Gulf Insider July 2013 Issue

The multi-award winning Arabian magazine

Gulf Financial Insider

GulfInsider The Arabian Review

Volatility -

a new asset class?

4 experts reveal why they believe central banks retreat from stimulus programs will create significant market volatility for years to come.

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Issue 102

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July 2013 more inside...

Cover Story

Volatility –

28

a new asset class?

4 experts reveal why they believe central banks retreat from stimulus programs will create significant market volatility for years to come.

Contents 14 Bahrain

Looking beyond Western advocacy

18

Real Estate

New World Cities

20 Feature

Child Exploitation

35. UAE

Hospitality Market

23

Abu Dhabi

Still stranded after 1 year

24

Sectarianism Why Arabs Must Worry

32 MENA

Insurance Sector Exudes Confidence

48. Superyacht

USD25 Million Adastra

40. London

Penthouse market tops ÂŁ1 Billion

43. Abu Dhabi

New Financial Free Zone

47. Techpicks More Power!

GulfInsider

Gulf Financial Insider

There are no secrets to success. It is the result of preparation, hard work, and learning from failure - Colin Powell

Publishers Nicholas & Rebecca Cooksey

Comments...

Editor in Chief Nicholas Cooksey

Is Education the Answer?

It’s tough to find a job everywhere: in the US, in China, in Europe, and in India. Think education is the answer? I don’t.

Economic Times reports a million engineers in India struggling to get placed in an extremely challenging market Somewhere between a fifth to a third of the million students graduating out of India’s engineering colleges run the risk of being unemployed. Others will take jobs well below their technical qualifications in a market where there are few jobs for India’s overflowing technical talent pool. Beset by a flood of institutes (offering a varying degree of education) and a shrinking market for their skills, India’s engineers are struggling to subsist in an extremely challenging market.

According to data from AICTE, the regulator for technical education in India, there were 1,511 engineering colleges across India, graduating over 550,000 students back in 2006-07. Fuelled by fast growth, especially in the $110 billion outsourcing market, a raft of new colleges sprung up -- since then, the number of colleges and graduates have doubled.

So what does India do with those excess engineers? Some end up in the US on work visas because the US citizens purportedly do not have the right skills. In reality, there are plenty of skills there, but foreign workers will work for a lot less. Since companies can hire a programmer from India or Russia for 1/3 the cost of a US worker, that’s what happens.

There is a glut of high-tech talent. Yet, we are continually told education is the answer, without ever addressing the questions “for who? at what cost? in what field?” After growing at an astronomical rate for years, the cost of education is going to plunge. Job statistics will force that outcome.

If education was the answer, there would not be millions of engineers looking for jobs.

Assistant Editor Melissa Nazareth Layout Designs Dhanraj S Admin & Finance Nikesh Pola Sales Account Manager Chelsea Copenhaver Business Development Manager Sueallen Menezes Editorial Contributors Nicholas Cortes Ramzy Baroud Matthew Green Asa Fitch Printed at Awal Press, Kingdom of Bahrain.

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Ministry of Information approval no. TFI-431© Copyright 2009. Arabian Magazines is a division of CG Arabia WLL. No part of this publication may be reproduced in any manner without the written permission of the publisher. All Rights Reserved. Views expressed in this magazine are not necessarily those of the publisher.

Issue 102

Volatility -

a new asset class?

4 experts reveal why they believe central banks retreat from stimulus programs will create significant market volatility for years to come.

*Articles by these correspondents are the copyright of

Telegraph Media Group, 111 Buckingham Palace Road, London SW1W 0DT, England.

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Send your views to gulfinsider@ArabianMagazines.com The multi-award winning Arabian magazine

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Issue 101

100 Leaders in Bahrain - Part 2

Fast & Furious

I think the Dubai Police Force’s initiative to provide its patrolling officers with supercars is fantastic. I’ve always believed that the saying ‘Rules are made to be broken’ doesn’t apply everywhere, especially not on the roads. It’s not just about one’s own safety but also a question of jeopardising the safety of fellow drivers. Speeding motorists must be taken to task and the fact that the Dubai Police are being able to do this more efficiently with super cars is just wonderful!

Fayez, Um Al Hassam

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100th Is

Special Feature

100 Leaders in Bahrain - Part 1 Bahrain Marketview 2013

Investing Luxury Real Estate

Technology 4G Comes to Bahrain

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Chairman of Menatelecom on 4G & Bahrain’s Telecom Industry Bahrain BD2

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Saudi Arabia

Condolence

My heart felt condolences to the victims of the Rana Plaza building-collapse, in Bangladesh. I agree with the author that the most painful part of this tragedy was that it could be prevented. Corruption is one of the biggest sins in the world. Every human aspires to lead a comfortable life, which is okay but greed is what makes things go haywire. Some people are like bottomless pits; they are blessed with so much and yet they crave for more. The Gandhian Principle of Trusteeship comes into play here. We must keep what we need and share anything over and above that; yes, that’s easier said than done but we need to start somewhere.

Reader

Real Estate Review

Dubai

Land Rover Expedition Hello Gulf Insider,

First of all let me congratulate you on your 100th issue, published in May. I enjoy reading your articles as they are so informative and entertaining. Your June issue carried an article on Bill Daly’s Land Rover Expedition which was great. I’m looking forward to the monthly updates about the expedition. Keep up the good work!

Jay, Gudaibiya

Happy Anniversary!

Congratulations, Gulf Insider, on publishing your 100th issue. I wrote to you last month but my letter was not published. I hope you feature me this month. I really liked your special feature covering 100 leaders in Bahrain. I commend your publication for coming up with a well-thought list. I personally liked the second list more than the first as it had more young leaders. Young people have a big responsibility to lead the country towards a better future. All in all, an inspiring feature!

Adnan, Juffair

Wow, is it really 100 issues?

Well, I have read and enjoyed Gulf Insider every month and would guess I have read, if not every issue then at least 90+. I have seen you improve as the years have gone by and can tell www.gulf-insider.com you that this is the only Bahrain magazine that I make a point of reading due to your honest and direct coverage. Best wishes.

To view the magazine online visit

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Bahrain

Gulf Round-up Mindshare Holds Management Meeting for Key Stakeholders Mindshare organised a management meeting to review the agency’s performance and establish a strategic direction and business plan for the coming five years. The 3-day gathering was held at the Grand Hills Broumana, Lebanon last month and witnessed MDs, regional directors, and key directors from across the MENA region.

The assembly began with a detailed review of Mindshare MENA’s performance from 2008 to 2012, including in-depth scrutiny of products, initiatives, activities, and new additions to the agency’s spectrum of services. After a careful examination of the last five years at Mindshare MENA, participating attendees discussed a 5-year business strategy and planned to further strengthen Mindshare’s position as an agency. Mindshare is the MENA region’s premier global communications group, located in 10 countries across the GCC, Levant, and North Africa

Lexus IS Launched Ebrahim K. Kanoo, the sole distributor of Toyota and Lexus in Bahrain launched the Lexus IS last month. Mr Ismail Akbar, Executive General Manager of Sales said that the new IS, particularly the IS F has taken strong styling cues from Lexus’ sports car LFA. The new IS range comes with two variants, the sporty 3.5 liter engine version and the highly responsive 2.5 liter engine variant.

Alba Applauds Women Employees Alba recently held a seminar on ‘Integrating Women’s Needs in Development’, as part of Alba’s Women Empowerment Education Series, at the Alba Club. The seminar was organised by Alba’s Training & Recruitment Department, in conjunction with the Supreme Council for Women. The seminar was conducted by Dr Donya Ahmed, Acting Director General of Polices and Development and Director National Strategy of the Advancement of Bahraini Women at the Supreme Council for Women. The seminar outlined the value of women’s contribution to the work environment, and their role as an equal partner in boosting the company’s growth and development. More than 100 women employees attended the seminar and were also joined by members of the Executive Management Team as well as managers from different departments.

8

Gulf Insider July 2013

Business News

Real Madrid’s $1 billion fantasy island in Ras Al Khaimah abandoned due to lack of investment.

According to the RAK Investment Authority, one of the cosignatories behind the deal, the quasi-dystopian resort, on Marjan Island, which was set to include a 10,000-seater stadium and a Galacticos museum, was entirely dependent on funding from France and Luxembourg, which has since fallen through.

“Building won’t start any time soon,” a spokesman told Big Project ME’s sister magazine, Sports Talk. “Plans are indefinitely on hold. The resort stands no chance of opening in January 2015, if at all,” he said.

“We have been searching for funding over the past two months, but due to harsh economic times none has materialised.

We haven’t totally abandoned the project, but it will need fresh backers, since we were banking on promised funds from France and Luxembourg. Even if we got some today nothing would be open until the end of 2016, at the earliest.”

Real Madrid are highly unlikely to wait, given they now have firm links in the region courtesy of their new $39 million shirt sponsor, Emirates Airline.

This extremely ambitious boast was made by Louis-Armand de Rouge, the CEO of RAK Investment (not to be confused with the RAK Investment Authority) – another co-signatory on the deal.

A few months ago, Rouge told Sports Talk the resort would still open in January 2015 as planned, but couldn’t proffer an explanation as to why construction was yet to begin, although he did let slip that he was going on a “concerted drive in April to find backers”. – BIG PROJECT ME

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Bahrain

KFH-Bahrain’s Accolade

UAE calls on Europe to grant UAE citizens visa-free access UAE calls on Europe to grant UAE citizens visa-free access, claiming Emiratis are “too often stopped at European borders and turned away because of unclear, complex, and restrictive visa regulations.”

Last year a proposal was tabled to allow UAE citizens visa-free access to the 26 countries that make up the Schengen Area. This was initially opposed by Austria, Belgium, Germany and The Netherlands, but Germany and The Netherlands reversed their stance.

The Schengen Area is made up of 419m people and covers an area of 4,312,099 square kilometres. Its member states include Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland However, a senior British official told Forbes magazine’s Arabic edition the UK will scrap visa requirements for UAE nationals by the end of the year.

The visa-free entry was a key priority for the Arab country during UAE president Sheikh Khalifa Bin Zayed al Nahya’s visit to the UK in April. - ARABIAN TRAVEL NEWS

Kuwait Finance House – Bahrain redesigned and developed a new corporate website with the latest Responsive Web Design Techniques. The Communicator Awards presented KFH-Bahrain the Gold Award of Excellence for the structure and easy navigation of the website as well as the Silver Award of Distinction for the financial services provided through the website. The Bank is the first to commercially and globally adopt the latest Responsive Web Design Techniques in its new website. The Responsive Web Design allows the website to adapt itself to any device accessing the site, whether it be mobiles (Androids, iPhone, or Blackberries), tablets (egg. iPads and Tabs), and laptops or desktops. The Communicator Awards is sanctioned and judged by the International Academy of Visual Arts, an invitationonly group consisting of top-tier professionals from acclaimed media, communications, advertising, creative and marketing firms.

GM Ranks 2nd in 2013 IQS General Motors (GM) built on a strong performance in last year’s JD Power and Associates Initial Quality Study (IQS), placing about 50 per cent of its vehicles in the top three of their respective segments with a company-best eight segment awards. GMC ranked second overall in initial quality, climbing 10 spots, and was the top-ranked non-premium brand. Chevrolet

10

Gulf Insider July 2013

also jumped 10 spots and ranked fifth overall and second among non-premium brands. Together with Cadillac, all GM brands performed better than the industry average of 113 problems per 100 vehicles. In addition, GM was awarded the Silver Plant Assembly Line Quality Award for its Oshawa, Ontario plant where the Chevrolet Impala and Equinox are built. GM swept the Large Heavy Duty Pickup segment ( C h e v r o l e t Silverado HD, gmc Sierra HD) and Large Light Duty Pickup segment (GMC Sierra LD, Chevrolet Avalanche and Chevrolet Silverado LD).

Business News

Iran bans dog-walking in public and warn animals could be ‘arrested’ if caught outside Walking dogs in public or driving them around in cars is set to be banned in Iran.

Now dog owners fear their pets will be ‘arrested’ if they are caught in public and they could also face a fine.

In 2011, authorities threatened to criminalise dog ownership and said the growing popularity of keeping the pets ‘poses a cultural problem, blind imitation of the vulgar Western culture’.

Deputy police chief Ahmad Reza Radan told the Fars news agency that they ‘will confront those who walk their dogs in the streets. Cars carrying dogs will also be impounded.’

However the Iranian Society for the Prevention of Cruelty to Animals has questioned whether this is illegal and said that now law forbids dog ownership, according to AFP. It said dozens of dogs had been ‘arrested’ and were taken to ‘undisclosed locations’.

According to animal supporters, this crackdown is more serious than previous attempts.

Payam Mohebi, a pet hospital chief from Tehran, was quoted as saying: ‘Owners are being told that their dogs will be killed, and no paper (confirming the confiscation) is given to them.’

Dog owners are now walking their pets at night to avoid detection.

In June 2010 Grand Ayatollah Naser Makarem Shirzi warned that dog ownership would lead to family corruption and damage societal values.

The Ministry of Culture and Islamic Guidance then banned all media from publishing adverts about pets, according to AFP. Despite the threats, sales of dogs are still booming.

Pet foods and grooming kits are available at most supermarkets and dog training schools and ‘dog hotels’ have even sprung up in the country.

It has become increasingly fashionable in well-to-do Tehran neighbourhoods to keep dogs – especially expensive pedigrees – as status symbols.

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Bahrain

Gulf’s biggest public square set for Downtown Doha Msheireb Properties has announced plans to create the Gulf’s largest openair square within the new Downtown Doha project.

The developer said that the Al Baraha square will be one of the main attractions of the development and will feature 15 surrounding buildings offering al fresco dining, including Qatar’s first Mandarin Oriental Hotel.

The square will be built as part of phase 1B of Downtown Doha, which is being delivered by Carillion and Qatar Building Co (QBC) under a $650m deal.

The manmade square will be equal in size to Venice’s Piazza San Marco and will host events throughout the year. It will also be bordered by a 19,000m2 Cultural Forum, which will house at least two arthouse cinemas and a performing arts theatre. Space will also be available for public art exhibitions and lessons in music and the fine arts.

A retractable canopy will shade the square to reduce direct heat during the day and retracted at night to allowing it to escape. Low-level canopies will provide additional shading and circulate chilled air from cooling bollards powered by photovoltaic solar panels on the roof.

Building sites being sabotaged, says Bahrain Bahrain’s Ministry of Housing has said that dissidents in the country are sabotaging housing projects by blowing up empty units in projects under construction.

According to the Bahrain News Agency, the ministry said that three incidents have taken place in a housing project at Horat Sand, where gas cylinders have been blown up.

In a statement, it said widespread damage was caused to the units, which means that both the ministry and the contractor building them incurred losses as they will have to demolished and then rebuilt.

It denounced the actions and said they were harmful to the interests of the citizens of Bahrain, adding that it would cause delays in delivering much-needed housing in the Kingdom.

In March, Bahrain’s new housing minister Bassem Al Hamer said that the country was unlikely to meet a goal set in 2011 to build 50,000 new homes by 2016.

Recent figures published by Jones Lang LaSalle have suggested that Bahrain needs at least 40,000 new affordable homes in order to meet housing needs. – CONSTRUCTION WEEK

“New decree in Pakistan regressive, insensitive to rape victims,” Pakistan’s top human rights watchdog on Friday expressed “alarm and disappointment” over a declaration by the Council of Islamic Ideology that DNA tests are not acceptable as primary evidence in determining rape cases.

The Human Rights Commission of Pakistan described the Council’s decision as “regressive” and “unkind to rape victims”.

Rape is a “horrendous crime, which is far too common in Pakistan”, HRCP said. “Poor investigation methods and reluctance of witnesses to come forward out of fear mean that the balance is tilted in favour of the rapist as it is. In these circumstances, it would be foolish to not depend on all the evidence that is available, especially something as incontrovertible as DNA test results,” the statement said.

“Rather than benefiting from scientific advances through DNA tests, which have proven to be an accurate method for

12

Gulf Insider July 2013

identification, CII suggests discarding that without any prudent reason,” it said.

The Council of Islamic Ideology, a constitutional body that advises the Pakistan government, announced on Wednesday that DNA tests cannot be used as primary evidence in rape cases. - PTI

Police Dubai

Dubai police sergeant on trial

Photo: Jamie Wiseman

A

Dubai police sergeant forged 67 bogus warrants claiming cars had been stolen before jacking them himself and selling them on, a court has heard.

The officer, known only as HS, is accused of hacking into the force’s traffic system to make wanted-car warrants which he took to a technician who made replacement keys for the vehicles.

He then used the phoney keys to unlock, steal and sell the cars on the black market and pocketed £62,000.

However, when asked in court if he was behind the ruse, he replied: ‘Not at all! I am not guilty. I did not steal anything. I am not guilty… I didn’t do that.’

He appeared in the Dubai Court of First Instance alongside eight alleged accomplices.

Despite his denial, court papers cite H. S. as admitting two of his co-defendants gave him the idea after a shady deal with a Russian businessman went awry leaving him with large debts and no car, the Gulf News reported.

He is quoted as saying: ‘I was covered with debts and loans because I had earlier entered a business partnership with a Russian man, who took the money and absconded from the UAE. ‘I did not have a car and my coworkers

97 floors to the top!

R

esidents of Dubai’s Princess Towers were forced to walk 97 floors to top, which is more than 1,300 ft of steps, after the lift broke down. It is the equivalent of walking one-third of the way up Ben Nevis.

Princess Tower in Dubai, which stands at 1,355ft tall with 97 above-ground residential floors, has been named the tallest residential building in the world Guinness World Records.

But residents living in the luxurious tower block were told they have ‘no choice’ but to walk up to their flats, some on the 97th floor, after all eight lifts in the building broke down.

The startling view from the 85th floor of the Princess Tower in Dubai Marina

were dropping me to work at the police station.

‘It was then when we first discussed the idea. S.K. and H.I. spotted a number of impounded cars and [...] they suggested to me to look for abandoned cars in streets, then steal those cars and they would help me sell the stolen vehicles and share the revenue.

‘I stole nearly 70 cars and handed them to S.K. and H.I. to sell them… I used the money to cover more than Dh360,000 in debts.’

But he is said to have suffered sleepless nights, racked with guilt over the conflict between his duty as a police officer and his lucrative new source of income.

The Syrian technician, who replicated the keys, claimed that he was not aware that the suspects forged the wanted-car warrants to steal the vehicles.

He said the cars included brands such as Lexus, Nissan Sunny, Chevrolet Tahoe, Toyota Pickup, Nissan Infinity, Chevrolet Optra, Mitsubishi Lancer, Ford Ranger and others.

The trial continues. GFI

Dubai’s Princess Towers, the tallest building pictured with a domed roof.

gives an idea the stair climb faced by residents after the building’s lifts broke down The building, which has six levels in the basement and 101 above ground level, opened in September last year, with penthouse flats selling for more than US$ 3million.

But the owners of Princess Towers shut down all of its eight lifts - forcing residents to walk the equivalent of onethird of the way up Ben Nevis - Britain’s highest mountain - which stands at 4,408ft tall.

Flat owners were told that a solitary

Photo: Stian Alexander

‘service elevator’ is available for ‘limited’ trips to the 50th floor - but anyone living above that level will still have to walk the rest of the way.

Bosses at the skyscraper - owned

by Tameer estates - say the flooding was caused by water from the ‘fire protection system’ and that a ‘faulty fire hose’ was to blame.

Emergency repairs are ongoing after the problems began last month. GFI

Gulf Insider July 2013

13

Feature Democracy

sider

n GulfI

ive

us Excl

THE DAMNING DEMOCRACY DIVIDEND THAT DRIED UP Looking beyond Western advocacy.

W

e are now in the so-called ‘Asian Century.’ China is soon set to take over as the world’s leading economy and other Asian powerhouses are to thrive as the West moves to second and all the other fiddles in the geo-political orchestra.

No, not an immediate Western ‘power fade’ but maybe a greater convergence of views between East and West on how the world will be run with the West no longer dominating key ‘globally reserved offices’ such as the World Bank, IMF, WTO, and all those organizations starting with G then a number.

A n d , asks the

14

Gulf Insider July 2013

By Nicholas Cortes

leading Singaporean former diplomat, scholar and thinker, Kishore Mahbubani, (In an article quoted by Rahmesh Thakur in the May 2013 American Review), will that challenge also extend to Western values and aspirations, those templates for the preservation of human rights and their interpretation of what the West considers to be ‘exemplary democracy?’

You know, the stuff that “we” in the West allegedly have, and which therefore gives “us” (You could actually use the capitals US!) the self-imposed right to say when others don’t have ‘democracy’.

Or when they claim to have it, yet “we in the West” know it to be a lesser version!

Like one of those fighter jet deals where an ally gets the shape of the front line

fighter, but hey, not the front-line avionics or full weapons platforms. Looks good, but doesn’t pack the same punch.

After all, everybody wants to be in the Premier Democracy League. Why North Korea and the Congo, Vietnam – among others – even include the term in their national title to demonstrate how committed to democracy they are! (Oh do stop laughing – I’m serious!)

But you don’t get into the Premier League by self-definition, you know.

“We” in the West know all the qualifying requirements, and “we” will let you know when “we” think you have qualified and are accepted.

First however, serious scrutiny!

“Oh you have elections?”

Democracy Feature

“Well, that is a good start, but is it to a parliament that genuinely reflects the “will of the people” through a fully elected government that can be readily dismissed when it no longer holds the confidence of the majority of parliamentarians?

“Oh, you have an and elected chamber, good, but also an appointed chamber with real powers of denial of popular will? Not like the House of Lords, you mean?

“So, if ever they are in a joint sitting of both chambers, the members of the appointed chamber will always outnumber the members of the elected house, is that right?”

“Hmmm, that colours things doesn’t it, you know, all that bit about popular self-determination kind of gets the flick.”

“Oh, you have a written constitution in which all the major freedoms are guaranteed and human rights are protected. This is very good news indeed, especially the claim that you have a separation of powers between the Legislature, Executive and an independent judiciary.”

“But not so fast. Does the independent judiciary enforce its judgments against, you know, the society “big-uns” as well as the man in the street? Put fraudsters and shysters in gaol if convicted, a-laConrad Black?”

“Oh, I see.”

Now, don’t be cheeky by crying out Guantanamo. We are your friends after all. We are trying to help you!”

“Let me tell you earnestly, you are close, but no full democracy cigar as yet. But the positive news is that from what you have told me, I can smell the smoke. Bend to a bit more pressure from Congress or Westminister, those folks at Human Rights Watch, make a few more teensy-weensy changes, and I am sure you will soon be in the Premier League.

“Yes, I know, you might lose the country to the extremists and Islamists who speak the language of democracy with ease, and boy are they convincing to all our lobbyists. I know it’s tough, but just do as they ask and you will soon be in the sunlight up-lands of the Premier League, well at worst, for a while any way.”

“Now that is unfair to mention Egypt or Iraq, and in the same breath.”

Trust us, we won’t let that happen to you. We’d come to your aid just like we did in Iraq and Afghanistan, Vietnam and Grenada. That stuff about Argentina and the Scuds was not completely the way the Brits tell it. Remember, we invented the phrase, “We are here from the Government, we are here to help you.”

Doesn’t it make you sick of the hypocrisy and Kant?

The sanctimonious, generally self-appointed or pliantly elected representatives, who regard themselves as the advocates and custodians of what some claim constitutes the pinnacle of “democracy.” Yet, that democracy was practiced for over a hundred years as though people of colour were of no consequence. A rather long time to sort out the idiosyncrasies, to broaden the

Bahrain showed the progressive nature of its ‘democracy’ and its willingness to accept critical assessment and make changes. democratic base, to bring about major changes to people’s lives. Bahrain has only been at it for a little over a decade and already leads the region in practice.

But lesser voices are simply unheard if they say to the US, “Well you don’t actually fully qualify to call yourself a democracy,” because they set the rules.

It is a rather different ‘punch-‘em power’ when it is a global fella applying such criticism of “little Bahrain.”

Such is the way of real politik. Just do as I say.

Oh make no mistake, without much of the US’s advocacy for issues of personal freedom, the human rights to pursue unbridled happiness and to oppose a return to colonialism after WW2, the world would have been a darker place.

Sometimes there is, and I venture it in the nicest way, a need for whip-cracking, and the US does it well. But that doesn’t mean that moral certitude is a one way street. Or that ‘one size of democracy fits all.’

As Mahbubani writes, in the new Asian Century the accelerating convergence brought on by globalization and universal technology application, the rapidly expanding ranks of the middle classes “will take its major lifestyle cues from the western middle class … in terms of values and aspirations.” And that “accelerating convergence heightens the urgency of the need for redressing global governance deficits,” and here he talks about the IMF the World Bank and the “great power machinations to keep the UN politically weak.”

But can we take that further, to the national level?

Singapore, on a small island with few natural resources, took the bulk of its people from virtual coolie-dom to become possibly the most highly educated nation in the world with a pace-setting efficient economy and an enviable lifestyle to match, all within a generation. And all at a time when its democracy was guided or limited, it dealt with racial division, external claims that its human rights were curtailed, and that its leadership was dictatorial, albeit benevolent. And it did so by effectively telling the world to bite its posterior and that it was ruling in the interests of all its people.

The loudest criticism of Bahrain comes from some countries in the Englishspeaking West, countries that are largely silent about democracy in other countries in this region, yet vociferous about the country which already is streets ahead in the democracy stakes in terms of its practices and institutions. A country whose leadership and parliament are committed to dialogue with political opponents, evolutionary change and a continuation – nay expansion - of educational and job opportunities and further improvement of the virtual cradleto-grave social welfare system which benefits all its people.

Since February 2011, Bahrain has become increasingly divided along secular lines. For democratic practices

Gulf Insider July 2013

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Feature Democracy

In the Asian Century there may well be pressure for a more guided form of democracy while invoking greater administrative transparency and institutional openness in pursuit of the rule of law. to be fully effective there also needs to be a greater maturation of the electorate so a ‘one man, one vote’ platform has a greater prospect of meeting the national interest than a blind adherence to the word from the mosque. And it requires a greater measure of honesty from secular leaders who by stealth wish to form a fundamentalist Islamic state, a decision Bahrainis in overwhelming numbers, would reject.

In June 2011, the leadership in Bahrain invited an international panel of experts to establish the Bahrain Independent Commission of Inquiry to give a wartsand-all assessment on the events leading up to the disturbances and its aftermath. It was both a courageous and astute move which was welcomed in the West.

Again, Bahrain showed the progressive nature of its ‘democracy’ and its willingness to accept critical assessment and make changes. All of the BICI’s recommendations were accepted and implementation of many of them began.

Opposition activists, stunned into a short initial period of inaction, subsequently resumed their violent affray, yet still claimed to be ‘peaceful,’ drawing significant support from some Western governments and human rights groups, despite the changes being made and mooted. There followed almost monthly visits from US, UK and EU Ministers and delegations, urging the Bahraini leadership to do more.

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Gulf Insider July 2013

Yet increasingly the country in both perception and reality, had become more secularly divided by events.

Under such a divisive situation, more citizens have questioned why the Bahraini leadership should accept or pander to Western calls for extending democracy to organizations and institutions that happily use democracy’s freedoms and lack of restraint, to in fact bring about a state of affairs that would simply ignore those tenets if they ever came to power?

If there is to be a ‘democratic dividend’ to be gained by pursuing Western concepts of democracy, many Bahrainis feel it to be based on policies and actions

critical of the rulers and government, the very people who are making concessions. However, there appears to be little commensurate pressure on the opposition groups to seek compromise and bring the violence to a close when in fact the alternative they promote will bring a ‘democratic deficit.’

Increasingly, there are more people thinking that Bahrain has got a ‘raw deal’ from the West in pursuit of its democratic circumstance and while the mood continues to promote democracy, questions are being asked as to whether liberal democracy is the only form of democracy to be pursued.

In the Asian Century there may

Democracy Feature

Image: REUTERS/Hamad I Mohammed (BAHRAIN - Tags: POLITICS)

well be pressure for a more guided form of democracy while invoking greater administrative transparency and institutional openness in pursuit of the rule of law. While the constitutional rights and freedoms of citizens will be respected, there would be rigorous enforcement of the rule of law and simply ignore the braying of do-gooders be they governments or NGOs. Perhaps like Singapore, Bahrain will say to the West, “We tried it your way but when we took your hand for help, we hadn’t realized you wanted the arm and the torso as well!”

“You chided us when we made the efforts yet you shouted the mantras

of an opposition that fooled you into believing that they wanted what you want us to have. Well thank you, but we believe that we have the support of the country and we will not cede the country to those who want to turn it into an Islamic state.”

Such views are likely to have greater resonance in Asia and elsewhere in the Arab world, than it ever will in the West.

Beyond the West there is a greater acceptance that democracy is governed by the maturity of the electorate and the fact that in the Muslim society, state and religion are inseparable in that the tenets of faith are fundamental to the manner in which Muslims live their lives.

Simply put, Bahrain can say, we will do what is in our interest irrespective of Western goading or pressure, and be in a League of our own, together with understanding friends. We would rather this, than continuing to strive for your Premier League, a League in which we are unlikely to be accepted while we have a system of rulership that suits this country, Shia and Sunni, Christian Hindi, Sikh and Jew, all very well. GFI

The author is a former senior diplomat and political adviser with extensive international experience in strategic and parliamentary affairs, and is currently working in Bahrain Gulf Insider July 2013

17

World Cities Real Estate

New world cities offer business cost effective real estate solutions

H

ong Kong is the most expensive world class city in which to locate a business, with London in second place and New York a close third, according to new analysis from international real estate advisor Savills. The total real estate cost of setting up business in all three cities is now almost three times that in the most competitively priced world class capitals, Shanghai and Mumbai. Sydney now stands out as especially good value and looks set to take advantage of expanding Pacific Rim investment.

Previewing its latest World Cities Review which was published in March, Savills has ranked the top ten world class cities using a measure of competitiveness based on the total cost of real estate space, both residential and commercial, to accommodate core financial and creative sector business teams. The analysis includes headline rents and all associated taxes and charges which are often overlooked and can add as much as 53 per cent to the base office rental cost.

“In the intensely competitive global market for top talent, the cost, quality and desirability of a city lifestyle is an important unit of currency,” says Yolande Barnes, director of Savills world research.

“Business location choices sometimes have as much to do with where the CEO wants to live as economic considerations,

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but the cost of residential and commercial accommodation for an international business team can have a significant impact on the bottom line. Our analysis shows the importance of looking beyond headline rents, or assuming that commercial and residential rents work in tandem.

“A location’s competitive pricing is by no means the only part played in its success – quality of life and business competitiveness will be key factors too – but the whole cost sum, and particularly the quality of business premises in a location can have an important impact on

the human capital that is such an key part of the knowledge economy. Shanghai, Sydney and Singapore all have among the cheapest total costs of the ten world cities studied but each offers different competitive and business environments.

Given their location within or close to the new world centres of wealth generation, they should be well-placed for inward investment from both financial and creative sector businesses.”

Looking forward, Sydney now stands out as offering particularly good value, though it has shown the greatest five year growth – with total accommodation

Total real estate occupancy costs (for one core financial and one creative business teams, based on the Savills Executive Unit measure*) City Hong Kong

Total cost rank 2012 1

Total annual real estate cost* £1,074,000

Office rent growth 2012

Residential rent growth 2012

-3.7%

3.0%

Residential capital growth 2012 15.2%

London

2

£973,000

6.5%

4.7%

2.7%

New York

3

£949,000

9.0%

4.6%

12.2%

Paris

4

£869,000

5.0%

0.0%

-3.4%

Tokyo

5

£782,000

7.0%

-2.0%

-0.7%

Singapore

6

£675,000

-8.5%

9.1%

3.5%

Sydney

7

£602,000

2.8%

4.2%

4.2%

Moscow

8

£590,000

13.9%

8.8%

9.0%

Shanghai

9

£371,000

4.3%

4.0%

-0.5%

Mumbai

10

£318,000

-9.7%

18.9%

0.7%

Source: Savills World Research

Real Estate World Cities

A location’s competitive pricing is by no means the only part played in its success – quality of life and business competitiveness will be key factors too. costs rising by around 14% per cent. The country’s new Significant Investment Visa is attracting a significant number of inquiries from Asia, both for residential and commercial investment opportunities, with budgets ranging from AUD5 million to AUD300 million.

The main obstacle to Sydney’s growth as a world city has been the restrictions on foreign purchasers buying homes. This new visa pathway for migrant investors, requiring the applicant to invest AUD$5 million into complying investments for a minimum of four years before being eligible to apply for a permanent visa, may change this.

Its purpose is to attract investors and may well mean that Sydney’s real estate values outperform many other world cities over coming years.

Financial sector or creative sector – the city rankings can look quite different There can be significant differences between headline commercial rents and the total costs that a tenant pays.

Headline rents alone make Hong Kong the priciest for financial sector locations, but London becomes far the most expensive world city, once all fees and taxes are included, at £159 per square foot (£1,711 per square metre) for a rarefied Mayfair hedge fund location (while London is one of the cheaper locations for a creative organisation or tech start-up).

The cheapest location – Mumbai – would

London

cost just £27 per square foot. The only other cities to break the £100 per square foot barrier on headline rent plus costs are Hong Kong, Tokyo and New York.

Overall, the growth in total costs since 2008 has been variable. Total real estate costs in most countries have remained roughly similar since the North Atlantic debt crisis struck, although the costs of financial company premises have fallen more. By contrast, creative businesses in Mumbai and New York have faced strong price growth of over 20 per cent, having grown from lower bases on the back of strong economies, while Singapore & Tokyo are as much as 20% cheaper than they were in 2008.

The relative ‘cost freeze’ in rents and Cities ranked by total accommodation costs

associated costs is changed by currency fluctuations (not shown) which have served to make some cities, such as Sydney for example, look more expensive to Euro and Sterling denominated businesses. Although static real estate costs might be expected in “old world” cities affected by recession, it is perhaps surprising in view of the high levels of capital growth seen in “new world” cities.

Barnes believes that this is indicative of a “more elastic supply-side response in these locations. It also reflects the extent of the yield contraction in many “new world” cities, where rents have not kept pace with capital values.” GFI

Financial Financial Sector Sector total £psf costs (incl accommodation all charges) costs change since 2008

Creative Industry £psf costs (incl all charges)

Creative Industry total accommodation costs change since 2008

Hong Kong

128

7%

48

London

159

8%

45

4% 1%

New York

103

14%

53

21%

Paris

43

6%

45

3%

Tokyo

105

-14%

50

-18%

Singapore

66

-19%

46

-4%

Sydney

40

14%

27

14%

Moscow

72

-11%

42

-6%

Shanghai

69

11%

27

16%

Mumbai

27

0%

16

22% Gulf Insider July 2013

19

Feature Child Labour

Khadamas for Sale: Child Exploitation Bonanza

L

ast night at the hotel lobby of an Arab Gulf country, a family walked in aiming for the westernized café that sells everything but Arabic coffee. The mother seemed distant as she pressed buttons on her smart phone. The father looked tired as he buffed away on his cigarette, and a whole band of children ran around in refreshing 20

Gulf Insider July 2013

chaos that broke the monotony of the fancy but impersonal hotel setting.

Chasing behind the children for no other reason but to be constantly vigilant to any unexpected harm was a very skinny Indonesian teenager wearing a tightly wrapped headscarf, worn out blue jeans and a long shirt. She was the maid, or khadama as maids are called here,

By Ramzy Baroud

meaning a servant.

The girl was but a child, of the same build and overall demeanor of my 14-yearold daughter who is busy with her studies anticipating a very exciting summer ahead. If she is lucky, the Indonesian ‘khadama’ can only expect one day off per two weeks, as she spends all of her time toiling for numerous hours, has no

Child Labour Feature

In most Gulf countries, cheap foreign laborers are asked to hand over their passports in a scheme involving authorities, employment agencies and employers.

rights, with little or no pay and cannot escape. In most Gulf countries, cheap foreign laborers are asked to hand over their passports in a scheme involving authorities, employment agencies and employers. This is done to ensure compliance and obedience of young men and women that are mostly from southeast Asian countries.

Some Arab countries have become a breeding ground for a form of modern slavery that capitalizes on existing miseries found elsewhere in order to feed the insatiable consumerism that permeates most societies. It is particularly disheartening considering that Islamic doctrines emphasized labor rights many centuries ago, leaving no room whatsoever for alternative interpretations to religious texts that people are created equal, deserving of respect, freedom and dignity.

The injustice doesn’t start and end there. Rich Arab countries are but a mere manifestation of a relentless global phenomenon that requires more than unbinding international conventions but a major shift in cultural attitude.

June 12 was World Day Against Child Labor, an occasion that barely warranted some habitual mentioning by some news media, but certainly not enough to compete with headlines pertaining to the latest gadgets and yet more revealing photos of one Kardashian woman or another. I wonder if we tend to avoid such topics because once they are truly discussed, to varied degrees, we all become culpable? From the brand name clothes we wear, the fancy gadgets we haul around to pretty much everything else we consume, there is surely to be found traces of the sweat and tears of some oppressed laborer or a child with much potential but little hope.

No, this is not a guilt trip, but a pressing issue than can no longer be ignored or lumped into some vague notions about the world at large, being unfair and such.

Many forms of injustice are driven by conscious decisions made by all of us.

They can also be reversed by conscious decisions made by some of us.

The International Labor Organization (ILO) has done much to delineate the problem and tried to engage various governments around the world to alleviate the suffering of laborers,

especially the children amongst them.

Most countries around the world ratified ILO Conventions into law, but most are yet to challenge the rooted exploitation in their own societies.

Browsing through the text of ILO’s fundamental child labor Conventions (namely No. 138. No. 182 and the more recently No. 189, adopted at the International Labor Conference of 2011), there is enough clarity regarding the minimum age of admission to employment, the ‘worst forms of child labor’ in domestic work and many other related issues. Yet while governments are giddily signing such Conventions knowing that accountability is almost nonexistent - often time little changes on the ground.

In Burma, an activist, Hsu Hnget told Irrawaddy news, that child labor is “so deeply rooted in society that it had become a ‘tradition.’”

According to a survey conducted by Child Rights and You, and cited in the Huffington Post, “19 percent of people in South Delhi believe that an individual is a child if he or she is below the age of 10 and most did not know about the laws that prohibit child labor.”

In Indonesia, ILO estimates that almost 2.5 million children are toiling at work, while they should not be working in the first place. The Jakarta Post reported that 21 percent of them are domestic workers and 60 percent work in the tobacco industry. According to the ILO and other organizations, many of them work for no pay.

“The children in the tobacco fields worked three to seven hours per day, earning only Rp 15,000 (US$1.51) to Rp 25,000,” reported the Jakarta Post on June 15.

Bangladesh is particularly rife with such exploitation, the type that also involves many western companies seeking cheap labor and large profit margins. Many of those who perished under the rubble

Gulf Insider July 2013

21



Feature Child Labour

According to a global interactive map on ILO website, “an estimated 13.4 million, or about 15 percent of all children in the (Arab) region are child laborers.”

of the Rana Plaza building in Dhaka on April 24 were children, and of course, exploited adults. Since then two relevant anniversaries came and went with little change in work conditions: Labor Day events on May 1 and World Day Against Child Labor on June 12.

There are an estimated 215 million children classified as child labors.

Amongst them, according to the International Labor Organization, “10.5 million kids are employed to cook and clean homes, where they’re often subjected to hazardous conditions and sexual abuse.”

In the Middle East, exploiting laborers is also a ‘tradition’, where there is no uproar, or even a slightly serious protest at the dismal work conditions, especially

22

Gulf Insider July 2013

those involving children. This is not limited to foreign workers, but nationals as well. According to a global interactive map on ILO website, “an estimated 13.4 million, or about 15 percent of all children in the (Arab) region are child laborers.”

In a separate study, the ILO explains the types of exploitation in Arab countries. “Working children in this region are vulnerable to participation in illicit activities such as drug trafficking and the commercial sex industry, recruitment by religious extremists, poor health, exposure to unsafe working environments, and lack of access to skills training.”

Of course, the Syrian civil war is expectedly important to any discussion related to exploitation as its horrible

consequences are now extending all over the region. Many Syrian children are being exploited in Lebanon and elsewhere as laborers and prostitutes, reported Al Akhbar on June 11. Similar reports are resurfacing elsewhere, throughout Arab countries, Turkey and Europe. “Not far from the Lebanese hot zones, media strategy expert Issam Azouri describes the situation of a child receiving $20 a day to throw a hand grenade or burn a tire,” according to Al Akhbar, which also reported on a 4-year-old boy that begs to survive.

In some tragic way, the Indonesian teenage ‘servant’ from the hotel lobby last night might not even qualify to be included under ‘worst forms of labors’ per ILO Convention No. 182 which defines the type of labor that is similar to slavery.

Regardless, we must not wait yet another year to make a passing mention of the tens of millions of exploited children, nod our heads in predictable tandem about how unfair the world is, and how lucky we are to be spared such injustice. Child laborers would not exist if it were not for the many more millions of willing exploiters, seeking khadamas, fine cigars and brand name garments.

The world, after all, is made up by us, so we’d better take responsibility for it and its exploited children. GFI

Ramzy Baroud (www.ramzybaroud.net) is an internationally-syndicated columnist and the editor of PalestineChronicle. com. His latest book is: My Father was A Freedom Fighter: Gaza’s Untold Story (Pluto Press).

Trapped Schoolboy Feature

Still stranded in the Gulf 12 months on...

Joe Thompson, aged 12, has developed a fear of travel.

He is currently in Abu Dhabi, and has been since June 2012. His condition continues to baffle psychiatrist.

Family may have to sell family home as expenses continue to mount.

T

he British schoolboy trapped in Abu Dhabi after developing a fear of flying is still in the Gulf state a year after The Mail on Sunday highlighted his plight.

Joe Thompson, now 12, had been due to fly back to Britain with his family last June after his father Tony’s work contract in the UAE ended. He tried four times to board a plane with his family, but each time he broke down in tears and refused to fly.

He subsequently refused to travel home by boat and overland. Now, a year later, Joe remains stranded 4,500 miles from home with his father while his worsening mental condition continues to baffle psychiatrists.

The situation has reached an expensive impasse for Mr Thompson, 63, who risks bankruptcy as he tries to reconcile his son’s condition with his responsibility to his distraught wife Pauline, 49, and daughter Chloe, 17, who are back at the

Stuck: Joe Thompson has now developed an intense fear of all forms of transport and his behaviour has left psychiatrists baffled Photo: INS News Agency

Parted: Joe and his mother Pauline who can only see her son when she comes out to Dubai on holiday family home in the UK. Mr Thompson has pleaded for help to rescue his young son after spending his savings and borrowing $60,000 to fund their unexpected extended stay in Abu Dhabi.

He now fears he might be forced to sell their home in Britain.

Joe has been diagnosed with Severe Anxiety Disorder and Flight Phobia, but Mr Thompson thinks his son’s problems go far deeper.

In the past year Joe has also been prescribed the anti-depressants Zoloft and Cipralex but he still refuses to return home and fills his time playing rugby, seeing friends, watching TV and going to the mall to surf Facebook.

Mr Thompson said: ‘I’ve tried all the tactics to encourage Joe. When I’ve no money left, I will sit on the British Embassy steps and say, “Here are our passports, we need help.” ’ The situation has put a huge strain on Mr Thompson’s marriage. ‘It’s difficult because I don’t see Pauline,’ he said.

‘But we’re still talking. We realise we have an end objective to get Joe home.

It’s like a project we’re working on. The biggest strain is a financial one… it’s amazing a year has gone by. My concern is, where will this all end?’ GFI Gulf Insider July 2013

23

Feature Sectarianism

Sectarianism and the Irrational New Discourse:

Why Arabs Must Worry

By Ramzy Baroud

M

y friend Hanna is Syrian and also happens to be Christian.

The latter fact was rarely of consequence, except whenever he wished to boast about the contributions of Arab Christians to Middle Eastern cultures.

Of course, he is right. The modern Arab identity has been formulated through a fascinating mix of religions, sects and races. Christianity, as well as Islam, is deeply-rooted in many aspects of Arab life. Needless to say, the bond between Islam and Christianity is simply unbreakable.

“I am Christian, but, in terms of culture, I am equally a Muslim,” he told me by way of introduction to a daunting realization. “But now, I am very worried.”

Hanna’s list of worries is long.

Lead amongst them is the fact that Christian Arabs in some Arab societies are increasingly viewed as ‘foreigners’ or ‘guests’ in their own countries. At times, as was the case in Iraq, they are punished by one extremist group or another for embracing the same religion that US-western zealots claim to represent. Churches were blown up in brutal retribution for a savage war that President George W. Bush and many of his ilk maintained to be between good and evil, using the most brazen religious references as they savaged Iraq, sparing neither Muslims nor Christians.

24

Gulf Insider July 2013

During the early years of the war, many Arab intellectuals seemed wary of the sinister divide that the US was erecting between religions, sects and communities. Many in Arab media referenced past historical experiences when other imperial powers – namely Britain and France – resorted to the ‘divide and conquer’ stratagem. Those attempts in the first half of the 20th century resulted in much bloodshed and lasting scars in many communities.

Lebanon is the obvious example with Iraq prevailing.

In response to the colonial attempts at busying the Arabs with internal conflicts, Arab nationalists had then wrangled with a discourse that proved of immense value to modern Arab identity. To escape the pitfalls of

religious and sectarian divides, and to unleash the untapped energies of Arab societies, there was an urgent need to articulate a new language expressing a unifying pan-Arab political discourse. In post-World War II, the rise of Arab nationalism was the force to be contended with, from Egypt, to Iraq and to Syria. It was a battle of wills involving imperialist powers, later joined by the United States. It was also local, tribal elites fighting for their own survival.

The nationalists’ discourse was meant to inspire, from Gamal Abdel Nasser’s thundering speeches in Egypt, to Michel Aflaq’s eloquent thoughts in Syria, Iraq and elsewhere. At least then, it seemed to matter little that Nasser was an Egyptian Sunni Muslim, and that Aflaq was a Greek Orthodox Christian.

Sectarianism Feature

Lead amongst them is the fact that Christian Arabs in some Arab societies are increasingly viewed as ‘foreigners’ or ‘guests’ in their own countries.

Aflaq was profound, and his insistence on the vitality of the Muslim character to Arabs was a testament to a generation of nationalists that since then, has all but completely faded. He spoke of Arab unity, not as a distant dream, but a practical mechanism to snatch liberty from many sinister hands. “What liberty could be wider and greater than binding oneself to the renaissance of one’s nation and its revolution?” he said during a speech.

“It is a new and strict liberty which stands against pressure and confusion.

Dictatorship is a precarious, unsuitable and self-contradictory system which does not allow the consciousness of the people to grow.”

Many voices echoed that sentiment in Arab nations near and far. Poets recited the will of freedom fighters and artists rendered the language of philosophers.

While Arab nationalist movements eventually fragmented, were weakened or defeated, an Arab identity survived.

Long after Nasser died, and even Anwar Saddat signed the Camp David accords, thus breaking with Arab consensus, school children continued to sing “Arab homelands are my home, from the Levant to Baghdad, from Najd to Yemen and from Egypt to Morocco.”

The war over Arab identify however never ceased, as it continued to manifest itself in actual and figurative ways. Israel and western powers, vying for military dominance, regional influence and ultimately resources, did the best they could to shatter the few semblances that sustained a sense of unity among Arab nations that survived despite numerous and perhaps insurmountable odds.

The Lebanese civil war (1975-1990) left deep wounds that continue to fester.

The Iraq war was particularly painful.

While Lebanon civil strife involved welldemarcated sects, the alliances were in constant influx. But Iraq’s civil war, encouraged and sustained with direct American involvement to weaken Iraqi resistance to US-British occupation, was well-defined and brutal. Muslim Shia and Sunni engaged in a bitter struggle as US troops wreaked havoc in Baghdad.

Members of all sects paid a heavy price for the fighting, which also damaged the national identity of Iraq and made a mockery of its flag and national anthem.

Gulf Insider July 2013

25



Feature Sectarianism

Christians form a chain to protect Muslims praying in Tahrir Square.

Credit: Khaled Moussa Al-Omrani

The sociopolitical impact of that war was so severe, it resuscitated a reactionary discourse that forced many communities to see themselves as members of one group or another, each fighting for its own being.

Soon after the Egyptian revolution, I walked the streets of Cairo, reminiscing, with much giddiness - about the past and the encouraging future. A ‘new Egypt’ was being born, one with ample room for all of its children. An Egypt where the poor are giving their fair share, and where Muslims and Christians and the rest would march forward, hand in hand, as equals, compelled by the vision of a new generation and the hopes and dreams of many more. It was not a romantic idea, but thoughts inspired by millions of Egyptians, by bearded Muslim men protecting churches in Cairo against government plots to stir religious tensions, by Christian youth guarding the Tahrir square as Muslim youth prayed, before they all resumed their fight for freedom.

Despite my insistence on optimism, I find the current political discourse hateful, polarizing and unprecedentedly defeatist. While Muslim political elites 26

Gulf Insider July 2013

Thoughts inspired by millions of Egyptians, by bearded Muslim men protecting churches in Cairo against government plots to stir religious tensions, by Christian youth guarding the Tahrir square as Muslim youth prayed, before they all resumed their fight for freedom. are sharply divided between Shia and Sunni, assigning layers of meaning to the fact that one is born this way or that, this wrangling has been weaved into a power play that has destroyed Syria, awakened past animosities in Lebanon and revitalized existing conflict in Iraq, further devastating the very Arab identity.

Iraq’s historical dilemma, exploited by the US for immediate gains, has now become a pan-Arab dilemma. Arab and Middle Eastern media is fomenting that conflict using terminology loaded with sectarianism and obsessed with erecting the kind of divides that will bring nothing but mistrust, misery and war.

Resurrecting Nasser’s and Aflaq’s

Arab nationalism might no longer be possible, but there is a compelling need for an alternative discourse to the type of intellectual extremism that justifies with disturbing lucidity the butchering of the inhabitants of an entire village in Syria because of their sect or religion. My friend Hanna has every reason to worry, as all Arabs should. GFI

Ramzy Baroud (www.ramzybaroud.net) is an internationally-syndicated columnist and the editor of PalestineChronicle. com. His latest book is: My Father was A Freedom Fighter: Gaza’s Untold Story (Pluto Press)

Business Stock Market

The Future of Volatility

Four volatility management experts believe central banks’ retreat from stimulus programs will create significant volatility for years to come.

Take a look at where they see volatility emanating from, ways to exploit volatility as well as manage it, and why volatility should be viewed as an asset class.

28

Gulf Insider July 2013

Kevin Kearns, Portfolio Manager Loomis, Sayles & Company

Too much debt in the developed world should continue to create volatility in the markets for several years, according to Kevin Kearns, head of Loomis, Sayles & Company’s Alpha Strategies group. “For Europe, Great Britain, the United States and Japan, there are really only four ways out of their unsustainable debt dilemma.

You can grow your way out, implement austerity, default – either via a hard default or a soft default such as raising the age on social security – or you can print money,”

said Kearns. What has transpired so far, and probably will continue to happen for some time, he believes, is a back-and-forth between all of these nations on which path is the least painful.

Kearns believes there are many opportunities to exploit volatility today, across multiple asset classes, including commodities, equities, fixed-income, and currencies. For example, techniques can be used to implement carry strategies, rate and credit curve views, and relative value opportunities (long/short) between cash and derivatives markets.

One spot Kearns sees for both offensive and defensive volatility plays is Japanese

Stock Market Business

markets due to Japan’s unprecedented quantitative easing program, announced in April to stimulate that island nation’s economy. The expansion of their Asset Purchase Program by $1.4 trillion in two years is so large it is expected to double the money supply in Japan.

“It appears that the Bank of Japan is trying to engineer a 2% inflation rate – with negative real yields of 1-1/2% to 3% – and they want the investor to take on their bonds. The question is, will investors buy that, knowing Japan’s balance sheet is arguably the worst in the developed world, as well as knowing there are significant demographic challenges,” said Kearns. He points out that Japan has an unfavorable demographic for growing its way out of debt: by 2025 29% of the population will be over 65. Moreover, he reckons the country has the furthest to climb among the G8 nations.

“So far, the trade has been to be long1 on Japan’s Nikkei 225 stock index and short2 the yen. But the big question is, ‘What happens with Japanese interest rates?’” said Kearns. With the direction of interest rates in question, he believes there are a few attractive interest rate volatility opportunities to consider.

Overall, Kearns warns that the world has put a lot of faith in central banks, despite the fact that about half of all recessions have been caused by central

The world has put a lot of faith in central banks, despite the fact that about half of all recessions have been caused by central bank policy mistakes. bank policy mistakes. Therefore, he will be watching closely for volatility spikes over the next three to five years as central banks retreat from quantitative easing policies.

Vincent Chailley, Chief Investment Officer H2O Asset Management

Vincent Chailley, CIO at H2O Asset Management, an alternative investments firm in London, believes pumped liquidity of quantitative easing (QE) policies will continue to push asset prices up for a little while. But he cautions that investors should keep in mind that the longer central banks play at this game, the higher the payback price will be.

“Basically, you have a market where everything today is going up, slowly but surely. But we all know at some

stage, and nobody knows when, all of these monetary policies will have to be normalized to get out of this extremely low rate situation,” said Chailley.

Chailley agrees with Loomis Sayles’ Kevin Kearns that central banks can make mistakes. And, if and when the market realizes this is the case with a QE exit strategy, it could trigger very violent moves in every asset class. “The only way to face this very possible situation is to start adding asymmetric strategies now, namely volatility strategies, to protect portfolios against this future extremely asymmetric event,” said Chailley.

Chailley believes volatility can be used in longer and non-short fixedincome investments to complement and enhance portfolio performance, as well as to reduce volatility and risk.

One opportunity he sees for today’s transitioning fixed-income markets is to pilot relatively cheap strategies that may help protect portfolios against interest rate hikes in the U.S. over the next three years.

“Currently, the U.S. market is not pricing in any sort of rate hike from the U.S. Federal Reserve until December 2015. So this may not be a bad proposal for complementing a portfolio,” said Chailley.

More and more, investors will come to consider volatility as an asset class, according to Chailley. “Volatility has

Gulf Insider July 2013

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

Business Stock Market

directly linked to the behavior of equity investors who tend to overpay for the “glamour stocks,” overpaying for discovering the next Apple or Google, at the expense of “boring” stocks, according to Bourdeix. Typically, these low-beta4, low-volatility stocks used in minimum variance strategies tend to outperform the market over a full market cycle while significantly reducing risk.

Michael Buckius, CFA, Chief Investment Officer Gateway Investment Advisers

The unconventional monetary policies used by central banks in several developed countries to stimulate the economies after the 2008–2009 financial crisis. proven to be one of the last ways to protect portfolios against risk today,” he said. Traditionally, investors have used assets such as currencies or gold to hedge their portfolio against any risk. But, Chailley points out, we see today that gold is down, the Swiss franc is pegged, and the yen is collapsing. Therefore, some of these once considered “safe haven” assets used for hedging strategies are now less appealing to investors.

Emmanuel Bourdeix, Head of Structured Product & Volatility Management, Seeyond

Emmanuel Bourdeix, a volatility management veteran at Seeyond in Paris, sees a lot of similarities between 2013 equity markets and those of the low volatility era of 2004–2007.

“We have quite the same configuration today. We had low interest rates in ’04 to ’07 like today. Huge flows of liquidity

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Gulf Insider July 2013

into the market pushed equity investors to a systematic buy-on-dips strategy.

And typically, interest rates are too low today to attract investors again toward spending on hedges. That is why we have such contained volatility today,” said Bourdeix.

So far in 2013 the S&P 500® has recorded low daily price fluctuations.3 But Bourdeix warns that investors should not be complacent with today’s low volatility, just as they should not have been in 2007.

“If we expect volatility to remain contained, we also expect some transitory spikes, which will come from geopolitical events, social unrest or concerns regarding the exit strategy for quantitative easing,” said Bourdeix.

Bourdeix points out that the majority of equity investments globally are still benchmarked against indexes. He also emphasizes the anomaly of low-volatility stocks tending over time to outperform high-volatility stocks. This anomaly is

Quantitative easing is the big macro event that the markets are wrestling with today and will be for several years, according to Mike Buckius, a hedged equity manager at Gateway Investment Advisers. “This grand experiment that our central bankers around the world have been running has been going on for quite some time, and it’s the exit from this experiment that is the biggest source of uncertainty for investors right now,” said Buckius.

Although there is no clear exit strategy for quantitative easing, the unconventional monetary policies used by central banks in several developed countries to stimulate the economies after the 2008–2009 financial crisis, Buckius is hopeful that there can be a measured ending coupled with some economic growth in a few developed nations that could create a fairly benign exit event. Along the way, however, he does believe there will be bouts of higher market volatility as markets have difficulty digesting news of governments draining stimulus money out of their systems. Given this recipe for volatility, Buckius thinks it is prudent for investors to consider allocating a portion of their portfolio to volatility management strategies.

Buckius also believes investors should really consider volatility as an investable asset class. “I think it’s important for investors to take advantage of value wherever it is in markets. A source of return like volatility is a little bit unique, but I think what we’re seeing now as investors get more sophisticated, they are realizing there are investments other than stocks, bonds and cash,” said Buckius. GFI

Business MENA Insurance

MENA insurance sector Exudes Confidence

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he Qatar Financial Centre (QFC) Authority recently published its first annual MENA Insurance Barometer. 35 senior executives from international and regional insurers, reinsurers and brokers operating in the MENA region participated in the study. According to the interviewees confidence in the future of the region’s

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insurance sector remains strong. In fact, 68% of respondents expect that MENA insurance premiums will grow faster than the region’s Gross Domestic Product (GDP), despite challenges arising from the Arab Spring and geopolitical tensions.

The MENA Insurance Barometer surveyed the countries of the Gulf Co-

operation Council (GCC), the Levant, North Africa and Turkey. The region has a population of more than 360 million people and generates a combined GDP of about US$ 3.3 trillion, close to 5% of the world’s total. As an economic block the region would rank as the world’s fifth largest economy, almost matching Germany. Between 2007 and 2011 the

MENA Insurance Business

region’s real GDP grew at 4.2% per annum, well above the global average of 3.3%. For 2012 and 2013 the International Monetary Fund (regional outlook November 2012) expects GDP growth in oil-exporting countries to be more than twice the level of oil-importing countries (4.6% versus 2.2%). The oil-exporting countries are expected to benefit from favourable oil prices and continued government spending, in particular in infrastructure and construction. In contrast, the oil-importing countries are confronted with slowing foreign direct investment flows and rising international food and fuel prices. In addition, the crisis of the Eurozone weighs heavily on a number of countries that have important economic links with Europe. .

In 2011, the MENA insurance market was worth about US$ 42 billion in annual premiums, up from US$ 26 billion in 2007. Non-life markets, which accounted for US$ 35 billion in 2011, grew at an average annual growth rate of 7.5%, while the life markets, accounting for US$ 6.6 billion, expanded by 10.1% per annum, adjusted for inflation. Insurance markets in the MENA region mirror the macroeconomic dynamics of the region as well as the market’s low insurance penetration - premiums account for just 1.3% of GDP, a fifth of the global average.

However, this gap is narrowing as MENA insurance markets have outpaced GDP growth recently.

In light of these strong economic fundamentals, it comes at no surprise that interviewees consider economic growth as the main strength of the MENA region. In addition, the young, growing and increasingly more affluent population is viewed as another key strength, along with the region’s low catastrophe exposure, which contributes to risk diversification strategies pursued by international insurers and reinsurers.

In terms of weaknesses, the Barometer confirms that the MENA insurance markets are characterized by fierce competition and an abundance of (re)insurance capacity, putting pressure on technical results and driving up acquisition costs. Furthermore the region’s insurance regulations are still perceived as inadequate by the majority of survey participants (56%). In particular,

The oil-exporting countries are expected to benefit from favourable oil prices and continued government spending, in particular in infrastructure and construction. a lack of consistency in supervisory oversight across the region is criticized.

The MENA region’s low insurance penetration is perceived as a major opportunity. Given the average GDP per capita the region’s penetration levels should be significantly higher.

Therefore, personal lines are expected to benefit most from the rising affluence of the population, supported by compulsory schemes, for example in medical insurance. In terms of threats, political instability and geo-political risks rank highest with the Barometer’s interviewees, followed by continued pressure on rates and a further erosion of profitability.

The Barometer also found that only a minority (36%) of respondents expects the MENA insurance market to consolidate over the next 12 months as average levels of capitalization are solid

and cultural reasons remain a major obstacle to mergers and acquisitions.

Further, some 50% of interviewees expect that foreign insurers will gain market share over the next two years, on the back of superior customer focus, distribution know-how and technical skills.

The prospects of Takaful insurance are viewed critically. Only 38% of respondents expect this market segment to outgrow total insurance premiums. Business models for Takaful insurance are believed to be in need of a thorough review. GFI

The interviews took place from November 2012 to January 2013. A copy of the report can be downloaded at http:// www.qfc.com.qa/en-US/Media-center/ Publications/Reports.aspx

Key readings (in % of respondents agreeing) Insurance premiums to grow faster than GDP*

May 2012 (GCC) 60

March 2013 (MENA) 68v

Insurance prices are currently low • Commercial lines

90

91

• Personal lines

58

55

• Commercial lines

70

77

• Personal lines

75

72

Insurance prices to remain stable or increase

Insurance profitability is currently low • Commercial lines

70

66

• Personal lines

73

39

Insurance profitability to remain stable or improve • Commercial lines

90

77

• Personal lines

79

83

Insurance markets to consolidate

40

36

Foreign market share to increase

60

50

Takaful insurance to outgrow total market

80

38

*Over the next 12 months Gulf Insider July 2013

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Feature Book Review

War Comes to Garmser

Thirty Years of Conflict on the Afghan Frontier - By Carter Malkasian

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ar in Afghanistan will never be understood without getting to grips with the small places – the provinces, districts, and villages – where most of the fighting occurred, away from the cities, in hundreds of hamlets, valleys, and farms amid a vast landscape. Those small places and their people were the frontlines, and it is only there that we can truly find answers to the questions that lay at the heart of the war: why people supported the Taliban, whether intervention brought peace, whether a better outcome was ever possible.

Garmser is a small place that has seen much violence; a single district within one of Afghanistan’s 34 provinces. Its 150,000 people inhabit a fertile strip along the Helmand River no more than 6 miles wide and 45 miles long. Carter Malkasian spent years in Garmser district as the political officer for the US Department of State. He tells the history

of thirty years of war, from 1979 to 2012, explaining how the Taliban movement formed in Garmser; how, after being routed in 2001, they returned stronger than ever in 2006; and how Afghans, British, and Americans fought with them between 2006 and 2012. He describes the lives of Afghans who endured and tried to build some kind of order out of war. While Americans and British came and went, they carried on, year after year, inhabitants of a small place. GFI

Available from Amazon.com

‘… represents the kind of detailed study of Afghanistan that has been badly missing: Most people associated with the international military and development missions here come in for six-month or one-year stints. …

One mark of Malkasian’s analytical mettle is that he presents, more so than any other writer I’ve read, a clear and fair picture of the Taliban and why they enjoyed so much support in the south.’ — Matthieu Aikins, International Herald Tribune

‘In the nineteenth century Britain employed political officers on the troubled frontiers of its empire. They immersed themselves in their localities, learnt about the inhabitants and heard their stories. Carter Malkasian is an American twenty-first century political officer. Outwardly his deeply revealing book is about Afghanistan’s experience of war over three decades, but it is also a mirror on the US itself. His message is clear: deep historical and cultural understanding is at the heart of good strategy.’ — Hew Strachan, Chichele Professor of the History of War, Oxford University

Israel’s Clandestine Diplomacies Edited by Clive Jones and Tore T. Petersen Hardback / 320pp

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or over sixty years the state of Israel has proved adept at practising clandestine diplomacy — about which little is known, as one might expect. These hitherto undisclosed episodes in Israel’s diplomatic history are revealed for the first time by the contributors to this volume, who explore how relations based upon patronage and personal friendships, as well as ties born from kinship and realpolitik both informed the creation of the state and later defined Israel’s relations with a host of actors, both state and non-state. The authors focus on the extent to which Israel’s clandestine diplomacies have indeed been regarded as purely functional and subordinate to a realist quest for security amid the perceived hostility of a predominantly Muslim-Arab world, or have in fact proved to be manifestations of a wider acceptance — political, social and cultural — of a Jewish sovereign state as an intrinsic part of the Middle East. They also discuss whether clandestine diplomacy has been more effective in securing Israeli objectives than reliance upon more formal diplomatic ties constrained by international legal obligations and how this often complex and at times contradictory matrix of clandestine relationships continues to influence perceptions of Israel’s foreign policy. GFI

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Available from Amazon.com

Tourism UAE

AN OUTLOOK ON THE UAE HOSPITALITY MARKET

By Matthew Green, Head of Research UAE, CBRE Middle East.

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he Emirates tourism sector remains fixed on a solid growth course, with occupancy rates rising across key markets in Dubai, Abu Dhabi and Ras Al Khaimah. During Q1, hotels in the capital recorded double digit growth in revenue and occupancy figures, building on a 2012 performance that saw 13% growth in total guest numbers. Dubai is also having another stellar start to its year, with further growth in tourist arrivals recorded during the first three months, building on the 9% rise achieved last year. Whilst still an emerging tourism destination, Ras Al Khaimah is starting to see a steady rise in its hotel keys, and some very impressive growth in tourist arrivals. After attracting over 1 million visitors in 2012, Ras Al Khaimah is now aiming for 1.2 million during 2013.

Over the past decade, the country has invested heavily into its infrastructure facilities and its tourism marketing capability, with Dubai leading the way in establishing the emirates as a globally recognised holiday destination and one of the most important aviation hubs on the planet. The recent opening of the first Dubai Tourism & Commerce Marketing (DTCM) representative office in Brazil, highlights a continued effort by the government to raise global awareness as part of their strategy to attract visitors from burgeoning tourism markets in South America and beyond.

Together, the UAE’s airports handled over 80 million customers during 2012, with the lion’s share passing through Dubai International Airport (DXB) which registered 71% of all passenger movements. Passenger numbers

have continued to rise during 2013, with Dubai and Abu Dhabi seeing double digit growth during the first quarter.

DXB is projected to see over 65 million passengers this year and 98 million by 2020. Significant investment has already been earmarked by the Dubai Government for further expansion plans, following quickly on the heels of the recently completed A380 concourse at DXB. Some of this new investment is likely to be directed towards the new Maktoum International Airport in Jebel Ali, a facility which has been integral to the 2020 Expo bid.

The UAE currently has over 95,000 completed hotel keys, a figure which could expand by 30% over the next five years with close to 30,000 keys in varying stages of construction and planning.

Dubai’s hotel stock dwarfs the rest of the region with nearly 60,000 keys operational, although other markets such as Doha are slowly catching up. Despite such significant supply, Dubai posted the best performance of any Middle East city with average occupancy rates of 76% during 2012 and one of the best ADR performances of any global market.

Although the regions sizeable hotel development pipeline should be monitored with some caution, the short term outlook for the sector looks to be positive with most key local markets recording growth during the first quarter. GFI

Gulf Insider July 2013

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Feature Advertorial

This Promotion will provide our customers the opportunity to buy their choice of cars easily, quickly and with greater value, all under one roof.

Mr Khalid Rafea, Executive Manager, KFH-Bahrain

Automall Ramadan PROMOTION Gulf Insider talks to Khalid Rafea, Executive Manager, KFH-Bahrain.

K

FH-Bahrain announced the commencement of its Ramadan Promotion, this year, from the first day of Ramadan to the final day of the official Eid Al Adha holiday. One of the Kingdom’s most popular Promotions, KFH-Bahrain has been conducting it for quite a few years now. Talking about the response expected this year, Khalid Rafea says, “Ramadan is the peak time of the year within the auto industry and so we’re expecting an excellent turnout, like previous years; our sales figures normally double during this time.”

Through the Ramadan Promotion, KFHBahrain aims to provide a setting where customers can comfortably select and buy cars from the numerous brands and models that KFH Automalls offer, whilst enjoying the Ramadan festive feel. “The Holy Month of Ramadan is one where people like to give, share and come together, says Khalid. “This

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Gulf Insider July 2013

Promotion will provide our customers the opportunity to buy their choice of cars easily, quickly and with greater value, all under one roof.” There are a wide range of special Ramadan gifts available with each purchase including iPads, TVs, digital cameras, bicycles and others. Customers will also be eligible to win one of four luxury holiday packages*.

KFH Automalls are considered to be the largest in Bahrain, providing customers with a unique automotive shopping experience.

There is also a full-fledged KFH-Bahrain branch within the facility. Customers can enjoy the convenience of ‘one-stop-shop’ services including the lowest profit rate financing, insurance, car registration and other add-ons. Talking about the uniqueness of KFH Automalls, Khalid highlights the variety of car brands and models offered and also the range of services available all under one roof. GFI

*Automall Ramadan Promotion Holiday Packages

 7 nights on a Mediterranean

Cruise including Spain, France and Italy.  9 nights of serenity in the Maldives and Sri Lanka.  7 nights aboard the luxury train cruise on the Palace-ofWheels, in India.  10 nights to explore Italy, including Rome, Florence, Venice and Milan.

* Holiday packages include travel and accomodations.

Business Feature

Researchers Need

Good Design to Have Impact The world is changing, and research needs to change tack, says marketing expert.

We are all, to an extent, seduced by good – and bad – content. We expect to be entertained. We expect simplicity according to Lucy Davison, Managing Director, Keen as Mustard Marketing.

M

any researchers are not keeping up with fast-paced changes in the business world and urgently need new approaches to presenting research to improve output, according to Lucy Davison, Managing Director, Keen as Mustard Marketing, UK. Davison was speaking to more than 150 delegates on the importance of good communications at the two-day ESOMAR Best of MENAP 2013 Conference at the Jumeirah Emirates Towers in Dubai.

The annual conference, organised by ESOMAR Live and now in its second year, was staged under the theme ‘Navigating Change for Growth.’ It brought together regional and international market research, advertising and marketing experts to share industry and sector insights, opportunities and challenges.

“We are all living in a vastly more visual world than 10 or even five years ago, and researchers need to create presentations and materials that will impress clients and help influence and drive decisions,” said Davison.

“Most client research materials lack motivation or impact, and although industry feedback shows that some

recognise that there is a problem with the communication tools used for clients, too little is being done too slowly.”

Davison went on to quote Andrew Doyle of Holmes & Marchant, who has worked both as a marketing client at multi-national companies and now as managing director of a brand design agency, as saying that he has never seen a well styled presentation from a research company in 40 years of being on the receiving end. “The design element in research presentations is getting worse instead of better,” Doyle stated…

A sector expert, Davison explained that the internet holds the key to instant visual and mental gratification with hundreds of image sites, videos, presentations and infographics available for download.

“We are all, to an extent, seduced by good – and bad – content. We expect to be entertained. We expect simplicity.”

Meanwhile, Aziz Cami, founder of design agency The Partners and now creative consultant to Kantar, said that successful research communications are ones that create action. “We have to provide materials that are motivating solutions to a business issue. Unless we make our outputs vivid, exciting and

Researchers need to create presentations and materials that will impress clients and help influence and drive decisions. actionable, it’s just data.

“From our very first experience of fairy tales, stories are archetypes that allow us to make sense of our world,” adds Davison.

“It’s my view, that without the basic skills of storytelling, researchers are not able to create great communication. The true value of research lies in how much impact it has,” she concluded.

The two-day conference threw a spotlight on trends and challenges of post-Arab Spring communication in markets such as Egypt and Tunisia, and a session on Health Consciousness Levels from a consumer perspective to understand local nuances, attributes, preferences and in depth segmentation of the Arab consumer. GFI Gulf Insider July 2013

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Feature Advertorial

Al Noor Tent, Elite Resort & Spa Elite Hospitality launches its Ramadan offerings.

T

he Holy Month of Ramadan is here and that means it’s time to get together with our loved ones and bond over good food and drink. Elite Group is all set to host you and your family this Ramadan. Last month, it launched its Ramadan offerings at Al Noor Tent, Elite Resort & Spa. The dinner reception was held to express appreciation towards the support extended by the hospitality brand’s corporate clients, and the media. Mr Sarosh Aibara, Chief Operating Officer, along with Director of Sales Ms Jamila Missilmani launched the reception. Guests enjoyed a sumptuous and lavish buffet with live grills. There was henna for the ladies too. Moroccan tea and gahwa were served while live music entertained the guests.

The tent hosts corporate events and private weddings throughout the year. Elite Group has added some new elements to the tent’s décor this year. The hotel has also come up with an interesting menu, for Ramadan this year. The tent has a capacity of 650 and is also known for its prompt and friendly

service. Elite Resort & Spa is located close to the airport and Commercial District.

The Ramadan Specials at Al Noor Tent include an Iftar Buffet at BD 6.9++ followed by Ghabgaa at BD 12.9++. Special room packages with Ifthaar and Suhour are also available. GFI

For more information visit elitegroup4u.com To make bookings call on Tel. +973 36193444 38

Gulf Insider July 2013

High Net Worth Individuals UAE

UAE HNWIs more active in managing their finances globally

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arclays recent report titled: Origins and Legacy: The Changing Order of Wealth Creation provides an in-depth study into how wealth is now being made, spent and shared across the world. This 17th volume of Barclays Wealth Insights investigates how the global landscape of wealth is changing, and how wealthy individuals plan for their legacy and philanthropy.

According to the report, high net worth individuals (HNWIs) in the UAE believe that accumulation of their wealth has been a rapid process. The report highlights that a high tolerance for risk is a prerequisite for successful entrepreneurship. Wealthy entrepreneurs have a higher risk tolerance than those who have acquired their wealth through inheritance, earnings or bonuses. But this appetite for risk must go hand in hand with an acceptance of volatility.

Entrepreneurs and business owners are of the view that their wealth has fluctuated a great deal over time and most of the wealth creation has been a rapid process.

Interestingly, HNWIs in the UAE, highest globally, are taking an increasingly

active role in managing their finances, creating a major growth opportunity for stable funds and have maintained their confidence in financial products, compared to 54% in the Middle East. In the UAE, savings and investments is the most popular use of wealth with 76% of respondents citing this option as their first choice, compared to 9% opting for tangible assets.

Rory Gilbert, Managing Director and Head of Wealth and Investment Management, Barclays, Middle East and North Africa, said, “HNWIs in the UAE are most optimistic in the world about how quickly wealth can be created as compared to the rest of the world, this could be a reason why the respondents from the UAE are also playing the most active role in managing their own finances. Once wealth has been created, UAE respondents are most likely to save or invest their wealth for growth opportunities, to be used for their future generations as opposed to short-term tangible gratification for themselves.�

The rise of entrepreneurial wealth and the shifting centre of economic power have profound consequences for the way in which wealthy individuals plan for the

In the UAE, savings and investments is the most popular use of wealth with 76% of respondents citing this option as their first choice, compared to 9% opting for tangible assets. future and think about a legacy for their wealth. As inherited wealth declines and as fortunes are made at a more rapid rate than ever before, the challenges facing newly wealthy individuals and families around planning for the future become more pressing and acute.

As wealth rises and fortunes are made at a more rapid rate than ever before, the report explores how the challenges facing newly wealthy individuals - and families that need to plan for the future have become more acute. GFI Gulf Insider July 2013

39

London Property

LONDON’S PENTHOUSE MARKET TOPS £1 BILLION

Average Price for a Penthouse in Prime Central London is now £13.3 Million.

C

BRE research reveals that the value of penthouses currently being sold in London now exceeds £1bn.Their report, `Penthouse London: paying a premium for perfection’, is CBRE’s first in-depth study of the London penthouse market, which has soared in value since the prime residential market began to recover from the global property crash.

The research also gives a definitive guide to `What makes a penthouse?’ helping to differentiate between true penthouses and large flats.

Penthouses are being developed across London, but vary dramatically in price and it is now impossible to buy a penthouse in London for less than £1m.

While you may find penthouses priced between £1.5m and £3m in Islington and Camden, in prime Central London the starting point for penthouses is closer to £4m. In the most desirable boroughs prices average £13m and can easily top £4,000 per square foot.

On average, penthouses sell for a 60% premium over the rest of a development, and can account for 20% of the Gross Development Value of the project involved.

However, penthouse’s sales are not

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Gulf Insider July 2013

limited to international investors: while many transactions are shrouded in secrecy, sales to UK buyers account for almost half of those achieved by CBRE. Mark Collins, Chairman, CBRE Residential, said; “Penthouses of the quality on sale in London now cement our capital’s new status as a homefrom-home for the super-rich as well as providing an invaluable store for their wealth. With the burgeoning volume of billionaires in the world and the increasingly international appeal of prime London real estate we anticipate that the penthouse market will continue to be a very exciting and elusive space going forward.”

The research says some penthouses have a range of features, including a private entrance or lift, a library or office space and additional suites for guests or staff. Often buyers demand strong security measures such as bullet proof windows, a panic room and, retina recognition systems. But there are ten features that are common across almost all London penthouses, ranging from the best locations, to generous outdoor space, spectacular views over a city or park, and include ground-breaking technology. GFI

Top 10 penthouse features requested by buyers:  High floor-to-ceiling heights, with glass wrap-around

 Generous outdoor space – up to 20% floor area

 Luxury specification, notably

better than the rest of scheme

 Top of an iconic tower, designed by lead architect

 Top appliances – ground-breaking technology

 Broad range of facilities

and additional amenities in development  State of the art security  Spectacular views over city or park  Location location location

Source: CBRE Penthouses now on sale in London are at schemes including Neo Bankside, Fitzroy Place, Grosvenor Crescent Apartments, and Roman House in the City of London.

Exhibitions Industry Middle East

conference and exhibitions industry

Middle EAst

New survey reveals outstanding levels of confidence in the region’s conference and exhibitions industry.

N

ew research from leading events company dmg :: events Middle East has revealed an increase in confidence in the region’s conference and exhibitions industry, with 56% of companies surveyed experiencing growth of between 10-30% in sales in the period immediately following participation in an event.

The research was commissioned by dmg :: events Middle East as it gears up for the December launch of the region’s largest consumer lifestyle expo – The Life & Show UAE. The survey provides insight into the attitudes of Middle East companies towards participating in exhibitions, the strategic importance of events and their personal experience in terms of sales and long-term business benefits.

The findings highlighted the important

role of conferences, exhibitions and events in boosting a company’s top line with a third (33%) of respondents witnessing between 10-20% sales growth in the month following their participation and almost a quarter (23%) seeing an impressive increase of between 20-30%.

When it came to their role in the marketing mix, conferences, exhibitions and events were cited as an essential tool in effectively promoting and publicising a product or service; almost all (93%) saw a significant increase in interest in their products and services in the period immediately following participation, while 23% said it helped them secure new clients and contacts.

For many organisations in the Middle East, they are the mainstay of their marketing strategy. More than two thirds (67%) of companies choose to exhibit

The marketing mix, conferences, exhibitions and events were cited as an essential tool in effectively promoting and publicising a product or service. in order to increase brand awareness amongst key audiences, while 47% use events as a platform to showcase their latest goods or services and engage directly with customers. More than half (53%) participate to increase sales and consumption of their products and services. GFI

Gulf Insider July 2013

41

Feature Travel

Travel budgets set to increase • United States ranks as top

destination for global travellers • Saudis top the global spenders’ list

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isa’s latest Global Travel Intentions Study 2013 has revealed that global cross-border tourism is thriving and travellers intend to increase budgets for their next trip by an average of five per cent – with some holidaymakers even suggesting that they would more than double what they spent on their previous trip.

Visa’s regular barometer of travel trends indicates budgets are no longer among the top three reasons behind why travellers choose their next holiday destination. The pull of attractions, scenery and rich culture are instead stronger reasons for travel.

According to the study, which surveyed 12,631 travellers from 25 countries, the average global travel budget of US$2,390 per trip is set to increase to US$2,501. Top spenders abroad are the Saudi Arabians, spending an average of US$6,666 per trip, while Australian (US$4,118) and Chinese travellers (US$3,824) were not far behind. Future travel budget increases are especially high amongst Asian markets with a predicted increase of 46 per cent – travellers from Singapore, Thailand and Hong Kong all plan to at least double the budget of their last trip in the future.

Attractions, Scenery, and Culture were cited as the key drivers for a future trip regardless of destination.

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Gulf Insider July 2013

This desire to explore new horizons was evidenced by the latest UNWTO World Tourism Barometer, which revealed that international tourist arrivals grew by four per cent in 2012 to reach 1.035 billion.

Visa’s Study revealed the United States ranked as the most popular destination choice for global travellers, both for trips taken in the past two years (17 per cent) and for intended travel in 2013 (10 per cent).

Other top destinations in 2011 and 2012 included the United Kingdom (12 per cent), France (12 per cent) and China, Singapore, Thailand and Hong Kong (all 10 per cent). Looking ahead, regional travel is set to increase with Egypt, Turkey and France emerging on the latest list of most preferred destinations for future travel for residents in Middle East & Africa.

The Rise of the Middle East

The increasing popularity of the Middle East & Africa is partially driven from within the region. Among travellers across the four global regions (APAC; the Americas; Middle East and Africa; Europe), respondents from the Middle East & Africa indicated strong intention (76 per cent) to travel more in the future – primarily residents from Saudi Arabia, Kuwait and the UAE. Much of this increased travel is expected to take

place within the region and Asia where 24 per cent of travellers in the region having chosen to take trips in the last two years.

Travellers from the Middle East and Africa are spending an average of US$218 per day during their trip – slightly lower than the global average of US$239 per day.

An increasing ease and availability of travel options is fuelling the tourism boom. This is particularly prominent in the airline industry where 85 per cent of travellers prefer to fly to their destinations despite a preference for shorter distances. Of this figure, most (71 per cent) chose to fly economy class while, perhaps surprisingly, only 16 per cent chose budget airlines.

The results of the Study paint a picture of today’s global traveller. They are seasoned travellers, with 79 per cent travelling in the past two years, taking 1-2 trips per year. About 80 per cent plan their holidays in advance, taking an average of 10 weeks to organize the trip. Spending time with family and friends was cited as the most popular (38 per cent) reason for a holiday. These trips are more likely to be organized independently (42 per cent) and will last an average of 10 nights. They choose hotels of four stars and above (39 per cent) with 69 per cent choosing to take a trip with family members. GFI

Financial Free Zone Abu Dhabi

Abu Dhabi sets up financial free zone;

could compete with DIFC

A

bu Dhabi is starting a financial free zone on its Al Maryah Island that could pose a direct challenge to the nine-year-old Dubai International Financial Centre, just an hour and a half’s drive away.

Foreign financial firms have anticipated a free zone on Al Maryah since Abu Dhabi’s government-owned Mubadala Development began building a financial district there several years ago. Free zones are common in the Arab Gulf, and typically exempt companies within them from rules forbidding majority company ownership by foreigners. Many foreign investment banks and financial services firms are not comfortable operating businesses they do not own outright, according to a banker who was briefed on the free zone project.

The new free zone, to be called the Abu Dhabi World Financial Market, was established via a federal decree issued in February but only recently published in the United Arab Emirates ‘ official gazette, which formally announces newly-enacted laws. A separate ministerial resolution specified Al Maryah, an island northeast of Abu Dhabi’s city center, as the location of the free zone.

Lawyers say the federal law and ministerial resolution are likely the preamble to the creation of a free zone

similar to the DIFC, with its own laws, regulations and court system. Since the DIFC’s establishment in 2004, more than 900 companies have set up there, employing over 14,000 people, according to recently-released figures.

Abu Dhabi and Dubai are the largest of the seven emirates which make up the United Arab Emirates .

A new center in Abu Dhabi could take away business from the DIFC, some bankers and executives say. One Dubaibased financial executive questioned whether the U.A.E. market was big enough to host two financial free zones.

While competition was good to a point, he said, the limited market could mean it becomes “a question of whether you’re going to eat yourself.”

Kai Schneider, a partner at the law firm Latham & Watkins LLP in Dubai, said the free zones in Dubai and Abu Dhabi could serve complementary purposes by focusing on different parts of the financial services industry.

“If done appropriately I think it’s a great step forward,” Mr. Schneider said.

“I don’t think it necessarily is competition for the DIFC. If you use Europe as a model, there’s room for more than one financial centre in a region and each financial center can focus on a separate sector of financial services. London is

By Asa Fitch

asset management, Luxembourg is where funds are domiciled and Ireland is where they’re administered.”

The federal decree lays the groundwork for a free zone in Abu Dhabi, lawyers say, and the next step will likely be emirate-level decrees by the Abu Dhabi government that establish regulatory and administrative bodies to oversee it.

Those structures could be modeled after the DIFC’s - or could be entirely unique to the Abu Dhabi World Financial Market.

“For now the first steps have been taken to build a legal and regulatory framework, but it’s not clear whether any particular laws, regulations or the judicial position will be the same as the DIFC,” said Nick Clayson, a partner at the law firm Norton Rose in Abu Dhabi.

Despite the absence of a legal and regulatory framework for Abu Dhabi’s new financial center, much of the physical infrastructure is already in place.

The financial district is called Sowwah Square, and includes four new office towers with 180,000 square meters of office space. Deloitte, General Electric, Booz & Co, JPMorgan and Macquarie Bank are among 46 multinational companies that have offices there. GFI

Copyright (c) 2013 Dow Jones & Co.

Gulf Insider July 2013

43

UAE Trade Credit Insurance

Trade credit insurances to grow by 50 per cent

UAE achieves A3 rating

T

rade Credit Insurance (TCI) in the UAE is predicted to grow by 50 per cent within two years - in terms of volume of transactions covered - according to Coface Emirates Services, a subsidiary of the French based Coface credit insurance group, with commensurate increases in the Gulf region. Their predictions were released in Coface’s quarterly country risk assessment survey. The report revealed a strong showing for the GCC, where TCI currently stands at AED20Bn, with the UAE gaining an A3 rating for the first quarter of 2013.

Coface publishes quarterly country risk assessments based on their insights of 60 million companies and the expertise of 350 underwriters. The risk assessments are a crucial indicator on the health of both national economies and the volatility of the firms that trade with one another.

TCI – provided by Coface – covers the losses generated by the non-payment of customer debt, something which has haunted global and local economies since the economic crisis of 2008. Highlights of the report present a more optimistic picture than then, but a number of countries remain volatile.

Coface predicts a continued recession

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Gulf Insider July 2013

at -0.1% in the Eurozone with a persistent contraction in activity in Southern Europe. Growth in the USA will slow down to +1.5%, whilst emerging countries will post growth that is both healthy and sustainable at +5.2%.

Among emerging countries, Coface has upgraded Indonesia which has demonstrated remarkable resistance to the recession in advanced countries. In contrast, the country risk assessment for India has been downgraded to A4 and the Indian model is being brought into serious question.

With risks in advanced countries deteriorating without let up since 2008, the gradual improvement in corporate risks in emerging countries is continuing.

Coface attributes the new hierarchy of risks to the greater resistance of emerging nations to external crises as being the result of more responsive, but prudent, economic policies. Furthermore, economic growth in emerging countries benefits from the uninterrupted expansion of their middle classes.

Coface has accordingly upgraded the assessment of Indonesia to A4 and has placed the B assessment for the Philippines under positive watch.

With little correlation with the European recession, high growth and progress

The report revealed a strong showing for the GCC, where TCI currently stands at AED20Bn, with the UAE gaining an A3 rating for the first quarter of 2013. in public finances and in their banking sectors, risks have been significantly reduced in both economies.

Warning: Coface country risk assessment measures the average level of payment defaults by companies in a given country within the framework of their commercial transactions in the short term. It does not pertain to sovereign debt. To determine country risk, Coface combines the economic, financial and political outlook of the country, Coface’s payment experience and business climate assessment. Assessments have a seven-level scale: A1, A2, A3, A4, B, C, D and can be watch listed. GFI

Traditional Chinese Medicine and Acupuncture offers relief from chronic pain

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Feature Technology

preventing data leaks 41% of companies make prevention of data leaks a priority task.

T

he leakage of confidential data – whether by accident or malicious design – can have serious consequences for any company, and in the worst cases might even cause a business to collapse. The results of a survey conducted by the IDC marketing agency in December 2012 show that many 41% of companies are concerned about possible data leaks and have made prevention a primary objective. According to IDC, encryption - one of the most effective and reliable data protection tools - is becoming more and more popular.

Generally encryption technologies fall into two camps - File and Folder Level Encryption (FLE) or Full Disk Encryption (FDE). FLE protects specific files and folders so it’s better suited for encrypting small amounts of sensitive information.

FDE, by contrast, encrypts the entire hard drive and is perfect for protecting, for example, corporate laptops in the

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Gulf Insider July 2013

event of them being lost or stolen. Since FLE and FDE solve different problems, most organizations prefer to use both technologies.

According to the IDC specialists, there are four main reasons to implement encryption technologies:  To limit access to confidential information and to protect against unauthorized access;  To protect sensitive files against malware and other increasingly prevalent cyber-threats;  To help secure data against attacks that successfully penetrate the corporate network - attacks on corporate infrastructure and attempts at data theft are becoming ever more sophisticated;  To complement a company’s risk management process; data protection plays an increasingly important role as a key element here.

Currently, encryption-related expenditure is not a priority item in most

41% of companies are concerned about possible data leaks and have made prevention a primary objective.

IT department budgets. However, IDC analysts are sure encryption will soon become one of the most in-demand technologies.

According to IDC, the market for workstation encryption will grow by more than 50% in the next few years - from $556 million in 2012 to $866 million in 2016. In 2013, the cost of data protection will exceed $2 billion for the first time while in 2016 it will reach more than $3 billion. GFI

Feature Gadgets Technology

Philips HTS 3541 Theatre System While watching movies in theatres is fun, nothing beats the comfort of home. Though watching a movie like F6, for instance or Iron Man for that matter, without surround sound is a crime! Experience Blu-ray 3D and powerful surround sound with the Philips HTS 3541 Theatre System. Stylishly designed it is sure to compliment your living room.

Powerbag Business Class Case Technology has made our lives so very ‘on-the-go’ that we use our smart phones, tablets and laptops for almost everything. It’s no surprise then that the battery conks off leaving us feeling like we’re stranded on an island. Here’s an easy way to keep those gadgets power-packed through out the day. This backpack has a built-in battery system that charges up to four devices together.

Tech picKs More Power!

Bose Head Phones For your workout this summer you could use Bose’s sport earphones. Designed specifically for exercise, it is sweat and weather resistant, stays in place throughout your workout and offers robust sound that will keep you pumped-up throughout your workout! It comes with a Reebok fitness armband that holds the device during exercise.

Mushroom GreenZero Wall Charger If there’s anyone who has never overcharged their phone or any other device, please stand up! We’ve all committed this sin (it’s nothing less than a sin!) and risked the durability of our gadgets. Overcharging not only stunts battery life but also is a waste of precious energy. We celebrated World Environment Day last month. Try this Mushroom GreenZero Wall charger which stops charging your device when it’s full; now that’s 30 per cent energy savings!

Gulf Insider July 2013

47

Feature Superyacht

USD25 million superyacht - Adastra Incredible USD25 million superyacht that can be controlled by an iPad.

D

escribed by Boat International magazine as ‘one of the world’s most amazing super yachts’, the 42.5metre-long Adastra is a floating pleasure palace equipped to entertain a billionaire with even the highest of standards.

She is the the new pet of Hong Kongbased shipping magnate Anto Marden, 64, and his wife Elaine, whose uses for

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Gulf Insider July 2013

her may include - among other things - gliding between the two tropical islands they already own off the coast of Indonesia.

Designed by British based yacht designer John Shuttleworth, the Adastra is so high-tech, it can even be controlled remotely at the touch of an iPad... as long as you don’t get any further away than 50 metres.

The yacht’s high-concept, space-age look is no gimmick. The shape has been specially developed to cut through waves as it glides across the high seas.

Adastra took three years to build, as well as two years of planning and design.

It is 42.5 metres long, 16 metres wide and weighs 52 tons.

Her enormous petrol tank coupled with her dynamic sailing efficiency allows the Adastra to travel up to 4,000 miles without refuelling - the same distance from London to New York.

‘It takes the power trimaran concept further than has ever been attempted before,’ Mr Shuttleworth told Boat International.

‘The challenge of turning this concept into a viable luxury yacht has taken us to further research and to develop new thinking on stability and comfort at sea for this type of craft.’

The hull of the Adastra is built from glass and Kevlar and can house nine guests and six crewmen. The deck saloon has a panoramic view while the open cockpit has sofas on both sides. The open deck running aft also has a door that hinges out to create a bathing platform.

Superyacht Feature

Adastra took three years to build, as well as two years of planning and design. It is 42.5 metres long, 16 metres wide and weighs 52 tons.

The man who bought a £1million Yacht to sail the High Seas

Very little is known about billionaire shipping magnate Anto Marden, the boss of Fenwick Shipping Services,and his wife Elaine.

Mr Marden, 64, is known as a very experienced yachtsman who has spent his life on the high seas for his business and now flitting between islands in the far east and south-east Asia.

He was educated at the expensive Charterhouse School in England before graduating from the University of Leeds.

Boat International magazine said Adastra ‘could spell the future for efficient long range cruising’.

Adastra is powered by one Caterpillar C18 engine of 1150hp at 2300 rpm and has 2 Yanmar 110hp @ 3200 rpm outrigger engines.

Adastra’s 16-metre beam features a saloon area on the main deck with a lounge area, dining table, and navigation station.

The deck at the rear of the yacht has a sofa and bar area to port and a dining area to starboard.

The main helm station, which has seating for two, is positioned in a raised pilot house situated between the rear deck and the saloon area and forms part of the cross beam structure.

The Adastra is the latest in a long line of super yachts that compete to be the most high tech. GFI

Gulf Insider July 2013

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Last Word

Sweden – Trouble in (socialist) paradise

A

nytime a free market guy rails against central planning and socialism, there is always someone who stands up and says “what about Sweden?”

Ah, Sweden... a socialist’s paradise... a place where taxes are among the highest in the world, few people are wealthy, and the government is involved in people’s lives from cradel to grave.

And in all of these government surveys on ‘happiness’, places like Sweden, Norway, and Denmark consistently rank among the happiest countries in the world.

Well... the veneer is cracking.

Though the coverage has been limited, there’s been rioting in Sweden over the past month, specifically in the immigrantdense suburbs around Stockholm where 80% of the population are first or secondgeneration.

Hundreds of cars burning. Schools were set on fire. Police stations were set on fire. Businesses were vandalized.

Rioters clashed with police. Hundreds of masked rioters ran wild in the streets.

Seeing photos and video of this you’d think it was a war zone in some unstable part of the world, not Stockholm.

Allegedly it started because the police fatally shot a 69-year-old man who wielded a machete in public. Now people

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Gulf Insider July 2013

are angry and destroying things.

Swedish politicians say the root causes of these riots are inequality of the immigrant minorities.

Bear in mind, this is a place so obsessed with equality that the words “him” and “her” have been blended into “hem”... and taxpayers fork over 70% of their income to ensure that everyone can live to an equal level.

But to those of us living outside of this statist bubble, the real problem is obvious: however well-intentioned they may be, welfare states almost always attract people who want to be taken care of at the expense of others.

And ultimately this engenders serious conflict... between those who are on the receiving end, and those on the paying end.

Occasionally this conflict becomes violent. And that’s exactly what’s been playing out.

The government has all sorts of propaganda to influence the way Swedes view the welfare state and convince them that they should pay huge taxes to support others.

In other words, Swedes should not be economically free so that others can live for free. This is the definition of a welfare state.

And in addition to such ‘thought

In other words, Swedes should not be economically free so that others can live for free. This is the definition of a welfare state. controls’, the Swedish government also rules with capital controls, people controls, and media controls.

Yet despite such a finely-tuned system, the capital suburbs practically turned into a war zones last month.

The politicians claim it can all be fixed with more redistribution of wealth. It’s not enough that the average working Swede pays 70% in taxes; if only they could extract 80% or 90% in taxes, they could solve everything!

If all you have is a hammer, everything looks like a nail.

People have the wrong idea of this place. It is not a well-functioning welfare state. Any system based on giving people something for nothing, and sticking hard-working, productive citizens with the bill, is doomed to fail. Sweden is no exception. GFI

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