Private Sector Qatar English | March 2014 by Private Sector Qatar

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we don't just work with the best suppliers. we also work with the best local suppliers. At Shell, we seek out ways to support Qatar's National Vision 2030 - in social, human, environmental and economic development. This includes helping Qatari entrepreneurs and encouraging growth by sourcing materials and services from local suppliers. At our state-of-the-art Pearl GTL plant, the need for large amounts of hydrochloric acid within the production process is met by Qatar Vinyl Company (QVC), a world–class chemicals and materials manufacturer. It’s just one example of Shell’s commitment to ‘local content’ in everything we do. To register your interest in becoming a supplier to Qatar Shell, please contact Qatar.shell.Vendors@shell.com

pearl Gtl at ras laffan is the largest Gas-to-liquids plant in the world.

CONTENTS March 2014

20 Privileged customer The founders of Ta3rifah, a new mobile app, explain their product to Ayesha Aleem.

SMEs 22 Pen, paper, scissors Walied Albasheer and Abdulrahman Alhashemi, Founders, www.staionery.ae, speak to Badar Salem about how a shopping trip with the family led them to develop their latest product.

Finance 24 A profitable partnership Dr. R. Seetharaman, Chief Executive Officer, Doha Bank Group, elaborates on how the bank supports the progress of SMEs.

Steering A big ship Eng. Abdullah Al Sulaiti, Managing Director, Nakilat, explains the company’s quick progress to Ayesha Aleem.

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

26 Sukuk – the way of the future? In the second part of a two-part series, Dr. Omar Fisher, Managing Director, Khidr Solutions, explains why Sukuk may be able to fill the gap of long-term bonds in Islamic capital markets.

Business guru 28 Steering A big ship Eng. Abdullah Al Sulaiti, Managing Director, Nakilat, explains the company’s quick progress to Ayesha Aleem.

About town 16 It’s all about food!

Management

Gulfood 2014 was held in Dubai from 23 rd -27 th February. We bring you the highlights.

32 Building big

Entrepreneur 18 Dreams in icing and sugar Fatma Al Kuwari talks to Aparna Shivpuri Arya about how she discovered her passion to make cakes and pastries.

Rod Stewart, Managing Director, Atkins, Qatar, sat with Ayesha Aleem to talk about what the company is doing in the country.

34 Up in the cloud Ahmed Elshrif, Director, Kronos, Middle East, suggests that it is time to take workforce management to the cloud and use automated systems to boost competence.

Business advice 42 Going global Juha Peralampi, Manager, Business Incubator at the Centre for Entrepreneurship, College of Business and Economics, Qatar University, gives Ayesha Aleem a checklist that companies can follow when starting foreign operations.

44 The next big thing Kamal Hassan, CEO, Innovation 360, talks to Ayesha Aleem about the Turn 8 entrepreneurship incubator programme.

46 Learning from leaders Raghu Krishnamoorthy, Vice President, Executive Development and Chief Learning Officer, GE, explains the company’s partnerships with the educational community in the MENA region to Ayesha Aleem.

Legal

36 Doing business in qatar Senior Legal Consultants, Brenda Hill and Richard Hughes, explain the details of doing business at QSTP and QFC.

Tech 38 Attack the hacker

Sector study 48 Modern luxury with a twist Caroline Guillon, Vice President, Marketing and Public Relations, Qatar Luxury Group, speaks to Badar Salem about the company’s role in transforming the luxury industry’s landscape.

Nader Henein, Advisor, Blackberry, talks to Badar Salem about safeguarding important data.

Tasdeer 40 Just Google it! Maha Abouelenein, Head, Global Communications and Public Affairs, Google, MENA, talks to Ayesha Aleem about what the company is doing in this region.

52 Have you found your customer? Tasdeer, the export arm of QDB, puts forth ways of finding the appropriate customers through its guide, Trade Secrets.

March 2014

EDITORIAL Chairman Dominic De Sousa CEO Nadeem Hood EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Senior Editor Aparna Shivpuri Arya aparna.arya@cpimediagroup.com +971 4 440 9133 Deputy Editor - English Ayesha Aleem ayesha.aleem@cpimediagroup.com +971 4 440 9120 ADVERTISING Group Sales Director Carol Owen carol.owen@cpimediagroup.com +971 4 440 9110 Commercial Director Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 CIRCULATION Database and Circulation Manager Rajeesh M rajeesh.nair@cpimediagroup.com +971 4 440 9147 OPERATIONS AND DESIGN Production Manager James P Tharian james.tharian@cpimediagroup.com +971 4 440 9146

Editor’s note Recently I googled the word “entrepreneur’ just out of curiosity and some of the key characteristics that came up were – organiser, risk -taker, self- employed, manager. Do you think all these terms sum up an entrepreneur? Is anything missing? I would like to add – believer to that list. An individual has to believe in himself, in his idea. Don’t you think so? Our stories this month, to me, are all about having faith in your idea and filling up that niche gap. I don’t think you can teach someone to be an entrepreneur, it comes from within but what you can do is to encourage them and provide an ecosystem that helps them realise their dreams. And the stories coming out of this region are a proof of that. When you turn to page 18 and see the pictures of Fatma’s cakes, it will bring a smile on your face or when you read about Ta3rifah, you’ll be impressed with the interesting concept. Then there is the Qatar Luxury Group, which is promoting local talent in the luxury goods industry. Similarly, technology giants like BlackBerry and Google are providing advice on how SMEs can take advantage of technology to be more cost-effective. And then you have GE discussing their programme for promoting entrepreneurs. To me, this is how it all comes together - an ecosystem that works together on promoting entrepreneurs in an economy. This is what our March issue is about. We also have a role to play in this ecosystem and by bringing together a variety of articles, which provide a holistic perspective on the various verticals of an economy, we try and help our readers stay ahead of the group. I hope you will enjoy the March issue, as much as we enjoyed putting it together. You’ll also find our coverage of the Qatar Pavilion at Gulfood 2014. February was a busy month and March promises to be no less. I would love to hear from you, so please connect with us by dropping me a line or through Facebook or Twitter.

Head of Design Fahed Sabbagh fahed.sabbagh@cpimediagroup.com +971 4 440 9132 Photographer Jay Colina jay.colina@cpimediagroup.com +971 4 440 9137 DIGITAL SERVICES www.privatesectorqatar.com Digital Services Manager Tristan Troy Maagma Web Developers Abey Mascreen Erik Briones Jefferson de Joya Louie Alma online@cpimediagroup.com +971 4 440 9100 Published by

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

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QATAR TOURISM INVESTMENT OPPORTUNITIES Qatar Tourism Authority and Qatar Development Bank, are pleased to invite commercial businesses and members of the private sector, including SMEs and entrepreneurs in Qatar, to attend the ﬁrst stage of: “Qatar Tourism Investment Opportunities” event. Date: March 2, 2014 Place: Four Seasons Hotel Al Mirqab Hall 1 & 2 Time: 4:00 pm – 7:00 pm For registration: opportunity@qatartourism.gov.qa For further inquiries: +974 4430 0000 For more information: www.qatartourism.gov.qa www.qdb.qa

advisory Board

Amal Al-Mannai

Gail Gosse

Executive Director, Social Development Center.

Dean, School of Business, College of North Atlantic-Qatar.

Professor Nitham M. Hindi

George M. White, Ph.D.

Dean, College of Business and Economics, Qatar University.

Associate Teaching Professor of Entrepreneurship, Carnegie Mellon University-Qatar.

Abdulaziz Bin Nasser Al Khalifa

Ali Al Khulaifi

Chief Executive Officer, Qatar Development Bank.

Executive Director, Business Support Services, Enterprise Qatar.

Wael Sawan

Hamad Mohammed Al-Kuwari

Managing Director and Chairman, Qatar Shell.

Managing Director, Qatar Science & Technology Park.

Raed Al-Emadi

Rashid Nasser Sraiya Al Kaabi

Chief Operating Officer, Silatech.

Chairman of the Board, Energy City Qatar Holding.

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

News

Argentina discusses new ties with Qatar seriously looking forward to make big investments in Argentina, particularly in the infrastructure and agriculture sector. According to him, the volume of bilateral trade between Qatar and Argentina in 2013 increased by 150% to QAR 3.64 billion (USD 1 billion) compared to QAR 1.46 billion (USD 400 million) in 2012.

Argentina is seeking Qatari support to build a new LNG terminal to enhance the country’s gas receiving capacity from Qatar. He´ ctor Timerman, Minister of Foreign Affairs, held meetings with Qatari authorities, including His Excellency Dr. Mohamed bin Saleh Al Sada, Minister of Energy and Industry and discussed important areas of mutual cooperation, said a senior Argentine Ministry official. A 30-member high level trade mission representing top 20 companies, under the leadership of He´ ctor Timerman, is exploring investment opportunities. He´ ctor Timerman, senior members of his accompanying delegation and the Argentine Ambassador to Qatar, Rossana Surballe, also met with senior officials from Qatargas and

QIA to attract Qatari investments in different sectors, such as energy, food and agriculture.

The Latin American country is boosting gas imports as local production is declining due to limited exploration and maturing fields. At the same time, according to reports, the level of gas consumption surged 33% to an average of 126 million cubic metres per day in 2012 from 2003.

Agustin Wydler, Under Secretary for Investment D evelopment and Trade Promotion at the Ministry, said QIA is

Argentina has a well developed food and beverage industry, which wants to attract Qatari investments for mutual benefits.

Qatar inflation increases marginally Consumers might be struggling to balance a monthly budget with their limited disposable income, especially due to high rentals and rising prices of groceries, but the official statistics on inflation tell a different story. Qatar’s month-on-month inflation has witnessed a marginal increase of 0.3% in January 2014 compared to December

2013, according to the latest data released by the Ministry of Development Planning and Statistics. The Ministry, in a press statement, said that the Consumer Price Index (CPI) of January 2014 is estimated at 115.7 and has increased by 2.3% when compared to the CPI of January 2013.

QDB helps companies reach new markets Qatar Development Bank (QDB), through its export arm Tasdeer, supported the participation of 7 Qatari companies in the energy and electricity sector at the Middle East Electricity exhibition, which concluded at the Dubai International Exhibition Centre. Held from 11 th–13 th February 2014, this is QDB’s second consecutive year helping Qatari companies boost exports at Middle East Electricity. It follows successful participation

in 2013, which resulted in trade agreements providing several Qatari companies the opportunity to enter new markets. The following companies were included in the Qatari pavilion – Doha Cables, General Switchgear & Lighting Industries, Qatar International Cables Company (QICC), Uniplast Factory, Aziz Manufacturing Advanced Technology Products, Q-Tec Sw i t ch ge a r a n d A l s h a m s Adva n c e d Lighting Technologies.

QIA fund open to all countries Qatar Investment Authority’s (QIA) global fund is open to partnerships across the world and not limited or restricted to a specific area or a country. The objectives of the QIA are to be managed on business rules and principles and achieve reasonable revenues, said Ahmad Al Sayed, Chief Executive Officer, QIA. Replying to a question on the fund’s keenness to invest in the UK, Ahmad Al Sayed said that Britain is one of the main destinations for QIA’s investment. “Britain is one of our major destinations for investment. It has a great system with great regulations. We have Harrods and other investments in Britain like Barclays, Sainsbury, Canary Wharf and London Stock Exchange.”The successful deals resulted in good revenues for everyone and the QIA is happy to invest more in the UK when the right opportunity comes along,” he said.

Qatar Airways to keep fleet age “very low” Qatar Airways’ strategy is to keep its average fleet age “very low” and many of its very large aircraft orders are for replacement of the current fleet, said Akbar Al-Baker, CEO. A Qatar Airways factsheet shows it has more than 280 aircraft on order books worth more than USD 50 billion. The fleet on order includes 80 Airbus A350s, 51 Boeing 787s (including options), 12 Boeing 777s (including freighters and options), 80 Airbus A320 Neos (including options), 13 Airbus A380-800s (including options) and an Airbus A320. Currently, the airline has a fleet strength of 129 including both passenger and cargo aircraft from Airbus and Boeing.

M e a nw h i l e , A k b a r A l - B a ke r s a i d Qatar Airways, the launch customer for the Airbus A350, expects to receive its first aircraft ahead of scheduled delivery in December 2014.

Akbar Al-Baker. He said that the airline was not interested in Airbus’s offer of a higher take-off weight “regional” A330, or Boeing’s 787-10 or 777-8X.

The airline is also set to receive its first superjumbo (Airbus A380), according to

The airline also has 50 Boeing 777-9 on order, but it is not keen on the smaller 777-8, he said.

Qatar property prices rise by 5% The website, www.propertyfinder.qa has reported a 5% overall rise in values of residential real estate between December 2013 and January 2014. Tracking price rises across key neighbourhoods, the portal revealed that while properties stood at QAR 6.6 million in December 2013, the figure rose to QAR 6.9 million in January 2014. Residences at The Pearl, one of Qatar’s most glamourous addresses, went from QAR 3.8 million to QAR 3.9 million during this period, while West Bay, another prominent district, saw prices move up to QAR 2.4 million from QAR 2.3 million. With more than USD 200 billion worth of projects due to be awarded in the years leading to 2030, Qatar will be burgeoned further by international and government investment, said Monsi Rabah, Country Manager, www.propertyfinder.qa’s Qatar operation. “Since the successful FIFA World Cup 2022

bid and the introduction of new foreign ownership laws, there has been a sharp spike in property prices. Foreign investors are buying, construction is accelerating with massive infrastructure projects, including a new metro and light rail system underway, the landscape is changing and with more than USD 10 billion growth projected over the next decade, we are gearing up for the next big boom.” With real estate heavyweights pumping in billions towards residential and commercial developments, the country’s risk profile also offers interesting opportunities for international investors. “With spending expected to accelerate in the lead up to 2022, Qatar’s growth might just trump that of other regional markets in 2014,” concluded Monsi Rabah.

march 2014

REGIONAL News

Saudi Arabia strengthens ties with Pakistan Pakistan and KSA called for taking advantage of the opportunities available in the 2 countries for expanding and improving investment, trade, energy, infrastructure development, agriculture and for an exchange between either government’s delegations for mutual benefit. A joint statement was issued at the conclusion of the official visit of Saudi Crown Prince H.E Salman Bin Abdulaziz Al-Saud, Deputy Premier and Minister of Defence to Pakistan, who said that both sides expressed a keen desire to further strengthen cooperation in various fields for the promotion of the causes of the Muslim Ummah as well as international peace and stability.

their foreign ministries. They also agreed on the need to enhance bilateral cooperation in the field of defence.

labour, manpower, sports and an agreement to encourage and protect mutual investment in the 2 countries.

The two sides decided to continue to work on further fortifying existing political relations between the two countries through regular holding of bilateral consultations between

Both sides acknowledged the importance of completing necessary measures for signing of the agreements and MoUs in different fields, including Islamic affairs and endowments,

During the visit, the Saudi prince held talks with President Mamnoon Hussain, Prime Minister Nawaz Sharif and other high level officials.

KSA’s non-oil sector to drive growth According to QNB, The Kingdom of Saudi Arabia (KSA) has been one of the best performing G20 economies in recent years with real GDP growth averaging 5.9% per annum during 20 08-13. The authorities recently announced their 2014 state budget plan, projecting another expansionary budget to continue the process of diversifying the economy. Based on a conservative oil price assumption of USD 80/b, government revenues and expenditures are expected to be USD 228 billion in 2014. The budget includes substantial additional outlays for education, health and infrastructure, despite expected declines in oil revenues. The non-oil private sector is expected to be the key driver of growth in 2014, boosted by large public sector infrastructure investment and the rapidly growing population. The KSA Ministry of Finance’s budget announcement included preliminary macroeconomic data, which provides some insight into the authorities view on economic

performance for 2013 as well as prospects in 2014. They suggest that overall economic growth slowed to 3.8% in 2013 owing to a decline in oil output. Oil production accounts for just under half of GDP. Production was raised during 2011-12, mainly to make up for lower exports from elsewhere in MENA. However, it was cut back slightly in 2013 as production recovered in other MENA countries. The non-oil sector is expected to continue g r ow i n g s t r o n g ly i n 2 014 , r e f l e c t i n g government-led infrastructure projects such as the Riyadh Metro and a high speed inter-city rail network, currently under construction. Furthermore, the authorities are investing USD 86 billion in building the new King Abdullah Economic City in an attempt to diversify the economy away from hydrocarbons into a knowledge-based economy. On the whole, the value of projects planned or underway was up by more than one third in 2013 compared to 2012, according to MEED projects data.

Oman Gas Company begins Sur operations Oman Gas Company (OGC), the Sultanate’s natural gas t r a n s p o r t a t i o n c o m p a ny, announced the beginning of its operations in the Wilayat of Sur. On this occasion, Eng. Yousuf Bin Mohammed Al Ojaili, CEO, OGC said, “The Wilayat of Sur is the sixth regional district of the company’s operations and the gas supply station is the second largest among the other gas supply stations managed by the company.” Highlighting the company’s future plans in Sur, he added, “There are further plans for the company’s operations in Sur, including the management of gas supply stations of Oman India Fertiliser Company, Al Kamil Power Plant and Sur Industrial Estate.”

Arab-Brazil food trade increases According to the Arab-Brazilian Chamber of Commerce’s annual report for 2013, food exports from Brazil to Arab countries reached a record high of 17 million tonnes for the year with meat, sugar and cereals as the predominant products. Brazilian meat topped the list at over USD 4 billion, a 3% increase in value compared to 2012, while sales volume touched 2 million tonnes in 2013, representing more than 10% of Brazilian exports to the region. The UAE is the biggest commercial partner for Brazil among Arab countries, with its total imports growing more than 5% to reach USD 2.5 billion

Dr. Michel Alaby, General Secretary and C E O, Arab-Brazilian Chamber of Commerce, said, “The trade balance for 2013 shows a greater refinement of Brazilian products exported to Arab Nations.” The top 10 Brazilian products comprise more than 80% of the total amount traded while chicken, sugar and ore have a 41% share. “This highlights a latent business opportunity for Brazil with Arab countries which needs to be tapped further,” he concluded. Additionally, trade relations with Libya bounced back in 2013 with a total increase

of 20%. Algeria also saw a significant boost in Brazilian exports.

UAE among leaders in e-government

A new comparative report has found that Singapore, Norway and the United Arab Emirates (UAE) rank first, second and third, respectively, among 10 countries in their use of “digital government”, from offering online portals to access public services to employing digital channels and social media to communicate and engage with citizens. To determine citizens’ perceptions of digital government, Accenture surveyed 5000 people across the 10 countries in the study. The survey found that 81% of respondents would like their government to provide more services through digital channels and 64% would like to use social media to engage with government.

According to the report, high-performing digital governments are: ■■ Focusing on their digital strategy, which is deeply embedded in the government agenda and public reforms. ■■ Continuing long-term investment in key information and communication technology assets and the digitalisation of core public services, such as taxation, pensions and healthcare. ■■ Leveraging the power of new technologies, such as social media, mobility, analytics, big data and cloud computing. ■■ Connected across agency boundaries and have a strong culture of collaboration and data sharing.

The countries in the study were Brazil, Germany, India, Norway, Singapore, South Korea, the Kingdom of Saudi Arabia, the UAE, the United Kingdom and the United States.

80% of the survey respondents in the UAE, seen as an emerging leader in digital government, said their government is proactively addressing their priorities in health, employment and education.

Kuwait approves bids to upgrade oil refineries

Kuwait has approved bids worth a total of USD 12 billion for major upgrades at 2 oil refineries, the state-run oil company said, in a sign it is moving ahead with large infrastructure projects. The Clean Fuels Project is a specification upgrade and expansion of Kuwait’s largest refineries as part of the G u l f s t a t e ’s e c o n o m i c development plan. A consortium led by Japan’s JGC Corp. won a tender for work worth KWD 1.361 billion (USD 4.82 billion) at the 460,000-barrels-per-day (bpd) Mina Ahmadi Refinery, a Kuwait National Petroleum Company spokesman said, citing a decision from the country’s central tenders committee. Britain’s Petrofac, in a bid worth KWD 1.07 billion, is expected to carry out work at the 270,000 bpd Mina Abdullah refinery and U.S.-based Fluor Corp. will also work on Mina Abdullah after a bid of KWD 962 million, he said. Contracts for the work are expected to be signed with the companies in April and construction work should begin shortly afterwards, the spokesman said.

march 2014

events

Save the date!

March â&#x20AC;&#x201C; June 2014

Date

Event

Location

9-11 March

MultaQa Qatar

St. Regis Hotel, Doha, Qatar

11-12 March

GCC Future Rail Summit

Doha Qatar

16-18 March

Drainage and Sewerage Middle East

W Hotel, Doha, Qatar

17-19 March

Qatar Projects Conference

Grand Hyatt Hotel, Doha, Qatar

24-26 March

World Exchange Congress

St. Regis Hotel, Doha, Qatar

25-27 March

Doha International Maritime Defence Exhibition & Conference 2014

Qatar National Convention Centre, Doha, Qatar

7-8 April

ARAB FUTURE CITIES SUMMIT 2014

Doha, Qatar

15 April

Building Materials Manufacturers Forum

The St. Regis Doha, Doha, Qatar

22-24 April

Gulf Water Conference 2014

Doha, Qatar

28-30 April

Corrosion Management Summit

Doha, Qatar

6-7 May

Fourth Annual Global Petrochemicals Technology Conference

Grand Hyatt Doha, Qatar

12-13 May

Third Edition Power and Desalination Summit

Sheraton Doha Resort & Convention Hotel

12-15 May

Project Qatar - International Construction Technology and Building Materials Exhibition

Qatar National convention Centre

19-21 May

World Stadiums Congress 2014

Grand Hyatt, Doha, Qatar

21-22 May

Tenth Trans Middle East 2014

Intercontinental Doha The City Hotel, Doha, Qatar

1-3 June

70th IATA Annual General Meeting

Doha, Qatar

2-4 June

Cityscape Qatar

Qatar National Convention Centre, Doha, Qatar

4 June

The MEP Middle East: Qatar Forum 2014

Grand Hyatt Doha, Qatar

To know about the events happening in Qatar in the next few months, please visit our Website www.privatesectorqatar.com/english

ONE PLACE DIVERSIFYING

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BUSINESS ENERGY

march 2014

About town

it’s all about food! Through its export arm Tasdeer, Qatar Development Bank (QDB) recently sponsored the participation of 10 Qatari companies from the food and beverage industry in the Gulfood 2014 exhibition. The event was held in Dubai from February 23rd-27th 2014.

ore than 152 foreign country pavilions participated in Gulfood 2014. This is one of the world’s biggest annual exhibitions, providing a trade, sourcing and networking platform for companies in the food industry from as many as 88 countries. The annual event which has been established for the past 25 years, has earned the reputation of a platform that brings companies in the food industry closer to potential buyers in the Middle East, Africa and even as far as South Asia. The Qatari pavilion had a modern feel and was strategically located to attract a large number of visitors. Companies that participated at Gulfood in 2014 ■■ Dandy Company Ltd. ■■ National Food Company (ZAD Holding) ■■ Qatar Flour Mills ■■ National Food Company (Nafco) ■■ Qatar Food Factories ■■ Colosseum Gelato ■■ Qatar Meat Production Co. ■■ Agrico Organic Farms ■■ Gulf Water Plant

Informative conferences were organised during the 4-day show, where attendees were provided with ample opportunities to learn about the latest business trends and new products. Talking about their experience at Gulfood, Faheem Al Haq, Assistant Business Development, Collosseum Doha WLL, said, “We received positive feedback last year and Tasdeer has given us another opportunity to participate in the Gulfood,” said “In 2013, there was a great interest from the GCC. This year we are targeting the whole MENA region. Our experience here has been very positive. People like our gelato and fresh pasta. It’s not every day that you see an Italian company in the Middle East making fresh Italian products. This year, we had at least 25% increase in enquiries. After Gulfood we plan to follow up with the clients that we’ve met.” The company has five brands which deal in premium ice cream, the Italian dessert of tiramisu and fresh pasta that comes in 30 flavours. The Qatari companies praised QDB/Tasdeer’s support for their participation in the show and facilitation of new business opportunities.

the right client to the right department. And then we’ll filter out all the customers according to what they require from us, get in touch with them and develop the business from there.” He also added that on the first day of the exhibition, the company didn’t receive many enquiries but the number improved on the second day of the event. Some of the Qatar flour Mills’ products include wheat flour, harees, jareesh, semolina and pasta.

Mohammad Ashfaq, Business Development Manager, National Food Company, said, “We really appreciate Tasdeer’s support in helping us find new clients and sponsoring Gulfood. They have organised a meeting with some distributors like a group from Tunisia, for example. We have got enquiries from markets like Iraq and Oman.” In response to what the company’s experience has been at the 2014 edition of the event, he said, “We had a wonderful experience here, even compared to last year when the exhibition included food equipment and machineries. This time, we are seeing genuine customers and demand is more specific. We will look for more opportunities to establish our brand in other countries.” Imran Khan, Marketing Executive, Qatar Flour Mills, speaking on the occasion, said that the company participates in Gulfood every year. He spoke about Tasdeer’s role in helping the company participate, “Tasdeer has always helped us in finding new customers and establishing new business contacts.” Responding to what the company intends to do once Gulfood comes to an end, he said, “After Gulfood, we’ll sort all the contacts that we’ve got and assign

Elaborating on QDB’s role, Abdulaziz bin Nasser Al Khalifa, CEO, QDB, said, “Qatari participation in Gulfood demonstrates the development and diversification of our food industry and its potential to compete on a regional and international level. Through Tasdeer, our aim is to enhance their position and expand it by identifying potential opportunities and offering the necessary data and insights about various markets. We were keen to participate in Gulfood for the second consecutive year as it is one of the largest food exhibitions in the Middle East and it has resulted in expanding business opportunities and ties.” This year, Gulfood was attended by more than 70,000 business visitors. Many professional chefs also took this opportunity to highlight their skills in front of a large audience.  Different varieties of food, beverages, restaurant supplies, hospitality services and other food-related equipment were exhibited by more than 4500 firms. Talking about next year, Marwan F. Nadar, CEO, Qatar Meat Production Co., Agrico, remarked, “I hope next year we can be part of Tasdeer again and hopefully have a bigger presentation stand. We are hoping to expand the range of products that we’d like to exhibit.” Qatar Meat Production Co. deals in a wide range of processed meats which includes cooked salami, breakfast sausages, beef pastrami, hamburgers, chicken nuggests and breaded fillets. Other companies that participated in Gulfood dealt in products like dairy produce such as yoghurt and the Middle Eastern favourite drink of laban, bottled olive oil, dates, snacks like potato chips and organic plants.

In 2013, there was a great interest from the GCC. This year we are targeting the whole MENA region.

march 2014

Entrepreneur

Enterprise Qatar launched a contest on Qatar’s National Day in 2013. The contest is through the website, www.thisiswhatido.qa with the hashtag #thisiswhatido. The idea behind it is to encourage entrepreneurs to present their work through this medium. The website and the hashtag are still active and entrepreneurs in Qatar are encouraged to use them to promote their work. Fatma Al Kuwari is one of the winners of this contest and we bring you her story. Please tell us a little about your background. My childhood and my mother had a big influence on me and my love for art. I was fascinated by my mother’s passion for art. I used to sit down and watch her working for hours on her paintings. Every time I looked at my mother’s face while she’s working, I would wish that I could find my passion the way my mother had found hers. I am very proud of my mother. She encouraged me to do craft and taught me drawing. I used to experiment with colours and brushes until art became part of my life. But after finishing high school, I decided to study banking and finance because I knew it would be easier to find a job. At that time, I did not ask myself whether

I really wanted to study finance. Now, I believe that if a person has the talent and the passion in a particular field and he/she decides to take it further, the result will be incredible. After years of searching and later joining a workshop in cake decoration, I have finally found what I love to do. I never thought that I will love what I am doing so much. You recently won the EQ contest. How important do you think social media is for a business? Social media is a necessity. We live in the time of a digital revolution and we must take advantage of it. Social media allows easy interaction with individuals and companies and it also allows us to promote our products free of charge.

Fatma Al Kuwari is the winner of a contest by Enterprise Qatar for the best entrepreneur/idea in 2013. She has a degree in banking and finance as well as a certificate in cake decoration and French pastries from the Sheraton Doha Resort and Convention Hotel. She can be contacted at fatma22@hotmail.co.uk

As an entrepreneur, what has been your experience on setting up a business in Qatar? Did you face any challenges? I faced many challenges and difficulties in the beginning, including high rents, difficulty in finding professional employees in this field in addition to the difficulty of finding materials and tools for cake decorations. My passion for my work, however, helped me in overcoming all of these difficulties. Tell us about your business and day-to-day operations. I like to be precise in my work, especially when making sugar flowers. This means that I need to study various types of flowers and try to make the sugar flowers similar to the real ones, in terms of sizes and colours. Cake decoration requires a lot of work to make sure the cake is finished in a short time, while also being in accordance with health standards. I wake up early and continue to work until the late hours of the night. Sometimes I may not sleep even the next day. But I do not feel how much time has gone by when I am working because I love what I do. When I receive an order, I discuss all the details with the customer so that I know exactly what he/she is looking for. After that, I begin working on the design that best reflects the idea of the occasion. Then I bake the cake and make the fillings. At the end, I work on the exterior design of the cake. The most exciting moment for me is the reaction of the customer when they see the cake for the first time. Before you started your business, did you make a business plan or consult anyone for the legal and financial aspects? After I discovered my talent, I did a feasibility study for the project for 2 years. According to me, this is the most important step when starting any project and I would advise all entrepreneurs to do the same. Without this study, there is a greater risk of failure. To avoid losses, first identify the market that you plan to work in.

How important do you think entrepreneurs are to Qatar’s growth? There are many young people who have ideas and projects that promise to keep pace with the country’s growth and development. The State of Qatar is going through a stage of growth in all sectors, with our government making goals for the Qatar National Vision 2030. This plan clearly states the objectives for the community and we should share the responsibility to implement these goals together. What lessons have you learnt as an entrepreneur? We have everything that is needed to succeed. We live in a state that provides us with the basic necessities of life from free electricity and water to free education and health insurance. So, all that we need to do is to work on ourselves and develop our skills to be a productive society. I would advise anyone who wants to start their own business to choose what they love. Don’t just choose a business because you see others succeeding in it. Having a successful project idea but no passion for it may result in a big loss. What are your future plans? At the moment, I am focusing on developing my skills by enrolling in different workshops and courses. In the future, I’m planning to have my own factory with the aim of producing the finest cakes in the region.

march 2014

Entrepreneur

Privileged customer Everyone likes to be treated like they’re special, which is what makes programmes like frequent flyer miles so popular. Ta3rifah is a mobile app that helps keep track of your loyalty programmes. Founders, Ismail Issa, Mahmoud Salaheldin and Mostafa Khalifa, explain their new product to Ayesha Aleem. Please tell us a bit about Ta3rifah. We observed that Dubai wants to be seen as a thriving trading centre. It hosts major attractions like Dubai Shopping Festival and is getting ready for the mega Expo 2020. So we thought that developing an app like Ta3rifah here would do well. T h i s m o b i l e a p p c o m b i n e s a l l t h e l oya l t y programmes that a person is signed up for and helps them manage them through one platform, while letting them know about promotions when they are in the vicinity of the place offering them. This eliminates having physical cards, which can become cumbersome. The app also does away with annoying SMS and unnecessary information. So to sum it up, Ta3rifah is an interactive platform that redefines loyalty programmes, combining the fun of shopping with the joy of saving. Can you please elaborate on how the app works? A user downloads the app on their SmartPhone. The core features of this service are currently free for the user. The merchant is charged a “pay-as-you-go” fee based on per active user per month, so he gets high value for a low price. Currently, a merchant can choose from Basic, Advanced and Premium subscription plans.

Users can log in using the Ta3rifah app or their Facebook info. We use “geofencing” technology in which a merchant can send information to a customer based on their location. This way, they aren’t bothered by unnecessary alerts. They are only notified when they are close to a store and are sent personalised updates. What makes Ta3rifah different? We have introduced a unique aspect that allows users to trade rewards with each other. This makes the app a little like social media or an online game. We have tried to give the users as much control of their experience while using the product. They can control the number of notifications that they receive. Notifications are based on the customer ’s profile and they appear in a notification centre where they can be reviewed at leisure instead of demanding immediate attention or action. The merchants’ usage has been considered when building the analytics so the software is designed for them to get the maximum benefit. Business owners can monitor customers’ usage and provide the most relevant information.

Ismail Issa is Chief Executive Officer at Ta3rifah. Issa is also the co-founder of Optimum, a business solutions company. He holds a Bachelor’s degree in Computer Science. He can be contacted at ismail.issa@ta3rifah.com

Mahmoud Salaheldin is Chief Technical Officer at Ta3rifah. He is the co-founder of G-seven, a technical solutions company as well as Event Earl, which is a professional event solutions company. He holds a BEng.degree in computers and systems and a University certificate in Business Management. He can be contacted at mahmoud.salaheldin@ta3rifah.com

Mostafa Khalifa is Chief Business Development Officer at Ta3rifah. He is the co-founder of start ups like Leaders, a project management company, vGate, a java-based platform for creating web-based solutions and Optimum, a business solutions company. He holds a BSc. degree in Design and Production Engineering and a Diploma in Supply Chain Management from Institute of Supply Chain Management, UK. He can be contacted at mostafa.khalifa@ta3rifah.com

What stage is Ta3rifah currently at? Ta3rifah exists in private beta form at the moment, which means that it is available to a closed group of people that can only access it by invitation. It will soon be available in public beta for the iPhone and Android. In the next few months, we intend to enter the Blackberry market and by the end of 2014, we might consider testing the app with the Windows mobile platform. What is the story behind the name Ta3rifah? Ta3rifah means “small amount of money” in Egypt, the country that we are from. It’s also a play on the word “tariff,” because customers can use virtual currency. The number 3 is a part of our name because we see 3 in every aspect of our business plan. And of course, Ta3rifah has three founders.

It is important to have an entrepreneurial spirit or mindset that is necessary to survive as the creator of a product. This means that you need to step out of your comfort zone.

What would you say are the important components of building a successful app? An app has to stand out in usability and design. The most relevant information has to appear first and there has to be an option to go into more detail at later stages of development. The creators of an app need to balance between creating a product that meets the needs of customers as well as merchants. Importantly, an app must be easy to use as well as to implement. What is your opinion about SmartPhone usage in this region? SmartPhones have become an inevitable part of our lives. The usage of SmartPhones in the MENA region has changed a lot in the past few years, with a penetration growth of more than 50%. There is also the trend of inceasingly using social media. Whether it’s taking decisions, looking for reviews, store locations or getting feedback – it’s all happening on social media. So, our mission is to create a better market place coupled with this realisation. We have designed an app that combines the retail sector with social media. What is your opinion about being an entrepreneur in this region? Being an entrepreneur here is a very energetic experience. The ecosystem is well-structured. It is difficult to be a good, unique entrepreneur here because competition is very high. But if you can’t make it here, it will be difficult to make it anywhere else in the MENA region. What are your future plans? We have received 3 commitments from merchants recently and at present have 30-40% of the funding that we require. Most of this money is our savings but we have a roadmap of how to procure funds for the next two and a half years. We are also going to begin an aggressive sales plan, starting with SMEs. What is your advice to entrepreneurs? It is important to have an entrepreneurial spirit or mindset that is necessary to survive as the creator of a product. This means that you need to step out of your comfort zone. You should also work in any field and be willing to do any task at any time. There should be no shame to do anything for your business. Ultimately, find a problem to solve and add value through your product. Don’t think about success and money. If you have the right solution, success and money will follow. Don’t listen to naysayers and don’t be discouraged. The joy of seeing your business grow is the same as watching a child grow.

march 2014

SMEs

pen, paper, Scissors

Sometimes, necessity is the beginning of invention. Walied Albasheer and Abdulrahman Alhashemi, Founders, www.stationery.ae, speak to Badar Salem about how a shopping trip with the family led them to develop their latest product. Where did the idea of www.stationery.ae come from? The idea behind www.stationery.ae came from a personal challenge when looking for stationery for my 3 young daughters. Children are very particular about the stationery they buy and finding the right things can take days, resulting in going from store to store. I’m sure that many people experience the same challenges. Buying stationery from bookshops and stationery stores can be inconvenient, because it can mean a long commute, the hassle of looking for parking space and waiting in long lines. So, Abdulrahman and I decided to launch an online platform that provides stationery and office supplies for students and SMEs. When we studied the market, we found some stationery websites but those websites were not run as an online business. Most of these companies were physical

stationery shops and just had an online presence as an additional channel but they didn’t generate any online sales. We wanted to create a dedicated online platform to cater to the different segments of the UAE stationery market. There is nothing like www.stationery.ae in the market at the moment and if we get the model right, we’ll be able to dominate the whole of the GCC region. How big is the stationery market in the UAE? According to official data, the paper market in the UAE is valued at USD 3.8 billion. There are more than 800,000 school children, 100,000 university students, and 240,000 small businesses in the UAE, which is our target group. So, we have around 1.2 million customers spending AED 1.6 billion annually on stationery and office supplies. Our aim is to generate AED 16 million in revenue and capture 10% of the target market share.

Walied Albasheer is the Founder and CEO of www. stationery.ae. As a serial entrepreneur, he has co-founded many companies like www.cityshow.com, the first listings directory in the GCC, Techoz Ltd., Formula World Sport, the first sports marketing agency in the region and www.xData.com, a market data feed from stock exchanges, among others. He can be contacted at walied@stationery.ae

Abdulrahman Alhashemi is the COO of www.stationery.ae. He has 13 years of experience in the banking sector with core expertise in collections, recovery, risk management, strategy planning and debt collection agency management in addition to experience in communications and marketing. He is also the Founder and CEO, Al Tahseel Debt Collection. He can be contacted at Albaity@stationery.ae

number of credit cards that are issued and their usage. We need to start bridging this gap. Our objective is to reach out to families and provide an enjoyable shopping experience. How are you planning to educate the market? We’re planning to have various activities in schools and universities, including workshops, about what stationery to buy to achieve academic development. We also plan to arrange sketching and drawing competitions to get more people interested in our business.

What were the main challenges you faced when you started this business? When you start a business, you need to have suppliers and clients. We identified our clients, but we faced some challenges in finding suppliers who were reliable and well-known in the market. Fortunately, we managed to overcome this challenge by partnering with the top stationery suppliers. We believe that by dealing with the top suppliers in the beginning, it will be become easier for us to form similar partnerships later.

What is the additional value that www.stationery.ae offers? Our mission statement is – convenience, availability and value for money. Convenience is targeted at school students and parents, availability is for university students and value for money is for SMEs. Our target is to offer high quality products while achieving a good profit margin. We offer larger discounts on stationery and office supplies and our products are up to 20% cheaper than what is available in physical stores. But we don’t want to position ourselves as just an online discount platform, because this will dilute the value. We’re offering a cost effective and convenient shopping solution for daily requirements.

At present, we are faced with the challenge of educating the local market about our platform and encouraging more people to buy stationery online. Customers’ purchasing patterns are not systematic, with most people deciding what they want to buy after reaching the shop. We want to help customers plan ahead and buy stationery for a few weeks at a time.

Do you have any plans of expanding to other markets? We are based in the UAE and our next move is to establish ourselves in Qatar and Saudi Arabia. There are big gaps in these markets with many opportunities that we want to explore. So, we’re planning to enter these market as aggressively as we can.

Another challenge is that people don’t like to use credit cards online. There is a big gap between the

What is your advice for start ups and entrepreneurs in the region? Our first advice is to be patient. Start ups are like rollercoasters. One day you’re succeeding and the second day you’re quickly sinking. It’s important to be flexible and adaptable. You also have to be passionate about your idea but still be realistic. Some entrepreneurs are so in love with their ideas that they don’t accept the need to grow.

Abdulrahman Alhashemi

Walied Albasheer

Some entrepreneurs are so in love with their ideas that they don’t accept the need to grow. Ultimately, your idea should benefit the community. If you don’t listen to your customers’ feedback and incorporate them in your strategy, nobody will buy from you.

Ultimately, your idea should benefit the community. If you don’t listen to your customers’ feedback and incorporate them in your strategy, nobody will buy from you. Creativity is also an important key to success. Having a good team is essential because you can’t make things work by yourself. The more diverse your team is, the greater your chances are of succeeding.

march 2014

Finance

A profitable partnership

As SMEs drive Qatar’s economy towards greater growth and development, Doha Bank supports their progress through customised financial solutions. Dr. R. Seetharaman, Chief Executive Officer, Doha Bank Group, elaborates.

oha Bank is equipped with a full-fledged SME team that has expertise in relationship management, providing solutions and credit skills. Instead of selling a product of the bank, our strategy is to provide a solution to the customer based on their specific business requirements. To cater to a larger clientele, the bank has also opened overseas offices in Dubai, Abu Dhabi and Kuwait.

potential. Doha Bank’s SME portfolio has grown with the market. Under this scheme, customers with an annual turnover of less than QAR 50 million or aggregate facility capped at QAR 25 million are categorised under the SME segment. Broadly, the bank categorises SME customers i n to Pro g r a m m e Ba s e d L e n d i n g ( P R L ) a n d Non-Programme Based Lending.

Doha Bank currently has representative offices in Sydney, Hong Kong, Germany and Canada. Recently, we obtained the license to start our operations in India. This global presence is helpful as we leverage the cross border expertise to provide assistance to local SMEs.

SME PRL is targeted towards the lower SME segment whereas the upper SME segment falls under the non-PRL segment. Any entity registered as a business concern, irrespective of whether it is a proprietorship, partnership or limited liability company, is eligible to be considered for SME facilities from the bank. These facilities are approved based on the customer’s repayment capacity, audited financials, projected cash flows and the feasibility of the project or business.

Understanding SME classification SMEs in Qatar is a booming economic segment that play a key role in the country’s economic development as well as that of the larger region. Acknowledging this role, Doha Bank has created specialised banking solutions called “Tatweer”. Tatweer provides a wide range of banking and financial services to help SMEs grow beyond their

Segments serviced under the SME segment include contracting and sub-contracting firms, trading companies, educational institutions, restaurants and hotels, service sector enterprises such as rental car companies and logistics operators.

Financial products Doha Bank offers two kinds of support. We make various products available to service long-term capital requirements of the customer in addition to short-term working capital, which can be used for purposes like overseas trade through imports and exports.

Dr. R. Seetharaman, Chief Executive Officer, Doha Bank Group, has three decades of experience in banking, information technology and consultancy. He is a Chartered Accountant and holds certificates in IT Systems and Corporate Management. He holds a Bachelor’s degree in Commerce from the University of Madras.

Through our wide network of branches, Doha Bank has developed a strong domestic presence. Currently we offer a range of products and services to SMEs such as: ■■ Different types of loan facilities – capex, working capital, contract financing ■■ Business Credit and Debit Cards ■■ Vehicle or equipment loan ■■ Trade finance services which includes Letters of Credit, short-term procurement financing and Letters of Guarantee ■■ Invoice and cheque discounting ■■ Overdrafts ■■ Electronic banking ■■ Cash Management Services ■■ Comprehensive Insurance packages at competitive rates from Doha Bank Assurance Company

Al Dhameen is an indirect lending initiative launched by QDB to assist SMEs that are unable to borrow money on their own because of a lack of collateral or financial statements.

Doha Bank and QDB In addition, Doha Bank is also one of the key partners in Qatar Development Bank’s Al Dhameen programme. Al Dhameen is an indirect lending initiative launched by QDB to assist SMEs. It is primarily aimed at new companies or start ups that show promise of success but are unable to borrow money on their own because of a lack of collateral or financial statements. A majority of banks have restrictions in lending to start ups because of the inherent risks involved. Existing companies can apply as well. Apart from Qatari business owners, this extends to foreign investors too. However, the company’s annual turnover should not exceed QAR 30 million. All main sectors are eligible to apply for this scheme, which includes manufacturing, health and safety and service. Through the Al Dhameen programme, QDB does not provide direct finance but offers the business owner with facilities to receive the finance from a partner bank, through issuance of guarantees. The guarantees extends to 85% of the finance value not exceeding 15 million QAR. The client has to contribute 13% as equity to the business. A customer can directly approach QDB or one of its partner organisations for a loan while providing the project’s feasibility study. The project first goes through a pre-screening process by QDB. Once pre-screening is approved, QDB conducts a detailed analysis of the project including engineering and cash flow verifications. After final approval from QDB and issuance of guarantee, the partner bank finalises internal approvals and documentation, further to which the loan is disbursed to the customer in tranches, based on the stages of project completion. QDB has also developed an SME tool kit for guiding entrepreneurs in areas like analysing the risks involved prior to setting up a business, guidance for how to develop a feasibility study, navigating the registration process and physically starting the company. For facilities geared toward capital expenditure for manufacturing, the loans have a long tenor including a grace period up to 2 years. Financing for services have a maximum tenor of 5 years, including 1 year grace period. Revolving lines are also available for the company’s working capital requirements. In relation to this, Doha Bank has helped many such customers float their venture across various sectors including restaurants and coffee shops, schools and clinics, fire and security solutions, manufacturing of plastic products, interlock blocks and tiles and water treatment plants to name a few.

march 2014

Finance Balance Sheet-specific Sukuk – Islamic Development Bank (IDB- Jeddah) issued this kind of Sukuk in 2005. The IDB mobilised these funds on the London Stock Exchange in the format of Medium Term Notes (MTN) and raised nearly USD 7 billion from 15 Sukuk to finance various projects of the member countries. Recently, IDB announced its intention to initiate a similar programme at Dubai DFM for up to USD 10 billion issued as Sukuk MTNs. Challenges Despite the remarkable growth of Sukuk issuance, a singular challenge is their relatively short duration. Issuers seek to have quick, oversubscribed offerings to raise capital and hence target investors who are risk-averse and demand short or medium-term maturity dates to unwind their investments. Also, Islamic finance has been slow to enter the long-term projects and infrastructure financing arena, so Islamically financed assets available to pool into Sukuk have depreciation lives shorter than 15 years. Table 6. below shows both Buy side and Sell side players state a preference for Sukuk tenors less than 10 years. Moreover, only 15% of Buyers expect to hold until full maturity, displaying a strong propensity to exit investments early or to trade out of securities.

In the second of a two part series, Dr. Omar Fisher, Managing Director, Khidr Solutions, continues to explain why Sukuk may be able to fill the gap of long-term bonds in Islamic capital markets.

fter explaining Sukuk and the market in the first part of this story, as well as elaborating about the differences between Sukuk and conventional bonds, Dr. Fisher continues his evaluation of the Islamic finance instrument. Common Applications of Sukuk Project-specific Sukuk – Debt funds are raised through Sukuk certificates for financing a specific project. For example, Qatar Global Sukuk issued by the Government of Qatar in 2003 was to mobilise resources for the construction of Hamad Medical City (HMC) in Doha. Assets-specific Sukuk – Debt funds are mobilised by selling the beneficiary right of the assets to investors. For example, the Government of Malaysia raised USD 60 0 million through Ijarah Sukuk Trust Certificates in 2002. Here, the beneficiary right of the land parcels was sold by the government of Malaysia to an SPV, which was then re-sold to investors for 5 years. The SPV kept the beneficiary rights of the properties in trust and issued floating rate Sukuk to investors based on the earning power of the assets.

Source: Thomson Reuters

Reflecting such preferences, only 0.5% of all Sukuk issued since 1996 featured a tenor longer than 15 years. Some such examples are: Table 7: Examples of long-term Islamic bonds Year of issue

Amount

Issuer

Profile

Duration Years

Saudi Arabia

2004

USD 390 million

Munshaat Real Estate

Real estate hybrid

Malaysia

2005

MYR 2.05 (USD 540 million)

Cagamas MBS Bhd

First Islamic residential mortgage-backed securities

Malaysia

2007

MYR 8 billion (USD 2.5 billion)

Nucleus Avenue Malakoff Corp.

First hybrid* Sukuk

Malaysia

2007

MYR 15.4 billion (USD 4.8 billion)

Binariang GSM

Largest Sukuk at the time

UAE

2007

USD 220 million

Tamweel PJSC

Ijarah

Saudi Arabia

2011

SAR 3.75 billion (USD 1 billion)

ARAMCO Total Refining & Petro. Co.

Musharaka

Malaysia

2012

MYR 3.29 billion (USD 1.03 billion)

Tanjung Bin Energy

Project finance use of MTN

Malaysia

2013

MYR 1.625 billion (USD 0.51 billion)

TNB Northern Energy

Project finance

Country

Note: * Hybrid defined as a combination of two or more types of Islamic financings such as Istisnaa and Ijarah, murabaha and Ijarah, and the like.

There do exist some examples of long-term Sukuk that can build investor confidence and suggest that they are able to support durations of more than 15 years.

Dr. Omar Clark Fisher is MD, Khidr Solutions, Dubai. He has more than 30 years of experience in international business development, strategic planning, marketing, in-house leadership training and structuring investment portfolios. He holds a PhD, Management Philosophy –Takaful, from Malaysia. He can be contacted at omar.fisher@gmail.com

Safety of Islamic bonds Newspaper headlines between 2008 and 2011 brought attention to imminent and actual defaults of Islamic bonds. However, 2 main defaults are remembered, both of which were issued in 2007 – Investment Dar of Kuwait of USD 100 million and Golden Belt/Saad Trading of Bahrain of USD 650 million. In addition, Nakheel’s Sukuk of USD 2 billion in 2008 threatened to default, but was successfully re-structured between 2011 and 2012. Since 2003, there have been 25 actual defaults of Sukuk in Malaysia valued at roughly USD 2.1 billion, 2 in Pakistan and 1 in USA by East Cameron Gas Company (USD 165.5 million). Thus, less than 1% of all issued Islamic bonds have failed during the global recession. How does this record compare with conventional bonds? As we are aware, several spectacular bankruptcies occurred during the same period: ■■ Bear Stearns (US) – USD 2.2 billion ■■ Countrywide Bank (US) – USD 4 billion ■■ AIG (US-UK) – USD 182 billion ■■ Citi-Group (US) – More than USD 300 billion ■■ RBS (UK) – More than USD 32 billion ■■ HBOS (UK) – USD 21.8 billion ■■ UBS (Swiss) – USD 59.2 billion

Between 2007 and 2013, more than 500 major corporations and commercial banks in the United States failed and were either liquidated or acquired at steep discounts involving more than USD 1.2 trillion in defaulted assets. This represents more than 8% of US banks declaring bankruptcy. Therefore, one can conclude that Islamic bonds are relatively more safe compared to bonds. Other matters: ■■ Investors can focus on the asset and viability of a project rather than the credit of the issuer. ■■ Sovereign Sukuk issues, following Malaysia’s lead, are enjoying widespread and positive acclaim among Islamic investors and global institutional investors. However, corporate issuers need to focus on risk-sharing mechanisms and rateable assets to widen the breadth of Sukuk offerings. ■■ Corporate Sukuk tend to have lower credit rating than sovereign Sukuk and are also smaller in size. Thus, corporates including Islamic investment banks, could seek a role in structuring project and infrastructure finance using Sukuk to achieve capital size and enhanced ratings. ■■ Ijarah, Mudarabah and Salam contracts, which minimise asset risks, still present modest returns. Issuers should venture into assets and projects with more profit and loss sharing to access a full spectrum of investors. ■■ Lack of harmony in existing Islamic securitisation products and differences in opinion of Sharia scholars creates some uncertainty. ■■ Substantially more documentation and legal due diligence is required for an Islamic issue compared to a conventional bond. ■■ Limited number of qualified personnel well-versed in Islamic capital market issues, from a Sharia and commercial perspective. More educational and training resources to develop these skills are needed. ■■ References to “real rates of return” need to be developed for Islamic securities. Using conventional interest rates is a deficient measure and fails to acknowledge Sukuk for its higher safety profile. 8

■■ Unlike the widely accepted benchmarks for portfolio monitoring and indexing of bonds, Islamic Sukuk portfolios still lack such global or regional benchmarks. Looking forward Although the new issuance volume of Sukuk dipped globally in 2013, about 30% from 2012, the future of the Islamic debt markets appears bright. Here is some of the most recent activity showcasing GCC private corporates tapping the Sukuk capital market: ■■ In 2012, Saudi Arabia’s Jeddah-based dairy firm, Almarai Co., issued a SAR 4 billion (USD 1.1 billion) denominated Sukuk to fund expansion plans. ■■ In 2013, Dubai-based mall developer, Majid Al Futtaim (MAF) Holdings launched a USD 400 million 5-year Islamic bond at a profit rate of 5.85%. The UAE major Islamic Bank, Emirates Islamic Bank, used Sukuk for balance sheet financing and listed 2 Sukuk, each with a nominal value of USD 500 million, a total of USD 1 billion (AED 3.67 billion) on the Dubai Financial Exchange. ■■ Saudi Arabia’s giant Saudi Electricity Co. issued an innovative dual tranche Sukuk valued at USD 2 billion of 10 and 30 years. According to their legal advisors, Allen & Overy’s: “The Sukuk issue was well received in the international markets and was oversubscribed by more than 6.5 times. It also achieved many firsts, including the first dual series Sukuk issued under Rule 144 A out of the Middle East, which means that it is open to USA investors and the first 30 year unsecured Sukuk.” ■■ In 2014, the government of Egypt announced plans for sovereign Sukuk to raise up to USD 2 billion, aimed to attract capital to promote domestic economic development. In conclusion, total Islamic bond issuance since 2008 amounts to USD 488 billion, of which approximately USD 255 billion remains outstanding. Forecasts suggest that near-term issuance of Sukuk will more than double to USD 907 billion and the pool of outstanding securities will reach USD 750 billion by 2018. Bibliography 1. Current Prospects of Risk Sharing Sukuk, Rafe Haneef, CEO HSBC Amanah Malaysia, Sept 2013 slides 2. Sukuk Report 1st edition, IIFM Bahrain, 2010 3. Sukuk Perceptions and Forecast Study 2014, Zawya and Thomson Reuters, Dec 2013 4. Halim Alamsyah: Some critical issues concerning the sustainability of Islamic finance development – Indonesia perspective Speech by Dr. Halim Alamsyah, Deputy Governor of Bank Indonesia, presented in the opening keynote session of the 2nd Annual World Islamic Banking Conference: Asia Summit, Singapore, 8–9 June 2011. 5. Into Sukuk, an Article by M. Griffery in Markit, Autumn 2013 6. Meezan Bank Guide to Islamic Banking: Dr. Mohammad Imran Usmani (Mufti), Handbook of Islamic Finance in Ethica Handbook, 2013, Chapters 21, 22 7. IIFM Database as of June 20 09, Sukuk Report 2010, 1st Edition, Bahrain 8 BIS Central Bankers’ Speeches Dr Halim Alamsyah, Deputy Governor of Bank Indonesia, Singapore, 2011.

March 2014

Business Guru

Steering a big ship

A relatively young company, Nakilat has emerged as a major market player and is making its brand stronger in the international market. Eng. Abdullah Al Sulaiti, Managing Director, Nakilat, speaks to Ayesha Aleem to explain what the company has been doing right. Nakilat oversees the world’s largest fleet of LNG vessels and has a vital role in ensuring that Qatar’s LNG reaches global markets. What has been your strategy behind this success? Nakilat was established as part of the LNG supply chain in 2004 when Qatargas and RasGas expanded business in Qatar. We wanted to participate in the shipping business and initially thought we would partner with foreign companies, which is what we did with the first 29 ships. But then the decision was made that Qatar was to be part of the transportation because strategically it’s very important to have control over all elements of the supply chain. Exporting to the international market, you need reliable access and flexibility for management and control. So,

Nakilat partnered with Shell to manage and operate a wholly-owned fleet of 25 LNG ships. We also acquired four LPG ships because Qatar has LPG production in addition to LNG production. In recent months, we have strengthened our p a r t n e r s h i p w i t h G re e k s h i p p i n g c o m p a ny Maran Ventures by acquiring 4 more LNG ships bringing our fleet to a total of 62 ships. This helps us to ensure reliable, safe operations to the world markets. Our charterers decide where to operate. The Qatari LNG supply chain extends from production in the North Field all the way to the end user in any of the world’s markets, such as the UK, Japan or Korea.

high-value ships up to 170 m, including commercial vessels, Naval vessels and superyachts. 2014 will be an important year for Nakilat since the Qatari government will decide whether or not to restart exploration and production programmes at the North Field. Are you preparing to hold back or expand your core business? Currently, our ships are capable of delivering 77 million tonnes of LNG per annum. If a decision is made by QP to further develop the North Field beyond this output, this will definitely give us an opportunity for growth. If there is an increase in production, we will increase our fleet, either by chartering additional vessels or by building new vessels. If we have a commitment from reliable third parties, we will also go into the international market to provide transportation for LNG and associated products. Eng. Abdullah Al Sulaiti

How did the shipyard concept come about? When Nakilat was created, the concept was to own and operate the LNG fleet. The shipyard concept began to develop in 2006, under the direction of His Highness the Father Emir, who envisioned a new marine industry in the State of Qatar. Accordingly Erhama Bin Jaber Al Jalahma Shipyard was commissioned, which was intended to provide a facility for the maintenance and repair of our ships. Under the guidance of Qatar Petroleum, the shipyardâ&#x20AC;&#x2122;s owner, the vision for the shipyard expanded beyond maintenance and repair, to offer shipbuilding as well. To operate Erhama Bin Jaber Al Jalahma Shipyard, Nakilat formed 2 joint ventures with world-class partners. They are Nakilat-Keppel Offshore & Marine (N-KOM), for ship repair and maintenance, and Nakilat Damen Shipyards Qatar (NDSQ), for the construction of

Nakilat currently employs 5000 people with an aim to grow the number of employees to 10,000 by 2016. Please explain your employment strategy. At Erhama Bin Jaber Al Jalahma Shipyard, we have 2 dry docks and within the next year or so we will acquire 2 further floating docks. This will significantly increase the capacity of the shipyard. We expect that in the next few years the number of people employed by Nakilat and affiliated companies will exceed 10,000 people. Your Qatarisation rate is high and increased by 139% in 2012. Please elaborate. We are extremely proactive in providing skills, training and development for Qataris. Our Marine Cadet Programme has expanded, providing seafaring educations and opportunities to young Qatari nationals. Nakilat fully supports the Qatar National Vision 2030 and intends to make a strong contribution to the sustainable development of our marine industry workforce.

march 2014

Business Guru

You mentioned that the shipyard has expanded into building luxury boats. Can you please tell us a little more about this. Building yachts is just one segment of our business at Erhama Bin Jaber Al Jalahma Shiyard. Our shipbuilding joint venture NDSQ also specialises in the construction of commercial vessels, such as tugboats and supply boats and in the construction of Naval and Coast Guard vessels. We have also built a vessel for the shipyard’s use, a 140m-long barge, the largest vessel of its kind ever to be built in Qatar. NDSQ has already signed a contract to build 19 workboats. We have delivered 10 of the boats this year and the rest will be completed next year. We’re also building a further 7 workboats for Nakilat’s marine services joint venture, Nakilat Svitzer Wijsmuller (NSW), for use at the Port of Ras Laffan. At N-KOM we do refitting, repairs and maintenance for all LNG ships, regardless of size. We can service and build offshore and onshore drilling rigs as well as build offshore accommodations. This is in addition to being able to perform all kinds of fabrication and construction for offshore platforms and onshore vessels for petrochemicals. These services have been operational for more than 2 years. We have also built a facility for smaller ships adjacent to the big ships facility. The idea is not to focus on just Qatar but to provide services to a worldwide market. Our ambition is to be an international key player in the marine industry. With the completion of the New Doha Port in 2016, do you expect new business opportunities? Yes, we are very interested in building new vessels at Erhama Bin Jaber Al Jalahma Shipyard for the new port. As previously mentioned, we manage the tug boats at the port of Ras Laffan and we’re interested in servicing other ports in Qatar. How does Nakilat plan to develop in Qatar’s marine industry? Nakilat is a pioneer of Qatar’s marine industry. To operate Erhama Bin Jaber Al Jalahma Shipyard, Nakilat partnered with companies at the top of their respective industries, such as Keppel Offshore & Marine from Singapore and Damen Shipyards Group from the Netherlands. We have the infrastructure,

Currently, our ships are capable of delivering 77 million tonnes of LNG per annum. If a decision is made by QP to further develop the North Field beyond this output, this will definitely give us an opportunity for growth.

a state-of-the-art facility, an ideal location and first-class partners. These are the key ingredients to create a competitive and successful fully-integrated marine industry in the State of Qatar, delivering reliable services and products. Going forward, we are looking to expand our business in the State of Qatar, throughout the GCC and world. We’ve laid strong foundations for the healthy and sustainable development of the Qatari marine industry for generations to come. What is your opinion of the private sector in Qatar? The private sector is growing. Companies like Nakilat depend on a strong and vibrant local supply community for goods and services. We’re very keen to collaborate and work closely with local suppliers to further strengthen and enhance development of the State of Qatar’s marine sector, with particular emphasis on activities at Erhama Bin Jaber Al Jalahma Shipyard. How does your company support local SMEs? Nakilat is prepared to work closely with local SMEs, to help them understand our needs and requirements for goods and services. A strong local supply community benefits everybody and is the grassroots of sustainable economic development, particularly for a specialised industry such as marine construction and repairs. Solid collaboration, entrepreneurship and communication between SMEs and larger organisations will help guarantee the sustainable growth of the Qatari marine industry, which is in support of the Emiri vision for the strong and diversified economic future of the State of Qatar.

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march 2014

Management

Building

big

Construction of infrastructure is one of the most visible aspects of how Qatar is preparing for the FIFA World Cup 2022, which is less than a decade away. Rod Stewart, Managing Director, Atkins, Qatar, sat with Ayesha Aleem to talk about what one of the world’s largest design, engineering and project management consultancy companies is doing in the country.

ne of the buzz words in Qatar at the moment, in addition to the muchawaited FIFA World Cup 2022, is the Doha Metro, which is expected to be an impressive high-speed rapid transit system. Atkins, the UK-based company, already made its mark in this part of the world when they engineered the legendary Burj Al Arab Hotel in Dubai. Recently, Atkins achieved a milestone in Doha when it signed a USD 40 billion contract for the Doha Metro. “This project requires a new understanding and use of ‘geotanical’ technology because much of the construction is underground,” said Rod. “We’re also working closely with QDVC on this project. In fact, our design is being used as reference.”

But even with these numbers, this is only the third largest project that the company is involved with in Qatar. The firm’s largest project is in providing design and supervision expertise for the General Engineering Consultancy Framework for Roads and Drainage, for Ashghal, which was the previous Public Works Ministry. Under this initiative, Qatar’s infrastructure development is divided into 5 geographic areas where Atkins is responsible for developing the area to the West of Doha. Currently, this entails almost 30 individual projects in this part of the city, employing about 500 people. The second biggest contract is a deal that was signed in 2011 to resource the Central Planning Office (CPO), created by Qatar’s Ministry of Municipality and

Cost of the Doha Metro contract Urban Planning. Under the 3 year contract, Atkins is responsible for coordinating road, rail, metro and other transport projects across air and sea as well as features related to the FIFA World Cup 2022 , moving towards the larger goal of diversifying the economy for the Qatar National Vision 2030.

In 2012, Rod Stewart was appointed as Managing Director, Atkins, Qatar. With almost 35 years of experience in the civil engineering industry, which includes almost 10 years in the Gulf region, he has held a number of senior leadership positions in both consultant and contractor organisations. His specialisation is in construction management, international business development and business leadership. He can be contacted at rod.stewart@atkinsglobal.com

The primary focus of the CPO, through embedded staff in the government agency, is to coordinate the activities of various government bodies involved in the delivery of Qatar’s multi-billion dollar transport infrastructure programme. This ensures that various project interfaces are managed properly. The body steps in to resolve disputes, if there are any clashes, which helps projects to be completed on time and avoid disruptions. The team works in the areas of tunnelling, traffic planning, environment and urban design. Qatar provides a different working environment compared to other markets that Atkins functions in. Being a relatively new city but one that has a rich history, authorities are keen to preserve older parts of the country while still making room for newer additions. “We don’t want to create a concrete jungle,” said Rod. “We want to protect the older parts of Doha while incorporating new elements like expressways. We are working closely

Everyone is talking about new ideas like renewable energy. All of these are great but they’re just a “bolt on”. The real steps to cut carbon emissions begin much earlier in the process, at the planning stages of the product.

with the government to develop the appropriate look of the city. This especially applies to some of the landscaping work we are doing towards the West of Doha. It’s been a strong learning curve in terms of understanding of design. We want our buildings to be sustainable. For example, we are looking at pedestrian connectivity to the Metro with air conditioned walkways, along the lines of the Dubai Metro.” For projects to be sustainable, elements need to be incorporated at the planning stage. “Everyone is talking about new ideas like renewable energy. All of these are great but they’re just a ‘bolt on’. The real steps to cut carbon emissions begin much earlier in the process, at the planning stages of the project.” said Rod. “For this, we use Geographic Information Systems,” said Rod Qatar is a relatively small country in terms of area and its population is only about 2 million people. “Considering these factors, the scale of work being done here is impressive,” said Rod. “The investment in such a small area is very high. Nowhere else in the world is anything similar taking place. That in itself provides a new set of challenges in terms of planning and logistics.” Atkins was recently named as the company to provide multidisciplinary design services for A l H a b t o o r C i t y i n D u b a i , t h e m i xe d - u s e development expected to be completed in 2015. There are no similar involvements in Qatar and that is because the company is focusing on getting necessary structures in place, Rod said. But in the next 18 months to 2 years, Atkins intends to diversify operations into residential, commercial and leisure projects. “We are likely to see a major growth.” This applies especially as the FIFA Word Cup 2022 draws closer. Like other companies, this mega event is also on Atkins’ radar. However, Rod said that it is wrong to think of it as some sort of ultimate goal. “It is definitely a milestone. And it is likely to bring plenty of media attention to the country. But it is still just an event. There is plenty else happening around that.” Since Atkins began operations in Qatar 12 years ago, its presence and operations have grown dramatically. From an office of just 60 people, the regional centre has grown to more than 500 employees of more than 20 nationalities. It’s been a question of helping our staff settle in to the new country, many of who have come from overseas, said Rod. “We have a certain background and training we’re looking for.” But Atkins is committed to employing local talent and expertise, he said.

march 2014

Management

Up in the cloud A workforce is every companyâ&#x20AC;&#x2122;s most valuable resource. However, workforce management can be expensive and an obstacle to growth if businesses use conventional methods. It is time to take workforce management to the cloud and use automated systems to boost competence, suggests Ahmed ElShrif, Director, Kronos, Middle East.

s the economy moves towards a fast recovery, rethinking workforce management is necessary. It is reported that 30% of MNCs have shown an interest in expanding business in the Middle East. There is an upsurge in recruitment initiatives in the lead up to global events in the region such as Expo 2020. Construction, healthcare and hospitality markets are the most affected by this upward hiring trend. Qatar has the worldâ&#x20AC;&#x2122;s highest GDP per capita with a small local population and a transient expatriate base. Smarter workforce management is essential in implementing the Qatar National Vision 2030, which entails economic development and diversification. Also, preparing for the FIFA World Cup 2022 in Qatar requires managing an army of unskilled and semi-skilled workers to build USD 220 billion worth of constructions and infrastructure projects. With this expected growth, an upward hiring trend is registered in the Gulf in key industries like oil and gas, hospitality, construction and real estate, accounting and banking and finance. Therefore, companies will face pressure for improved results. Strengthening

an organisation is strongly connected with achieving optimal employee productivity and cost reduction. For many of the booming industries, especially healthcare, hospitality, retail, construction and aviation, labour costs constitute 40-60% of their operational expenses. However, labour costs is the most controllable expense. Employing manual methods to schedule labour to demand, record and track time and costs, makes organisations miss out on opportunities to boost productivity and control costs. Cloud and automation While Dubai and Doha may be used to a large influx of visitors, these regions have never experienced anything compared to what is expected in the coming years. Therefore, scheduling and managing absences will emerge as major challenges for HR departments which use conventional methods for record keeping. Normal daily occurences can have a huge impact on costs. For example, 21% of daily productivity loss is linked to absences. HR personnel often handle such situations by over-staffing and are inclined to employ their most reliable and flexible employees. Not surprisingly, these happen to be the most

expensive employees. Hence, this inflates labour costs, especially when combined with overtime payments. As an example, in the retail sector it is crucial to have complete visibility and control over scheduling and absence during events such as the Dubai Shopping Festival and the World Trade Festival in 2014. Enterprises should be able to enhance time, attendance and data collection, while reducing the administrative burden on HR managers.

Ahmed ElShrif, Director, Middle East, Kronos, has over 25 years of experience in the IT industry working with large multinational organisations in Australia, New Zealand, Asia, Europe, and the Middle East. He holds a Bachelor’s degree in Computer Science and Statistics in addition to a Bachelor’s degree in Business Management.

Dashboards, reports and alerts are critical to manage absenteeism, lateness, actual-to-standard labour expense, overtime expense, early start/late leave and the percentage of non-productive time. Looking at the impact of unplanned situations on business, it is estimated that absences, vacation time, family medical leave, late arrivals and early departures, can account for 15-36% of an organisation’s total payroll expense. It is expected that companies in the Middle East will incorporate IT solutions to overcome challenges related to scheduling and absence management. Increased compliance requirements The associated cost with compliance is significant as it requires highly skilled personnel to interpret, apply and enforce laws. A recent example is the requirement for mandatory health insurance system for all Dubai workers and residents, also known as ISAHD, as of January 2014. Also, Qatar Foundation has launched an initiative called “Mandatory Standards of Migrant Workers’ Welfare” which applies to all contractors and sub-contractors engaged in building projects for the organisation. Under this programme, any violation of standards will result in corrective measures and may lead to termination of contract. This will have a huge impact on productivity if companies fail to comply. Having a centralised database will allow companies to have complete visibility on their status of meeting quotas. This will mean spending significantly less

With “Bring Your Own Device” and flexible workforce environments, employees need to be empowered to manage themselves, thereby reducing hours of management.

on hiring personnel for monitoring, auditing and reporting and will also help eliminate problems of policy misinterpretation. With widespread unemployment of GCC nationals, countries are encouraging nationalisation in the private sector. This means that 4.5 million nationals are expected to enter the workforce between 2010 and 2015. For example, studies reveal that there are 11 non-Qatari employees for every Qatari national. In an attempt to close the gap between the private and public sector in terms of employment of nationals, the KSA has put in place the Nitiquat system and the Hafiz. The former is set to measure employers’ compliance with labour laws and the latter is to require advertising of vacancies to nationals before permitting employment of foreign workers. Therefore, companies will find themselves under increased pressure to minimise compliance risks when it comes to meeting such quotas, which can extend to a number of other sectors as well. Self-service With “Bring Your Own Device” and flexible workforce environments, employees need to be empowered to manage themselves, thereby reducing hours of management. The process involves requesting days-off, updating their availability, requesting a schedule change, reviewing their timecard data and seeing their earnings history. With the Middle East expected to have the fastest growing SmartPhone penetration than any other region in the world, it is critical for organisations to leverage this trend to boost productivity and reduce labour costs. Companies have different areas of interest when it comes to managing their workforce, depending on the sector. On one hand, companies are primarily concerned in having the right person in the right place at the right cost in areas like healthcare, hospitality and retail. On the other hand, construction companies are focused on making exact calculations of the actual hours worked as well as the costs of projects and activities. In the oil and gas sector, managers want to maximise availability of assets and productivity, thus reducing unplanned absences which could disrupt expensive projects. The perception that taking workforce management systems to the cloud is difficult is ill-placed. Companies in the Middle East are embracing workforce management as the next big step in reaping the benefits of technological advancements.

march 2014

LEGAL

Doing business in Qatar Senior Legal Consultants, Brenda Hill and Richard Hughes, explain the details of doing business at Qatar Science & Technology Park and Qatar Financial Centre. Qatar Science & Technology Park If you are a technology-based company or a start up technology venture interested in development, research, training and collaboration with Qatar’s universities and research institutes, then the QSTP may be the right environment to set up operations in Qatar.

Brenda Hill, Senior Legal Consultant, DLA Piper, is a senior legal consultant based in the firm’s Doha office. She has a range of commercial legal experience in Asia, the UK and the Middle East, including contentious and non-contentious Intellectual Property matters, commercial dispute resolution and corporate and commercial matters on energy and utilities project finance transactions in Qatar. She can be contacted at brenda.hill@dlapiper.com

Qatar Science & Technology Park (QSTP) is the national agency that develops commercial technologies in the energy and environment, health sciences and information and communication sectors in the State of Qatar. Qatar Law No. (36) of 2005 established the QSTP. The QSTP is part of Qatar Foundation and offers a “free zone” to foreign or local technology based companies and start up enterprises whose main activities are the advancement of technology. The details Entities within the QSTP free zone do not have to comply with the Qatar Companies Law and can be 100% owned by foreign investment. In other words, there is no legal requirement for a partnership with a Qatari national or a wholly owned Qatari company. Foreign entities that wish to invest in the QSTP can apply for a license from the managing board of the QSTP. An entity licensed to work in or from the QSTP is not required to obtain any other license or permission to carry out its activity. The licensed entity can also have full capital and income repatriation benefits. There is a 20-year exemption from the payment of income tax for new entities registered under the QSTP. This period can be renewed for a similar period or by a decision of the Qatar Council of Ministers.

Richard Hughes, Senior Legal Consultant, is a member of DLA Piper’s corporate team specialising in public and private mergers and acquisitions, private equity and general corporate matters. He has been based in the Middle East since April 2012, having worked in DLA Piper’s London office since September 2007. He can be contacted at: richard.hughes@dlapiper.com

Companies operating in the QSTP can import goods and services duty free. Equipment, machinery or any other goods being imported for use by an entity doing business in QSTP are exempt from customs duty. Goods that are produced in the QSTP are not subject to export tax. However, goods that are sold within Qatar but outside of the QSTP are subject to normal customs duty applicable to imported goods. Eligibility To be eligible to obtain a QSTP license and become a tenant of the QSTP, the entities licensed activities must contribute to the enhancement of technology and at least 50% of its investment should be dedicated to

research. This includes applied research, development and testing of products and services and technology related training. Technology projects that do not create ongoing intellectual property will not meet the criteria. The QSTP measures investment in terms of headcount. For example, an entity setting up in the QSTP with 10 employees must dedicate at least 5 employees to research, development and training. The scope of an entity’s permitted activities in the QSTP are set out in the license and defined during the application process. There is no application, licensing or registration fees to set up in the QSTP but licensed entities are expected to pay rent and services charges such as electricity, water and telephone for its offices located in the QSTP. The QSTP is a state of the art modern facility and rentals are not subsidised by the QSTP. Therefore, rental rates can be very high. The costs The QSTP provides funding to support ventures that will lead to the creation and growth of technology companies, particularly those ventures that relate to Qatar’s economy and institutes. For this purpose the QSTP has set up a dedicated funds called The Proof of Concept Fund and New Enterprise Fund. These funds will receive applications from universities, research institutes and existing small-to-medium companies. There are currently more than 30 companies established in the QSTP such as Cisco Systems, Rolls Royce and Shell. The QSTP is located at Qatar Foundation’s Education City in Doha and has the vision to be recognised as a hub for applied research, innovation and entrepreneurship. The QSTP creates an ideal opportunity and environment for companies to combine their technology development and trading activities in the Gulf region. Qatar Financial Centre The Qatar Financial Centre (QFC) was created by the Government of Qatar in 2005 with the aim of establishing the country as the leading financial and business hub in the Gulf region. Since its formation, the QFC has issued more than 170 licenses to both international and domestic businesses. The QFC’s success is due to its attractive business environment coupled with Qatar’s reputation as a key political and economic player both in the Middle East and internationally.

Why the QFC? While structured primarily to encourage overseas firms to choose Qatar as their Middle Eastern base, the QFC also provides domestic businesses with a platform to operate. Following are the key features of this structure: ■■ Legal and regulatory regime distinct from the rest of Qatar, based on international best practices and closely modelled on English common law. The QFC has its own regulations, rules and policies governing companies, partnerships, insolvency, employees, trusts, data-protection, contracts, immigration and arbitration. ■■ Largely tax free environment. Only locally sourced profits are taxed at a rate of 10%. QFC licensed entities also benefit from Qatar’s extensive network of double taxation treaties. ■■ 100% foreign ownership of QFC licensed entities is permitted with no restrictions on repatriation of profits. Typically an overseas business setting up in Qatar would require a 51% local shareholder entitled to a portion of profits. ■■ Unrestricted access to business opportunities within Qatar. Unlike offshore centres or freezones found in other Gulf countries such as the United Arab Emirates, QFC licensed entities are not limited by jurisdictional boundaries and are free to operate throughout Qatar. ■■ It is a “one stop shop” for immigration and employment arrangements which are overseen by the QFC on behalf of licensed firms and individuals, on an expedited basis. ■■ Independent court and dispute resolution centre, with proceedings conducted in English. QFC Structure The core institutions of the QFC were established by the QFC Law, No. 7 of 2005 (QFC Law) which was enacted in March 2005. The QFC Authority is the central body of the QFC and is responsible for driving the commercial strategy. It is also responsible for overseeing the legal and tax environment and approving and issuing licenses to businesses who meet the criteria. The QFC Authority’s operations are overseen by a board of 8 directors, which is chaired by the Minister of Finance, His Excellency Ali Shareef Al Emadi. Although ultimate responsibility for regulation of the QFC is reserved for the Qatar Central Bank (pursuant to the Qatar Central Bank Law, Law No. (13) of 2012), the QFC Regulatory Authority (QFCRA) is responsible for implementing the Central Bank policies within the QFC. Chaired by His Excellency Sheikh Abdullah Bin Saud Al Thani, the QFCRA is an independent regulator with wide ranging powers to authorise, supervise and discipline QFC licensed firms and individuals. Key objectives of the QFCRA is to maintain a financially stable and low risk environment within the QFC and to prevent financial crime. Decisions of the QFCRA and the QFC Civil and Commercial Court can be appealed to another independent body, the QFC Regulatory Tribunal. The QFC also has its own civil and commercial court which derives its powers from the QFC Law, as amended by QFC Law No. 2 of 2009, and operates in accordance with specific regulations and procedural

rules under the QFC regime. The court deals exclusively with disputes between QFC licensed firms and individuals but also has jurisdiction to hear disputes between non-licensed parties if this has been agreed between them. Alternative dispute resolution mechanisms such as mediation and arbitration are promoted within the QFC and conducted through the Qatar International Court and Dispute Resolution Centre. Eligibility The QFC Authority focuses principally on licensing businesses in three core sectors – asset management, re-insurance and captive insurance. However, it also issues licenses to a wide range of financial and professional services firms provided such organisations meet the QFC’s “strategic fit” requirements. The determination of suitability is dealt with at the earliest stage in the application process, either at a preliminary meeting with the QFC Authority or following submission of a detailed business case, which is fundamental to the licensing decision. Applicants must demonstrate a strong track record in their field, financial strength and compliance with best international practices. At this stage, it will also be determined if the applicant firm’s activities will be “regulated” or “non-regulated”. Applicants seeking to carry out banking, fund management, financial services or insurance activities will be subject to increased regulation. Activities of professional services firms generally fall into the non-regulated category. Regulated firms are subject to higher minimum capital requirements and annual fees, dependent on the specific nature of their activities. The annual fee for non-regulated firms is currently USD 5000 per annum and there are no minimum capital requirements. Establishing business in the QFC All QFC authorised entities must choose office space in a QFC approved building, either within the 2 QFC Towers situated in Doha’s West Bay or from a list of other approved locations, but will otherwise be free to do business within Qatar under their QFC license. The establishment process in the QFC is intended to be transparent with requirements clearly set out in the application documentation, guidance notes and Q&A materials, which will be provided by the QFC team following the initial meeting with the QFC Authority. At the time of writing this article, the QFC are preparing revised forms which are intended to further simplify the application process. Generally, the QFC will advise that licenses can be issued within 2 months of first contact with the applicant firm but this depends on the firm’s ability to quickly respond to QFC enquiries during the process. Applicants will find that the greatest hurdle to overcome in obtaining a QFC license is approval of the business case during the “strategic fit” assessment phase. The QFC Authority is selective about the types of business which can benefit from acceptance into the QFC regime. For those firms and individuals who are able to meet the licensing criteria, the QFC is considered as one of the most attractive locations in the region from which to base their Middle Eastern operations. Note: This article is only a general introduction to some legal issues and laws in Qatar. It is not legal advice and should not be relied upon as such. If any reader requires legal advice, this should be obtained from an experienced lawyer who can provide advice which is tailored to the relevant facts and circumstances.

March 2014

Technology

Attack the hacker As digital security becomes a top priority for companies and governments, Nader Henein, Advisor, Blackberry, talks to Badar Salem about safeguarding important data. What are the most challenging digital threats facing companies in the Gulf region? For the past 40 years, unpatched and badly configured systems remain the biggest issues for most organisations. Managing enterprise mobility over wireless networks presents new and varied challenges to IT departments. From device management and user experience to application and broader business issues such as the IT service delivery and security, IT departments need comprehensive solutions to ensure a smooth rollout.

Nader Henein works within the BlackBerry Security Group in an Advisory role, coordinating with security agencies, government bodies and strategic enterprise customers to help them understand the various aspects of BlackBerry security solutions. Over the past decade, Nader has worked with multiple start ups.

Enterprise use of mobile technology has changed drastically over the past few years and along with it cyber criminals have become increasingly savvy. To defend against these elements, a measure of creativity is required rather than just throwing money at the problem. A solid security foundation is essential in such an environment. At BlackBerry, security is our core competency. Our guiding business principle is keeping organisationsâ&#x20AC;&#x2122; data out of the hands of third parties. A key element of security is encryption technology. This is critical to protecting the confidentiality and integrity of a digital transaction between two endpoints, such as a mobile device and a corporate server located behind a firewall. Providing an integrated approach to mobile security, where data is encrypted while at rest, which means when it is stored on a digital device, or in transit, is the best protection against the loss of data or a security breach that could impact the profitability, competitiveness or reputation of an

organisation. Strong encryption guards against data integrity compromises in these environments, which are typically treated by network engineers or mobile security experts as hostile and untrustworthy. It is important to note that encryption technologies differ significantly in the degree of protection they offer. At the highest level, the AES-256 encryption, which is at the core of BlackBerryâ&#x20AC;&#x2122;s solution, delivers unsurpassed encryption capabilities that protects data outside the oversight of the IT department. Are governments and businesses ready to cope with such threats? They have to develop and implement a formal enterprise mobility management strategy for 2014. This will help detect where the vulnerabilities are and make them better prepared to protect a network from an attack. Which sectors are most vulnerable to security penetration? Do you see any patterns or trends in security threats? In 2013, there were escalating concerns over cyber attacks as both corporations and governments fell prey to online adversaries. As mobile devices are further integrated into networks, organisations will have a critical need to implement end-to-end security solutions that offer comprehensive security at the device, server and network level, to provide a multi-layered security solution that will better protect their corporate assets.

The best advice is to make an audit of where your information is, how you interact with it and how you disseminate information. Work on securing your data “at-rest” on one hand and your data “in-transit” on the other. How is the proliferation of cybercrimes affecting companies and how can they fight these threats? With so much sensitive information including patient records, customer credit card numbers, usernames and passwords, databases and financial records at stake, a patchwork solution will never be sufficient for protecting a mobile computing environment. Too many organisations learned that lesson the hard way in 2013, and now in 2014, the trend will be towards more robust security features and controls that allow organisations to leverage their investments in mobility solutions to drive new ways of transacting with their customers. To help avoid and thwart attacks, organisations should employ a solution that can proactively identify malicious applications as well as recognise those that are designed to erode the privacy of user data on the device and then deny access to the network. Strong encryption of data between end points in a communication chain will help ensure that data in motion and on devices remains secure. In the case of a lost or stolen device, organisations will need the ability to manage or wipe devices remotely. The cost of a cyber-attack can far outweigh the expense of transitioning to a best-in-class solution with comprehensive management and security for devices. With the ability to control the devices, apps and content, and manage them from a single unified console, an IT team can save significant time and resources during the training and transitioning phase. Are companies in the region taking cybercrimes seriously enough? Prevention will always be the best line of defense against cyber criminals. Many companies that have come under attack have become much more serious about cyber defense, but there is still a long way to go. How has the rise of technology changed cybercrime with more people having access to advanced technology? The collection of information generated from the online activities of citizens, by both private and public interests, has become so widespread and pervasive that it has prompted several social commentators to label today ’s digital-defined culture as “The Surveillance Age.” The moniker is an apt one, in part given the fact that nearly every sovereign state

with the means is conducting high-tech surveillance programmes – a practice that is considered by most to be integral to national security and ensuring the safety of the state and its citizens. Are enterprises or start ups more vulnerable to security penetration? The bigger an enterprise, the more complex its systems are, resulting in a larger attack surface. Most start ups are small enough to be manageable and tend to favour enterprise cloud services which are secure and constantly monitored. They have less resources than large enterprises who struggle with legacy systems, so both have their challenges. What are the solutions available in the market to fight these threats? There is no shortage of solutions but the rule of thumb is that if it sounds too good to be true, it probably is. The best advice is to make an audit of where your information is, how you interact with it and how you disseminate information. Work on securing your data “at-rest” on one hand and your data “in-transit” on the other. Do you expect the demand for security services to increase? The market for mobile security will be a growth segment. Estimates vary with some analysts predicting a doubling of the market. But the question remains whether companies will premept and take the necessary action or wait for a decisive scenario before acting. What is the most common mistake companies make when dealing with cybercrimes? A lack of planning is the most common mistake. Enterprises can conduct simple exercises to prepare for unfortunate circumstances. For example, training sessions and “mock breach” scenarios are a simple way of demonstrating the importance of preparation. This can make people aware of the need for adequate planning and readiness. Tell us a little bit about your participation in the GCC Digital Security Forum that recently took place in Doha. As with most events, our focus here was on education. With the increase in demand for secure communications and enterprise mobility management over the past year, we have increased our participation at these regional events to ensure that companies have all the information they need to choose the best solution to fit their needs. At this year’s Forum, we were explaining how BES10 can help companies and governments around the world secure their mobile data from potential attacks and the unintentional leakage of information. BlackBerry works closely with ICT regulators and government entities in the Middle East, which includes a strong relationship with ictQATAR.

March 2014

Technology

The search engine is so popular that the brand name is now a common verb. Maha Abouelenein, Head, Global Communications and Public Affairs, Google, MENA, talks to Ayesha Aleem about what the company is doing in this region. What are some of Google’s main goals in the MENA region? B ro a d ly, we wo rk i n 3 a re a s – t e ch n o l o g y, government and business. With technology, we want to help people make the best use of the Web and show them how technology can make their lives easier. We work with the government in e-government services, developing mobile apps and creating Smart Cities.

Maha Abouelenein, Head, Global Communications & Public Affairs, Google, Middle East and North Africa has more than 20 years of experience in corporate communications, PR strategy and campaign management. Maha oversees the company’s communications efforts across 18 countries in MENA. She can be contacted at mga@google.com

With businesses, we help them get online and show them the enormous economic opportunities that exist when they do this. By creating an online presence, businesses gain access to customers and small businesses can become global players. Small businesses get the same playing field as big businesses because of access to the same tools. At present, the MENA region is estimated to have more than 141 million Internet users, which is about 35% of the population. What are the top 3 things that businesses should do to take advantage of the Web? O u r re c o m m e n d a t i o n i s to c re a te a we b s i te because this is the first step towards taking advantage of all that the Web has to offer. SMEs have a huge opportunity to grow if they go online. Can you believe that about 76% of UAE companies, according to our research, don’t

think it is necessary to have a website? A small percentage of companies are using social media pages instead of websites. It is also important to invest in digital and online marketing and to target the campaigns according to factors like location and age group. This means paying attention to what your customers’ preferences are and what topics are of interest to them. Consumer habits are constantly changing and online marketing is growing quickly. About 4 years ago, it only amounted to 1% of the total advertising market in the MENA region. Now, it amounts to 6% and is worth USD 5 billion. The social aspect of the Internet adds another important dimension. Social currency is king where things that people recommend online become popular. More people are now spending time in front of their computers that in front of the television. They’re using different devices like their mobile phones, tablets and PCs for different uses like browsing or online shopping. People’s habits are changing so businesses need to adapt how they communicate to the customer. Finally, harness the access that the Web gives to customers and data. Businesses need to keep track of what kind of content people are clicking on.

SMEs have a huge opportunity to grow if they go online. Can you believe that about 76% of UAE companies, according to our research, don’t think it is necessary to have a website?

What are some Google products that are targeted at the business community in this region? Google offers SMEs a number of solutions and products aimed at helping them monetise their content and generate revenue from the Web. EZStore ( www.ezstore.me ) is one of them, which allows companies to register themselves on the website and offer e-commerce services. EZStore.me aims to offer a “minimum-risk online store,” which is a onestop solution to help offline merchants and start ups debut their e-commerce journey in MENA. This is a partnership with Aramex, PayPal and ShopGo where companies can use the platform to manage their online retail business as well as access payment and shipment solutions. Google helps businesses promote themselves through ads.

SMEs can connect with potential clients. As part of this initiative, companies can also get certified by Google for free, which shows clients that they are proficient at using Google’s products. What have been your observations about IT developments and technology usage in this part of the world? Any predictions for the IT sector in Qatar? As more people have access to the Internet, they are using it increasingly. Whether it’s planning a vacation or making dinner reservations, the Internet has become an essential part of our lives. Brands are understanding the importance of advertising on Youtube because people use the website for entertainment, to watch news and even education through the informational videos. Travel and hospitality industries particularly are realising the importance of being online. Qatar is growing exponentially and the Internet can play a role in the growth. What are some of the challenges and opportunities that Google faces in the Middle East? Our biggest challenge here is that we don’t have enough Arabic content. To be releavant in a region, it is necessary to have content in the local language.

Mix n’ Mentor is another programme that we are involved in, where we want to train entrepreneurs. Google started in a garage. So we want to help entrepreneurs in areas like marketing, innovation and building a brand online. The initiative helps build long-term relationships between entrepreneurs and mentors.

E-commerce capability is essential to allow businesses to do commercial transactions online through websites and mobile phones. However, setting up e-commerce platforms is sometimes difficult, especially in terms of back-end operations. More Internet users are shopping online with e-commerce growth having doubled in the last 2 years. It is expected to become a USD 15 billion industry by 2015. With the high purchasing power in the MENA region coupled with a thriving retail market, businesses need to be ready, now.

Finally, we introduced Google Partners, a platform for the digital marketing community, that helps businesses and agencies grow and thrive together. Google Partner businesses are online marketing companies that are trusted by Google because they use Google’s products and best practices. Through Google Partner Search,

Mobile readiness requires a different level of operations. SmartPhone usage in the GCC is among the highest globally with around 74% penetration in the UAE and 73% in Saudi Arabia. Businesses need to create mobile applications and websites must have mobile versions.

People’s habits are changing so businesses need to adapt how they communicate to the customer.

Affordability of the infrastructure is another factor. Companies need access to the Internet to be online. The Middle East still needs to improve in this area compared to markets like the United States, for example, where Internet penetration is very high. Challenges aside, we are blown away by the talent and original content that this region generates, from mobile applications to websites, Youtube videos and social media.

March 2014

Business Advice

Going global When the home market has been fully explored, it may be time for a company to consider taking its operations to foreign soil. Juha Peralampi, Manager, Business Incubator at the Centre for Entrepreneurship, College of Business and Economics, Qatar University, gives Ayesha Aleem a checklist for companies to follow which can make this big step less daunting.

Is there some way for businesses to know when they are ready to start exploring foreign markets? There are a few signs for companies to look out for that may suggest it is ready to consider taking its operations to foreign markets. These include: ■■ Receiving unsolicited orders ■■ Receiving high interest at exhibition shows ■■ Receiving high activity of people on the company website from abroad ■■ A limited or saturated domestic market, or even one that it is too competitive ■■ An abundance of resources either of money or competent people ■■ A lack of resources at home. This could be people, materials, or that resources are much cheaper abroad ■■ Receiving partnership offers What are the first steps that a company must take before beginning global operations? It is important for a company to do the following: ■■ Screening potential markets for factors like basic appeal, national business environment, market size and selecting the appropriate market. ■■ Having a clear understanding of the current situation of the company. An option for SMEs to consider is e-commerce or patnerships.

■■ What is the motivation to go global? Is to expand the product line, curiosity, or another reason? ■■ Assessing commitment level of the management team ■■ Considering whether product modifications are necessary before it is ready for the foreign market. If yes, what are the costs involved? ■■ Recruiting or training a management team and employees who possess global communication skills, a global mindset and knowledge of global processes. These are necessary elements for global competence. What are some of the common mistakes that companies tend to make during this process? ■■ Underestimating the time and money that the process will involve, although this depends on the method of internationalising. ■■ Not doing a thorough market survey – local customers may be more loyal to a local producer, product or be used to certain buying patterns that can be tough to break. ■■ Underestimating the competition ■■ A lack of market understanding ■■ A limited global perspective – especially in crucial areas like negotiations, sales and marketing. Taking these things for granted or doing them exactly as you would in the home country won’t take you far.

Juha Perälampi is Manager, Business Incubator, Centre for Entrepreneurship, College of Business and Economics, Qatar University and teaches entrepreneurship and international business at the College of Business and Economics. He holds a Bachelor’s degree in International Business from Aalto University and a Master’s degree in Entrepreneurship from the University of Jyväskylä. Juha can be contacted at juha.peralampi@qu.edu.qa

What should companies be careful about while entering a foreign market? ■■ Be respectful – be careful not to express opinions that may offend potential customers. Unless you are completely sure about what you are talking about, try to avoid topics such as politics, religion and past or current wars. Small talk is good but avoid controversial topics. ■■ The assumption that customers will run to you. This is not true. You need to go to them. ■■ Whether to tap in on the home country’s brand/image or try to hide it ■■ Currency fluctuation ■■ Legislation – hire a lawyer who understands the company’s background and local laws in the home market as well as foreign market to explain matters like taxes and other legalities that will affect profits. ■■ Political risk What can companies do to familiarise themselves with local cultures and practices in a way that will help them function better in the market? To become familiar with the the local market, a company can take the following steps: ■■ Business communication and cultural training ■■ Extensive business visits ■■ Hire local people ■■ Talk to people “who have made it” in the same industry Are there certain sectors that stand a better chance of growing if they explore international markets? Please give some examples as well as reasons that make them favourable. ■■ E-Commerce is a low cost option for smaller companies to explore. It’s a faceless model that can do away with problems like language barriers, for example. It really helps tap global potential. But for this, a company must be familiar with aspects like how to be visible online, how to take advantage of social media and how to be one of the first search results. ■■ Industries which require a high amount of resources such as oil and biotechnology as domestic markets are too small. These big industries need to have global operations from the onset. ■■ Luxury products – because preferences and buying patterns tend to be similar globally.

E-Commerce is a low cost option for smaller companies to explore. It’s a faceless model that can do away with problems like language barriers, for example. It really helps tap global potential.

What resources are available in Qatar for companies that wish to go global? There are a number of organisations in Qatar that support SMEs: ■■ Centre for Entrepreneurship of Qatar University’s College of Business and Economics offers the Global Competence Training Programme. The course content helps with business communication, developing a global mindset and ways to navigate global processes. ■■ ictQATAR ■■ QDB’s Tasdeer What are some of the unique opportunities that this region offers? ■■ An international market – Doha is truly global where a high number of people come from overseas. When you are an entrepreneur in Qatar, many of your customers and competitors are not local. This gives you a great competitive advantage to broaden your horizon. This region is unique as a pilot market because it is possible to observe how people from different backgrounds will respond to a product. While much of the Western world is struggling with recession, China and the Middle East are booming. In my experience, even language hasn’t been a problem here. You can get by just fine with English. ■■ A high investment in education ■■ Great purchasing power among the people. Qatar has the highest per capita income in the world. ■■ A growing market whose population is relatively young ■■ Talented people Once a company begins global operations, what are the best ways in which it can manage the business? Apart from mode of entry into the market, management will depend on the type of organisational structures adopted. For example, a company will need to decide whether it just wants to create an international division in a foreign market or if it intends to set up a complete international area structure. How can companies better equip their workforce with skills that prepare them for an international market? Success is never guaranteed and internationalising requires special talent, commitment and financial resources. Make sure your team has people who possess excellent communication skills, have a global mindset and understand the processes behind internationalisation. It is almost impossible to become successful on your own. Partner with people abroad who can help. Having trustworthy partners helps share the risks but it also means sharing the profits. Finally, purchase training and consulting services when needed.

march 2014

Business advice

Facebook began in a dorm room. Google started in a garage. The team at Turn 8 are busy looking “for the next big thing” in this part of the world. Kamal Hassan, CEO, Innovation 360, the company that runs the Turn 8 entrepreneurship incubator programme, talks to Ayesha Aleem about the initiative.

urn 8’s Demo Day was held in Dubai recently. Entrepreneurs who had graduated from Turn8’s programme pitched their “market-ready” ideas to a room full of potential investors, like Tecom Investments, UK-based Venuturebright and US-based Fenox Venture Capital, hoping to get some funding and continue to develop their latest technical product. Participants from all over the world, including Egypt, Belarus and Pakistan spoke about mobile applications that can help tell the difference between authentic products and fakes to ones that let you record your dreams. The following week, we met with Kamal Hassan at the Turn 8 office in Dubai, which is currently under extensive renovation. The 10000 sq. ft. office is expected to be ready soon, where a new batch of Turn 8 entrepreneurs will receive support. But for now, the latest graduates that consist of 9 teams

of entrepreneurs, occupy the main portion of the space, where they sit at clusters of work stations, tinkering at their online inventions and bringing them closer to perfection. “The UAE is a Middle Eastern hub,” Kamal explained. “If you want to target the Middle East, this is the place to be. And that’s for a couple of different reasons. First, it has the infrastructure to support businessmen. There is wide consumption here, so there is a strong market. Also, its geography lends it a favourable position, from where it is possible to explore other markets, like Europe or Africa.” There are some challenges like insolvency issues and bankruptcy laws, he said, which need to be solved. But largely, the environment is conducive to setting up a sustainable, successful business. “If you have an idea that addresses a global problem, Dubai is the place to test it. This is such a multicultural city.”

Tur n 8 i s uni que i n t h a t i t i s t h e re g i o n’s only programme to offer support from the conceptualisation stage until it is ready to be made available to a customer. “We take a 10% ownership in the idea or equity,” said Kamal. “It’s a high-risk strategy but we are gambling on some very good teams. We’re hoping to find the next Facebook.”

Kamal Hassan is CEO, Innovation 360. He has 20 years of business experience in the United States, Asia, South America and the Middle East. An active supporter of regional SMEs and start ups, he holds a Bachelor’s and Master’s degree from San Francisco State University. He can be contacted at kamal.hassan@i360institute.com

Following a “Silicon Valley” approach, the programme invites applications from any nationality and from any part of the world. So there is talent from Jakarta, Moscow and Lebanon vying for attention that will entitle them to USD 30,000 worth of tangible support in the form of visas, accommodation and other facilities as well as an estimated USD 300,000 in perks like mentorship from industry experts, work space and networking opportunities. “We’re looking for teams,” said Kamal. “We don’t accept individuals no matter how good they are. But beyond that, we’re also looking at the experience between team members to assess if they are a good fit together. Applicants should also have previous entrepreneurship experience. Preferably, they should be serial entrepreneurs.” Turn 8 also puts them through a psychometric test that uses specific parameters to determine qualities like passion, dedication and resilience. Applicants are judged on their business model and their approach of how they plan to make money. There needs to be an addressable market for an idea to stick and subsequently soar. For that, the idea itself needs to be an interesting one. It needs to be big, dynamic and important enough to disrupt the market so as to make an impression, Kamal explained. Even the mentors are looking for something specific, depending on their position. A venture capitalist, for example, wants to see an idea grow before they invest in it. A corporate executive, on the other hand, is interested in an idea but doesn’t necessarily want to invest in it. A consultant or coach is not involved in any financials and is instead available to help entrepreneurs polish their skills.

Applicants are judged on their business model and their approach of how they plan to make money.

E n t re p re n e u r s c a n a l s o l e a r n f ro m o t h e r entrepreneurs so there are plans for future Turn 8 graduates to participate in exchanges with participants in similar accelerator programmes from Singapore, the United States and Europe. “The young generation is more interested in working for themselves,” said Kamal. “There is still some way to go for entrepreneurs in this region, compared to the United States for example, which has a very strong entrepreneurship market. But this has more to do with learning that begins when a child is still in elementary school. Many start ups begin while the founders are in college. This doesn’t mean that the college injected them with something special. It means that the thinking and skills were developed very young. We need to create that kind of a culture here.” To achieve this, better laws are necessary, along with improved infrastructure. “There is still a stigma of failing,” said Kamal. “There is also fear of the legal implications and the difficulties in getting loans. The movement should not be limited to Dubai. It needs to be a region-wide effort. The entire system needs to support successful entrepreneurship.” Turn 8 supports the entrepreneurs for 4 months after they have set up business. Plans in the pipeline include the launch of a USD 50 million fund. Currently, Turn 8 is funded by DP World but to grow, the programme will need more corporate sponsors. “We want to participate and operate toward supporting Expo 2020, innovation and sustainability,” Kamal said. “We want to be the Y Combinator of the Middle East.” Y Combinator is the American seed accelerator whose total success value is estimated at USD 14 billion. It has funded companies like the popular, Dropbox. As parting words, Kamal has some wise advice to prospective applicants: ■■ Be ready to take on the risk of being a start up. ■■ Do your homework. We know the markets and the industries so we’ll know if you don’t know what you’re talking about. ■■ Be disruptive. Be willing to create something new and interesting. ■■ Be humble. Arrogance doesn’t work in this market. ■■ Work as a team. A person can’t do everything on his own or outsource. At the beginning, you have to do everything otherwise you’re missing the point and losing the experience of being a start up. ■■ Think business. Think of how to make money.

march 2014

business advice

Learning from leaders GE is at the forefront of some exciting partnerships in the MENA region, where students now have the opportunity to learn best management practices from a globally-acclaimed company. Raghu Krishnamoorthy, Vice President, Executive Development and Chief Learning Officer, explains the details to Ayesha Aleem.

Please give us some background about GE’s projects specific to the MENA region. GE is in 160 countries and has about 30,0 0 0 employees worldwide. In 2013, our revenue was USD 10 billion. We have what we call a “long pipe” of employment from entry-level to senior management, which follows a more horizontal structure compared to a vertical one. When recruiting at the entry level, our goal is to look for potential that suggests that an employees can one day become senior management. So it’s not just about hiring people but creating talent. MENAT is one of our most important regions. We have about 5200 employees here spread across 18 countries. We’re partnering with several universities in the region so that they can build their curriculum in line with what the industry is geared towards, thereby minimising the gap between what employers are looking for and what is taught to students.

Can you please elaborate further? We’ve started what are called “Functional Leadership Programmes” in collaboration with partner universities known as “Executive Universities.” Through this initiative, we are providing world-class training through senior-level management that visit students to establish linkages and provide mentorship. This helps develop quality leadership skills. Interns are also sponsored at GE offices for an opportunity to get some practical experience. Just as the job market is competitive, employers are also competing for the best employees. Through this programme, we generally offer a stint in an international office, like the United States or France, for example, which gives us a competitive edge. We’ve been able to forge strong connections locally and our goal is to continue these relationships so that universities can understand what we are looking for when hiring to GE.

Please give us some specific examples. We offer 10 scholarships at King Fahd University of Petroleum and Minerals in Saudi Arabia as well between 20 and 30 internships, either locally or internationally. We are looking at developing more such relationships in countries like Algeria and Turkey. We have a commitment to develop local engineers so we also hire locals for field support. In Dammam, we have the biggest repair shop for turbines, where 500 Saudis are employed.

Raghu Krishnamoorthy was named Vice President, Executive Development and Chief Learning Officer in August 2013. In this role, he is responsible for GE’s global talent pipeline, learning and development. Raghu holds a Master’s degree in business administration from the Indian Institution of Management, Ahmedabad, India. In 1993, he attended the University of Minnesota as a Fulbright scholar. He can be contacted at raghu.krishnamoorthy@ge.com

At women’s universities in Saudi Arabia, we offer five scholarships in the biomedical area to prepare women to work in our healthcare section. At the GE Tech Academy in Saudi Arabia, we also train welders and technicians. We have entered into a joint venture with Mudabala Development Company, the investment arm of the Government of Abu Dhabi, to create a training centre that we want to use as a hub for technical training, using the GE leadership curriculum. This is one of 4 global centres, with the other 3 in Shanghai, Rio de Janiero and Bangalore. Finally, we have a strong relationship with Qatar Airways with whom we have developed an aerospace technical training centre. Qatar is active in building education. We consider it an important market for our operations and for an exchange of information. GE wants to support this process. What have been your observations about the quality of the talent pool here? We see a very high calibre of applicants with plenty of energy, curiosity and a great willingness to learn. The students here have a certain clarity of thought, which is very motivating. I could have found the same presence at MIT’s Sloan School of Management, for example. Universities here have done a phenomenal job in creating that cache. Despite many institutions being relatively new, they have been able to emphasise on the value of knowledge coupled with practical experience.

We need to be confident of the expertise of a candidate based on the university they graduate from, which is a basic starting point. Beyond that, we look for qualities like confidence, communication skills, the ability to be a team player, a learner and plain hard work.

Particularly encouraging is how many women engineers we have seen recently, who are willing to go against social norms to follow the career path. Many of these students want to excel but also want to go back to their countries and contribute. When hiring, we look for quality but this thinking also shows character, which is a necessary element for leadership. What is GE doing to attract women employees and support them to occupy senior management positions? We have a programme called “Leading and Learning,” where each year, all senior-level women employees from GE offices all over the world meet to discuss GE best business practices. In 2014, the session will take place in New York, where women business leaders from Saudi Arabia, who are not GE employees, will be invited to share their insights. We also invite customers to these sessions, so that we get both points of view. This initiative creates a sense of community which is very powerful. We also have two women employees who teach a “leadership practices” course at our offices across the globe, where they discuss leadership issues that women face. They have been doing this for the last 10 years and it has been very successful. We also have a GE “women’s network” where women from different fields inspire other women and create an environment to promote entrepreneurship. This is critical in this part of the world. What are you looking for when you hire someone at GE? We need to be confident of the expertise of a candidate based on the university they graduate from, which is a basic starting point. Beyond t h a t , we l o o k fo r qu a l i t i e s l i ke c o n fi d e n c e , communication skills, the ability to be a team player, a learner and plain hard work. It doesn’t matter where you come from. If you perform, you will succeed in this company. GE is active in a number of fields. How and why do you choose these sectors? The market chooses the field of operation as much as we make a decision about it. Our focus is on curing, powering, building and moving the world. Aviation is a big sector in Qatar, for example. Algeria is a big market for power and Saudi is a big market for healthcare. We approach each market and see where we can add value, depending on specific needs. But we also understand that it is important to support our products through adequate and appropriate training, which we can do by creating jobs. This is one of the reasons why we’ve grown so rapidly in this part of the world.

march 2014

Sector study

Modern luxury

The Middle East is reinterpreting the luxury industry. Caroline Guillon, Vice President Marketing and Public Relations, Qatar Luxury Group, speaks to Badar Salem about the companyâ&#x20AC;&#x2122;s role in transforming the sectorâ&#x20AC;&#x2122;s landscape. Please give us an overview of the group and the vision behind setting it up? Qatar Luxury Group is a company based in Qatar with headquarters in Doha. It was created to build and foster luxury brands in the fashion, hospitality and lifestyle sectors for an international audience. It is owned by Qatar Foundation, whose mission is to prepare Qataris to meet the challenges of a changing world. Our vision is to initiate a luxury industry in Qatar, either through our own brands or through acquisitions. For this, we have started to create a portfolio of brands that are linked with a similar

understanding of traditional craftsmanship, creativity and culture. The key to sustaining in this business is to be as close as possible to the culture we live in, which is characterised by timeless traditions but also has an unbelievable openness towards the future. Our fashion division is built on the belief that there is an opportunity in the global luxury market for a Qatari group that is true to its heritage and creates timeless products using the best materials and highest level of craftsmanship.

Caroline Guillon, is Vice President of Marketing and Public Relations, Qatar Luxury Group. She graduated from Université Paris XI with a Master’s degree in Law and from EAC Paris with a Master’s degree in Communications. She can be contacted at contact@qatarluxurygroup.com

Through our hospitality division, we are active in the world of high-end restaurants. Along with chef Guy Savoy, Quisine by Guy Savoy opened at The Pearl in November 2012. In addition, La Varenne, a French Brasserie and T h e A nv i l Ro o ms, a t ra d i t i o n a l s teak ho us e, opened in the Tornado tower. Why did you choose hospitality and fashion as the 2 sectors? We have a very sophisticated market for fashion here. This is an area where we feel we can also develop the expertise and talent locally that will keep QLG at the forefront. As I mentioned earlier, all of our projects in the hospitality space – Quisine by Guy Savoy, who is of course a Michelin-starred chef and the first to make a debut of this kind in the Middle East, The Anvil Rooms steakhouse and La Varenne brasserie – they are all different and designed right down to the details.

Can you please tell us a bit about QLG Fashion? QLG Fashion is composed of two brands – Le Tanneur, a 150-year old leather goods company based in France and QELA, our homegrown luxury fashion brand, which was launched in Qatar in September 2013. We have invested heavily in the best of design and engineering equipment for in-house production. We opened the first QELA boutique at The Pearl in Doha and are currently preparing for the opening of a second boutique in Paris.

You need to balance talent and vision with the environment that you are operating in, along with realistic figures and a timeline by which to achieve them by.

What main changes have you seen in Qatar’s luxury market? I would say that most of the changes I have seen can be attributed to a growing savviness of the local market as well as a self-confidence in Qatar of its own identity, tastes and styles. There is a strong paradox in Qatar of preserving the historical culture while keeping in touch with or even being ahead of international trends. The Museum of Islamic Art or Katara are beautiful examples of how the local culture can be interpreted in a modern way. Most trends used to come from western countries, but this has evolved. Now, it is nice to see local designers emerging, who are blending a touch of local spirit with international fashion trends, as Wadha Al-Hajri does. Paris is considered Europe’s luxury hotspot. Is there an equivalent in the Middle East? In terms of creation and export of luxury goods, we could say that there is no equivalent to Paris in the Middle East yet, but there is a reasonable willingness in Qatar to build an international luxury industry, step by step and for the long term. What makes a luxury brand successful? A balance between creativity and craftsmanship, a c o m p e l l i n g s to r y to te l l , a re s p e c t fo r i t s audience and an unshakeable sense in its own identity and values.

March 2014

Sector study

Ideas are wonderful, but a solid team, dedication and hard work are needed to transform them into a business reality. It takes a lot of perseverance to nurture and grow a healthy business. Finally, passion and enthusiasm are contagious and can transform hard work into an exciting journey.

One of QLG’s goals is to support local talent/entrepreneurs and provide local career opportunities. What programmes do you have in place to achieve this goal? One of the ways in which we support local talent and local careers is in having a local presence. Our design studio and workshops are located in Doha, and so are the offices. We are also particular about preserving old techniques by passing the know-how of traditional methods to the next generation. QELA products are crafted by artisans who have spent their lives acquiring and mastering traditional crafts of the fashion industry that are slowly being forgotten with time. Our craftsmen are passionate about preserving these techniques. So, we provide long-term internship opportunities for talented young graduates who are interested in learning these timeless crafts. With the growing influence of new technologies and the Internet, have you made any changes in your business model? We have built the Internet into our customer service and marketing models since inception. QELA is dedicated to providing clients with a unique in-store experience and to reflect it as closely as possible online. But nothing will give a better sense of what QELA is as a luxury brand than a visit to the boutique or one of the workshops. The precision of our designers and craftsmen, the time and passion behind the creation of a piece, a raw material before it is polished to perfection, the movement of fabric, the scent of leather, the warm atmosphere of the boutique – the online experience is not as rich as the actual experience.

Qela boutique is Qatar’s first home-grown global fashion brand. Please tell us more about the concept? Qela is the beginning of an exciting journey. It is Qatar’s first homegrown global fashion brand, with international sensibilities as well as understated Arab influences. Our boutique reflects the essence of the brand with a quiet space dedicated to craftsmanship and creativity. The collection is meant to be discovered in this artistic environment. All lines are fluid, organic, soft and feminine. Curved mashrabiyas shape the space, creating a division between the gallery space, lounge areas and private salons. What are the top challenges facing luxury brands in the Qatar market today? What are the biggest opportunities? The market is highly competitive, so the challenge for a luxury brand in Qatar is to understand what customers aspire for. In terms of opportunities, Qatar has evolved so quickly over the past decades that consumers are traditional as well as progressive in their consumption patterns. There is definitely an opportunity for a luxury brand that strikes a balance between traditional and international cultures and reflects that philosophy. Our boutique will host 2 annual artistic exhibitions. The Doha boutique currently presents an exhibition by Ali Hassan and we will soon unveil a second exhibition. For an entrepreneur or SME interested in entering this segment, what do they need to do? Can you explain the steps involved? Qatar is well-known for its strong support of entrepreneurship and SMEs and there are very good programmes in place to assist entrepreneurs in taking their ideas forward. But the QELA journey, for example, is not a plug-and-play model. You need to balance talent and vision with the environment that you are operating in, along with realistic figures and a timeline by which to achieve them by. It is also essential to assemble a dedicated team who share the same goals. What have you learned that you think every entrepreneur should know? There are some fundamental requirements for successful entrepreneurship. Ideas are wonderful, but a solid team, dedication and hard work are needed to transform them into a business reality. It takes a lot of perseverance to nurture and grow a healthy business. Finally, passion and enthusiasm are contagious and can transform hard work into an exciting journey.

Tasdeer

Have you found your

Customer? Continuing from last month, Tasdeer, the export arm of QDB, puts forth ways of finding the appropriate customers through Trade Secrets Guide – the export answer book for SMEs – which was prepared in collaboration with the International Trade Centre. How does an exporter prepare for a trade fair? Letting potential buyers know that a firm will be participating in a particular trade fair is an important marketing activity. An investment in pre-fair promotional activities will result in a more successful experience at the fair. A recent survey revealed that a large number of fair participants were involved in pre-fair promotional activity. However, only 20% of these firms showed a strong commitment to creative pre-fair marketing. It has been clearly established that a personal invitation from an exhibitor is the most important reason a person visits an exhibit. Personal invitations are not to be confused with a postcard merely indicating the booth location. Invitations should be handwritten if possible and present a compelling reason to visit the exhibit. Some firms follow up invitations with a telephone call to make sure the invitation was received and to reinforce the need to visit.

Some companies send a “teaser” that requires a visit to receive the rest of the information. However, all correspondence should feature the company’s name, logo, telephone number, address and booth number. Besides creating interest before and during the fair, visitors will most likely take this literature with them when they return home, where it can be a regular reminder of the firm’s product or service. To achieve the objectives of participating in trade fairs, planning is crucial. Planning ensures the protection of investment and the maximisation of returns. An exhibition coordinator is essential for successful planning and participation. This person is responsible for: ■■ Booking the stand ■■ Confirming and clearly communicating exhibition objectives ■■ Preparing a detailed budget ■■ Confirming the items to be exhibited and ensuring their availability

■■ Implementing the exhibition’s theme ■■ Designing of the stand and organising its construction ■■ Recruiting staff for the stand and organising their training as well as putting a duty roster in place ■■ Preparing and implementing promotional activities ■■ Devising a lead recording system ■■ Arranging transportation ■■ Submitting a report on the results obtained from participation in the fair

use trade fairs as a primary source of information when making annual purchasing decisions. A firm’s booth speaks volumes about the capabilities, efficiency and commitment of a firm. An exporter should think of the booth as an introduction. Therefore, a good first impression is essential to attract potential customers. Firms with limited space can compete in the trade fair arena by using good design techniques and well-trained staff. There are simple techniques that can be used by small companies to make the booth stand out and generate traffic.

What are the typical costs of participating in a trade fair? Preparing a detailed budget and operating within it is essential. To prepare a comprehensive and realistic budget, the best method entails the following steps: ■■ Deciding objectives to be achieved through participation ■■ Listing necessary tasks to be undertaken to achieve those objectives ■■ Estimating the costs involved

The trade fair booth is an expression of the firm and should be designed to quickly convey the image of a firm. The booth must make a strong visual impact and project the company as well as the product offered. It must perform the dual role of being an effective showcase for the company’s products and services and an efficient platform for demonstrations, so that it is possible to capture the interest of people passing the booth within seconds.

To ensure that a participant spends the right amount on exhibition related activities, a detailed listing of possible areas of expenditures must be made and resources allocated accordingly. Listed below are typical areas of costs that are incurred while exhibiting: ■■ Stand costs: Space, stand design and construction, electricity, water, waste, graphics, furniture, floor covering, equipment, floral decorations, transportation, lifting and handling costs, telephone connections, insurance, storage, security ■■ Staff costs: Staff training, accommodation, uniforms, exhibitor’s badges and passes, catering, corporate entertainment ■■ Promotional costs: Preparation of press information, hiring space for press conferences, design and production of sales literature, pre-show publicity through design, production and postage as well as preparing a mailing list or rental from a commercial list provider, sponsorship of fair events like banners, fair-linked advertising such as gifts, souvenirs and stand photography What are the ways in which an exporter can excel at a trade fair? Research has revealed that a majority of buyers

Chairs make for inattentive employees so avoid having more than are absolutely necessary. Professional, well-designed literature should be used. Many good displays are built around “literature stations” which are often used as the focal point for a booth, allowing people to browse and learn more about a product. The stand must not be cluttered. It must have enough room so that people can come in and look at products that are displayed. If a demonstration is needed, the booth needs to be large enough for a sufficient number of people to get a clear view. If possible, encourage people to handle products. Buyers are wary of a company that displays products with a sign that says, “Do not touch”. Finally, staff must be friendly, approachable, and well-informed about the company ’s products and services. What are the procedures to obtain a visa for foreign buyers and inspection agents to enter Qatar? Business Visa ■■ Companies and agencies dealing with business-related visitors are responsible for arranging visa applications. ■■ Authorised companies and users may apply for business visas online. ■■ Visa holders are advised to carry all supporting documents, such as a letter from the company, when entering Qatar.

march 2014

Tasdeer

Application Process Follow these steps to apply for a business visa: ■■ Fill out the online application ■■ Pay the application fee ■■ Print visa Additional Information A fee of QAR 200 applies for each visa and QAR 50 for each registered companion. The visa is valid for 1 month and can be extended for 2 months at QAR 200 per month. The Qatari exporter has to provide the visa office at the Qatari Immigration Service with a copy of a valid passport and a guarantee letter that the visitor will leave Qatar before the expiry of the visa. The visa may be issued by Qatari Embassies outside the country or through the visa office in Qatar. The visa office issues visas for short trips, business visas and Quick Trader Visas. Traders who visit Qatar for less than 72 hours may get a tourist visa to enter the State of Qatar. However, it is recommended that all the necessary arrangements related to the arrival of buyers and foreign traders are made before entering Qatar. What is the B2B exchange and how can it benefit the exporters? A B2B (business to business) exchange is an electronic market place where buyers and sellers meet and transact. It is a means of using the Internet to bring previously inaccessible buyers and sellers together to a common platform where they can conduct business in a mutually beneficial manner. B2B exchanges employ a fixed price mechanism (catalogue model) or dynamic price mechanism, like auctions and exchanges, or both. The fixed price model creates value by using the powerful search capabilities of the Web. It creates value by aggregating buyers and sellers. The market maker digitises paper catalogues and other information of various sellers and provides buyers

with a “one-stop shop” on the Web. Buyers are able to quickly compare sellers across a variety of parameters like price, delivery terms, specifications, warranty and service information. This model is typically used for low-value products, where there is a fragmented buyer and seller base and frequency of transactions is high. Auction and exchange models are deployed for products whose demand and price volatility is high. This type of exchange usually specialises in a particular industry, like steel, paper and textiles, for example. A B2B Exchange creates value in the following manner: ■■ Reduces search cost – increased business and prospective clients at negligible costs ■■ Reduces information transfer cost ■■ Standardised systems – improvement of business efficiencies and increased competitiveness ■■ Improved matching for buyer and seller The potential to create value increases exponentially with the growth in number of participants. B2B exchanges are particularly relevant for SMEs. Most Qatari exporters come under this category. While strategic vendor development for raw material imports will be done in the traditional manner, purchasing can be done online. Raw material inputs can be obtained at competitive rates by accessing a wider variety of suppliers. On the sales front, B2B exchanges can reduce the cost of sales lead generation significantly and streamline the export process. Geography is no longer a constraint for export. The only requirement is that a quality product be available at a competitive price. Exporters can reach out to a wider market which can increase export potential exponentially. Exposure to world-class competition can also drive the need for quality in Qatari products. Hence B2B exchanges can play a very positive role for the Qatari exporter.

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