanliner and Orient Express luxury, not because of its top speed. It’s about comfort and class rather than squealing wheels and noisy exhausts. In other words, it’s a grown-up cat.

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HE ARABIAN TRAVEL Market Exhibition 2011 is the region’s mega platform for the travel and tourism industry, unlocking business potential within the Middle East for inbound and outbound travel professionals. The event offers an opportunity for exhibitors to present their destinations and products directly to consumers. The Arabian Travel Market also offers four days of intensive meetings, seminars, press conferences and social networking, covering travel trends, ideas and deals.

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Tel: +971 4 282 9299

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conference providing a tribune for business leaders & government officials to discuss FDI, strategic partnership, PPP, PFI, multilateral trade relations…

Central & Eastern Europe Official Partner

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Dubai Business & Trade Partner

pre-arranged B2B/B2G/G2G meetings with serious investors A Central & Eastern European Investment Club to enhance cross promotion between CEE and regional markets A ministerial roundtable with over 20 ministers of economy, trade & industry from BRICS, EAGLE, Goldman Sachs’ Next 11, HSBC’s CIVET & Standard Chartered 7% Club

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HOTELS COLLECTION United Arab Emirates AL RAHA BEACH HOTEL

Abu Dhabi Al Raha Beach Hotel, created to provide the very best of traditional Arabian hospitality. This unique jewel of luxury and tranquility, offering magnificent services, awaits you for an unforgettable visit to Abu Dhabi. Tel 00971 2 50 80 555 Fax 00971 2 50 80 429

JUMEIRAH EMIRATES TOWERS

PARK ROTANA ABU DHABI

CRISTAL HOTEL ABU DHABI

LAYIA PLAZA HOTEL DUBAI

THE FAIRMONT DUBAI

Khalifa Park area, Abu Dhabi Conveniently located adjacent to Khalifa Park, the property offers 318 luxurious rooms and suites, 6 world class dining venues, 6 meeting rooms and spacious ballroom with day light access and outdoor terrace. Tel 00971 2 6573333 Fax 00971 2 6573000 park.hotel@rotana.com

Abu Dhabi Cristal Hotel Abu Dhabi offers 192 spacious rooms and suites, state of the art conference and business center, as well as, a multipurpose gym, indoor pool, and the exclusive Cristal Spa. Tel 00971 2 652 0000 Fax 00971 2 652 0001 res.auh@cristalhotels.ae www.cristalhotelsandresorts.com

Al Qusais, Dubai Conveniently located nearby Dubai International Airport Terminal 2. Offers exceptional levels of comfort with 232 rooms & suites, three dining options, temperature-controlled swimming pool and state-of-the-art fitness center. Tel 00971 4 233 44 44 Fax 00971 4 233 44 45 welcome.plaza@layia.net

Sheikh Zayed Road, Dubai This 394-room hotel boasts 10 dining and entertainment venues a superb spa and unrivalled meeting facilities. Tel 00971 4 3325555 Fax 00971 4 3324555 dubai.reservations@fairmont.com

KEMPINSKI HOTEL MALL OF THE EMIRATES

EMIRATES GRAND HOTEL

MEDIA ONE HOTEL

PULLMAN DUBAI MALL OF THE EMIRATES

Media City, Dubai Tailored to the savvy business traveller, with large comfortable beds & hi tech facilities. A vibrant collection of cafes, bars & restaurants; state-of-the-art conference facilities, a fully equipped gym with ample parking. Tel 00971 4 4271000 Fax 00971 4 427 1001 cu@mediaonehotel.com

Mall of the Emirates, Dubai Discover a new attitude hotel directly linked to the region’s ultimate shopping destination amidst Dubai’s sophisticated metropolis. Elegant 481 guestrooms complemented with chic dining experiences awaits both leisure and business guests. Tel 00971 4 702 8000 Fax 00971 4 702 8001 H7337@accor.com

Our Location

Sheikh Zayed Road, Dubai Jumeirah Emirates Towers is a sleek architectural masterpiece of steel and glass. It redefines the business hotel category, seamlessly combining form with function, high technology with unparalleled luxury and elegance with efficiency. Tel 00971 4 3300000 www.Jumeriah.com

SHANGRI-LA

Sheikh Zayed Road, Dubai Offers 301 luxuriously appointed guest rooms and suites, nine restaurants and bars, health club and spa, tennis and squash courts and outdoor swimming. Tel 00971 4 3438888 Fax 00971 4 3438886 sldb@shangri-la.com

Sheikh Zayed Road, Dubai The truly unique and exciting five stars hotel features 393 rooms, suites and chalets together with Mall of the Emirates shopping centre and Ski Dubai’s alpine themed indoor snow resort. Tel 00971 4 3410000 reservations.malloftheemirates@ kempinski.com www.kempinski.com/dubai

Sheikh Zayed Road, Dubai Located in the centre of Dubai’s business district and just five minutes away from DIFC, Jumeirah Beach, Burj Khalifa and Dubai Mall, this 500-room hotel offers you a convenient access the must see and must go places in the emirates. Tel 00971 4 323 0000 Fax 00971 4 323 0003 reservation@emiratesgrandhotel.com

ACACIA HOTEL

FRASER SUITES DUBAI

Ras al Khaimah The Acacia Hotel is a superbly designed four star hotel complete with Al Nakhla restaurant, the stylish Flamingo bar, the vibrant Club Acacia, a pristine pool serving as a backdrop to varied and exciting Theme Nights, the luxurious O-Zone Spa, and high-energy Oxygen Gym. Tel 00971 7 2434421 Fax 00971 7 2434429

Sheikh Zayed Road, Dubai Rising high above the fringe of Media City on Sheikh Zayed Road, Fraser Suites Dubai enjoys panoramic views with superb 1, 2 & 3 bedroom apartments, lifestyle facilities, relaxed dining in Aqua Café and the exclusive Awazen Spa. Tel 00971 4 4401400 Fax 00971 4 4401401 reservations.dubai@frasershospitality.com

Qatar MÖVENPICK HOTEL DOHA

INTERCONTINENTAL DOHA

Doha Located on the Corniche Road, opposite the Museum of Islamic Art, the hotel offers 154 rooms and suites, a business centre and meeting rooms. Recreation facilities are also available. Tel 00974 4291111 Fax 00974 4291100 www.moevenpick-doha.com

Doha Superbly located in the prestigious West Bay area and within easy reach of the city centre. With its various dining options, 257 guest rooms and suites, private beach and a 24-hour state-ofthe-art gymnasium, it is an idyllic setting for business and leisure. Tel 00974 44844444 Fax 00974 44839555

Saudi Arabia HOLIDAY INN RIYADH, IZDIHAR

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@J PFLI ?FK<C C@JK<; FE K?@J G8><6 Riyadh The first 5 star Holiday Inn hotel in the Kingdom, with 289 new and trendy accommodations, huge lobby with W-Fi access, outdoor pools, sauna, Jacuzzi and health club. Also has state-of-the-art meeting rooms, 24-hour business center with professional secretarial support. Tel 00966 1 4505054 Fax 00966 1 4505056

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ÈG<FGC< JG<E; FE K?@E>J K?8K ?8M< CFE><M@KP# 9FK? @E K<IDJ F= K?<@I ;<J@>E 8GG<8C 8E; K?<@I @EKI@EJ@: HL8C@KP%É

BAGS OF STYLE 8c`Z`X 9lcc\i [ifgj `ekf ;lYX`Ëj e\ncp i\mXdg\[ Cfl`j Ml`kkfe jkfi\ Xe[ d\\kj k_\ ÔidËj i\Xjjli`e^cp [Xgg\i \o\Zlk`m\ m`Z\ gi\j`[\ek# G_`c`gg\ JZ_Xlj OUIS VUITTON’S NEWLY expanded store in Mall of the Emirates, Dubai, feels less like a shop and more like a living room. A very, very posh person’s living room. And that’s the idea, according to global executive vice president, Philippe Schaus. “We call our big stores ‘maisons’. We furnish them in the spirit of what you would put in your apartment,” he says. The firm’s big boss certainly looks the part, ensconced in one of the store’s to-die-for luxury sofas. And the fact that Schaus has personally travelled to the desert for the reopening is an indicator of how seriously Louis Vuitton views the Middle East region. Looking around at the room’s newly-clad designer surroundings, it’s clear that the Dubai refurb was a no-expense spared job for the Parisian fashion house and purveyor of high-end travel bags. The original Louis Vuitton (1821–1892) came to intimately know the attributes of a good carry case when he was employed as a luggage packer for French royalty and the rest is bag history. Today, the iconoclastic ‘LV’ brand is estimated to be worth $19.8 billion. While all the global stores are “futuristic and contemporary”, what sets the Dubai store apart is its considerable size – catering to Dubai’s boundless taste for high-end goods – and its debut crèche. As might be expected, it’s no hoi polloi nursery and contains artwork by famous urban artist Nadim Karam, in association with Dubai’s Start art charity for kids. The crèche is a ruse that may increase brand loyalty among parents, amid an increasing melee of luxury shopping options. “We design every store in the world individually and we try to invent something new for each one. The crèche is unique. We would like this remain for sometime a unique feature in the

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UAE,” Schaus says. “The family is very important in the Middle East. The Mall of the Emirates is a family-orientated mall. It makes their lives a bit easier.” In a reassuringly thick French accent, the VP says he’s just rushed in from Abu Dhabi, where he’s naturally been scoping out a new Louis Vuitton location in the richest city in the world. The luxury brand is also looking to invest in Kuwait, Qatar and Saudi Arabia. “It is constant movement. The ambitions of the Gulf go beyond everything, and we want to be part of that and continue to offer more and more exciting stores to our customers,” he says. While Louis Vuitton doesn’t release its figures, the VP claims the firm grew in both 2009 and 2010, despite the recession, as customers sought value over volume. “This is the case for those brands who present a lasting value and craftsmanship. You will spend on things that have longevity, both in terms of their design appeal and their intrinsic quality.” Schaus adds that Chinese consumers have driven business throughout the recession. “Asia has woken up today and is interested in luxury products. We have also seen our business growing in the Middle East and Latin America. It’s not just one region’s story.” As Louis Vuitton continues well into its second century, the challenge lies in maintaining the brand’s desirability, by investing in luxurious stores and high-end staff training. The other non-negotiable challenge is product quality – especially as Louis Vuitton remains one of the world’s most popular counterfeit brands. Schaus says: “We pride ourselves on using our own workshops, using the best possible materials. There’s the challenge of growing the business without losing any of the quality in our manufacturing. These are our challenges, today and tomorrow.”

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