Private Sector Qatar - February 2013 | English

FEBRUARY 2013 www.privatesectorqatar.com/en

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CONTeNTS February 2013

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22 MAKE THE RIGHT INVESTEMENT Tamara Pupic visited Qatar Plastic Additives and Industries Group and brings to you details on their impressive business development.

Entrepreneur 26 BACK TO BASICS In the second article of a series on SILA Angel Investment Network finalists, Layla Al-Dorani, Founder and CEO, Raw ME, tells us about her entrepreneurial initiative – Raw ME, the first “fast health food” company in Qatar.

ATMOSPHERE OF INTERACTION Made in Qatar 2013 was held at the Qatar Exhibition Centre from 16th to 18th January 2013. Private Sector Qatar brings to you coverage of the event.

News

16 ATMOSPHERE OF INTERACTION

10 UPDATES A quick look at news and events in this region.

Made in Qatar 2013 was held at the Qatar Exhibition Centre from 16th to 18th January 2013. Private Sector Qatar brings to you coverage of the event.

Sector study 28 WHAT’S YOUR RENT? Dr. Tarek Coury, Chief Economist, Tanween, explains why the need for affordable housing in the GCC extends beyond responding to the social aspirations of a growing population.

Business guru 30 THE FIVE STAR AIRLINE

About town

SMEs

14 HEALTH COMES FIRST

18 WHAT’S IN THE PIPELINE?

Private Sector Qatar was at the Arab Health Exhibition and Congress 2013 to provide you with the latest news from the healthcare sector.

One of the five regional factories of Future Pipe Industries, a leader of the fiberglass pipe industry, is in Qatar. For that reason, Jenny Kassis got talking with their management to learn about their plans within the Qatari market.

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Qatar Airways Cargo has ramped up its expansion which according to the CEO, Akbar Al Baker, is an extension of the airline’s strategy to develop its global air transport business. Aparna Shivpuri Arya engaged with him in a discussion to know more about this business section of Qatar Airways.

Technology

20 ARE YOU IN A GOOD MOOD?

34 THE WORLD WIDE WEB

Tamara Pupic met up with Ahmed Khalifa Al-Assiry, Senior Partner, Qatar Technical Steel Fabrication & Refrigeration, to hear what is required for business success in the area of steel fabrication and industrial refrigeration.

In today’s troubled economy, certain firms are flourishing and it is the Internet that is making it possible. Taylor Reynolds, Senior Economist, OECD, suggests that the Internet is a key resource for economic growth.

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Women in business

Business advice

36 HOW SOCIETY WINS?

40 WHAT YOU NEED TO KNOW!

Elsbeth Blekkenhorst and Danielle Duttenhofer, Co-Founders and Directors, Global Women Qatar, explain to us the concept of corporate social responsibility and its various interpretations.

Just after Mowgli Foundation received the Mohammed bin Rashid Award for Young Business Leaders for the Best Mentor Network in the Arab World, Kathleen Bury, Business Manager for GCC and North Africa, Mowgli Foundation, provided us with an insight into the power of mentorship.

Insurance

Legal

38 PROTECT WHAT’S YOURS Mahan Bolourchi, Head of Risk Management, Information and Claim, Middle East, Euler Hermes GCC, elaborates on the concept of credit insurance and how does it work for an organisation.

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44 FIND YOUR AGENT

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Despite the current financial crisis, the GCC market remains the hub for attracting foreign investments. In line with increasing interest of foreign companies, Khalifa Al-Misnad, Partner, Al-Misnad & Rifaat, advises foreign investors on how to market their goods and services without legal establishment in Qatar.

Management 48 SOLVE THE PUZZLE Solving problems successfully depends on many factors, but mostly on the willingness and desires of those responsible. Osama K. Jbarah, Senior Engineer, Qatar Petroleum, explains that we can learn a lot about a company’s management by observing how they solve problems.

52 DELIVER WITH SUCCESS Sangeetha Thomas, Management Consultant, suggests that SMEs can deliver contracted work successfully with effective management of three critical aspects – scope, time and costs.

FeBruary 2013

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edITOrIal Publisher Dominic De Sousa

Helping you stay at the top...

Group COO Nadeem Hood Managing Director Richard Judd richard@cpidubai.com +971 4 440 9126

We try our best to cover all aspects of the private sector in the magazine to ensure that our readers are updated about the different sectors and industries.

EDITORIAL Senior Editor Aparna Shivpuri Arya aparna@cpidubai.com +971 440 9133

So in this issue, we feature an interview with the CEO of Qatar Airways to talk about the cargo division and know his opinion on the importance of trade for Qatar. With melting borders, trade is becoming the cornerstone of economies and Qatar is no exception.

Assistant Editor - English Tamara Pupic tamara@cpidubai.com +971 440 9130 Assistant Editor - Arabic Jenny Kassis jenny@cpidubai.com +971 440 9116 Contributing Editors Mike Byrne mikeb@cpidubai.com +971 440 9105 ADVERTISING Commercial Director Chris Stevenson chris@cpidubai.com +971 4 440 9138 CIRCULATION Database and Circulation Manager Rajeesh M rajeesh@cpidubai.com +971 4 440 9147 OPERATIONS AND DESIGN Production Manager James P Tharian james@cpidubai.com +971 4 440 9146 Head of Design Fahed Sabbagh fahed@cpidubai.com +971 4 440 9148

This is also reflected in Qatar’s representation in events, which give it a platform to showcase its products and services. Last month, we covered “Made in Qatar” and “Arab Health 2013”, both of which highlighted the efforts being made

by Qatar to promote its goods and services to the rest of the world.

If trade is one cornerstone of the economy, then technology is another. A few months back, I had attended an event in Qatar which highlighted the link between economic growth and the Internet.

And it was evident from the discussions that in economic terms, comparative advantage will only rest with countries that have a lead in Internet growth and penetration. You’ll notice that this point is reiterated in our article on technology by Taylor Reynolds from OECD. Besides talking about trade and technology, this issue also brings forth the concept of “mentoring” and its importance for entrepreneurs. We all have been working towards encouraging the youth and preparing them to be entrepreneurs and the one crucial step in doing that is to guide or mentor them to the right direction. Wouldn’t you agree?

As always, we hope you’ll enjoy this issue. We’ll be in Qatar in February to cover some events and hope to meet some of you there.

Till then..

Photographer Jay Colina jay@cpidubai.com +971 4 440 9137 DIGITAL SERVICES www.smeadvisor.com Digital Services Manager Tristan Troy Maagma Web Developers Erik Briones Jefferson de Joya Louie Alma online@cpidubai.com +971 4 440 9100 Published by

Aparna Shivpuri Arya, Senior Editor, Private Sector Qatar Talk to us: E-mail: aparna@cpidubai.com Twitter: @PrivateSectorQA Facebook: www.facebook.com/PrivateSectorQatar LinkedIn group: Private Sector Qatar

Head Office PO Box 13700 Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409

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Dar Al Sharq Distribution © Copyright 2013 CPI All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

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Ms. Amal Al-Mannai

ADVISORY BOARD Gail Gosse Gail Gosse, is the Dean of the School of Business at College of North Atlantic-Qatar.

Hamad Mohammed Al-Kuwari Mr. Hamad AL-Kuwari is the Managing Director of Qatar Science & Technology Park.

Professor Nitham M. Hindi

George M. White, Ph.D.

Professor Nitham M. Hindi, is the Dean of College of Business and Economics at the Qatar University.

Dr. White is Associate Teaching Professor of Entrepreneurship at Carnegie Mellon University-Qatar.

Abdulaziz N. Al-Khalifa

Nasser Al Muhannadi

Mr. Al-Khalifa is the Executive Director, Strategy and Business Development at Qatar Development Bank (QDB).

Mr. Al Muhannadi is the Chief Operating Officer at Enterprise Qatar.

Raed Al-Emadi

Rashid Nasser Sraiya Al Kaabi

Mr. Al-Emadi is the Deputy CEO, Silatech.

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Ms. Al-Mannai is the Executive Director of the Social Development Center (SDC).

Mr. Al Kaabi is the Chairman of the Board of Energy City Qatar Holding (ECQH).

For more information, please visit www.privatesectorqatar.com/en

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Bring on tomorrow www.aig.com AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. Products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Not all products and services are available in every jurisdiction, and insurance coverage is governed by actual policy language. Certain products and services may be provided by independent third parties. Insurance products may be distributed through affiliated or unaffiliated entities. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.

NeWS

BREATH-TAKING IMAGES OF QATAR Mansoor Bin Ibrahim Al-Mahmoud, CEO, QDB, said, “First of all, we would like to congratulate to all our winners and thank each participant for taking the time to be part of this national initiative. The level of participation and interest we had for “ Qatar in our Hearts ” exemplifies everybody’s fondness of our country and appreciation of its culture, heritage and legacy. It also helped unlock the creative capabilities of many who are looking for a platform to showcase their talent and flair.”

Abdulaziz N. Al-Khalifa with the awardees

Qatar Development Bank (QDB) announced the winners of “Qatar in our Hearts” competition, the online visual contest organised on the occasion of the Qatar National Day. Mohammed Hosho, the first place winner, was

awarded a cash prize of QR 5,000, a trophy and an iPad 3. The second place winner, Ahmad ElSayed, was awarded a cash prize of QR 3,000 and a trophy. A trophy also went to the third place winner, Bijoy Joseph.

Created especially for Qatar National Day, the Facebook-driven “Qatar in our Hearts” competition was launched on 28th November and stretched till 22nd December 2012. It saw over 42,990 participants in registration and voting with a total of 484 images published.

Participants, accessing QDB’s Facebook page (www.facebook.com/QatarDevelopmentBank) uploaded breath-taking images and drawings that helped showcase uniqueness of Qatar particularly around the country’s celebration of its annual day.

TRADE WITH QATAR Driven mainly by liquefied natural gas contracts, four Asian countries have now become Qatar’s top export destinations and accounted for exports worth QR 76.4 billion (USD 21 billion) in the third quarter of 2012.

Japan was Qatar’s top destination with QR 32 billion (USD 8.8 billion) in the third quarter of 2012. The other major Asian export destinations of Qatari products are South Korea, IndiaandChina.SouthKoreaaccountedforabout QR 25.5 billion (USD 7 billion), India QR 12 billion (USD 3.3 billion) and China QR 6.9 billion (USD 1.9 billion).

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Qatari exports to China are continuously rising and have increased by 68% yearon-year (y-o-y) on the back of new LNG contracts. According to QNB, the country’s exports to Japan have shown a 22.6% increase y-o-y, South Korea 46% y-o-y and India 0.6% y-o-y. Outside of Asia, the major export destination for Qatar was the European Economic Community which accounted for QR 12 billion (USD 3.3 billion) Qatari exports in the third quarter of 2012.

Overall, there has been a marginal decline in the Qatari exports in the third

quarter of 2012, which QNB attributed to a drop in condensate and natural gas liquids (NGL) exports, though liquefied natural gas and crude oil exports have increased.

The EEC accounted for most of Qatari imports and accounted for QR 5.8 billion (USD 1.6 billion) in the third quarter. The other major import sources for Qatar in the third quarter of 2012 were the US QR 2.5 billion (USD 0.7 billion), China QR 1.8 billion (USD 0.5 billion), Japan QR 1.45 billion (USD 0.4 billion) and the UAE QR 1.45 billion (USD 0.4 billion).

2012: REGIONAL GDP GROWTH Real GDP growth in the GCC region is likely to have slowed from 7.8% in 2011 to an estimated 5.7% in 2012, according to QNB Group. The non-oil sector has driven growth while oil output has also risen.

In 2012, oil prices remained at historically high levels, boosting government revenue and spending, which, in turn, boosts growth across the non-oil industrial and services sectors. Around 22% of government spending is capital expenditure, mainly on infrastructure in the transport, real estate, education and healthcare sectors. Government spending, therefore, supports non-oil sectors such as construction and utilities.

Rising oil production was also an important factor driving growth in 2012.

Total GCC oil production reached 17.2 million barrels per day, on average, in the first three quarters of 2012, 6.2% higher than in 2011. Higher oil production came as OPEC removed its production quotas for individual countries.

Overall, despite historically high oil prices and rising oil production, strong growth in the non-oil GCC economy has sustained its share in total GDP at around 50% in 2012.

QNB Group estimates that total nominal GDP in the GCC was USD 1.56 trillion in 2012, or 2.2% of global GDP. Saudi Arabia accounts for around 47% of the region’s GDP. The oil sector has underpinned the Saudi economy with production averaging 9.8 million barrels per day in the first three quarters of 2012, up from an average of 9.3 million in 2011. Real growth was even stronger in the Saudi non-oil sector in 2012 at 7.2%. Ongoing major investment projects have supported growth in sectors such as construction, which expanded by 10.3% in 2012.

The UAE accounts for 23% of regional GDP. UAE real GDP growth for 2012 is estimated at 4.0% in the IMF’s most recent Middle East Regional Economic Outlook. Oil production was 3.2% higher in the first three quarters of 2012 than in the same period of 2011.

Qatar is the third largest economy in the GCC, accounting for 12% of regional GDP. Qatar’s growth is still strong at 6.1% in 2012 due to the non-oil sector. The non-oil industrial and services sectors are estimated to have exhibited strong growth of 10.1% and 9.1% respectively,

according to QNB Group. This compares to just 2.1% for the oil and gas sector.

Kuwait accounts for 11% of GDP in the GCC. GDP growth is estimated at 6.3% in 2012, driven mainly by a 12.1% increase in oil production to an average of 3.0 million barrels per day in the first nine months of 2012.

Growth in Oman, which accounts for 5% of GDP in the GCC, was forecast to remain relatively steady at around 5.0%, according to the IMF, driven by gently rising oil production and major expansions in the petrochemical sector.

Finally, growth in Bahrain, which accounts for 2% of GDP in the GCC, was forecast by the IMF to have been just 2.0% in 2012.

Bahrain’s economy is more diversified than the rest of the GCC as it has a strong services-oriented non-oil sector (financial services account for 18% of GDP) and relatively limited oil reserves.

Going forward, the non-oil sectors are likely to grow strongly in most countries, supported by the rising government expenditure. Therefore, QNB Group expects GDP growth in the GCC growth to stabilise at around 5-6% in 2013-14.

FeBruary 2013

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NeWS

TASDEER launches the EXIM LINK QDB’s Qatar Export Development Agency, TASDEER, recently launched another export-driven initiative, the EXIM Link, in order to provide non-oil Qatari exporters with an effective tool to reach key target importers from across the world.

The initiative is a culmination of a survey championed by TASDEER to glean helpful insights and recommendations from local exporters and to cater to their demand with solutions and programmes that are tailormade to the overall growth strategy of the industry.

As an initial step, TASDEER prepared a list of 122 Qatari exporters with their contact details, including the mobile numbers of the key personnel, and the Harmonised System Code (HS code) of the product manufactured by each company. Second, TASDEER collected the contact details of importers from selected target countries as per the HS codes of the products manufactured by the Qatari exporters.

An information technology tool, called EXIM LINK, was later developed under Microsoft Dynamics CRM platform by QDB’s in-house IT team. The link features a host of benefits such as the ability to manage: ■ ■ ■

Qatari exporters database Global importers database World wide Chamber of Commerce or Associations’ database

In addition, the link provides importer contacts to Qatari exporters based on HS Codes matchmaking mechanism, facilitates exporters interaction tracking management, captures exporter’s feedback through forms and surveys, provides a centralised document repository for managing export promotion, creates email and SMS alerts notifications and generates various statistical reports.

Hassan Khalifa Al Mansoori, Executive Director, TASDEER, added, “The objective of launching the IT-based EXIM LINK tool is to help TASDEER in establishing strong business relationship with Qatari exporters and to promote exports. Furthermore, the tool will help TASDEER in managing customer relationship efficiently through the CRM platform.”

Mansoor Bin Ibrahim Al-Mahmoud, CEO, QDB, said, “EXIM LINK accentuates our continued efforts to build a solid support system to Qatari exporters, helping them, thus,

EXIM LINK will be implemented in two phases.

The first phase will cover 52 Qatari exporters and the second phase to be implemented by May 2013 will cover the rest of them.

SAVE THE DATE! Date

to smartly expand their businesses through an effective communications platform with their target groups. EXIM LINK is a truly unique export development service from TASDEER which will have a strong impact on the rise of the non-oil, non-QP Qatari exports. EXIM LINK is a key addition to the broad portfolio of services provided to exporters by QDB and TASDEER. It highlights our strong investment in furthering our commitment to grow a worldclass exporting industry in Qatar.”

FEBRUARY – MARCH 2013

Event

Location

31 January – 2 February

Forum Mobile Phone – ICT Qatar

doha

4 - 6 February

Second high level Forum on global geospatial Information Management

Qatar National Convention Center

4 - 6 February

POWer-geN Middle east 2013

Qatar National Convention Center

4 - 6 February

Water World Middle east 2013

Qatar National Convention Center

7 February

Qatar Conference Qatar to the Security of Financial Information

doha

10 - 13 February

1 doha International astronomy Conference "gravitational Microlensing - 101 years from theory to practice"

Qatar National Convention Center

16 - 17 February

arab youth and entrepreneurship: holistic approaches to Nurturing local ecosystems

hilton hotel, Westbay, doha

17- 20 February

Qatar Projects Conference

grand hyatt doha

st

20 - 21 February

real estate Fair Qatar

doha

20 - 21 February

GRI Certified Training on Reporting

doha

25 – 26 February

7th gCC regulators' Summit

doha

March

energy Forum

doha

2 - 5 March

Seminar - Convert Natural gas

doha

4 March

gulf expo-Qatar

doha

12 - 14 March

World Cargo Symposium

doha

13 - 14 March

Middle east geospatial Forum 2013

Qatar National Convention Center

17 – 21 March

Second Turbine Machines Middle east Symposium

doha

31 March - 2 april

World luxury expo doha

doha

To know about the events happening in Qatar in the next six months, please visit our Website.

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aBOuT TOWN

Health comes first Arab Health Exhibition and Congress 2013, the region’s largest event dedicated to the healthcare sector, was held at the Dubai International Convention & Exhibition Centre from 28th to 31st January 2013. Private Sector Qatar brings to you coverage of the event.

H

is Highness Sheikh Hamdan bin Rashid Al Maktoum, the Deputy Ruler of Dubai and the Minister of Finance and Industry of the United Arab Emirates, inaugurated the Arab Health Exhibition and Congress 2013 on 28thJanuary 2013 at the Dubai International Convention & Exhibition Centre. The largest event across the region and the second largest in the world was running until 31st January, featuring over 3,500 exhibitors from 63 countries and more than 7,500 conference delegates.

Major delegations present at the 38th edition of the Arab Health Exhibition and Congress came from China with 428 participating companies (40% increase from 2012), India with over 111 companies (5% increase from last year) and the United Arab Emirates, with more than 200 companies exhibiting (10% increase). Large representations also came from France, Italy, South Korea and Taiwan with upwards of 100 companies each.

Running in parallel with the exhibition, the Arab Health Congress addressed the following key topics – big data, robotic surgery, and complementary medicine. For the first time, the congress hosted a dedicated diabetes conference. During the four days, views on the status of the world’s healthcare sector were exchanged within 19 healthcare conferences and discussions.

The team of Private Sector Qatar checked whether the exhibitors met their main objectives which were the following: ■ To find new business opportunities ■ To build new and existing relationships with the industry ■ To educate the audience and build brand awareness

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Around the world The event was a unique opportunity to meet and talk to representatives of the companies from around the world.

Thus, we thought it would be a good idea to learn what companies from outside the Middle East region had to say about this market. We first talked to Clark Lee, Manager, Global Business Unit, Korea, who briefed us about his company, “Our company was established in 1966. We participate in all the main exhibitions dedicated to the healthcare sector. Since we want to develop our business in the Middle East region, I did research and found out that this exhibition is the biggest event in this part of the world. For that reason, we have been participating for four years already.”

Since this is not their first time in this exhibition, Clark compared his experience gained from participating over the years, “The exhibition is growing. My experience from the exhibitions held in 2010 and 2011 is that, then companies were only interested in seeing new products.

But, now I can say that a lot of them really want to do business with us. For example, companies from Iran, KSA, Turkey and India approached us this year and I hope we will manage to create good business relationships in the future.”

Lastly, we were curious to learn more about their targeted business destinations. Therefore, Clark explained, “We already have established partnerships in the main markets like US and Europe, but the Middle East region is still our weak point. We have developed distribution network in the region, but we now aim to establish stronger partnerships here. Our main focus is on KSA and UAE, but we are also interested in Qatar since we already have a distributor there.”

Once we finished talking to the representative of a Korean company, we approached a European company to find out why the Gulf region is an attractive destination for development of their businesses. Emil Svendor, Sales Director, Norma, Austria, answered, “We have three products which we try to present here. We are very young company and came to the exhibition to find distributors.

Traditionally, this is a strong market in our field and for that reason we are looking for partners in the region. The region is composed of bigger and smaller markets, but since we are a small company each of the regional markets is interesting for us. Our aim is to collect as many contacts as possible and establish cooperation with them after the exhibition. Currently, it seems better than we expected. I can say that companies from India, KSA, the UAE and Egypt are interested in our products. But, I am surprised that companies from Turkey didn’t show a lot of interest, as we have expected them to.”

In line with Emil’s last statement, we decided to check what the Turkish companies were interested in and talked to Cagdas Ali Hatipoglu, International Sales Executive, Istanbul Medikal, who stated, “Our products are completely produced in Turkey and sold in over 20 countries around the world. We want to explore this market and find out where our competitive advantage might be when compared to local producers. We are interested in KSA, Egypt and Kuwait. If you ask me about other regions, I would say we are interested in India, Pakistan and other Asian countries.”

During the second day of the exhibition, we spent quite some time talking to representatives of companies from the USA. First, we visited the booth of Hologic, Inc, which is a US-based developer, manufacturer and supplier of various products dedicated to serving the healthcare needs of women. David Harding, Senior Vice President and General Manager, Hologic, said, “The Arab Health Congress is our opportunity to reach out to physicians, administrators, hospitals and laboratories serving the fast growing healthcare market in the Middle East.”

Later on, we had a nice chat with Maria Corbo, Director of International Health Services, Boston Children’s Hospital, USA, who was honest to share with us, “We have very strong commitment to this region since we receive a lot of patients from here who undergo our treatments. The patients are mainly from the UAE, Kuwait, Qatar and KSA. Also, we cooperate with the regional hospitals for trainings and exchange of information. For that reason, it was important for us to be here in order to maintain our presence which was officially established in 1997. In the last few years I have seen an increased openness to exchange and training within the regional healthcare sector. Also, the quality of personnel in the sector has progressed a lot.”

Qatar’s healthcare sector Although Qatar’s first hospital was opened in 1957, today, citizens and residents enjoy state-of-the-art health and medical services from both public and private health care providers. Access to public healthcare services is

affordable and efficient with the government-issued health card. A wide selection of private healthcare clinics, which operate under strict national standards, have also opened in Qatar. The Supreme Council of Health (SCH) is responsible for regulating both public and private healthcare. Its mandate is to provide the most effective and advanced healthcare possible, and propel Qatar’s healthcare system into one of the best in the world.

Hamad Medical Corporation (HMC) is the premier nonprofit healthcare provider. Established in 1979, it manages five specialised hospitals and 24 primary health care centers. HMC offers the most comprehensive healthcare in Qatar, covering every area of medicine and wellness from oncology to psychiatry.

And it was a great evening for HMC on 30th January 2013 when it was awarded in the Sustainable Hospital Award category at the Arab Health 2013 Achievement & Innovation Awards. The gala ceremony was held at the JW Marriott Marquis Hotel in Dubai, with the attendance of more than 700 of the region’s leading healthcare professionals, senior government officials and special VIP industry guests.

“I am thrilled that Hamad Medical Corporation submission won the top award in the Sustainable Hospital Award category. This recognition reflects the great work done by Hamad Medical Corporation leadership and staff collaboratively for patient care. This award is dedicated to our Managing Director, Dr. Hanan al Kuwari, and all the HMC family,” said Shakil Ahmad, Assistant Medical Director and Medical Administration, Hamad Medical Corporation, commenting on their win for the Sustainable Hospital Award.

Last, but not least, we visited stands of two Qatari companies – Qatar Pharma and Qatar German Company for Medical Devices. Although they were quite busy with many visitors, we managed to use this opportunity and take interviews from Dr. Ahmed Mohammed Al Sulaiti, Qatar Pharma, and Emre Anlar, CEO, Qatari German Company for Medical Devices. These two interesting stories we will feature in one of the forthcoming issues.

The event assured us that the regional healthcare sector is set for a strong growth and we will make sure to follow the progress.

FeBruary 2013

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aBOuT TOWN

Atmosphere of interaction Made in Qatar 2013, an annual exhibition dedicated to showcasing the Qatari products and businesses, was held at the Qatar Exhibition Centre from 16th to 18th January 2013. Private Sector Qatar was there to hear opinions of all business stakeholders in Qatar – entrepreneurs, SMEs, large enterprises as well as decision makers. Read about what they had to say.

T

he inauguration of Made in Qatar 2013 exhibition was patronised by H.H. the Heir Apparent Sheikh Tamim bin Hamad Al Thani on 16th January 2013. The event was organised by the Qatar Chamber of Commerce and Industry (QCCI) in collaboration with the Ministry of Energy and Industry.

This year’s edition of the exhibition focused on presenting Qatari businesses involved in the manufacturing, food processing and chemical and petrochemical sectors as well as on small and medium-sized industries in general.

Besides showcasing Qatari products and businesses, the event also aimed: ■ ■ ■

To support development of the industrial sector To encourage partnerships among the business community in Qatar To contribute to attracting investments in the manufacturing sector

Unique to Made in Qatar 2013 was the presence of well-known companies and traders from other parts of the world who aimed to choose products of Qatari companies and pave the way for marketing them abroad.

The team of Private Sector Qatar didn’t miss this must-attend event in Qatar, since it was a unique opportunity to meet representatives of many of the participating companies and learn about their various projects and initiatives.

We began our tour from the impressive booth of Qatar Development Bank. As a proven supporter of SMEs in Qatar, the bank presented its support programmes as well as the work of TASDEER, Qatar Export Development Agency. We briefly talked to Hassan Khalifa

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Al Mansoori, Executive Director, TASDEER, who started by saying, ”QDB participates in this event as the strategic partner, in order to sponsor and support it. This is also a chance for our management department to identify the needs of SMEs and assist them through our numerous initiatives and services designed to contribute to the expansion of the private sector. This is an opportunity for TASDEER as well. We can provide solutions and assistance to participating companies in order to ensure exports of their products.” When we asked him what the role of this event was, he explained, “This exhibition is an opportunity to exchange views and experiences between large companies and SMEs. It is also the place which creates an atmosphere of interaction between decision makers and beneficiaries of these decisions.”

Local manufacturers In order to assert Qatar’s support for projects operated by the Ministry of Social Affairs Department of Productive Families Development, the exhibition contained pavilions of traditional craft. Within this section of the exhibition we first stopped by the stand of the Social Development Center (SDC) of the Qatar Foundation for Education, Science, and Community Development. Through its Badr Programme, the center offers full entrepreneurship support to individuals and families throughout Qatar to help them develop successful enterprises. Fatima al Manaii, Volunteer, SDC, was kind enough to share with us her experience from the event, “The SDC is a non-profit, social and development organisation with projects to support families as well as mentoring programmes and vocational trainings.

Our leading project is the Badr Programme which offers loans by the Micro-Star Fund to all families and individuals in Qatar aspiring to develop their own businesses. Our main aim here is to present the programme to Qataris. A large number of interested people have visited us. Since I am a volunteer in the programme, I am glad that I was

Hassan Khalifa Al Mansouri & Nasser Rashid Al Humaidi

Mansour Bin Ibrahim Al-Mahmoud

also able to learn about the plans and projects of all Qatari citizens who came to the fair.”

are manufactured in Qatar. It is very important for our company to contribute to the growth of this sector.”

With an idea to hear opinions of small Qatari manufacturers we talked to Fadia Ibrahim, Bu Saif Apiaries, a honey producer, who said, “We are presenting different types of honey which are produced in various regions of Qatar. We always participate in this kind of exhibitions and we are very pleased that the government supports the production of local honey. That will increase demand for our products rather than for imported ones. The exhibition is well coordinated and organised by the Chamber of Commerce.

The turnout at the exhibition is great. We were able to sell large amount of honey and we also got a number of orders.”

Since we were more than impressed with boats showcased in this section of the exhibition, we went there to take a closer look and talk to Salah Mohamed Al Khazraiji, Manager, Halul Boats. It is the only company which manufactures boats in Qatar. Even though they face a lot of competition from foreign large corporations, they are still able to maintain significant amount of sales within the domestic market. Since this is not their first time to participate in this exhibition, Halul compared his experiences gained from participating over the years, “Our participation in the exhibition this year was more successful than in the previous years. This year the overall event was a great success. Many Qataris visited our booth and we were able to make more than one deal. I want to thank the organisers for providing us with a lot of services and facilities. Our participation enhanced our role in the local market and gave us new opportunities. I am very satisfied.”

Since a lot of fashion design companies were also present, we were curious to learn about their position in the market.

For that reason, we spent quite some time talking to Riham Khattab, Sales Executive, Diamond White, who explained, “This is a unique and special exhibition since it is covering industries from different fields. The industry sector in Qatar has evolved recently and a special focus has been put on the garments section. Diamond White is a designing house within which a group of talented and passionate Qatari women respond to the latest trends in fashion.” In line with that, when we asked her what was the first thing that came to her mind when she heard “Made in Qatar”, Riham was quick to point out that it were abayas, incense and perfumes. She further added, “Since we design abayas, we are participating in this event in order to encourage the industry sector in general and women in particular, so that they can pursue their ambitions and implement their industrial projects. All of that will contribute to the growth of our country”.

Time for the industry During the second day of the exhibition, we focused on the section which showcased Qatar’s industry. We got talking to Abed Al Aziz Al Rifaii, Business Development Executive, Al Sraiya Holding Group, who appreciated the positive impact of this kind of events on his business, “Our participation in the Made in Qatar 2013 exhibition is very important for us.

We think that the industry sector in Qatar is fundamental for its growth and, thus, it is very important to develop it.

All of our products displayed here, such as tiles or metals,

Abdulaziz Al-Khalifa

Lastly, we visited the booth of a very successful Qatari company, Qatar German Medical Devices, which is the only manufacturer of medical disposables and medical consumables in Qatar. Christina Kamal, Sales and Marketing Representative, Qatar German Medical Devices, told us that they already had a big market share within Qatar and that their export destinations were spread across 17 countries worldwide. However, she highlighted the importance of participating in this kind of events, “We have been participating in this exhibition every year with the objective to make our company well-known. I think that our participation here is always a good chance to meet new investors and partners from foreign countries. For example, yesterday we had guests from Egypt who were looking for new industries in Qatar to invest in. This year we specifically aim to promote one of our products, QNeeda, in the region since it is already commonly used in Europe.”

The exhibition also featured parallel discussion forums where experts from the industry exchanged views on the Qatari industries, its prospects and challenges as well as on sectors having high potential for foreign investment. Made in Qatar 2013, one of the largest exhibitions of its kind in the world, left us in no doubt that a lot opportunities have been created for products of Qatari origin.

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WHAT’S IN THE PIPELINE?

Being successful in business requires perseverance and pursuing expansion and development. Future Pipe Industries (FPI) is a successful example of that. Jenny Kassis spoke to their management to learn about their role and future plans within the Qatari market.

F

uture Pipe Industries Group was established in 1984 and is now the global leader in the large-diameter fiberglass pipe industry. The group develops, manufactures and supplies pipe systems for customers in over 50 countries.

The group’s operations include ten factories and a global network of sales offices across four continents.

It serves customers and end users in a wide variety of sectors including oil and gas, infrastructure and municipal, water distribution, desalination and power, petrochemical and industrial.

About the product Fiberglass pipe systems can be used in a variety of applications, including water distribution, water transmission lines, sewer systems, drainage, irrigation, power generation plants, desalination, petrochemical plants, oil and gas exploration and production facilities.

In 2004, Future Pipe Industries (FPI), a part of the Future Pipe Industries Group, was established in Qatar with the support of Qatar Development Bank. It is now one of the five factories in the Gulf region. The other four factories are in the United Arab Emirates, Saudi Arabia and Oman.

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Since establishment in Qatar, FPI has been supplying its products to many Qatar-based projects in the infrastructure, manufacturing, and oil and gas sectors.

They also provide Qatar Petroleum with the largest fiberglass pipe system in the world which is used for pipelines sea water cooling.

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They have two different types of fiberglass pipes: ■

Wavistrong - GRE pipes and fittings up to 1600 mm in diameter Fiberstrong - GRP pipes and fittings GRV / GRP up to 400 mm in diameter.

In each particular case, the type of a pipe is chosen according to the specifications and requirements of the project.

In addition to these plastic pipe systems, FPI also offers engineering services, training for installation contractors on jointing techniques, site supervision, project management services and after-sales services in certain markets.

In recent years, the oil and gas market has been the fastest growing end-market for the company due to the overall level of investment made in the sector globally and, particularly, in the regions where they operate.

The increased exploration of non-conventional sources, which typically requires more complex piping systems, and the increased spending on exploration and production, has made the oil and gas sector a growing market and ensured a continued demand for their pipe systems.

Moreover, rising oil and energy prices have also supported demand for pipe systems as well as strong regional economic growth over the past few years.

Besides this, population growth, urbanisation and industrialisation have made water distribution market a strong and growing area for their products. FPI expects that the demand for their products within this sector will continue to grow over the next few years.

Elaborating further on their projects in Qatar, they explained that, as a manufacturer, they have been feeding local projects and also trying to expand into other countries.

When we asked them about their export plans they were quick to point out that the large volume of production in their factory in Qatar entitled them to engage in exports. Thus, they now export to all the Emirates in the UAE and Saudi Arabia. In addition to that, they offer support services to their factories located in these markets.

The increased exploration of nonconventional sources, which typically requires more complex piping systems, and the increased spending on exploration and production, has made the oil and gas sector a growing market and ensured a continued demand for their pipe systems.

Furthermore, they have recently started exporting to Bahrain and South America as well as to Indonesia, with future plans to expand more in Asian countries such as Korea, Japan and their neighbours.

Challenges They convinced us that in Qatar there are no major challenges for their business, but only the issue of competition with foreign factories which seek to enter Qatari market.

As a consequence of the financial crisis, most of the companies started to look for cheaper products.

For that reason, FPI has been facing price-based competition from several countries. Due to the geographical proximity and lack of projects in the United Arab Emirates, Emirati producers have started producing at lower prices. This has increased the competition for FPI. However, the numerous challenges which they face abroad are linked to the geographical location of their projects and restrictions imposed on manufacturers in some of those areas, such as lack of facilities and similar.

When we asked them what advice would they give to other SMEs interested in exporting, they highlighted that SMEs should first pay particular attention to the local market. Due to increased number of projects in Qatar, these companies should first strengthen their position and brand name within the domestic market. As a second step, they should expand to other regional countries.

Speaking about the importance of good advice and support for SMEs, they pointed out the important role of TASDEER. Qatar’s export development agency, TASDEER, has provided them with considerable assistance by informing them about the new markets with export potential for their products. In addition to studying the potential export markets, TASDEER also connects them with foreign companies in order to promote their products.

On the basis of TASDEER’s support they participated at the Big 5 Dubai exhibition, which was held in Dubai in November 2012. In order to promote their products in the UAE, they distributed explanatory brochures about their factory and products to the visitors.

Achievements and plans ahead Talking about the goals achieved so far, they stated that FPI is ISO 9001 and ISO 14001 certified. The company is also accredited by the relevant international bodies and has just developed a new business strategy for their pipes which should allow them access to new projects, such as cooling projects.

Furthermore, since projects for FIFA 2022 World Cup will require further infrastructure development, FPI will be able to participate in those projects by supplying pipes for sewage and rainwater. Thus, their next step is to, once the projects are assigned; contact the companies that will undertake these projects in order to offer their products.

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ARE YOU IN A

GOOD MOOD?

Due to the continuous efforts and exceptional work in the areas of steel fabrication and industrial refrigeration, Qatar Technical Steel Fabrication & Refrigeration has accomplished a signi�icant success record. Tamara Pupic got talking to Ahmed Khalifa Al-Assiry, the Senior Partner of the company, to hear his views on conditions for doing business in Qatar.

How was idea of the company created? What was your vision?

Our business has been with the family for the last 40 years in Qatar. My partner Gabi Mitri, Managing Director, established his first company Alfa Industrial Refrigeration back in 1992. In 2004 we recognised that demand for locally produced engineering products was increasing. At that moment, we began our expansion which resulted in the opening of a new plant in early 2011 when the business was relaunched as Qatar Technical Steel Fabrication & Refrigeration.

Ahmed Khalifa Al-Assiry

Over the years, we have dedicated ourselves to constant improvement and quality consistency. Now, I think we are the only company in our line of business that can produce and offer to the market that kind of quality. It’s important to note that we are not just contractors, since we also sell directly to the market.

How is your business structured?

Currently we have four divisions. The original business of Alfa Industrial Refrigeration has been transformed to Industrial Refrigeration Division which continues to design and install cold rooms and refrigeration units.

The Steel Fabrication Division adds to Qatar Technical

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a wide range of services and products – decorative items, customised rails and stainless steel kitchens.

Within our Machining Division we design and fabricate custom manufactured skids and moulds of up to 6,000 kilos in weight. Lastly, our Standard Products Division manufactures items like cable support systems, interior fixtures and structural support systems.

How do you assess conditions for doi ng business in Qatar?

We are facing challenges and we would appreciate more support from the government. Firstly, we need support through monitoring of whether legal preference in favour of Qatari companies is respected in practice.

Secondly, our businesses suffer because of the less efficient procedures of some of the government bodies.

For example, for some time after changing our name to Qatar Technical Steel Fabrication & Refrigeration, we imported machines, but could not collect them from the customs until we obtained various additional approvals in order to prove that it was the same company. It took us three months to collect our goods.

Furthermore, competition within our line of business in Qatar comes from Chinese products. Their quality is below standard. Nevertheless, they are still present because there is no efficient quality control and monitoring system in the market.

Our current sale in Qatar is between QR 10 to 12 millions. We would like to increase it and for that we need to invest. However, small businesses have to deal with significant investments. These can include payment of the installments for the factory building, machines and for the license. The nature of industry itself imposes that this process doesn’t end since we need to invest and upgrade constantly. To keep up with that pace can be quite difficult for small businesses. For that reason we need understanding and support from the government.

Industry is all about implementation and innovation, and innovation needs a good mood. That is one of the secrets. You have to take care that businessmen are in a good mood because only then they will contribute to the development of the country. I need to be positive in order to think and work more.

What export opportunities do you foresee for your products?

You have to succeed fully in your own country in order to export later. We have plans to export in KSA and the UAE. For that we need to produce in large quantities in order to reach economies of scale. Only by reducing our price we will manage to export later on.

But, exporting also requires marketing which is done through participating in exhibitions like Big 5 Dubai.

I would like to thank TASDEER for inviting us to that exhibition. If all government bodies would give the same encouragement like them, the industry would flourish.

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SMes

MAKE THE RIGHT INVESTMENT

For those with the ambition and vision to rise to new challenges, a new era in development within Qatar is creating in�inite opportunities. One such enterprise is Qatar Plastic Additives and Industries Group. Tamara Pupic visited them and brings to you details on their impressive business development.

M

ubarak Salem Hamad Al-Safran AlMarri, CEO, Qatar Plastics Additives and Industries Group, established his first company in 1999. With the idea of being a part of the support sector for petrochemical industry, the company has become one of the leading manufacturers of plastics in Qatar and the Gulf region.

Mubarak Salem Hamad Al-Safran Al-Marri

In 2000 Qatar’s market started booming, especially in the field of infrastructure and construction. In line with that, Mubarak Salem Hamad Al-Safran Al-Marri, CEO, and Salem Mubarak Al-Safran Al-Marri, Vice CEO, Qatar Plastics Additives and Industries Group, decided to develop a second line of business which included the production of complete systems composed of plastic pipes and adequate fittings.

At that time 95% of the plastic pipes were imported from neighbouring countries like KSA and the UAE. Since the two competitors were producing typical plastic pipes, the idea of Mubarak Salem Hamad AlSafran Al-Marri was to produce the pipes locally and complete them with the fittings from the European partner companies.

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They partnered with Marley - UK for production of drainage pipes, and with Prandelli - Italy for hot and cold portable water systems which were not previously produced in Qatar. The company obtained licence from these two companies and became their agent for distribution of fittings. Osama Naser Ahmad Ghanem, who is now the General Manager of the company, also established cooperation with COMER and Unidelta from Italy.

Due to their rapid business growth, in 2010 Qatar Plastics Additives and Industries Group, which is the umbrella company, formed three separate subgroups: ■ ■ ■

Qatar Plastic Additives Company W.L.L. Qatar Plastic Compounding Co. W.L.L (QPCC) Qatar Pipeline & Fittings Co. W.L.L. (QPF)

For the last 11 years they have been an approved supplier of Qatar Petrochemical Company (QAPCO). In order to remain their main supplier on a yearly basis, they have proved to be the best service provider.

Since we believe that their visionary business expansion may offer valuable advice to other Qatari businesses, we asked them a few questions to hear about their experience, ideas and plans firsthand.

product directly from the market and test it to check whether it conforms to their standards. We maintained that license simply because we take our responsibility very seriously.

Access to finance is difficult in the first years of business development, how did you gain access to finance?

Initially, the company was established on the basis of the financial contribution by the founders.

Another challenge is the constant introduction of different standards with which we had to comply with.

The production of plastic pipes in Qatar is not based on one single standard, since companies use US, European or UK standards. So, we have to conform to different standards. Luckily, now we cover almost all of them and we can satisfy clients from all around the world.

At a later stage we approached QDB not only for finance, but for advice as well. The owners’ vision was to ask for a second opinion from QDB which was Qatar Industrial Development Bank (QIDB) at that time.

How did you decide on the strategy for your business development?

Setting a business was not instant, since it usually goes through stages. We were constantly working on improving the quality of our products. We are now authorised, tested and certified by all our foreign partners and also by most of the relevant governmental authorities which allow usage of our products within their projects. Lastly, we are fully ISO certified which is very important for our line of business.

At one point, we decided to expand since our experience suggests that we cannot rely on one particular product to sustain success. With one product you can reach certain size, but you cannot expand. Thus, the variety of our investments capture portions of each of those product markets – we don’t rely only on one product and our products are not conflicting.

Development of our business went hand in hand with the development of the country. We are proud to state that 90% of Doha Towers has used our products and almost all facilities of the Asian Games 2006 were supplied by us.

Furthermore, we all know that Qatar is heading to become the biggest producer of petrochemicals in the world. Due to vast natural resources, Qatar has developed the industry on a larger scale and additives are now required by the petrochemical industry more than ever before. Since we already are in that business, we have just enlarged ourselves – our capacity has multiplied by ten while demand for our products has tripled since 2010. Now, we have signs that it will double again. So, we can meet this increased demand only by increasing our capacity.

What challenges did you face and how did you solve them?

In the initial stage, the main challenge was the acceptance of our products within the market.

One of the on going challenges is to maintain our licence with the European partners. We are being audited almost every six months. They collect the

What would be your advice for new companies in your line of business?

Success is not a guaranteed thing, but studying the case well and being very logical is the first key of success.

The first advice for people, who want to invest, is not to be in the same stream as the others, but to be special.

Our advice to new investors is to look for something new and not to stick to what’s currently available.

In that manner, Qatar reached the current level of development - by researching and initiating new ideas.

If the research of new ideas was not pursued, people would still be using coal for heating.

The second advice is to adapt to the market size and avoid creating an establishment ten times bigger size than the market. The size of your investment should match your capabilities. Management is very important because you cannot set up a huge enterprise with a small structure of the company. Furthermore, don’t invest in the place which has local goods available, but in a place where imported goods are sold. In that manner, you can be a supplementary supplier and people would prefer your products over importing from other places.

As a third point, always try to be close to the raw materials in order to reduce the costs.

How do you assess doing business conditions within your sector in Qatar?

Qatari government offers the kind of assistance to businesses which is not found in other places. In the initial stage of starting a business in Qatar, Ministry of Energy & Industry checks all parameters and informs you whether your product is already available or highly required in the market. So, we have an alarm provided by the government.

Furthermore, they provide us with facilitated areas to build our factories. In some other countries you will not find an industrial area like the new one in Doha where gas, electricity, water and telephone are already connected to your place even before you start building anything.

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Qatar also has QDB whose rates are extremely favourable for businesses. Furthermore, they study the investment with you. Thus, QDB provides you with free of charge advice which is not available everywhere.

On the top of this, every investor in the world wants stability and Qatar is a very stable country internally and externally – everybody is a friend of Qatar! It’s an oasis for investment. You just need to be wise on how to invest.

Salem Mubarak Al-Safran Al-Marri

What differentiates you from the competition within the Qatari market?

Within QADDCO and QPCC, we are pioneers and we still don’t have competition. Regarding QPF we have competitors, but we don’t consider them as such. We are happy that there are other local producers. We can say it’s not competition, but completion. We prefer that they are local instead of foreign companies because we can work together to make domestic products stronger.

But, we do consider import companies as competitors.

They have become even more competitive in the process of exploring other attractive markets, like Abu Dhabi. They are now trying to enter our market.

But, we are supported by the government as local producers and by our customers who remain loyal to local products. Also, we are providing, if not better than at least, equally good products. All these factors ease the impact of competition.

What export opportunities do you foresee for your products?

What would be your advice for other companies in this regard?

We do export, but on a very small scale. With additives we are focused only on the local market since we fully cover it. We try to export compounds, but not in the GCC countries because they have their own local producers. However, we do export some of our other products to Bahrain, Jordan, Kuwait and Oman.

Osama Naser Ahmad Ghanem

We would advise each investor not to expect the exports to reflect more than 5% or 10% of targeted production. If you expect to export 60% to 70% of the production you are not a businessman, but a dreamer!

In foreign markets so many factors control your products. It’s not only the price that allows you to enter a new market, since the exported products also need approval and marketing in each country. Depending on the kind of the product you have, you need to check whether it can be sold directly to the final consumer or it needs to go through various stages, one of which is approval. And for obtaining approval, you need a local partner.

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In the next stage you need to convince the customers to use it. For that you need to maintain the quality which is costly keeping the additional costs associated with exports – for instance, 10% for transportation costs. For example, once local producer feels competition from you, he can reduce his profit for 5% just to compete with you. Everything being equal, you cannot go down to his level because you are already losing 10% for transportation. So, what’s the point of exporting?

However, if you have a pioneer product that nobody else can produce, you can make profit from exports.

What are your ambitions and growth plans and how do you plan to achieve them?

Our ambition is to never stop developing. Currently, we are researching the new product for which we plan to set up our fourth factory.

We hope to meet expectations of our customers while we promise to be responsible. We hope to grow, not rapidly, but to follow the pace of the country.

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eNTrePreNeur

Back to basics!

A Qatari-American is creating waves in Doha with her unique take on healthy fast food. Launched in 2012 Raw Middle East (Raw ME) is the �irst 100% raw, eco-friendly, “fast health food” company in Qatar. In the second article of a series on SILA Angel Investment Network �inalists, Layla Al-Dorani, Founder and CEO, Raw ME, tells us about her entrepreneurial passion.

I Layla Al-Dorani is the Founder and CEO of Raw ME. She graduated from the American University Washington DC with a B.A. in International Business Management. She worked as a commercial analyst at a US based energy company, and as a senior analyst for investment management with a local Islamic bank. Layla is an active health coach and a certified raw food nutritionist. For more information please visit www.raw-me.com.

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n response to the growing need in Qatar, and the rest of the Middle East, for healthier lifestyles, Raw ME was born with a vision to make healthy consumption accessible and desirable to more people. As a raw food nutrition coach and a certified yoga and dance instructor, Layla Al-Dorani, Founder and CEO, Raw ME, spends her days spreading the message of health awareness through coaching kids at schools, teaching yoga classes to adults, and working full time on her startup company Raw ME.

Her work with young children gave her an insight about a large deficiency in their education in nutrition, on which she said, “One afternoon I asked 15 kids under the age of ten which piece of fruit, like an apple or a strawberry, they had that day. Only three raised their hands and answered. That made me realise that they can go for days without eating a piece of vegetable or fruit which is a result of our habits and the lack of attention parents give to their kids when it comes to their diet.”

Her message of living a health-conscious lifestyle is now embodied in the company’s bottles and packages designed to detoxify and purify your body. Layla started by explaining the message in more details, “Life is complicated, let’s not complicate our food. Back to basics is our goal. We deliver simple, clean, fresh products which are healthy for you. We want you to feel good and guilt-free when you are eating, so you can enjoy life to the maximum! We are a company that cares about your wellbeing and the environment you live in.”

She continued by highlighting the consequences non-healthy eating habits have on Qatari population, “In a population of 250,000 Qataris, roughly half of the adults and a third of the children are obese. In addition, around 215,000 are living with diabetes. This crisis can also be found in the rest of the Middle East region like Kuwait and KSA. I believe we need to focus on preventative care. Changing your diet will help you feel better on a daily basis, but more importantly, we need to educate our children on how to eat healthy.”

Health as a market niche Elaborating further on her motivation to establish Raw ME, Layla added,“While I was training to become a yoga teacher I realised the value of nutrition and how it affects the body and mind. It was simple for me to get the sources I needed when I was living in the United States or Asia. But, when I returned to Qatar I found it more difficult to maintain a clean diet. Everything was overcooked or over processed.

Then when I started working as a freelancer, focusing on exercise and nutrition, I became vastly aware about the epidemic Qatar is facing with obesity and diabetes. I have always known that the Middle East, especially Qatar, had an issue with health, but seeing how it affected my students in their daily lives motivated me to create a change. That’s when the concept of Raw ME was born. There was a gap in the market for healthy ready-made meals.”

In order to ensure that her idea saw the light of the day, Layla undertook all necessary steps, “When the business idea came to mind, I automatically registered the company and worked on the business plan and financials. With my business degree and previous work experience this came easily. Since I needed financing, I registered the company to Qatar’s National Business Plan Competition Al Fikra and won the second place in May 2012. Simultaneously, I went through Bedaya’s Entrepreneurship Competition which is open to all the Middle Eastern countries.

Raw ME was also recognised as one of the six finalists presented at the SILA Angel Investment Network launch. Out of six SILA finalists my company was the only one founded and owned by a Qatari national.”

The support group About the challenge of obtaining necessary finance for starting her business, Layla stated, “There are four ways to get finance for a startup in Qatar – friends and family, a bank, an investor, or the government. I tried to obtain financing through Qatar’s organisations and competitions established to help entrepreneurs. Till now it has been difficult to get an investment for my innovative business plan, but I hope it will change soon. Thus, I have yet to find an investor or gain the government’s support since I want to avoid applying for a loan from the bank.

The reason for this is in the requirement to sign a personal guarantee, regardless if the bank is the partner with QDB. Currently all of the finance came from my personal savings and a small portion was provided by my friends and family. However, that is not enough to grow as large and fast as I have planned. So, I have to start in small steps and base decisions on available funding and what I can afford at the moment.”

Layla was kind to share with us who encouraged her to push forward on those tough days when she felt like giving up, “My friends and family have been and are still my biggest support group. I am blessed to be surrounded by such talented and passionate people who care about my success and the mission of my company. They are always willing to give me advice and help me for free.”

In line with this, Layla gives important advice to other entrepreneurs in Qatar, “Firstly, keep your day job! I realised that the hard way since I wanted to focus solely on Raw ME and give 100% of my energy to see it developed.

But, unfortunately, if there is a lack of financial support, you will need your day job to cover the loan that you might take from a bank. This advice is, of course, for companies which are starting financially from zero. Secondly, always be open for new initiatives. Talk to as many people as possible about your business idea. You would be surprised about the tremendous support you will receive.”

Speaking about her further business plans, Layla explained, “One step at a time, one product line at a time. That’s been my strategy. It does mean things will develop at a slower pace, but it will be worth it. I’m not here to make a quick profit, but to change the mindset on nutrition of one individual at a time. I imagine Raw ME to be in every corner in the Middle East, so it can be accessible to anyone. Thus, I consider that the best way to spread the message is to make the company franchisable.”

In the process of developing product lines of Raw ME, Layla’s sister joined her and, after much research, together they developed four product lines: ■

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FEED ME is a line of personalised salads where you are able to choose the exact ingredients for your salad and dressing.

SQUEEZE ME is a popular line of bottled, coldpressed juices that can be enjoyed either with your salad, on their own, or as a cleanse package.

■ ■

The juice cleanse consists of six 16oz juice bottles delivered daily to your door. It is a great way of detoxifying your body.

TREAT ME is a line of sugar-free and gluten free desserts for all those out there with a sweet tooth.

TAKE ME is a line of packaged, dehydrated healthy snacks geared towards children.

Raw ME is also planning to initiate social responsibility programmes, such as “An Apple a Day” and “5 a Day For Better Health.”

“All of our products are 100% raw, fresh, and, when available, organic. Nothing is cooked, heated or pasteurised. We don’t add any chemicals, flavours, preservatives or colouring and they are also free from sugar, wheat, and animal products. We produce all of our products in a sterile and clean environment to the highest safety standards. Our first product line SQUEEZE ME will be available online by early 2013. Raw ME is a modern movement towards a healthier Qatar,” added Layla.

Committed to creating a better ecosystem, Raw ME extends to the community through informative nutrition and fitness seminars for young students in public and private schools, as well as college campuses. Raw ME will also deliver a networking platform to connect their followers with local events, classes, and centers which promote healthy lifestyles and community services.

In addition, the company will streamline eco-friendly measures in their production process. From utilising recyclable packaging to composting waste, the company is committed to preserving the environment.

Layla concluded on her visionary plans, “I hope to work with the government to introduce the concept of “5 a Day” which is the mandate of the World Health Organisation (WHO) to improve public health around the world with particular emphasis on decreasing inequalities in health. In May 2002, WHO was requested by the member states to develop a Global Strategy on Diet, Physical Activity and Health in the context of the rising chronic diseases. During a series of regional consultations to develop the strategy, member states stressed to WHO the importance of working proactively with them in increasing the consumption of fruit and vegetables. With this obligation, WHO aims to actively promote an increased fruit and vegetable intake worldwide, especially in developing countries.

Incorporation of fruit and vegetable consumption as a part of the national non-communicable disease (NCD) prevention and school health programmes is a central aim – to make sure everybody gets their “5 a Day.” Raw ME mission is to create awareness in the Middle East about food and nutrition. Following the examples from the United States and Europe where one can find huge markets for health-conscious people, with Raw ME the Middle East region is on the brink of creating the same.

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SeCTOr STudy

WHAT’S YOUR RENT? With population growth in the GCC topping world rankings, the lack of adequate supply of affordable housing poses an impediment to the region’s aspirations for sustainable economic growth. In the third articles of a series, Dr. Tarek Coury, Chief Economist, Tanween, explains why the need for affordable housing in the GCC extends beyond responding to the social aspirations of a growing population.

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ffordable housing as a concept remains tied to heterogeneous demographic and economic realities across the Gulf. With a growing national population, Saudi Arabia faces the challenge of affordable housing sales and sound mortgage regulation while Qatar and the UAE, where the expat population predominantly drives population growth, must cater to a segmented demand for housing rentals.

Dr. Tarek Coury is Chief Economist at Tanween, a Qatari real estate developer and development consultancy providing turn-key solutions to investors, developers, land owners and occupiers.

Tanween’s unique approach covers all services within the real estate investment value chain from idea creation to market research, feasibility studies, project delivery and asset management. For further information, Tarek can contacted at tcoury@tanween.com.

In Qatar, where infrastructure projects are currently being undertaken ahead of the FIFA World Cup 2022 and with the bulk of projects frontloaded in the coming decade, demand for affordable housing will be driven by expatriate construction and service workers in the labour accommodation sector. In the longer term, the GCC will remain reliant on a foreign workforce and affordable housing will be the key to generating sustainable economic growth.

1/3 as a rule of thumb As a rule of thumb, housing services should not account for more than about a third of total disposable income.

This is reflected in the calculation of the consumer price index (CPI) in various countries in the GCC where rent typically accounts for a little over 30% of total CPI. In the case of Qatar, the mid to high-end housing stock has increased massively following double-digit growth in population in the period

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2004-2009. As a result, the rent component of Qatar’s CPI has undergone a deflationary episode and bottomed out in mid-2012. Additional mid-end stock coming online in 2013 is likely to limit growth in rental rates in the short-run. With a moratorium on further investment in hydrocarbons, Qatar’s economy will depend on the success of its non-hydrocarbon economy. Qatar instead is witnessing investment in its infrastructure which will push the number of construction and service workers in the country. Supply conditions for affordable housing catering to this segment of the population remain challenging with the cost of land within Doha being a major impediment.

Macro level inefficiencies are likely to result from the lack of affordable housing – existing wages paid to low income migrant workers as well as semi-skilled workers originating from the MENA region may fall short of their expectations. As the regional housing market begins to show signs of post-crisis recovery, retained earnings and remittances for foreign workers may not be sufficient in light of existing wages and escalating rentals.

External conditions are also sure to impact the market structure for foreign workers in the Gulf. While many OECD countries continue to suffer from austerity measures brought on by the global recession of 2009, emerging countries have experienced a period of sustained economic growth. Labour exporting countries in North Africa and South East Asia, in

A recent report by Ernst & Young emphasises the importance of the “demographic window of opportunity”, a period during which countries will face a “workers’ bulge” and an opportunity to transform their countries from emerging to developed market status.

The timing of this demographic window relates to the surge in the ratio of adults between the ages of 16 to 64 to dependents, those under the age of 16 and over the age of 65. The demographic window lasts somewhere between 30 to 50 years depending on a country’s level of economic development and represents a period of increased demand for affordable housing. According to a report by the United Nations, most countries in the GCC are currently experiencing this demographic window. Qatar’s demographic window began in 1985 and ends in 2025. Surprisingly, Saudi Arabia, which is already experiencing a shortage in affordable housing, has its demographic window slated to begin in 2025, according to the UN.

particular, have witnessed wage growth in the past few decades just as median wages in developing countries have stagnated. For example, GDP per capita in the US, a measure of income closely linked to wages, was nearly 60 times that of China twenty years ago. It is now only eight times larger, with annual per capita income in China increasing from nearly USD 400 to over USD 6,000 over the period 1992 – 2012. These data suggest that reservation wages for migrants of all skill levels working in the Gulf are set to rise.

As a result, supply constraints on affordable housing in the GCC imply that overall labour costs for private sector firms are also set to rise. With government financing of infrastructure projects underway in the GCC worth over a trillion dollars in the next few years, governments in the region face an oversize risk of cost overruns associated with a higher wage bill. Luxury and high-margin developments have traditionally been the focus of developers in the GCC. While the affordable housing market remains an overlooked asset class by private sector developers, government involvement in facilitating an expansion in supply of affordable housing will likely help in containing costs associated with the existing and future projects.

Demographic window of opportunity An increase in the supply of affordable housing will likely bring macroeconomic benefits beyond cost containment. The attendant increase in population size is likely to stimulate the economy through the retail and hospitality sectors while private sector firms operating in the region will face lower payroll and become more

10% average mortgage penetration in the GCC

Given the extensive reliance of the GCC on migrant workers across the socioeconomic spectrum, the provision of affordable housing is a crucial pillar of economic development and sustainable growth and diversification away from hydrocarbons in the region.

competitive. Given the extensive reliance of the GCC on migrant workers across the socio-economic spectrum, the provision of affordable housing is a crucial pillar of economic development and sustainable growth and diversification away from hydrocarbons in the region.

The increase in the provision of affordable housing should ideally be timed to match relevant demographic trends. This will ensure that government investment in this real estate asset class results in a desirable economic impact.

60% average mortgage penetration in developed countries

While population growth is an important determinant of demand for affordable housing, growth dynamics in the Gulf suggest that causality also runs in the opposite direction. Population growth in the GCC remains driven by growth in its population of foreign nationals. This, in turn, is determined by economic growth in the private sector, in particular in the nonhydrocarbon economy. Because affordable housing directly impacts the cost of doing business, a lack of affordable housing may impact demand and increase the likelihood of inefficient outcomes. Specifically, it may hinder the capacity of the GCC economies to diversify their economies away from hydrocarbons.

The externalities associated with the provision of affordable housing imply that government intervention in the form of increased access to cheap land, project financing and subsidies to the end user remains critical in this sector.

The economic potential associated with affordable housing will not however be unlocked with government financing alone. A real estate regulatory framework aimed at making affordable housing more accessible to prospective owners through the provision of mortgages, and making residential property accessible to foreign buyers will be an important pillar of this strategy. Averaging about 10% in the GCC, mortgage penetration, which is the mortgage lending as a proportion of GDP, remains low by international standards with developed countries averaging around 60% (Source: National Commercial Bank).

A regulatory framework aimed at increasing mortgage penetration will unlock pent-up demand for affordable housing while greater access for foreign owners will ensure that the high-end segment of the residential property market benefits from attendant economic growth.

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BuSINeSS guru

The ďŹ ve star airline In a short span of time, Qatar Airways has become a leading airline of the region. One of its most important components is cargo. Qatar Airways Cargo has also ramped up its expansion which according to the CEO, Akbar Al Baker, is an extension of the airline’s strategy to develop its global air transport business. We engaged with him in a discussion to know more about this part of the airline.

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atar Airways is the national airline of the State of Qatar and one of the aviation industry’s big success stories. Operations began in 1994 when the airline was a small regional carrier servicing a handful of routes. The airline was re-launched in 1997 under the mandate of the country’s leader The Emir, His Highness Sheikh Hamad bin Khalifa Al Thani, who outlined a vision to turn Qatar Airways into a leading international airline with the highest standards of service and excellence. Freighter operations started in the year 2003.

Elaborating further on this, Akbar Al Baker said, “Qatar Airways has since become one of the fastest growing carriers in the world with unprecedented expansion averaging double digit growth year on year that industry peers can only admire with envy. Qatar Airways has matured into a leading force in regional and global aviation, earning many admirers around the world for its excellent standards of service. From only four aircrafts in 1997, the airline grew to a fleet size of 28 aircrafts by the end of 2003 and a milestone 50 by October 2006. Today the airline operates over 100 aircrafts. By 2015, the fleet size will rise to more than 170 aircrafts covering a global network of destinations that will also increase to over 170. The freighter fleet consists of 3 A300 freighters and 4 Boeing 777 freighters. A fifth B777 freighter will join the fleet next year. From a small number of freighter destinations in 2003, today the airline operates to 42 freighter destinations worldwide.”

Talking about the global network of the cargo division, he said, “In terms of capacity, Hong Kong, Chennai, Amsterdam, and Frankfurt are our big freighter destinations. We recently stepped up freighter frequencies on Middle Eastern destinations, adding a third freighter to Kuwait and fourth to Bahrain including new freighter destination Abu Dhabi and Sharjah. The airline’s dedicated cargo network provides customers with more options and flexibility.

While we already serve established freighter markets, such as the US, we look forward to developing smaller markets and expanding into niche areas that are currently underserved by the industry.”

At present, crude petroleum and natural gas make up the major commodity exported. The imported goods are mostly related to liquefied gas industry. Other commodities include vehicles, electronic devices, foods, luxury items and other required goods to meet the population growth.

When asked how he maintains the competitive edge, he quickly pointed out that, “We keep a close eye on market developments and stay constantly in contact with our customers. We definitely benefit from the progressive thinking behind the passenger airline with an increasing portfolio of passenger

Akbar Al Baker

The Cargo Complex is made up of seven facilities covering over 292,000 m2 and will have the capacity for processing 1.4 million tons of cargo per year, making it amongst the largest cargo terminals in the world. destinations. With the technological advancements in new passenger aircraft, the ability to carry revenue generating cargo via Doha to all corners of the globe is a huge plus for QR Cargo.”

He continued by stating that special facilities and welltrained personnel ensure expert handling over a wide variety of product categories. These include express products, livestock, dangerous goods, valuables, vulnerable goods, automotives, perishables, oversized cargo and general cargo that require air freight carriage. Facilities available are temperature-adjusted chillers to suit the cargo, valuables security storage areas, a special vulnerable goods area, dangerous goods holding area and special livestock area to ensure animals have the most comfortable arrival or stopover possible. For cargo booked with minimum transshipment times, the staff will ensure the correct cargo is transferred to the connecting aircraft. Tight security is maintained at all times, ensuring all cargo deliveries are handled and stored in secure areas.

FeBruary 2013

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BuSINeSS guru The cargo handled at Doha International Airport has been consistently increasing each year. This capacity will further increase once the airline moves to the NDIA. The cargo complex is made up of seven facilities covering over 292,000 m2 and will have the capacity for processing 1.4 million tons of cargo per year, making it amongst the largest cargo terminals in the world.

Elaborating on the infrastructure available to support such an operation, Akbar Al Baker said, “A main feature of the Cargo Complex is the 55,000 m2 cargo terminal building which houses the Air Cargo Handling System. The Air Cargo Handling System will have the capacity to accommodate over 1,000 main deck ULD’s and over 5,000 individual consignments.”

He also stated that the Cargo Warehouse Information System (CWIS) will ensure that the locations of all the cargo in the cargo terminal, whether stored in the Air Cargo Handling System or in the various special cargo handling areas, are tracked so that the cargo can be processed quickly, thereby ensuring efficient handling.

Other major features of the cargo terminal building are the elevating workstations in the ULD build/break Area, special cargo areas, hazardous cargo areas, high value cargo area, and perishable cargo areas. All these features contribute to create a world-class cargo facility.

The IATA World Cargo Symposium is being held in Qatar in March 2013. This is the first time, it is being held in the Gulf region which only emphasises the growing importance of logistics and trade in the Middle Eastern region.

KEY FEATURES: Cargo Complex ■ Cargo capacity: 1.4 million tons handled per year ■ Aircraft parking facilities: Up to 11 Boeing 747 – 8 Freighters ■ ULD capacity Up to 1,000 main deck containers ■ Cargo Complex Area 292,000 m2 ■ Cargo Terminal building 55,000 m2 ■ Cargo Agent building 5,000 m2 ■ Live Animal Centre 4,200 m2 He was also quick to acknowledge the impact of the upcoming events and the FIFA World Cup 2022.

“The IATA World Cargo Symposium” is being held in Qatar in March 2013. This is the first time, it is being held in the Gulf region which only emphasises the growing importance of logistics and trade in the Middle Eastern region. We expect to continue

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to see many infrastructure projects in the state of Qatar as the country continues to develop in terms of economical and political stature – FIFA World Cup 2022 is just one of them. This in turn will require an increased focus on the logistics sector since Qatar’s geographical position ensures it truly is global. The GCC is commonly perceived as being a major logistics market in the future.”

Talking about the future plans for Qatar Airways Cargo, he said, “We have recently revamped our charter product to cater to the increasing demands for special charters or part-charters. QCharter is a product that allows agents, brokers and forwarders the ability to request special loads or diversions on the company’s fleet of 4 x B777Fs and 3 x A300-600Fs. It features a direct contact to Qatar Airways Cargo charter team. In recent times, the company has chartered consignments of horses, bank notes, oversized oil and gas items as well as humanitarian cargo. Benefiting from huge synergies with the growing worldwide network of Qatar Airways passenger aircraft, as well as the increasing portfolio of freighter destinations, there is much potential for the provision of creative combined-solutions.”

At the end of our conversation, he said that their move to the NDIA airport will present QR Cargo with further ability to enhance and improve its product portfolio to customers. As befits the World’s 5-Star Airline, QR Cargo is also looking at destinations around the world where customers may forward cargo with one single stop via Doha. * This article was first published in Trade and Export Middle East, our sister publication.

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TeChNOlOgy

THE WORLD WIDE WEB In this era of globalisation, the Internet is now the main source through which people can be connected and reachable. Taylor Reynolds, Senior Economist, OECD, explains the importance of the Internet as a key resource for economic growth.

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t is a difficult time to be in business. As people around the world are faced with high unemployment rates and a contracting economy, the demand for goods has fallen in many key markets. But, certain firms are flourishing, despite the economic malaise, and it is the Internet that is making it possible.

Taylor Reynolds is the Senior Economist at the OECD. He leads the OECD’s Information Economy Unit.

Before joining the OECD, he worked at the International Telecommunication Union, the World Bank and the National Telecommunications and Information Administration (United States). Taylor can be contacted at taylor.reynolds@oecd.org

For example, the Yoox Group, the Italian Internet firm, has emerged as a key online retail partner for leading fashion and design brands. Yoox operates its own fashion retail business (Yoox.com), but also powers the online stores of many well-known fashion designers. Yoox has seen growth of nearly 43% (CAGR) over the previous five years despite the challenging economic conditions at home and around the world. As a sign of how the Internet is fundamentally changing business, Yoox was the only Italian company to go public in 2009 – at the height of the economic crisis! Yet, its stock is currently up 171% from the IPO price.

An economic engine With many countries still struggling to recover, business leaders and policy makers want to understand how companies, such as Yoox, can grow and expand when so many traditional companies are struggling. It turns out that the Yoox’s success story may be less about the global demand for high fashion and more about the economic potential of the Internet for businesses.

The private sector is increasingly focused on the Internet as a source of economic growth because it supports an increasingly large share of all the economic activities.

A recent study by the OECD found that up to 13% of the entire value created by businesses in the United States in 2011 was based on Internet-related activities.

That percentage is still growing. Businesses rely on the Internet and will continue to do so in order to survive.

Integrating the Internet into existing business operations makes economic sense. The Internet enlarges the scope

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of the market while reducing operational barriers and costs. Firms that can successfully use the Internet to expand their markets and lower their operating costs will be at a significant advantage compared to similar firms relying only on traditional communication channels.

While it is true that some firms have been able to grow without the Internet, their days are numbered. Internet connectivity has moved beyond the PC and now reaches the mobile phones, presenting exciting opportunities for businesses to interact with their customers anywhere and at anytime. This new ability to connect with people more easily is, in itself, a motivating force for businesses to leverage the Internet for growth.

But, this is only the very beginning. We are on the cusp of a much larger wave of connectivity that will rapidly eclipse the number of mobile phones in the world.The next items that will be connected to the Internet are objects that are not typically associated with communication capabilities.

Television sets, electricity plugs, automobiles, light bulbs and even water levees are increasingly connected to the Internet as a way to introduce new functionality. Ericsson estimates that there will be 50 billion mobile wireless devices connected to the Internet across the globe by 2020, and predicts that the total number of devices connected to the Internet could reach 500 billion. While projections of the number of devices connected to the Internet vary, it is clear that the “Internet of things” will have significantly more connections than users.

Although these figures may seem high, they are easy to illustrate and every component of a system can become an addressable part of the “Internet of things”. In essence, the Internet will continue to permeate all sectors of the economy and firms will need to leverage this connectivity to compete and survive.

But, the benefits of the Internet go beyond just business.

For example, it also advances social objectives such as the promotion of local language and culture. The

The Internet provides a unique platform for individuals and businesses to widely disseminate information, nearly instantaneously and with very little cost.

Internet provides a unique platform for individuals and businesses to widely disseminate information, nearly instantaneously and with very little cost. It is an ecosystem which fosters content from creation to distribution to consumption. Recent OECD research confirms that there is a strong correlation between the development of network infrastructure for greater Internet access and the growth of local content, even after controlling for economic and demographic factors.

Qatar: a digital trading hub Qatar is at crossroads in terms of its development and currently has the resources to determine its future.

Investment decisions made now could help define Qatar’s comparative advantages in the global economy for decades to come.

Qatar has been known as a trading hub for centuries, a place where merchants brought valuable goods to exchange for local items such as pearls, dyes, robes and animals. Clearly, Qatar’s geographic location helped it become a key stop on east-to-west trade routes. That geographical advantage continues today as Qatar is quickly becoming a global hub for international air travel. Natural resources have also played a key role in Qatar’s success, but it is not just natural endowments that have led to Qatar’s success. Qatar has remained a vital centre of exchange because it fosters an open market for trade benefitting both locals and foreigners.

Today, Qatari investments in the next-generation Internet infrastructure are creating the types of “natural resources” which will undergird the next century. Efforts to extend fibre connectivity to all households and businesses will make Qatar a global leader in terms of domestic infrastructure, a standing it will soon enjoy with only a handful of other countries.

Businesses in Qatar will be able to interact with people and other businesses in the domestic market in a much richer and bandwidth-intensive way than is possible in most other countries in the world. Qatari expertise in the domestic market can then become a platform supporting the delivery of digital services globally.

However, Qatar will need to attract businesses and investment in the Internet sector. This will require an employment pool of well-educated workers for the sector and a business environment that supports innovative thinking, creativity, business creation and entrepreneurship.

50 billion mobile wireless devices connected to the Internet across the globe by 2020

Qatar’s support of an open Internet will be a key determinant in whether Qatar becomes a hub of the Internet economy or whether investment and innovation will cluster elsewhere.

Any country wishing to develop a strong information sector will need to ensure it has a well-educated workforce to support the Internet economy.

Employment in the information and communication technology (ICT) sector already accounts for up to 5% of total employment in OECD countries and ICT intensive-users account for more than 20% of all workers. But, as countries jostle for comparative advantage in the Internet era, these needs will increase and our education systems will need to adapt to promote and maintain the skills needed to support the Internet economy.

Furthermore, educational institutions have a pivotal role to play. In the past, most of the training of ICT skills has been led at the university level. But, the transition to a digital trading hub will require a much broader educational structure that teaches ICT skills earlier and reaches those outside of the traditional education system. The very new and rapidly changing nature of advanced ICTs makes workplace training, in addition to formal education, increasingly important for augmenting and adapting workers’ skills.

Finally, Qatar needs an open and vibrant Internet culture that can support the innovation and creative destruction that permeates in such dynamic regions.

Just as the openness of Qatar’s economy throughout history has supported its role as a vital trading hub, Qatar’s support of an open Internet will be a key determinant in whether Qatar becomes a hub of the Internet economy or whether investment and innovation will cluster elsewhere.

Qatar is at an important crossroad for its future with implications that will last for decades to come. It has the enviable position of having the resources to establish itself as a global digital hub for the knowledge economy and to develop a comparative advantage in one of the key economic growth areas of the future.

It must, however, pair its investment in infrastructure with greater ICT training throughout its population.

By actively promoting an open, innovative Internet, Qatar will realize its important and achievable vision of creating a knowledge-based economy that will drive sustainable development and societal benefits for all.

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WOMeN IN BuSINeSS

How society wins?

No major company strategy is complete these days without a statement on corporate social responsibility (CSR). In fact, there is now a complete CSR industry since companies increasingly espouse their desire to invest in communities and to care for the environment. Elsbeth Blekkenhorst and Danielle Duttenhofer, Co-Founders and Directors, Global Women Qatar, explain to us this broad concept and its various interpretations.

S Global Women Qatar was established in January 2012 as Qatar’s first employment agency to focus exclusively on the recruitment of women who already reside in Qatar.

They are a very dynamic, rapidly growing employment agency with both local and expatriate women in their database. For more information please contact Elsbeth Blekkenhorst or Danielle Duttenhofer at info@globalwomenqatar.com

ome argue that corporate social responsibility is merely a window-dressing, or an attempt to preempt the role of governments as a watchdog over powerful multinational corporations.

But, what does it really mean? Basically, it is about how companies manage their business processes to produce an overall positive impact on the society. It is also about the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of the local community and society at large.

engagement and morale, and become an employer, the staff can feel good about. From the perspective of clients, the company is positively evaluated since the clients are increasingly monitoring and checking their suppliers.

But, taking care of the company’s reputation here is not the primary driver – you have to be authentic! Otherwise people become very sceptical about who you are and why you’re doing it which can be very damaging.

It came into use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholder – meaning those on whom an organisation’s activities have an impact. The reason corporate social responsibility is put into place is for companies to take responsibility for their actions and to take care of the environment, consumers, employees, communities, and similar. This is all written in a company’s policy and can often be found on its Website where the company promotes this policy to show they are looking after their community. Larger organisations usually have a dedicated head and a team of corporate social responsibility in place.

There can be many ways of measuring success. It is really important to have some clear goals in mind and make sure those are shared and delivered to both partners, as well as a clear exit strategy that leaves the charity in a better place.

At a fundamental level, CSR involves going beyond looking solely at how to make profit, to include a wider commitment to building a better society. This can either be through actual business practices or through extracurricular activities, such as charitable donations or staff volunteering projects. Companies have recognised the value they get from being actively involved in CSR. From the employee’s perspective, they can improve staff

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The key to a successful CSR programme Schemes have to be of mutual benefit to both the corporate and the charity.

Charities sometimes say they find it challenging working with business. So, obtaining a good cultural fit between the two organisations is also vital. It’s not just about money. Through partnerships, charities can access the fundraising potential of employees and other company’s assets and skills, such as IT and marketing departments.

A lot of charities are starting to recognise the importance of that.

CSR is not without its critics and the case of the US energy giant, Enron, did little to help the cause. Enron was well-known for its CSR projects presented through their published social and environmental reports. The trouble is that, at the same time, it was not being honest about its profits. When the truth emerged, it led to the company’s collapse in 2001 while the top executives were

jailed for conspiracy and fraud. Enron became a byword for corporate irresponsibility. All of its community and environmental work was undermined by the fact that it was carried out by a company with dishonest business practices.

Not everyone believes it is the job of big businesses to address problems in a society. On one hand, we have the critics stating that, “The business of business is business.

The business of civics is for the government.” They believe that businesses in general are highly responsible since they have to sell goods, hire people and maintain workers in their local communities. Therefore, most companies do recognise the responsibilities they have to the wider public. However, what’s happened is that politicians have intervened and tried to make them spend money in particular ways - ways that suit politicians.

On the other hand, we have critics saying that the first statement is a very old-fashioned thinking. It would be clear to most people that if you sit back as a citizen and say, “That’s fine, we do what we do and you guys do what you do,” then things aren’t going to change very much.

All sectors need to work together to address the big issues, such as global warming. They state that we need to take collective responsibility. None of us have the final solutions, so we need to share knowledge and expertise.

Growth in women’s income, education levels, and labour participation rates make them essential participants in the global economy. Companies are realising that advancing more women to senior leadership roles has many benefits, including increased financial performance and sustainability. Women in leadership also have a positive influence on the quantity and quality of an organisation’s corporate social responsibility initiatives.

At a fundamental level, CSR involves going beyond looking solely at how to make profit, to include a wider commitment to building a better society. This can either be through actual business practices or through extracurricular activities such as charitable donations or staff volunteering projects.

When business leadership includes women, society wins.

It is possible that companies with more women leaders are not only more committed, on average, to corporate social responsibility, but they may also be better at it.

Leaders who highlight gender issues in corporate social responsibility strategies often position their organisations for sustained growth — a payoff that extends from the company to communities and to broader society.

CSR in Qatar CSR is an important pillar of Qatar National Vision 2030.

The Qatari government extends social responsibility to the business community by creating a corporate responsibility framework that will formalise an enabling environment to further contribute to the wellbeing of the Qatari society. Many companies within Qatar, especially in the energy sector, are initiating and implementing corporate social responsibility programmes and projects while some have already started to align their corporate strategy with Qatar National Vision 2030. The role of the private sector is also growing as it is increasingly recognising that the corporate responsibility extends beyond the workplace.

Qatar National Vision 2030 provides clear principles for developing the country in an environmentallyfriendly way. It updates and expands this commitment by embarking Qatar on a mission to cut its carbon dioxide emissions, improve energy efficiency and minimise water use in new, green buildings, and invest in renewable energy solutions and environmental science and technology. The target in Qatar is to implement a corporate social responsibility framework suited to the country’s economic, political and social context, including a monitoring system. Qatar presented achievements of these initiatives at the 2012 United Nations Climate Change Conference (COP18/CMP8) held in Doha at the end of 2012.

Examples of companies in Qatar which have already implemented their corporate social responsibility policies are: ■

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Qatar Airways is engaged in and actively supports various social projects at home as well as abroad, such as the National Green and Clean Qatar Campaign Shafallah Center Vodafone with a “Better World” programme specifies how they can contribute to make the world a better place through their activities QNB’s “Together Forward” programme focuses on six key areas – arts and culture, economic and international affairs, health and environment, social and humanitarian efforts, sports, and youth and education.

As corporate social responsibility gains momentum globally, the Gulf countries, such as Egypt and Saudi Arabia, have also taken steps to institutionalise corporate responsibility through legislation and institutions that govern business activities.

FeBruary 2013

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INSuraNCe

Protect what’s yours In any business, it is important to know that your money and assets are secure.

And with the recent uncertain times, it helps to know how an organisation can protect itself against insolvency or non-payment. Mahan Bolourchi, Head of Risk Management, Information and Claim, Middle East, Euler Hermes GCC, elaborates on the concept of credit insurance and how does it work for an organisation.

Mahan Bolourchi is the Head of Risk Management, Information and Claims, and responsible for Middle East region at Euler Hermes operation within the GCC. He is a German Graduate in Economics and International Business Management from Hamburg University of Applied Sciences. He is based in Dubai since 2007. Mahan can be contacted at Mahan.BOLOURCHI@eulerhermes.com

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redit risk management is about protecting the assets of a business. In the GCC, a large part of a company’s assets are trade receivables and businesses are increasingly protecting these assets through credit insurance.

throughout the world; stock markets have shown extreme volatility and investment returns have dwindled across the board. This crisis has had an effect on the region and the level of trade credit defaults has increased.

Every company is looking to satisfy its clients and its shareholders. Positive cash flow – combined with prudent investment, healthy growth and the control of the cost is absolutely essential and needs to be protected.

The recent sovereign credit downgrades announced by ratings agency Standard & Poor’s are a stark sign that global confidence is down. The spreads of credit default swaps within the MENA region are widening, another sign that awareness of credit risk is high on the agenda for the financial world.

Commercial credit is a business tool that should be used to increase sales, maximise customer loyalty, enter and expand to new markets. It should not be offered where there is a risk of non-payment. We insure companies against the risk of payment default by their customers as a result of commercial and/or political risks.

It is clear that the economic crisis is unprecedented in terms of its severity and simultaneous impact

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On a local level, due to an increasing lack of availability of bank credit and a slowdown in the global economy, many companies in the GCC are not as creditworthy as they used to be. Add regional problems triggered by the Arab Spring into the mix and it is evident that credit risk management is increasingly coming to the forefront of a company’s priorities.

We consider it our duty to protect our clients’ asset base by informing our clients early when we see a buyer’s financial situation deteriorate. We have noticed that credit management is being taken more seriously as companies increasingly focus on collecting cash and getting paid upfront for their sales.

Generally, large multinationals in the region followed the credit risk management strategies of their parent company, whereas the GCC has traditionally been a market where late payment was accepted. However, post-credit crunch, even local companies have become far more stringent about when they will get paid and are less likely to accept long delays in the payment process.

In the past, too often credit was provided without assessing the creditworthiness of the buyer and companies then wasted time and resources chasing payment.This would subsequently result in the companies having to take legal action against customers who were not able to meet their obligations.

Today, we are seeing long-established businesses in the region credit insure their trade debts and outsource their credit checking. Credit risk insurers will not only underwrite this trade debt but will minimise risk through offering advice on who to offer credit to. The insurer will also assist with collection in the event of nonpayment.

In the current turbulent global economic outlook, trading history on its own has become an unreliable guide to present creditworthiness. Therefore, companies are increasingly outsourcing their credit management in order to gain expert advice.

HOW DOES CREDIT INSURANCE WORK? Credit insurance covers the risk of non-payment when a business offers a trade credit to a corporate customer.

Commercial credit is a business tool that should be used to increase sales, maximise customer loyalty, enter and expand to new markets. It should not be offered where there is a risk of non-payment.

As credit management is now been taken more seriously, the sales team should not decide alone which buyer can be given credit. The finance team should also be involved in the decision as there is a risk of payment default involved.

With intelligent risk management and appropriate insurance cover, companies should still be able to operate despite a challenging economic climate. The GCC is a goldmine of untapped potential for credit risk insurers, as the region wakes up to the need to protect its assets.

Below is the summarisation of the steps a company needs to undertake to obtain credit insurance coverage: 1. Seller mitigates credit risk by signing a credit insurance policy.

2. The client intends to supply goods or services to his buyer on credit terms.

3. The client sends an application for cover to the insurer.

4. The insurer assesses the buyers, collects information, analyses the creditworthiness of the buyers and finally sets a credit limit for each buyer in the client’s portfolio. A credit limit is the maximum amount outstanding that will be insured.

5. The client will receive cover. The client can then trade with the buyer without having to report anything as long as he is paid within the timeframe.

In addition, insurers will offer credit risk protection to the client: buyer insolvency or protracted default.

6. The insurer continues to monitor the buyer’s creditworthiness and will advise the client if further credit can be safely provided or if the buyer’s financial situation is deteriorating and credit should be reduced.

7. The client will report all overdue payments and requests to commence a collection action.

8. The insurer will collect the outstanding payment.

If the buyer is still unable to pay, the insurer will indemnify the policyholder for the credit extended.

9. The insurer pays the majority of the insured debt and collection expenses. * This article was first published in Trade and Export Middle East, our sister publication.

FeBruary 2013

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BuSINeSS adVICe

WHAT YOU NEED TO KNOW! Mowgli Foundation de�ines mentoring as “having someone who tells you what you need to know, not necessarily what you want to hear.” On the basis of the Mowgli Foundation’s vast initiatives in the MENA region, Kathleen Bury, Business Manager for GCC and North Africa, Mowgli Foundation, provides us with an insight into the power of mentorship.

T

he youth unemployment rate within the Middle East and North Africa (MENA) region currently stands at 27% (18-35 years old) and is the highest globally. Unfortunately, this situation is worsening. Between 50-80 million jobs are required over the next ten years to maintain the current levels of unemployment, signifying the requirement for a 40% expansion in available jobs (Arabia Monitor, World Bank 2012). This is a highly daunting goal.

Kathleen Bury is the Business Manager, GCC and North Africa, and Marketing & Communications Manager at Mowgli Foundation. She holds a BA Hons degree in Business and Quality Management from the Nottingham Trent Business School. She has a robust understanding of the challenges that entrepreneurs and SMEs face today when setting up and growing their businesses.

Kathleen can be contacted at kathleen.bury@mowgli.org.uk

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A key way to address this huge unemployment challenge is the incubation, development and support of sustainable entrepreneurship and small and medium enterprises (SMEs). To foster an environment conducive to private enterprise development, a number of factors are required:

seeks to place mentorship at the heart of supporting entrepreneurship and leadership development. With primary operational focus on the MENA region, Mowgli provides trained mentors to inspire, support and empower entrepreneurs in achieving their business and personal potential. This is achieved through the recruitment, training and matching of mentors with entrepreneurs in relational and business mentoring relationships through their unique and unparalleled yearlong Mowgli Mentoring Experience (MME) programmes.Through these yearlong facilitated mentoring relationships, Mowgli aims to encourage sustainable business growth as well as social and economic development.

It was with the latter in mind that the Mowgli Foundation was founded in 2008.

Since its launch, Mowgli has conducted 30 Mowgli Mentoring Experience (MME) programmes in Jordan, Lebanon, Syria, Palestine, Algeria, and the UK. In November 2012, Mowgli launched their first programme in Qatar, together with their local partner Enterprise Qatar. This programme, sponsored by Norman Broadbent and Social Development Centre (SDC), saw the partnering of eight predominantly Qatari entrepreneurs with eight high caliber mentors from Qatar, Jordan, Egypt, India, England and Ireland who all have MENA experience.

The Mowgli Foundation is an award winning, UK headquartered mentorship organisation, which

In an effort to increase the growth and success rate of micro-entrepreneurs into small and medium

■ ■ ■ ■

Strengthening of regulatory frameworks Access to infrastructure Access to capital Access to appropriate business skills training and mentoring

sized businesses, Mowgli has also run three microentrepreneur focused mentoring programmes in Egypt, in collaboration with Silatech and Alexandria Business Association, and in Jordan, with Ahli Microfinance Company, a subsidiary of Jordan Ahli Bank. Through all 33 programmes, Mowgli has matched over 250 mentors with 220 startup and growth-phase entrepreneurs and 30 micro-entrepreneurs. In 2012 they doubled the size of the Mowgli Alumni, which now exceeds 540.

As a result of this progress, Mowgli was recognised with the Mohammed bin Rashid Award for Young Business Leaders for the Best Mentor Network in the Arab World, in December 2012.

stick” – a large component of success in this phase is down to intangible factors such as capability, social skills and attitude of the entrepreneur. This sums up to what business scholars call “human capital”. When applied to entrepreneurship, human capital is equated with the prime ability to assess risk accurately and take decisions based upon this assessment. Therefore, confidence, self-awareness and judgment are crucial skills. Having an experienced business owner or a professional who is trained as a mentor alongside you, facilitates the development of these capabilities and enables you to approach challenges differently.

Why is it so important?

On every entrepreneurial journey, the business the entrepreneur is nurturing will have a lifetime of development, overseen, guided and indeed lived by the entrepreneur him or herself. As a result, the entrepreneurial learning often goes through several distinct phases of growth and development, along with the business. Within these phases, three of the most challenging times, where Mowgli believes an entrepreneur can benefit from a highly skilled mentor are:

■ Growth This is where the business moves from breaking even to sustainable growth. The growth phase of a business is a well-documented phenomenon, but it is not a precise science. With new business models and new industry trends changing the shape of traditional growth patterns, the only thing that is certain is that this phase brings entrepreneurs both rewards and challenges as their business changes.

Many entrepreneurs fail to take into account, once they begin making money, that the skills required to work on a growing, established business are fundamentally different than those required at startup level. A mentor can assist an entrepreneur to recognise their own strength and weaknesses and identify any subsequent limitations that may be inflicted on the business. This self-assessment is really tough to do on one’s own. In addition, the mentor may also help the entrepreneur to see that they may not be the most appropriate person to lead the organisation.

■ Startup This is where the business moves from conception to when it breaks even, also known as the “hockey

■ Success This is a rarely discussed, and in fact rarely reached phase where the successful entrepreneur, after

So, what is mentoring?

“A mentor is someone who stands beside you in a shoulder-to-shoulder relationship and works with you to empower you to develop your own leadership, thought process and decision-making capabilities. They do this by acting as a listener, friend, mirror and sounding board and, therefore, they don’t tell you what to do, but provide you with hope, aspiration and motivation,” explained Kathleen Bury, Mowgli Business Manager for GCC and North Africa.

Countries where Mowgli has already run programmes

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BuSINeSS adVICe The three critical stages of an entrepreneur›s journey when they need a mentor

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Success ■

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Start up

Growth

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overcoming the previous two phases, can, if not checked, reach the “hubristic” or “ego” phase. At this point, many entrepreneurs jeopardise everything they have aspired to, as they lose the ability to question the drivers of their own success. They begin to take success for granted and complacently neglect their business – refuse to innovate, ignore risks and become undisciplined in the pursuit of more. Many successful entrepreneurs who have avoided both the personal and professional downfalls of hubris and boredom, for example Richard Branson and David Packard, have chosen to surround themselves with people, continually acknowledge the efforts of others and the importance of the team rather than the lone wolf. A mentor can offer both constructive criticism and a neutral space in which the entrepreneur has no need to pretend to be invincible and can help an entrepreneur to find new learning opportunities, as well as provide an antidote for euphoria.

However, it is not only the entrepreneurs that benefit from the mentoring relationship and exchange, but the mentors themselves through their own personal and leadership development. The learning process is also a period of self-awareness and self-discovery for the mentors, which results in the development of new competencies that can be applied in all areas of their personal and professional lives. Following the completion of the programme: ■ ■

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With primary operational focus on the MENA region, Mowgli provides trained mentors to inspire, support and empower entrepreneurs in achieving their business and personal potential.

Given the region’s relatively recent entrepreneurial drive, the majority of Mowgli’s entrepreneurs are operating within the startup and growth phases.

Following the completion of the programme, Mowgli’s impact data highlights that: ■

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Each entrepreneur under Mowgli mentorship, on average, creates two to three jobs in the first year and the trend seems to continue

90% would recommend the Mowgli Mentoring Experience (MME) to other entrepreneurs 80% say that mentoring has helped them develop confidence in their business decision-making 80% say that they would like to continue with the mentoring relationship after the yearlong Mowgli facilitated relationship comes to an end 75% say that their mentor has helped them in addressing personal doubts about the direction of their business and has helped them to understand how to move their business onto the next growth stage 70% say that they would either like to become a Mowgli mentor or mentor others in their community as a result of their experience with the foundation 50% say that they have expanded their business product offering, increased their client list and secured more contracts under Mowgli mentorship as well as predicted higher profits at the end of the coming financial year, over the previous year

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90% said that they will seek further opportunities to mentor in the future 80% said that their mentoring experience had been valuable to them and that they would recommend the programme to other professionals 80% said that their participation on the programme improved their active listening skills and their empathy/understanding of others 55% said that the skills they have learnt have been useful in their own professional settings, in terms of the way they deal with colleagues, staff and clients

It is clear that by providing entrepreneurs with a solid mentoring relationship, the chances of sustainable growth and success are increased. However, the benefits go far beyond supporting entrepreneurship, as mentoring also enables and facilitates the development of different leadership models. Tony Bury, Mowgli’s Founder and Trustee Board Member, defines leadership simply as, “to serve is to lead”. He says, ‘if I serve you, and you follow me, then I will become a leader. The greatest gift that one human being can give to another is their time to mentor them. If someone cannot mentor, they cannot lead.”

legal

FIND YOUR

AGENT

Despite the current financial crisis, the GCC market remains the hub for attracting foreign investments. In line with the increasing interest of foreign companies, Khalifa Al-Misnad, Partner, Al-Misnad & Rifaat, advises foreign investors on how to market their goods and services without a legal establishment in Qatar.

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mong the states forming the Gulf Cooperation Council (GCC), Qatar is one of the smallest from a population and geographical standpoint, but remains however the third largest natural gas reserve in the world. This excess of natural resources along with the economic diversification, the latest legal liberalisation and the adoption of various incentives, allow Qatar to offer great investment opportunities. These opportunities have drastically increased since Qatar was selected to host the FIFA World Cup in 2022.

company to market goods and services within Qatar. A commercial agency allows a foreign entity to market its goods and products in the territory of Qatar without any physical presence in the country. The commercial agent must be a wholly Qatari-owned entity or a Qatari individual.

In most sectors of the national economy, foreign investors are allowed to carry out businesses provided, however, that they have a Qatari partner who has a share of at least 51% of the company’s equity.

Conditions to be met According to Article 2 of the Commercial Agency Law, an agreement by virtue of which a principal appoints an agent as its exclusive commercial agent in a territory to distribute goods and products or to offer them for sale or to perform specific services within the scope of the agency on behalf of the principal in return for a compensation, would be qualified as a commercial agency agreement.

Nevertheless, one of the business mediums that do not require the presence of the foreign company in Qatar is the commercial agency agreement according to which a Qatari agent would be appointed on behalf of the

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Commercial agency agreements in Qatar are regulated

by Law No 8/2002 (Commercial Agency Law), which has subrogated the previous Law on Commercial Agency No. 4/1986.

Thus, in order to be considered as a commercial agent under the Commercial Agency Law, the following conditions must be met: ■ Exclusivity ■ Licence to distribute/sell goods or deliver services ■ Acting on behalf of a principal ■ Consideration in the form of profit or commission There are two types of agencies defined under the Commercial Agency Law: ■ Fixed term agency – ends upon expiry of its duration, unless the parties agree to the renewal of the same ■ Unlimited duration agency – may only be terminated upon mutual agreement of both parties Whether agency is for a fixed term or an unlimited duration, the agreement must specify the following: ■ Name of the agent and principal and their nationalities ■ The commodities, products or services covered by the agency ■ The agent’s territory ■ The duration of the agency’s relationship and the terms of renewal ■ The agent’s commitment to provide all necessary spare parts and to undertake the required maintenance of the products and commodities covered by the agreement ■ Any other terms and conditions agreed upon between the agent and his principal in accordance with the provisions of the Commercial Agency Law Register to start The Commercial Agency Law provides that only registered agents are permitted to engage in commercial agency business. Commercial agents must be registered in the Commercial Agents’ Register held by the Department of Commercial Affairs at the Ministry of Business and Trade.

In order to be registered in the register, the applicant must be a Qatari national and be over twenty-one (21) years old. Where the applicant is a legal person, its entire capital must be Qatari. In addition, whether the applicant is a natural or legal person, it is required that the business activity covered by the agency agreement be recorded in the Commercial Agents’ Register and that the applicant must not have been sentenced for crime of honour or loyalty unless rehabilitated.

The application for registration must be submitted using the application form provided and should include all supporting documents along with a copy of the commercial agency agreement. A translation into Arabic of the commercial agency agreement may be required.

The Ministry of Business and Trade is required to rule on the application for registration within thirty (30) days of the date of the application. However, the Ministry has the right to refuse the registration or the renewal of registration based on reasonable grounds and provided that the reasons for refusal are notified to the applicant.

The Commercial Agency Law requires that the agency registration be renewed every two (2) years and within two (2) months after its expiration date.

After the registration process is duly completed, the agent shall be granted the following rights: ■ The rights of exclusivity over the products sold or services provided.

■ The right to a compensation that shall not exceed 5% of the value of the products imported.

Claims before the closure Termination of a fixed term agency According to Article 8 of the Commercial Agency Law, on the expiry of a fixed term agency agreement and notwithstanding any agreement to the contrary, the agent shall be entitled to claim for compensation from the principal if: ■ Its activities have brought about substantial success in the promotion of the principal’s products or increased the principal’s customers ■ If the agent was deprived from obtaining the remuneration arising from such success as a result of the principal’s refusal to renew the agency Termination of an open term agency According to Article 9 of the Commercial Agency Law, in the event of the termination of an open ended commercial agency agreement, the agent is entitled to a compensation for the loss of profits if: ■ Its activities have brought about substantial success in the promotion of the principal’s products or increased the principal’s customers ■ The refusal of the principal to maintain the agency agreement would deprive the agent from obtaining the remuneration arising from such success

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legal

Khalifa Al-Misnad is the Partner at Al-Misnad & Rifaat, Doha, Qatar, and the President of the EO Qatar. Khalifa earned a degree in Mechanical Engineering from the University of Texas (2003) before receiving a Doctorate of Jurisprudence at the University of Houston (2006.) Upon being admitted to the State Bar of Texas (2006), Khalifa joined QP’s legal department. After acceptance to the Qatar Bar (2010), his law office joined forces with Beirut-based Rifaat Associates to launch Al-Misnad & Rifaat, a new law firm in Qatar. For more information please visit www.almisnad-rifaat.com

The following rule has been confirmed by the ongoing jurisprudence of Qatari courts: ■ Competent jurisdiction Article 23 of Commercial Agency Law provides that the courts of the State of Qatar have jurisdiction over any dispute that may arise in connection with the implementation of agency agreements unless otherwise agreed.

The parties to a commercial agency agreement may choose to settle their dispute through arbitration. It should be noted that the State of Qatar is member of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Judicial practice In this respect, the courts usually appoint an expert in order to determine the compensation amount.

According to Article 355 of Qatari Procedural Code, the expert’s assessment is not binding upon the courts. However, if the court decides to disregard an expert’s report, it has to mention the reasons behind such disregard. Practically speaking, the courts tend to adopt the expert’s conclusions especially if technical points are concerned.

In its decision No. 231/1409 H, rendered on 14th January 1996, the Full Civil Court of Qatar based its assessment on the expert’s report that has assessed the damage incurred by the agent by measuring the profits that the agent was getting form the sales of the agency’s products.

In another case, the court has appointed an expert to (i) assess the commercial activity between the parties as of early 1982 till the date the case was raised (1983) and to (ii) examine the agent’s accounts or financial documents, so as to reveal the profits gained by the agent in each year.

It should be noted that the courts have complete discretion according to Article 263 of the Qatari Civil Law as to the evaluation of the compensation if such compensation would not be determined in the agreement or in the law.

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■ Commercial law In 2006, the Commercial Agency Law has been supplemented by the Qatari Commercial Law No. 27/2006 (Commercial Law), which regulates commercial agencies in general and provides for a classification of various sub-forms of commercial agency arrangements such as contracts agency agreement, distribution agreements, commission agencies, and commercial/sales representatives.

According to Article 304 of Commercial Law, distribution agreements are defined as “the Agreements by virtue of which a trader commits to promote and distribute the products of an industrial or a commercial establishment in a particular territory provided that such trader is appointed as the sole distributor.” Article 304 specifies that Articles 294, 300, 301, 302 and 303 of the Commercial Law shall apply to distribution agreements.

In conclusion, the Qatari Commercial Agency Law No 8/2002 and Commercial Law No. 27/2006 provide for a legal framework for commercial agency relationships through which foreign entities are allowed to sell goods and products in the territory of Qatar without any physical presence in the country.

This is one of the numerous business opportunities that Qatar has to offer, especially in view of Qatar’s economic performance to date and that expected in the years to come, in the midst of an otherwise difficult global economy. This is one of many reasons that deepens the trust that foreign investors have in Qatar.

MaNageMeNT

Solve the puzzle!

Problem solving is an essential management tool that distinguishes those who are capable from those who pretend. Osama K. Jbarah, Senior Engineer, Qatar Petroleum, explains that we can learn a lot about a company’s management by observing how they solve problems.

Osama K. Jbarah is an ASQ certified quality engineer and a six sigma black belt with over 23 years of experience in manufacturing and oil and gas in Canada, the US and the Middle East. Osama currently holds the position of senior engineer with Qatar Petroleum where he is responsible for the continuous improvement system.

Osama can be contacted at jbarahquality@hotmail.com

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A

former professor of mine used to refer to engineers as “problem solvers”. To that effect managers are the same as engineers – they not only need to solve problems on a daily basis, but they also need to be good at it.

Problems are generally defined as undesirable situations causing undesirable results. With that in mind, problems can be divided into two broad categories. The first category is situational where what we are doing is not achieving a desired result. The other is a process where we are doing exactly what we are supposed to do, but are not getting the desired results. Distinguishing between the two is critical to your choice of problem solving methodology and ultimately the success of the exercise.

If all problems were simple to fix, then it would be easy for anyone to fix them. But, we know that problems are at times very complex and span over several areas of an organisation and that it takes a great deal of skills, time and, more importantly, commitment from management to make them disappear. The other fundamental fact about problems is that they represent the tip of the iceberg. What that means is that one very large problem or many problems manifest themselves in a smaller problem that is visible to everyone, but meanwhile the larger problems are hidden and require some deep digging to expose.

So, why do so many problems go unsolved?

Throughout my career I have come across managers who claim that they have no problems in their areas and that everything works fine, only to find out that this is not the case. Those who make the claim, for most parts, actually make that claim with good intentions, so again, why is that?

The answer to this question can be very complex, but for now we can simply focus on the simple, yet subtle answers – ■ ■

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The problem is not identified. This means that we are unable to see the problem.

Problems are identified by the wrong people.

That could cause the problems to be ignored as the wrong person may not have a stake in the problem, or is not affected by the undesirable situation.

Problems are avoided. It is easy for someone to pretend that a problem does not exist rather than take it head on and resolve it. I call this the Ostrich way. When an Ostrich is faced with danger, it buries its head in the sand hoping that when it takes its head out again the danger would have, somehow, disappeared.

Managers are too busy doing the usual to stop and solve a problem. This situation sometimes leads to deferment of the problem to some time in the

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If all problems were simple to fix, then it would be easy for anyone to fix them. But, we know that problems are at times very complex and span over several areas of an organisation and that it takes a great deal of skills, time and, more importantly, commitment from management to make them disappear.

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future when they are not busy. This time in the future never comes as they are still busy doing the everyday thing.

People do not know how to solve problems. Much like anything in this world, you either know how to do it or you don’t. Most of us claim to know how to solve problems, but in reality very few of us know because very few of us have had training and experience in the many problem-solving techniques.

With that in mind it is time to break down the categories of problems into further categories for a deeper understanding of the problem solving techniques to learn. Problems are categorised on the basis of the nature of the problem. Those are people problems, operational problems, and technical problems.

People problems are those problems which are caused by the action of an individual or individuals. The cause of the problem could be within the person or how she or he fits within a group. Also, sometimes a group of people could be the cause and at times the group dynamics within a group are the cause. Additionally, conflicts between groups could be the cause of major problems. Solving this type of problems could be

Solving problems successfully, it goes without saying, depends on many factors such as the nature, scope, and extent of the problem, but mostly on the willingness and desires of those responsible.

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very complex and time-consuming as they require a great degree of understanding of human behavioural psychology.

Operational problems are those caused by organisational structures, processes, and basic systems.

As such, they are easier and more manageable since they are supported by operational data that makes for a concrete case.

Technical problems are those problems which are neither people nor operational in nature. They are very easy to understand, yet very difficult to solve. Manufacturing defects in automobiles fit this category. They are easy to detect as the defect will cause a performance problem, yet solving the problem requires a great deal of work by many people and may take a long time to resolve.

Solving problems successfully, it goes without saying, depends on many factors, such as the nature, scope, and extent of the problem, but mostly on the willingness and desires of those responsible. It is my experience that most people are genuinely interested in solving problems, but for some reasons their efforts fail more often than not. Depending on the organisational culture, people problems may be very difficult to fix. The organisational structure may make operational problems very difficult, and so on. So, it is very critical that the situation is considered when attempting to find a feasible solution.

Furthermore, a well-designed and practical training in common problem-solving techniques is a must. As seen, problems are diverse in nature and, thus, require treatment with specific problem-solving techniques.

There are many techniques that have been around for many years and have been proven effective by many organisations. 8D which was popularised by Ford Motors is a typical technique, so is the Lyles Seven Step method. Generally speaking, most techniques are somewhat similar with slight variations to suit users. When comparing the two mentioned ones, the reader will notice that they are similar. Triz is another problem-solving technique that is somewhat complex and requires a lot of training to master, but it is mainly used for complex technical issues dealing with the design of complex products.

In summary, I do believe that in order to solve problems effectively, one needs to have formal training in problem-solving techniques, an open mind to accept solutions that may seem unrealistic at the beginning.

In addition, it must be understood that solutions are like medication, they do not work instantly.

Ad

MaNageMeNT

DELIVER WITH SUCCESS

The challenges that an SME faces after winning a contract are many. In the second article of a series, Sangeetha Thomas, Management Consultant, takes a look at how SMEs can deliver contracted work successfully with effective management of three critical aspects – scope, time and costs. In addition, she presents a case study which illustrates the importance of these aspects for contractual success.

I

n the first part of this series, we looked at how SMEs can write effective proposals to bid for contracts and boost their chances of winning.

In this part, we will take a look at how SMEs can be successful in delivering their contractual obligations. We will learn some lessons from the world’s largest security firm G4S’s contract to provide private sector security personnel for the Olympic Games held in London.

Nick Buckles, CEO, G4S, was ecstatic that they had won the contract to provide security cover for the London Olympics. When it was over, he was quoted as saying that he regretted having signed the contract in the first place. While G4S did not exactly fail in doing what it set out to do, which was supplying 2000 personnel, history will mark its engagement as a contractual failure.

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Taking this case as an example, we look at the three keys to managing a contract successfully Work the scope The first key to fulfilling a contract is simply to deliver what has been promised. During the bid, bidders often use value addition as a differentiator to position themselves as chosen vendors for fulfilling the contract. However, a large percentage of contracts fail because deliverables are not managed well. Simply put, any mismanagement of the scope of a contract threatens to bring disastrous results.

The scope defines what must be done as part of a contract’s fulfillment and more importantly, what will not be done. Once this is understood, all work efforts must be directed to ensure that the results are delivered in the expected time.

Sangeetha Thomas is the Management Consultant with extensive experience in working with clients from private and government sector across the GCC region. She uses her expertise in project and process management areas to advise clients and foster expert teams within the clients’ organisations.

She can be contacted at sangeetha.thomas@iccke.org

Any significant change to a contract’s scope will resonate ominously in terms of both cost and time.

Sometimes, contracts may be either time-bound or resource-limited. In a time-bound contract, any incremental changes to the scope can result in cost escalation while in a resource-limited contract such changes can result in extensions of the timeline.

SMEs must examine their resource capability closely to recognise whether they can address a scope change, as even big players can falter here. Subcontracting is a strategy that can be adopted in such instances if the contract terms permit it. If scope changes are drastic, revisit plans and estimates and opt for separate contracts to ensure the fulfillment of the primary contract.

It was initially estimated that the Olympic Games would need 10,000 security personnel, of which 8,000 would be volunteers or come through a publicly funded recruitment scheme. G4S won the contract to provide the remaining 2,000 based on a very competitive price bid. When asked about resource planning, Ian Horseman-Sewell, Account Manager for the Games, G4S, was quoted as saying that G4S had the potential to run an event in Australia at the same time as providing staff at the Olympics. However, toward the end of 2011 the initial estimate of 10,000 had more than doubled itself to become 23,700 personnel! The scope of work had just doubled.

G4S took the challenge and renegotiated their contract to raise their billing from GBP 86 million to GBP 284 million for the additional personnel. However, G4S was able to provide only 13,700 personnel. Though this was nearly seven times the initial estimate, it eventually resulted in contract failure.

Advice: ■ Deliver the scope in its entirety ■ Subcontract if resource pool is not resilient ■ Address drastic scope changes through separate contracts

Evaluate all scope changes as viable with regard to time and cost factors before deciding to take up the challenge.

Fence the cost A scenario familiar to the SME is one where the cost of fulfilling a contract ends up bleeding its profit lines. Increase in costs may result in incomplete delivery and failure to complete the contract. No single disastrous event causes costs to escalate.

Multiple decisions by project managers across the contract timeline contribute to cost escalation.

Among SMEs, lack of experience and knowledge in dealing with complexity and uncertainty can influence the decision making.

While external reasons such as inflation can influence costs, the common reasons SMEs register losses are closer home. Faulty estimation techniques, poor planning, weak processes, uninformed decisions, absence of periodic cost reviews and inadequate quality control contribute to cost escalations. The second key to successful completion of contracts is to have sound estimation, planning and review of cost. It is important to remember that estimates are just best guesses when it comes to planning. While plans look good on paper, well defined processes and informed decisions help shape reality.

Reviewing the Olympic Games contract, Nick Buckles, CEO, G4S, was quoted as saying, “We did this purely because we wanted to have a successful security operation at the Olympics. It is not particularly financially lucrative for us. It was much more about, ironically, reputation and building it for the future.” Unfortunately, the contract resulted in negative reputation for G4S. G4S had to take an additional USD 80 million hit for failure to complete the contract, lose reputation due to public perception of the failure and suffer loss of goodwill as reflected in share value. This was despite raising management cost estimates nine times and operational costs twenty times the initial estimate.

Most contracts are undervalued by nature. Add cost competitiveness of bidders to this and the result is a contract with thin margins and tight specifications.

Quality control ensures that the scope is addressed completely. Rejected work and rework increases costs, while scope changes and resource scarcity challenge the SME by narrowing profit margins. SMEs can fence project costs by conducting periodic cost reviews to choose better options and make more informed decisions.

Advice: ■ Use sound basis for cost estimations ■ Review cost information during decision making ■ Factor quality control to assure work scope

FeBruary 2013

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MaNageMeNT

Watch the time SMEs need to be exceptionally cautious about any time overruns. Time overruns inevitably result in cost escalations. Internal reasons for time overruns can arise from the poor planning, supplier, inspection or logistical delays, assembly lines problems, resource scarcity and rework. Time-consuming negotiations with partners, suppliers and labourers can also eat into the contract time.

The third key to successful contract fulfillment is to have a well-defined work schedule and plan for resources to be phased in and out of the project. SMEs need to define milestones and interim deliverables that will also help them keep track of resource usage and availability to complete the contract. Review supplier and partner performance periodically to identify delays early on and compensate for them.

SMEs with the ability to leverage time by arranging work creatively will stand to gain from resource and work efficiencies.

With just six months to go before the start of the Games, G4S agreed to provide nearly seven times as many personnel as it had agreed to provide initially.

This meant that recruitment would have to increase by 400%. It should have been obvious to both G4S and the Games organisers that it was a logistical impossibility to process more than 8,000 security industry authority applications in such a short period.

The initial shortfall acknowledged by G4S was 3,500 personnel. The Home Secretary was made aware of the shortfall just two weeks before the start of the Games. Being a time-bound national contract, the

The G4S contract is a perfect example of a stable entity failing to establish communication and effective management of work after winning the contract.

Cabinet had to intervene and rescue the situation by deploying an extra 3,500 military personnel to fill the gap. An additional 1,200 personnel were added later and G4S agreed to foot the bill of the military

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personnel. Unfortunately, the entire risk of an outsourced project cannot be outsourced.

Advice: ■ Work with a well-defined time based work schedule ■ Review third party performance periodically ■ Arrange work phases to maximize work efficiencies Some pointers to use What are some of the pointers that you can use?

The most critical aspect in bringing all the above together is communication. You can never over communicate the need to complete the work according to the agreed scope. Check with your team periodically to review shared understanding of work specifications. Use team meetings as review points for your work timeline. Communicate the cost implications for delayed timelines and engage them in keeping the work schedule alive and updated. Conduct post period cost reviews to help your team have a business perspective of the work undertaken.

Have regular client interactions to ensure that your work efforts and the desired scope are aligned.

Evaluate all scope changes as viable with regard to time and cost factors before deciding to take up the challenge. Where possible, include a cost escalation clause to address increased costs due to external factors such as inflation, economy factors, and similar.

Don’t reserve the bad news for the eleventh hour. For G4S the disaster is the damage done to its reputation.

It is clear is that both sides are regretting the erroneous estimates. The G4S contract is a perfect example of a stable entity failing to establish communication and effective management of the work after winning the contract. Work smart and establish good governance to produce results, deliver value and mitigate risks in your contracts.

START YOUR BUSINESS

Introducing the SME Toolkit Qatar: An Online Platform to Support the Private Sector

RUN YOUR BUSINESS

GROW YOUR BUSINESS

The SME Toolkit is a joint project between Qatar Development Bank and International Finance Corporation (IFC), a member of World Bank Group.

By bringing together the global expertise of IFC and the local knowledge of QDB, the SME Toolkit Qatar provides small businesses in Qatar with the tools and resources that allow them to function to international standards.

• Step by step guidelines for business start up and management • Downloadable software tools like Business Plan Maker, Website Builder etc.

• Online library with information on topics like Finance Marketing, Technology and International Business • Business Directory Listing and Legal Updates

qatar.smetoolkit.org