Market Watch - Supplement | January 2013

market watch

We bring you a selection of the opportunities, products and services offered to smes in 2012 INSIDE THIS ISSUE:

Unlocking potential

PRIME TIME PITCH

Safeguarding your business

How banks like ADCB are continuing to support and advise SME 100 companies

2012 marks the launch of du’s hit TV show The Entrepreneur

How the right insurance policy can make all the difference

market watch Publisher Dominic De Sousa

Snapshot successes

T

Group COO Nadeem Hood

o cap off 2012 we decided to provide this extra supplement to accompany the January 2013 issue of the magazine. Last year stepped up a gear with even more intensive and consistent progress made on the SME front; not only was there the Dubai SME 100 list released at the beginning of the year, but there was the introduction of bankruptcy legislation, as well as hints of soon-to-be-released SME legislation for this coming year. Add to that du’s The Entrepreneur television show and it’s been a constant traffic flow of success stories for businesses in the region.

Managing Director Richard Judd richard@cpidubai.com +971 4 440 9126 EDITORIAL Senior Editor Mike Byrne mikeb@cpidubai.com +971 4 440 9105 Sub Editor Joumana Saad joumana@cpidubai.com +971 4 440 9115 Contributing Editor Aparna Shivpuri Arya aparna@cpidubai.com +971 4 440 9133 ADVERTISING Commercial Director Chris Stevenson chris@cpidubai.com +971 4 440 9138 Business Development Manager Pankaj Sharma pankaj@cpidubai.com +971 4 440 9120 PRODUCTION AND DESIGN Production Manager James P Tharian james@cpidubai.com +971 4 440 9146 Circulation Manager Rajeesh M rajeesh@cpidubai.com +971 4 440 9147 Head of Design Fahed Sabbagh fahed@cpidubai.com +971 4 440 9107 Designer Froilan A. Cosgafa IV froilan@cpidubai.com +971 4 440 9107

Events aside, this supplement also endeavours to provide an overview of various industry related updates – we’ve plucked a sample of some of the more notable flashpoints within the insurance, legal and logistics arenas. Opportunities, products and services are constantly evolving, particularly with a notable shift in the approach of the larger businesses and their interaction and engagement with SMEs. The big hitters such as AIG, Zurich, DHL and the usual suspects within the IT arena, have all shifted their focus to concentrate more on building tailor-made solutions for SME players. What we are seeing is the emergence of affordable products and services from companies that were traditionally beyond the SME sphere – for the first time SMEs are now in the position of being able to pick and choose according to what best serves their requirements.

We will of course keep you up-to-date with all developments, offerings, and opportunities for SMEs across a range of industries this year. Should any of you have any queries regarding the articles contained herein, please mail or call – we’d be happy to clarify and refer any queries.

Photographer Jay Colina jay@cpidubai.com +971 4 440 9141 DIGITAL SERVICES www.smeadvisor.com

Mike Byrne Senior Editor

Digital Services Manager Tristan Troy Maagma Web Developer Abey Mascreen online@cpidubai.com +971 4 440 9100 Published by

Talk to us: E-mail: mike@cpidubai.com Registered at IMPZ PO Box 13700, Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409

Printed by Printwell Printing Press LLC © Copyright 2013 CPI. All rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

Twitter: @SMEadvisorME

Facebook: www.facebook.com/SMEadvisor

www.tinyurl.com/smeadvisorme

Are you looking for business loans that tick all the right boxes?

Empower your business with InstaLoan from ADCB Business Banking.

InstaLoan from ADCB Business Banking offers: • Loans up to AED 1,500,000 • Exclusive offers for UAE National owned businesses • Competetive interest rate • Repayment schedule of up to 48 months To apply, SMS ‘BEIL’ to 2626 now, or visit www.adcb.com Terms and Conditions apply.

adcb.com

market watch Contents

16 Technology

08 Banking and finance

08

UNLOCKING POTENTIAL

We take a look at how financial players like ADCB are continuing to support the future growth of SME 100 companies.

10

SKY-HIGH AMBITION

The 2012 ADCB Ambition Award attracted a number of innovative business ideas aimed at addressing market demands and consumer trends.

Entrepreneurship

12

PRIME TIME PITCH

du’s hit TV show The Entrepreneur gives UAE entrepreneurs an opportunity to turn their business ideas into reality.

16

IN THE SPOTLIGHT

After being crowned winner of The Entrepreneur, Nabbesh.com Founder, Loulou Khazen Baz, is hoping to leverage the extra exposure to build up a profitable business.

20

CYBER SECURITY

Joumana Saad speaks with Symantec’s Tom Powledge about changing attitudes on risk awareness and the company’s renewed focus on SME solutions.

22

NEW AND IMPROVED

2012 marked the release of a number of important business offerings from Microsoft, including Microsoft Office 365 and Windows 8.

Logistics

24

SUPPLY CHAIN

26

THE COST OF SECURITY

Businesses must understand the true value of outsourced supply chain management to achieve a sustainable competitive advantage, says Frank Courtney, Chief Executive for EMEA region, Barloworld Logistics.

Anthony Beckley, Hub General Manager, DHL Express, addresses the challenges of managing freight security amid the increasing cost of security measures.

Insurance

28

SAFEGUARDING YOUR BUSINESS

Clint Draper, Head of Small Business, Zurich Middle East discusses the important role insurance plays in protecting businesses and their people.

Legal

18

NAVIGATING BANKRUPTCY

We investigate the newly proposed UAE Federal Financial Restructuring and Bankruptcy law aimed at increasing legal sustainability.

26 marketwatch

7

Banking & finance

We take a look at how financial players like ADCB are continuing to support the future growth of SME 100 companies.

I Joumana Saad CPI Business

t’s been almost a year since Dubai SME unveiled the first batch of SME 100 companies. The initiative has become the key platform and catalyst in Dubai for identifying promising SMEs before grooming them to become bigger, better and sustainable enterprises; with the hope of graduating some of them to become large globallyoriented companies. Furthermore, the list has opened up new doors for the SME community at large, by providing them with a benchmark to work towards.

A total of 1,092 SMEs registered for the initiative, of which 196 SMEs applied to move on to stage two of the application and evaluation process. From these 196 serious applicants, the top 100 were selected and

8

marketwatch

ranked based on complete submissions of financial statements, supplemented by either a management interview or a site visit to ascertain facts and evaluate the merits of each case.

As part of the process for the SME 100, a number of UAE banks partnered with Dubai SME to help drive nominations and offer special benefits to the listed companies. These include designating them as a priority account with a dedicated relationship manager, preferential pricing, priority transaction processing at a preferential schedule of charge, high loan amount limits, low collateral obligations, reduced fees and charges on export transactions, as well as flexible repayment options.

The companies who were ranked in the SME 100 were honoured during an unveiling ceremony in 2012.

The ranked SMEs resemble an attractive investment pool for investors. The net turn-over of the top 100 SMEs is estimated at AED 2.3 billion and their total assets are worth at AED 1.4 billion while their combined profit is AED 220 million.

Nilanjan Ray ADCB

SME 100 Quick facts

All in all, 800 SMEs were nominated by the various banks. Essam Disi, Senior Manager, Strategy & Policy Department, Dubai SME, tells SME Advisor that his team has facilitated around 50 requests so far for the ranked SMEs to avail the benefits based on their needs, and is also working with the banks to standardise and have a common assessment process across the banks.

“The ranked SMEs resemble an attractive investment pool for investors. The net turn-over of the top 100 SMEs is estimated at AED 2.3 billion and their total assets are worth at AED 1.4 billion while their combined profit is AED 220 million,” says Disi.

Abu Dhabi Commercial Bank (ADCB) is one of the banks who partnered with Dubai SME to provide support to these companies. Nilanjan Ray, Senior Vice President and Head of ADCB’s Business Banking Division, tells us that the initiative was a “highly effective and beneficial process” for their SME clients.

As a partner, ADCB encouraged their clients to nominate themselves for the ranking. In turn, the applicants were advised by Dubai SME throughout the whole process. “We have seen 17 customers of ADCB being included in the ranking in 2012. We have ongiong discussions with several other members of the ranking for initiating banking relationships,” says Ray. “Our association with several members of the list has reinforced our positioning with customers as leader in this segment, offering comprehensive banking solutions.”

Ray also says that ADCB is planning on being on board for the next round of the SME 100 when it’s announced at the end of 2013. In addition, the bank is working with a number of other government organisations including the Khalifa Fund, in an effort to extend its services to reach more and more SMEs in need of financing solutions.

ADCB was also among the banks who took part in the SME Friendliness Index, another major Dubai SME initative which was announced earlier this year. The index ranked various UAE banks on the degree to which they lend to SMEs, as well as the number of SME clients as part of their total customer base. The report incorporated input from the banks as well as key decision makers from a large number of local SMEs. Its main aim is to provide more clarity for both parties to make the lending process for SMEs more transparent.

Corporate governance has increasingly become a priority area for both the private and public sector in the UAE. This year alone, there has been a number of events, workshops, seminars and even a legal framework put in place to encourage the SME community at large to adopt some of the best corporate governance practices. Dubai SME was highly involved in drafting the Corporate Governance Code, and has presented a number of the SME 100 companies as shining examples in this category. Disi also says that Dubai SME has plans to include a new corporate governance category when it announces the opening next round of SME 100. He adds: “Many SMEs have started to adopt corporate governance practices and are considering new channels to finance their growth including attracting investors and IPOs.”

marketwatch

9

Banking & finance

Sky high ambition The 2012 ADCB Ambition Award attracted a number of innovative business ideas aimed at addressing market demands and consumer trends.

I

Joumana Saad CPI Business

n a very short amount of time, Colette Griplas has been able to cross off a number of achievements on her checklist. With the intention of setting up her business, she moved to Dubai in January 2012. After developing her website and getting all the moving parts in place for her business Specs Addict, she found out about the Emirates Woman of the Year Awards and entertained the idea of entering a nomination. “I saw the awards advertised and thought it might not be right for me as we are such a new business. Then I saw the ADCB Ambition Award, which is more in line with entrepreneurship, and thought it was a perfect opportunity. We ran an aggressive campaign for public voting, so it’s been quite a process,” she says.

Colette, an Australian native, says it was Dubai’s flourishing ecosystem for entrepreneurs that initially attracted her to the Emirate, as similar support mechanisms were very hard to come by in her home country. She explains how she was able to come up to

10 marketwatch

speed very quickly in a unique and enabling business environment, and learn a lot of important lessons along the way. “Handling all of the process myself, I’ve seen the whole spectrum of Dubai and have learned from my experiences attending events learning about the logistics side of my business and also visiting the factory where the products are made,” says Colette.

Much like previous winners of the prestigious award, Colette prides herself on her dynamic background and her ability to blend tradition with fashion and new consumer demands. To describe her business in a nutshell, she labels it as a flexible fashion product everyone can use. “We’ve taken a very old idea, embraced consumer purchasing and e-commerce, and on top of that we’ve incorporated new technology with a virtual mirror on our website where users can try on different styles by using a webcam and then share it through social media. There are no geographical boundaries, and glasses are a universal product that appeal to all consumer groups,” she adds.

Winners of the annual ADCB Ambition Award receive USD 10,000 in cash, in addition to advisory services from the bank aimed at helping these entrepreneurs make wise decisions on how to spend the prize money.

In recent years, there has been a rise in the number of awards and programmes in the UAE dedicated to SMEs and entrepreneurs. However, only a handful of them offer rewards sizable enough to really take their business to the next level.

“It provides a huge amount of value. Being recognised as an ambitious woman is really the highest compliment I could be paid. Standing out amongst other competent businesswomen, and the fact that the judges believe in the vision of my business, it’s a truly humbling experience,” Colette adds. She plans to use the prize money to open up a showroom in the UAE, where her clients and target customers can familiarise themselves with the products in a physical environment.

This is the fourth year Abu Dhabi Commercial Bank (ADCB) has sponsored the Emirates Woman of the Year Awards and the Ambition Award, in partnership with INSEAD Business School. From the ambitious woman looking to start her own business, to the women who have excelled in their fields, the Emirates Woman of the Year awards are an annual reminder of the contribution

Colette Griplas wins the 2012 ADCB Ambition Award for her business, Specs Addict, an online retailer of sunglasses and glasses that allows users to virtually try on different styles and purchase them online.

Among the finalists for the ADCB Ambition Award this year were Deborah Henning, Founder of Shoreditch Muse, a platform for designers to develop and sell their collections; Kate McGill, Founder of pokkadotstripes.com, an online marketplace for families who are looking to buy or sell pre-loved baby items; and Mahyra Roy, Co-Founder of Catalyst Concepts, a provider of professional and life coaching services.

What sets the Ambition Award apart from the other awards, Majdi says, is the added value and confidence that it gives a young business still trying to find its way. “It’s about the The finalists for the 2012 Ambition Award presented innovative business ideas tapping into a variety of consumer and business needs.

women make to the development of their communities and their active contribution to the economy. The awards have also attracted a growing number of Emirati women entrepreneurs, who have gained exposure through the initiative and become examples in their own communities.

“We’ve been involved in this award to prove our commitment to the entrepreneurs who have ambitions to fulfill. These values apply to our products and services offered to the community. This is one of our endeavours to celebrate the ambitions that we present to the market. In addition to these kinds of activities, we also support SMEs through financing and advisory services to help them make their dreams a reality,” says Dr. Majdi El Muhdi, Head of Corporate Communications, ADCB.

It provides a huge amount of value. Being recognised as an ambitious woman is really the highest compliment I could be paid. Standing out amongst other competent businesswomen, and the fact that the judges believe in the vision of my business, it’s a truly humbling experience. journey these women go through from the moment they come up with their business idea to the moment when they are being recognised and crowned on stage. The winners are then faced with the task of investing the money to enrich and support their businesses,” he says. He added that the bank keeps in touch with all of the award winners year after year, and encourages them to share their success stories with a wider audience.

marketwatch

11

ENTREPRENEURSHIP

PRIME TIME

PITCH

To foster new ideas in business, du launched The Entrepreneur, a unique and exciting reality TV show providing entrepreneurs in the UAE a real chance to turn their business ideas into reality.

C

onceptualised by du, the show is aimed at both existing ventures that need recapitalisation for growth, as well as high impact business ideas requiring startup capital.

The Entrepreneur aired during October and November 2012, with Dubai One under Dubai Media Incorporated, as the exclusive broadcaster and Sony Pictures Television Arabia as the producer of the show.

Unveiling the show, Hala Badri, Executive Vice President, Brand and Communications, du, said: “We are convinced there are many good ideas out there which need to be heard and, which need to be promoted. The UAE is brimming with fantastic entrepreneurial talent which just needs a platform to take it to the next level. The Entrepreneur aims to empower and support the new breed of UAE entrepreneurs that build new enterprises which are innovative, sustainable and, most importantly, contribute meaningfully towards the social development of communities. This truly is a once in a life time opportunity, and for those with big dreams, I would say – go for it!”

Speaking to SME Advisor, Hala said: “The winner not only receives the financial prize to boost their business idea, but also has the opportunity to avail of mentoring, marketing expertise, office setup, and, assistance with

12 marketwatch

other logistical issues that many businesses often find difficult to access.”

The primary evaluating panel comprised of UAE-based personalities who have trod the path to success and are eminent in their chosen field of work today. Throughout the competition, the judges assisted in evaluating the contestants, offering constructive criticisim and advice.

• The competition is open to all UAE residents above 18 years of age and who have a registered company in their name. NGOs, societies, and associations are also welcome to submit their innovative business ideas.

• Shortlisted contestants from across the country are invited to participate in an audition day, where they will be required to pitch their ideas/product/business infront of judges.

• After the final round of auditions only ten best contestants are selected to be on the show and they will battle it out in the final round of challenges.

• On the final episode, only one deserving winner takes home the prize of AED one million in cash plus professional services and support towards their business in terms of marketing, mentoring, premises and other logistical areas to assist the business.

“The winner not only receives the financial prize to boost their business idea, but also has the opportunity to avail of mentoring, marketing expertise, office setup, and, assistance with other logistical issues that many businesses often find difficult to access.”

- Hala Badri , Executive Vice President, Brand and Communications, du

Meet the judges Abdul Baset Al Janahi Chief Executive Officer Mohammed Bin Rashid Establishement for SME Development (Dubai SME)

Muna Al Gurg Director of Retail Easa Saleh Al Gurg Group (ESAG)

Abdul Baset Al Janahi is currently the CEO of the Mohammed Bin Rashid Establishment for SME Development.

In his role as CEO, Al Janahi has contributed significantly to their growth and development. In addition, he has become renowned for his support of young and aspiring entrepreneurs in the UAE.

Muna Esa Al Gurg is the Director of Retail for the Easa Saleh Al Gurg Group (ESAG). She is responsible for strategy and operational development for the group’s international retail brands. Prior to 2010, Al Gurg oversaw the group’s marketing department. Her role as Head of Corporate Communications included working with media, customers, partners and other stakeholders in support of ESAG’s business objectives.

Prior to his appointment with the Establishment in 2002, Al Janahi held a number of senior managerial positions in leading organisations in the UAE. He was the founding member of Dubai Shopping Festival (DSF) and was also one of the founding members of the Dubai Internet City (DIC) and its Commercial Department.

She is currently the Chairwoman of Young Arab Leaders UAE and is repsonbile for guiding essential components of the initiatives’ success across education, entrepreneurship and youth development.

Yogesh Mehta Managing Partner Petrochem Middle East

Nisreen Shocair President Virgin Megastore, MENA Nisreen Shocair has been the President of Virgin Megastore for the Middle East since 2006. She has been instrumental in building the Virgin brand across the region by incorporating local and international consumption trends into one shopping experience.

Prior to joining Virgin Megastore, she held important positions at Sony Music, Bertelsmann AG and Hearst Entertainment.

Nisreen has extensive experience within music, publishing, licensing, digital entertainment and retail sectors.

Nisreen Shocair, President, Virgin Megastore, MENA, spoke to SME Advisor about the contribution and expertise of Virgin Megastores and what it can bring to the table: “We have

14 marketwatch

Yogesh is a first generation entrepreneur and the Managing Partner of Petrochem Middle East and his success story is an inspiration to anybody with an entrepreneurial streak. Having started his first business venture in 1982, Yogesh had to face several tribulations before he found his true calling – petrochemicals, when he co-founded Petrochem Middle East in 1994.

Today, with a turnover of more than USD 1.1 billion, his business has a global presence with office in China, Singpaore, India Egypt, Antwerp, the UK and with the headquarters in Dubai.

been working closely with businesses in the region for quite some time and have teamed up with du on other business related initiatives. At this point, we are in a position to spot what

ideas have the potential to succeed and what ideas will not. What I will be looking for is a business proposition that will sell and will be received well by consumers in the market.”

entrepreneurship

stepping into

the spotlight After being named the winner of du’s hit TV show The Entrepreneur, Nabbesh.com Founder, Loulou Khazen Baz, is hoping to leverage the extra exposure to build up a profitable business.

A

Joumana Saad CPI Business

t a time when one would be taking in their moment of fame, Loulou Khazen Baz is working tirelessly on developing new features on her website Nabbesh.com.

Since winning the televised competition, she has tried, tested and evolved her business to become simpler and more user-friendly. It has been one year since she launched the first version of Nabbesh.com, a website aimed at creating job opportunities through skills listing. The original concept proved viable enough to be pitched to a panel of distinguished judges and more importantly, to an audience of millions.

A Lebanese national who has lived in Dubai for ten years, Loulou has worked in a number of fields. During her most recent role working for a venture capital firm, she saw firsthand the hardships entrepreneurs faced in getting investor attention and funding. She knew deep down that she would never be able to start her own venture, unless she could devote all of her time to it. She left her job and began looking for freelance work online, and in the process discovered what she saw as a real market gap that could be filled.

“It’s a global need; the right to be employed and earn money where necessary. In this region, employment is a very big issue and women are still not very included in the workforce.

16 marketwatch

So, this is a good platform for women who want to start families, and women who do not want to work from 9:00 am to 7:00 pm,” says Loulou. “The beauty about Nabbesh, is that I look at it every night and uncover what skills are out there.

You never hear about these peoples and their unique skills.”

What sets Nabbesh apart from other job sites is its practical and simple format. Registering your profile and listing your skills takes only a few minutes. Immediately categorised by your interests and skills, you can view updates on who is hiring and what exactly they’re looking for. Currently, Loulou says her team is working on formalising the process for the employer and the job seeker, by creating a system that protects the rights of both parties.

The website will also begin to introduce ways for users to upload their credentials, portfolios and certifications to display the quality of their work. She checks the statistics on the site daily, to see how many jobs are being posted, and what people are looking for. As more and more people begin to use the website, she hopes to one day expand throughout the MENA region and uncover new market demands and trends by analysing user data and attitudes.

Over the last few years, the number of startup competitions and accelerator programmes has steadily climbed, creating

more opportunities for new and innovative websites like Nabbesh. Loulou, however, opted out of entering into just any competition, and played her cards wisely by going for The Entrepreneur. “The competition had a lot of value to it, so even if you didn’t win, the exposure you get is valuable,” she says. “At the beginning stages of building up your business you have to use your time very wisely. You can put a lot of effort into something smaller, or focus on things that will help you a lot more in the long run,” she says. “The fact that the show was very new, we really didn’t know what to expect. I didn’t know that I had to pitch four times and that every pitch had to be different. I now see it as a good thing to go through that kind of pressure by the judges early on, because pressure is something that every entrepreneur faces eventually.”

Winner receives:

The winning idea Nabbesh is a social network aimed at promoting work life-balance by giving people a platform to use their skills and practice their passions.

Like-minded people can connect, communicate, work and collaborate based on their interests or their proximity to each other.

Nabbesh aims to make a positive impact in the Middle East and North Africa by creating opportunities that enable dialogue, connections and collaboration between people, and converting those opportunities into income, outreach, education and experience.

presented her action plan for Nabbesh, as well as how she will tap into the needs of her target user groups. Going into detail, she described how the platform would serve the needs of women and young users, who are looking for more flexible job opportunities, while SMEs could use the site to hire freelancers and save time and money in the process.

Although confident throughout the competition, Loulou admits feeling pretty surprised when her name was called as the winner. “I really knew that I had something really good and knew I had a good chance, but I didn’t think I would win. So, when they said I won, it was an amazing feeling.” When it came down to the top three contestants, Loulou went up against Abdelghani Sinno, Founder of FLYconnect, a USB device with wireless capabilities, as well as Mohammed Kazim and Faisal Lutfi, Co-Founders of Allinque, a personal assistance service that covers work and personal tasks. To this day, she keeps in touch with her fellow contestants and says she has formed so many great relationships as a result of the show.

One video, five pitches and three upgrades later, Nabbesh’s name is now out there for everyone to discover. Knowing beforehand that the show would air in quarter four, Loulou says was a real motivator for her and her team to better prepare themselves for the time when people would be actively searching for the website. “When you’re in startup mode, you’re sort of allowed to make a few mistakes. The show put us on a higher platform, where we knew we couldn’t make mistakes anymore. It also gave us a time frame for us to achieve the goals we wanted to reach, and it made us very disciplined.”

Preparing for her final pitch on the show, she remembers feeling exhausted and uncertain how she would be able to wow the judges once again. During the last episode, she learned something new about herself—that she performs her best while under pressure. Competing in the top three, she delivered what she calls her “best pitch yet” as she

In addition to AED one million, Loulou received another AED one million in consulting services and office space from leading companies such as Ernst & Young, Leo Burnett, Dubai Silicon Oasis and Wamda. The value of such a prize is unique as it provides real financial support for a business looking to build a strong foundation. At the same time, it also allows a considerable amount of freedom for an entrepreneur to build up their business as they see fit, a definite luxury, as many entrepreneurs today find themselves tied down to the demands of venture capitalists and investors.

The future for Nabbesh is looking bright as Loulou begins to put an action plan together for the next few years.

Being fortunate enough to witness such rapid success, the responsibility will now be on Loulou and her team to keep up the pace and take Nabbesh to the next level.

“We’ve grown a lot since then and are now focusing on building a good team, acquiring talent and marketing a lot more, so you will hear a lot more about us soon,” Loulou says.

“I don’t think we should keep calling ourselves a startup for a long time, and starting thinking about Nabbesh as a real company.”

marketwatch

17

Legal with greater provision for out-of-court negotiations, which in turn should logically lead to a boost in foreign investment in the Emirates.

Al Hamil explained to attendees at the policy conference that the law draft covers various advanced concepts in the field of financial restructuring and bankruptcy, such as cross-border solutions. Therefore, while effectively acting as a hybrid law, it will be tailored to meet local circumstances, working in tandem with what is sufficiently suitable and beneficial from a pro-UAE viewpoint.

A step in the

right direction We investigate the newly proposed UAE Federal Financial Restructuring and Bankruptcy law aimed at increasing legal sustainability.

I

t’s been over two years since the first murmurings of potentially new bankruptcy legislation were circulated.

Earlier this year it was reaffirmed by Dr. Hadef Bin Jouan Al Dhaheri, the UAE Minister for Justice, that the legislation would be finalised for the end of 2012, noting that provisions of the new draft law will apply more widely than the current rules and procedures governing bankruptcy in Book 5 of Federal Law No. 18 of 1993.

Mike Byrne CPI Business

At the Global Policy Conference in May of this year Hani Al Hamil, Secretary General, Dubai Economic Council (DEC), commented that the primary aim of the legislation was to increase legal sustainability and flexibility of the economy. “This step should enable the economy to maintain the existing businesses operating in various sectors and attract prospective foreign investments,” he said.

As per its vision to be a strategic partner for the Government of Dubai in economic decision making, the DEC is involved in reviewing the legislation. Catering to this evaluation process, the two-day policy conference was organised to bring together both the decision makers and practitioners to draw lessons from the best international practices in financial and bankruptcy law and to refine the proposed legislation accordingly.

Existing federal bankruptcy legislation remains untested in the UAE courts as distressed companies often prefer to settle creditor claims privately because the existing legislation is both obscure and complex, leaving a considerable amount of space for differing interpretations.

It’s hoped that the new laws will ease debt restructurings

18 marketwatch

“This law will make the UAE the first GCC country to handle the financial restructuring and bankruptcy law in an objective and scientific manner, as well as to combine the regulatory and legislative framework with experience and practice. The new law will separate from the existing company law; it will be interlinked to the company law because it will tackle the practice of the company and the governance,” he commented.

What’s on offer?

So who exactly will fall under the remit of this new legislation? Richard Catling, Corporate Commercial, Al Tamimi & Co., noted in his recent review of the new legislation that not all businesses in the UAE will be able to avail of the laws. Companies incorporated under the Commercial Companies Law, establishments and individuals engaged in commercial activity can utilise the new provisions, but government authorities and entities in financial free zones cannot.

“The Law sets up a new regulatory body, the Committee of Financial Restructuring and Bankruptcy, which must administer the law and its procedures. Outlined within are twin gates through which any debtor becomes subject to its processes, payment suspension and excessive indebtedness,” notes Catling.

The former gate will apply where the debtor has stopped meeting or servicing debts; the latter instance is applicable where the debtor’s assets do not cover liabilities. In either instance the debtor can access the law’s procedures to protect the debtor from other legal attacks. The law also provides for active involvement by creditors, who can attend meetings, inform court appointed experts of their debt claims and vote on any proposed restructuring.

Catling also makes mention of further plans for preventative composition procedures. “Similar to the Financial ReOrganisation Procedures, a debtor, a regulatory authority or, a creditor, may apply to the Court for (or it the court may instigate itself) a court sponsored plan for the restructuring of a debtor’s liabilities, which will be known as a Preventative Composition of Bankruptcy Plan,” he says.

Judiciary participation Indeed, the next stage can involve the court appointing an agent of the debtor one or more Supervisors of Composition (court registered bankruptcy experts and

other specialists) to assist the debtor in the restructuring of the debtor’s liabilities and a judge may be appointed to oversee such proceedings where extra complexity arises.

In his assessment, Catling notes the various avenues of action, each according to the circumstances of the debtor.

He writes: “A Preventative Composition of Bankruptcy plan must be logged with the court. From the beginning of this plan the debtor shall manage the ongoing conduct of his commercial or financial dealings under the direct supervision of the Supervisors of Composition (who have wide ranging powers to interfere in the conduct of the debtor’s business and affairs).

“Creditors can apply for up to five observers to represent them in the Preventative Composition Procedures. The observer’s job is to ensure that the views and interests of the creditors as a whole are represented throughout the process,” he notes.

Breakdown So, in the case where this plan will simply not deliver the results hoped, or where it becomes apparent that the debtor is in a hopeless position of excessive indebtedness, what are the viable options available for the debtor?

Richard Catling

“In this instance the court may, upon a request from the Supervisors of Composition or at its instigation, transfer Preventative Composition Procedures into bankruptcy.

Whilst bankruptcy procedures in effect deprive the debtor of the power to manage the debtor’s business and affairs; as all such powers are assumed by the Court appointed bankruptcy supervisor,” says Catling.

“After a meeting or creditors is convened, the bankruptcy supervisor will produce a plan to the Court which will recommend either a restructuring plan or the liquidation of the debtor’s assets. Once approved by creditors and the Court the key terms of the plan are published. The plan will set out time limits for returning the debtor to profit, the provisions recommended by the bankruptcy supervisor for settling all liabilities and the preferential treatment of creditors if justified. The restructuring plan cannot exceed five years in duration,” Catling explains.

According to a statement from Hadef & Partners, the new law will empower the supervisors to maintain a centralised register for disqualified persons and directors and a centralised register of bankruptcy restrictions and orders.

Key makers Hadef & Partners and Clifford Chance have both been instructed by the UAE Ministry of Finance to assist in formulating key policy proposals and to assist in drafting the new legislation. Ricahrd Briggs, Executive Partner at Hadef & Partners told SME Advisor that both legal firms have been requested to conduct comparative analysis’ of various jurisdictions, largely focussing on the UK, the US, Germany, France and Singapore.

“The proposed draft law is intended to provide balance between the rights of creditors and the rights of debtors.

The idea is to avoid obliging certain businesses that could potentially survive into liquidation. “Thus, one idea would be that a business which is unable to service its debt or pay its creditors could file to the court for protection.

This would allow breathing space for restructuring of the business; for example, the ability to acquire financing by giving new lenders first priority.

Implementation If the new legislation is introduced by the end of 2012, will the various institutions concerned be equipped to handle the changes effectively? Briggs explains that, pursuant to the UAE constitution, each of the seven Emirates is permitted to opt out of the Federal court system and operate its own courts. Those courts must follow and enforce applicable Federal laws. Each of Dubai, Ras Al Khaimah and most recently Abu Dhabi has elected to operate its own courts. The remaining four Emirates operate under the Federal court system.

So what are the shortcomings of the new legislation?

What is rather surprising is that the bankruptcy laws do not address the criminal sanctions under existing law for dishonoured cheques. “In practice, the culture of using cheques to support payment obligations and provide security still constitutes an important component of the UAE business community’s approach to risk. The interface between the new law and this issue will continue to unfold in the coming years,” explains Briggs.

Gordon Stewart, President, International Association of Restructuring, Insolvency & Bankruptcy Professionals, (INSOL), echoed such sentiments while praising the new legislation at the Global Policy Conference this year. While emphasising that the real test would come from the ability of the courts to enforce the laws, he also noted that: “One has to look at the existing civil and criminal laws of the country and the ones governing the issuance of cheques.

While our contributions might take certain situations for granted, this is a crucial aspect.”

Breaking the mould Therefore, it would seem that while the new proposed laws will represent considerable shifts to the approach of debtors in the UAE, and will afford more breathing space to some sinking SMEs, the element pivotal to its successful integration will be under close review.

As Catling notes in his review: “The law presents significant implications for the administration of the procedures set out in the law, not least given the lack of professionals and court officials with acute expertise in the handling of expertise.”

Given that a smooth transition to adopting new procedures may not be as forthcoming as first thought, the new legislation nevertheless breaks the legal mould in the region and will very likley send ripples to neighbouring GCC states.

marketwatch

19

TECHNOLOGY Dubai in October. The company’s bright yellow branding could be seen at just about every section of the venue during the five-day exhibition. In addition, the company served as the main sponsor of the exhibition’s new SME Zone.

A message of protection This positioning fits perfectly into the company’s future strategy in the region and around the world, with the creation of Symantec Small and Medium Enterprise, a new business unit taksed to serve the unique needs of this market. “It’s really about continuing that brand recognition. I think the message of protection is most important to what Symantec stands for. When you think of viruses today, they can wipe out any small business, and we’ve seen targeted attacks on these businesses increasing substantially within the last few years,” says Tom Powledge, VP of SMB Delivery at Symantec.

Cyber

security

Tom Powledge, VP of SMB Delivery, Symantec, talks about the challenges of selling security to SMEs and changing attitudes on cloud adoption.

S

Joumana Saad CPI Business

MEs in the region are currently facing a number of issues with regards to managing their IT infrastructure, including increased security threats, the adoption of cloud technology and the need to protect mobile devices in their networks. According to a recent survey conducted by Osterman Research, the typical SME employee uses a number of endpoint devices, a desktop computer, a laptop, a SmartPhone, a tablet and home computer, with various applications on them, all of which malware can easily enter their organisation’s network.

Cyber criminals employ multiple compromised endpoints and social networking to reach large numbers of targets, pinpointing the more popular mobile devices such as Android and iOS. Symantec, one of the world’s largest providers of Internet security and backup software, has recently refocused its business to develop new products and solutions created specifically to help SMEs protect their information. The company recently went full force in marketing to SMEs during GITEX Technology Week 2012, which was held in

20 marketwatch

Even with more awareness in the market, selling security is still no simple task. More and more solution providers are entering the marketplace with complex solutions that companies are not always able to comprehend. Statistics have shown that SMEs globally generally understand the importance of adopting security measures, yet there is a disconnect somewhere along the way where they hesitate when it comes to the buying process. “In my experience, I’ve seen that people often wait until something bad happens before they actually go out to get security or backup solutions.

I think most of the people I meet from SME companies know they need protection; it’s just a matter of making it very easy for them to purchase it and get what they need,” says Tom. New SME-focused solutions There has been a lot of talk lately on the issue of backup and the lack of recovery plans implemented by SMEs. This year, Gartner released a report on Best Practices For Addressing the Broken State of Backup, which shed light on strategies and lessons learned from eliminating legacy backup infrastructure problems. Looking to address this pressing issue, Symantec will introduce Backup Exec 3600, a simplified and intuitive backup solution for SMEs. “Beyond features, we are changing the regional market with technologies like our purpose-built appliances that combine backup software, servers, storage and deduplication in a single solution,” says Amer Chebaro, Appliances Sales Manager for Emerging Region at Symantec. “Both our Backup Exec and NetBackup appliances provide customers with a platform that centralises backup for physical and virtual environments and maximises performance,” adds Amer.

Another key product included in the new lineup is Endpoint Protection Small Business Edition 2013, which will be available in early 2013. It offers simple, fast and effective protection against viruses and malware, and includes both a cloudmanaged service, as well as an on-premise option, in case a business is not quite ready to switch to the cloud. The value proposition for the cloud option, Tom says, is the ease of use

and time-saving benifits, as well as the ability to receive all feature upgrades automatically, by simply being an annual subscriber to the product.

Symantec’s new offerings aim to change the way SMEs look at security, by marketing products that are simple to navigate and provide real value to companies with limited time and an even smaller IT budget. Referring to the cloud-managed Endpoint Protection solution, Tom says that he is of the belief that “once customers see and experience it for themselves, they will realise the benefits, in terms of saving time and effort. You can start managing the security of your small business in 10 to 20 minutes by using the cloud-managed option. Of the customers that have taken this route, we are seeing satisfaction rates above 90%,” he adds.

Advocating cloud adoption The company also recently unveiled the findings of its 2012 SMB Cloud Adoption Survey. The report, which was conducted in the UAE, found that about 46% of SMEs in the country were considering cloud computing solutions. The survey also highlighted a high level of awareness of cloud technology across the board, which Tom expects to lead to a sharp increase of SMEs moving to the cloud to manage their security. “The primary reason for that is the need to save time. With smaller organisations, the IT manager is also the owner of the business, or someone who does IT on top of another job. They don’t have alot of time to spend on managing and researching their IT. They need things to be quick and easy. We saw that in the study and it’s a general trend and demand that we are seeing globally, ” he adds.

Coming from the US, this is the first time that Tom has visited Dubai and participated in GITEX. Yet, he could not help but be taken back by the size and energy of the exhibition. “You don’t see that many of these huge technology trade shows anymore in places like the US, so it’s great to see it come to life here. One of the distinct impressions for

Attitudes on security

50% Tom Powledge

40% 67% Source: Symantec SMB Threat Awareness Poll

me is having all of the countries represented and seeing all of the IT companies in the region. It reminds me of all the technology shows we used to see in the US before,” he says. “I think the regional ICT space is just as advanced as anywhere in the world and it’s truly impressive. The modern feel of Dubai and having an event of this size here with all of the major corporations, it really rivals any of the large technology trade shows around the world.”

Security offerings Endpoint Procection Small Business Edition 2012 • Fast and effective scans protects against viruses, worms, Trojans, spyware, and won’t slow down your systems so you can

focus on running your business • Gain flexibility to enjoy the power and convenience of a cloud-managed service with always-on protection or manage locally on-site with a server • Save on time and labour with set up in just minutes with no additional hardware • Symantec Insight and SONAR technologies detect new and rapidly mutating malware stopping malicious behaviour • A single subscription fee flattens operating costs and covers maintenance, service updates and 24x7 support

Backup Exec 3600 • Protects both physical or virtual servers and applications

• Manages data growth and reduces data backup storage by up to 90% • Minimises downtime and data loss by recovering what you need, when you need it • Enterprise class reliability – RAID 5 data drives, mirrored SSDs for hardened OS, redundant power supplies, battery backup on RAID controller • Provides a secondary copy of your data in the event of a system or site failure

marketwatch

21

TECHNOLOGY

A CLOUD SOLUTION FOR ALL Microsoft’s Office 365 aims to boost productivity for businesses of all sizes, in the Middle East and Africa region.

P

reviously available on a trial basis in markets across the Middle East and Africa, Office 365 is now commercially available in 16 countries across the region. The cloud solution will also be available with local pricing in Turkey, Saudi Arabia and South Africa. Regional service providers, will bring the service to their customers.

These providers will each integrate Office 365 with its other offerings and market the service to millions of SME customers worldwide.

Office 365 brings together Microsoft Office, Microsoft SharePoint Online, Microsoft Exchange Online and Microsoft Lync Online in an always-up-to-date service, at a predictable monthly cost. The service was introduced in limited beta last year with enthusiastic response, particularly among SMEs. Over a few months, more than 10,000 organisations, many of which were SMEs, signed up and began testing Office 365, creating

one of Microsoft’s largest global beta programs for businesses.

Moving to the cloud with Office 365 doesn’t require a business to change the way it works, because the service is based on familiar productivity tools people know and trust, including Microsoft Word, Excel, PowerPoint, OneNote, Access and more. Employees get new ways to work together with ease, on virtually any device or mobile phone, and businesses get the reliability, security and IT controls they need in the cloud, even without a dedicated IT staff.

With Office 365, small businesses can be up and running with Office Web Apps, Microsoft Exchange Online, Microsoft SharePoint Online, Microsoft Lync Online and an external website in just 15 minutes, for a monthly fee. These tools put email, voicemail, enterprise social networking, instant messaging, Web portals, extranets, video conferencing, web conferencing and more at everyone’s fingertips.

Office 365 for enterprises has an array of choices for midsize and large businesses, as well as government organisations, and includes Microsoft Office Professional Plus desktop software on a pay-as-you-go basis, for the first time ever.

Windows 8: All about the apps

Among the new operating system’s best enterprise-grade solutions are its immersive apps, that have been developed to better reach employees and improve customers’ experiences.

L

ess than a month after the global launch of Windows 8, Microsoft recently showcased the nextgeneration operating system to customers and partners at a launch event in Dubai. Microsoft’s top executives in the region discussed the opportunity Windows 8 brings to consumers, businesses and developers.

22 marketwatch

“Windows 8 offers a no compromise platform, giving you the same experience on a touch device as through mouse and keyboard,” said Antoine Leblond, Corporate Vice President for Windows Web Services at Microsoft Corp. “Windows 8 builds on what is great about Windows 7. It works well side-byside with existing Windows 7 infrastructure to deliver the experiences people love and the enterprise-grade solutions organisations need. Windows 8 also helps companies improve the way they do business through immersive apps developed to better reach employees and improve customers’ experiences,” he added.

Now available on more than 1,000 certified PCs and tablets on a wide variety of screen sizes, configurations, and designs, Windows 8 is supported by thousands of apps available in the Windows Store.

Microsoft highlighted early deployment customers, including British Telecom, Emirates Airlines and UAE Smart Learning, that are already taking advantage of enterprise benefits, from enhanced fundamentals with security, performance and manageability, to new features like Windows To Go that offer new possibilities in mobile productivity.

In addition to opportunity for companies to reach customers directly, the Windows Store represents a major opportunity for developers with the largest potential market of any platform as all new and upgraded Windows PCs can run Windows Store apps. Developers using the Windows Store for their apps have the most control over their business, the most favorable terms, and the most flexibility in their code.

lOGISTICS

Maintain the competitive edge

It is important for businesses to fully understand the true value of outsourced supply chain management as an essential tool to achieve a sustainable competitive advantage, says Frank Courtney, Chief Executive for EMEA region, Barloworld Logistics.

E

ven if we consider that many businesses now operate in what is essentially a global market, supply chain management, in general, remains a vague concept to many companies.

Frank Courtney Barloworld Logistics

In the Middle East, our own experience tells us that there is a growing appreciation of strategic supply chain management. However, a large portion of the market is yet to take full advantage of the benefits of outsourced logistics solutions. In fact, analysts predict a relatively modest compound annual growth rate (CAGR) for the Middle East’s contract logistics market of around seven per cent between 2011 and 2015. Nonetheless, although the growth forecast is far from ideal, it actually represents an enormous growth potential considering the size of the region’s untapped market.

Supply chain management is the complex aggregation of various professional disciplines, from facility location and information management to order management and even waste disposal (cradle to grave).

In this regard, the large-scale logistics operations associated with medium and large companies means that logistics can deliver substantial cost savings, particularly when supply chain management operations are outsourced to qualified professionals.

The outsourcing model is especially promising in the Middle East, a region boasting globally renowned commercial hubs such as Dubai and yet contending with a lack of supply chain outsourcing.

24 marketwatch

Why outsource?

So, what can Middle Eastern companies expect to gain by outsourcing their supply chain management activities?

First and foremost, they will be able to unload tasks that are not part of their core businesses, allowing companies to focus more on strategic functions and ultimately growing their business. A true 3PL provider typically specialises in integrated operations, warehousing and transportation that can be tailored to specific customer needs based on factors such as market conditions and delivery requirements.

Moreover, the outsourced solution goes beyond logistics to include value-added services related to the production or procurement of goods. All supply chain activities are dependent and affected by the other logistics activities within the supply chain; the quantity you ship affects the size of the truck required, which in turn affects your warehouse, the number of shipments you need to make, the size of the racks in the warehouse and so on. These activities therefore have to be viewed holistically, and the true value comes from the integration of these services to extract the synergies that exist.

Typically, for any medium or large company, the resources needed to undertake various logistics functions such as tracking orders, shipping, inventory and returns, and other supply chain tasks can be very timeconsuming and expensive. This is where outsourcing becomes a game-changing tool by offering integrated logistics solutions that are more cost-effective and are

About For the last 27 years Frank has been part of the supply chain industry. He has steered the wheel in almost all departments ranging from transport, inventory optimisation, dedicated transport

managed by experienced supply chain management professionals. Moreover, outsourcing supply chain management functions enables companies to expand internationally and operate on a larger scale. The setup also reduces risks for businesses starting operations in a foreign country as the provider is more familiar with local conditions. Companies can also tap a proven logistics infrastructure that balances expertise, experience and facilities.

Outsourcing logistics operations to a 3PL (third party logistics) provider has the potential to become a significant source of competitive advantage, as it frees the company to focus on their core competencies, whilst the 3PL provider can focus on service delivery.

It boosts the bottom line for both the retailer and manufacturer through accurate, well-managed inventory and supply chain solutions, ensuring the right product in the right place, in the right quantity and at the right time. It also reduces the need for vast areas to hold inventory. The recorded efficiencies made possible by outsourcing have made it a very attractive business proposition. Recent studies in fact

Outsourcing logistics operations to a 3PL provider has the potential to become a significant source of competitive advantage as it frees the company to focus on their core competencies, whilst the 3PL provider can focus on service delivery. show that companies that reengineer their supply chain and its management on average reduce their total supply chain cost by up to 20%. What more can be said for a strategy that allows businesses to pass on logistics tasks to experienced professionals so that they can focus more on growth?

With the UAE emerging as the acknowledged premier logistics hub of the Middle East, businesses operating in the country stand to gain much from the adoption of outsourced supply chain management solutions. Revenues from the country’s logistics market are expected to hit USD 9.4 billion in the next two years. The large domestic industries with diverse business interests differentiate it from other logistics markets in the region. Due to the large amount of freight movement in and out of the UAE, it is considered a fertile seedbed for logistics service providers, especially those engaged in freight forwarding and shipping services. This is due to the fact that domestic manufacturing

management, demand planning, SOP planning, warehousing and distribution and now freight forwarding. Frank has worked in different geographies such as Spain, the Middle East and the Far East.

industries typically undertake only trading operations, resulting in a logistics sector that leans more towards freight forwarding.

There are many challenges that offer a strong case for 3PL partnerships in the UAE. Firstly, less than ten per cent of end-users say that they use a technology solution to facilitate logistics. Third-party providers are also mostly contracted for freight forwarding, international transportation and domestic distribution services. Only 30% to 40% of end-users outsource warehousing, and less than 10% outsource valueadded logistics functions such as packaging, labeling, and quality checks. Moreover, the global recession has influenced enterprises to re-evaluate their logistics strategies. Many appreciate that outsourced logistics solutions allow them to optimise their cost structure and concentrate on their competencies. However, very few allow their 3PL partner to assist in aligning their supply chain strategy with their business strategy.

One important consideration for those planning to outsource their logistics functions is to partner with the right provider; that is one that shares the same values and goals. It is critical for both parties to fully discuss and understand the nature of their relationship and their respective responsibilities and commitments before they decide to sign a deal. There are a few providers, that offer the full breadth of competencies needed to analyse, design, implement and manage any element in the supply chain or to integrate them and manage the supply chain itself.

A supply chain should be fully aligned with a company’s business goals, which is something that an outsourcing provider can help to achieve. By teaming up with a logistics firm with proven expertise and market-leading skills in supply chain solutions, companies can boost their efficiency and effectiveness by better aligning their value chain networks to their business strategies.

Lee Kuan Yew, the prominent Singaporean statesman who transformed his country from an underdeveloped colonial outpost to an Asian Tiger economy once said: “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” For Middle Eastern countries, such as the UAE, where outsourced supply chain management is poised to gain more traction in the coming years, now is the ideal time to assess current market conditions, predict future trends, and overhaul their business models accordingly with a sound and transformative logistics outsourcing option on hand.

marketwatch

25

lOGISTICS

how secure

are you?

Anthony Beckley, Hub General Manager, DHL Express, addresses the challenges of managing freight security amid the increasing cost of security measures.

9

Anthony Beckley, DHL Express

/11 was a watershed moment in world history in that it changed the face of security not only in the US, but around the globe. The logistics industry did not escape its effects in that subsequent to 9/11 and various other notable security incidents, the industry has had to quickly adapt to a new and challenging environment where stringent security requirements are being implemented to enhance border and transport security. Without a shadow of a doubt, the way we do business today has changed and logistics solutions are being defined by security considerations when moving freight by air, sea and road.

Ensuring that freight security is a top priority and a common goal for all stakeholders in the supply chain is a necessity. Efficient and effective security measures are of paramount importance and vital to ensure that free trade around the globe can continue unimpeded by the security threats.

Increased regulations and control DHL, along with other integrators and aviation operators principally adheres to the global aviation safety and security rules set out by International Air Transport Association (IATA). As the driving force in aviation security, its guidance is universally accepted but the industry is now also increasingly exposed to additional regulations implemented by global organisations and for specific markets, with the US and European Union (EU) being particularly stringent and focused on aviation security for passengers and cargo movements.

Despite the universal call for the global alignment of regulations, the industry is faced with a real challenge when dealing with specific market aviation security requirements. This is illustrated by the incongruity and non-alignment of US and EU security requirements, which makes compliance expensive, difficult and fraught with complexity. The following example highlights an area of disparity in specific market regulations: the US only accepts x-ray screening when carried out on dual

26 marketwatch

view x-ray machines, whereas the EU accepts single view x-ray screening but requires, under certain circumstances, additional screening that the US does not mandate.

In March 2012, in an attempt to redress the imbalance and to implement common global standards for compliance, the International Civil Aviation Organisation (ICAO) and the World Customs Organisation (WCO), which have their own security programme, announced they have agreed to work together at the IATA Global Conference. The partnership aims to improve collaboration and cooperation amongst their organisations to tackle and manage the threats in the global air cargo security in a unified and cohesive way.

They have developed a four-point plan which they hope will become the yardstick for a mutually acceptable solution to authorities across the globe. The ideal outcome of this four-point plan is to enhance and align global aviation security standards by sharing the accountability and burden among all stakeholders. It also aims to gain acceptance of mutually acceptable risk management and screening standards across the globe, an outcome which would be a very welcome solution by the industry.

The World Trade Organization (WTO), which in principal supports stringent security compliance standards, has raised some concerns that it will jeopardise fair-trade opportunities for smaller countries that are unable to implement such onerous and costly procedures. This is where DHL can help by stepping in to facilitate the process.

Like most integrators, we run a Hub & Spoke model, making it easier and more efficient for organisations and governments alike by routing shipments through one of our centralised hubs, such as Dubai, where we have all the approved systems in place to meet the requirements set out by the IATA as well the individual authorities. This is not only more efficient, but also reduces the risk of error.

About Anthony Beckley, a South African national, is the Dubai Hub General Manager for DHL Express. He has been with DHL Express for the past ten years. During his time with DHL Express, Anthony has carried out and managed various large and diverse projects relating to operations.Prior to joining DHL Express in 2002, Anthony worked for 11 years at the First National Bank in South Africa heading the operations team as

Senior Operations Manager in the Remote Payment / Banking division. He has an MBA from ESC Rennes with a major in Management Science. He is also a part-time lecturer at the Emirates Aviation College, where he teaches Management Science on the BA Honors program Project Management, plus two more core modules that pertain to Supply Chain and logistics strategy – all EAC courses are accredited by Coventry University UK.

Whilst the industry stakeholders work to achieve unification and compliance in terms of specific and diverse rules, there is no doubt that the measures already put in place have led to a significant increase in air cargo security and the system is stronger and more robust than ever before. It is also true that compliance has a cost, and it is vital that any regulations put in place take into account the cost and the capability of stakeholders to practically comply with the “rules” in place.

But it is not just integrators that need to be forging these partnerships with the authorities and regulators.

Compliance to security is everybody’s responsibility and not something you can delegate. The shipper, the integrator, the carrier and the authorities, all have their role to play in ensuring that the security is a top priority and that the supply chain is safe and secure.

Despite the universal call for the global alignment of regulations, the industry is faced with a real challenge when dealing with specific market aviation security requirements. This is illustrated by the incongruity and nonalignment of US and EU security requirements, which makes compliance expensive, difficult and fraught with complexity.

Collaboration and cooperation Collaboration is the key to success, and in no area is this truer than security. To this end, effective businesses to government (B2G) partnerships are vital if we are to be able to negotiate the myriad of challenges facing us on a national and international scale. Ensuring on-the-ground success in each of the 220+ countries and territories we operate in across the globe is no by means an easy feat, but one that we are very proud of having achieved.

In addition to governments, and regulatory bodies the WCO also plays a significant role in supply chain security, not least because it supports our core function by helping to ensure trade flows smoothly. Through its signatories, the WCO is implementing programmes with a series of enforced initiatives put in place to streamline and enhance supply chain security. For example, they have specified the need to establish partnerships with stakeholders, profile shipments and shippers through information sharing and importer and exporters registration, supported by robust risk management processes. As a cornerstone of the WCO programme they actively advocate and promote the deployment of EDI interchange systems between the broker (ie DHL) and Customs authorities, which is reflected in the eMirsal2 system.

Enhancing security and risk management The key to maintaining robust security standards is to ensure that the methodologies in use empower the stakeholders to be proactive in managing the risks posed. The physical processes in place serve a valuable purpose but intelligence gathering and information sharing is the key to creating a safer and more secure supply chain. The challenge is in obtaining the right information at the right time, and then managing it correctly to proactively negate the risks identified. It is imperative that we use the pooled resources of all stakeholders to move from being reactive to being able to identify the issues and putting in counter measures that are feasible and address the risks posed and key to this is a system of intelligence gathering The response to threats identified must be practical.

For example, there has been a lot of discussion recently around the possibility of removing freight completely from passenger aircraft as way of improving security, but this does not fit the economic model of a commercial airline and will have consequence for the aviation industry.

Whilst the aforementioned action would possibly have some effect in enhancing security, the focus must be on risk management strategies as opposed to an outright ban, with cargo profiling, known shipper programmes, physical freight screening, carrier and agent accreditation programmes and so forth, all being the basis of a more workable solution.

The focus of all stakeholders must be to find the balance between the need for security, whilst facilitating trade and managing cost in the most practical way possible. We have come a long way in improving aviation security over the past ten years and in time through partnerships, the alignment of strategies and objectives supported by viable physical and information gathering methodologies supply chain security will continue to improve.

marketwatch

27

insurance

Damage control

In the event of a catastrophe, would your business survive? Clint Draper, Head of Small Business at Zurich Insurance Middle East, discusses the threats that can impact your business and the solutions for ensuring that your business can survive any disaster.

I Clint Draper Zurich Insurance Middle East

n 2012, there were 3,274 fires across the UAE. That’s almost ten fires a day.

It’s a frightening statistic. But it took the fire at JLT Tamweel Tower in Dubai on 18th November, 2012 for residents across the UAE to finally recognise the risk that fire had on their homes, contents and lives.

The risks for businesses, however, can be far greater.

If one of the 3,274 fires were to strike a warehouse, factory or office, then it could destroy a small business overnight and with it the livelihoods of hundreds of workers and their families.

Without adequate insurance protection, as a business owner, you would be financially responsible for covering the expense of any unexpected misfortune.

Insurance as a business partner Insurance can protect against such risks. Unfortunately, the reality is insurance is not viewed as a priority by many small business owners in the UAE. Cost, a lack of understanding and a previous poor insurance experience are all reasons why some businesses do not see the investment value in paying an insurance premium.

However, like a good bank, the right insurance cover can act as a partner in your business. Insurance can allow businesses to take measured risks; decisions that are key to enabling growth.

Insurance can also flatten out the peaks and troughs in your business cycle. Economies are cyclical by nature, which makes managing cash flow a difficult balancing act during any year. But, if your business were to suffer from a disaster, then the trough can become very deep and cash flow a serious issue. This is particularly true for small businesses that do not often have the strong financial balance sheet and cash flow required to cover the cost of a disaster and the resulting loss in revenue.

28 marketwatch

At Zurich, we recognise that small businesses face a unique set of challenges and risks, which can be negated with the right advice, business continuity expertise and insurance solutions. Not only does Zurich’s small business team help individual business owners, but it plays an important role within the UAE economy. There are 190,000 small businesses across the UAE, which represents 90% of all businesses in country. Small businesses employ more people than any other type of business and make a significant contribution to GDP growth. In short, small businesses are the lifeblood of the UAE. Protecting your business It is important, therefore, that these companies are able to continue operating their business if they are hit by an unexpected accident, instead of closing down and harming the economy.

So, what can you do to protect your business? In the event of a fire or any other catastrophe, property insurance will cover the cost of rebuilding your business premises and the cost of replacing your merchandise, furniture, equipment, fixtures and fittings. That’s useful for the rebuilding of your business, but who will cover the overheads while you’re waiting for your factory or warehouse to be rebuilt?

This is where business interruption insurance can protect your company. It covers the cost of paying bills, salaries and other overheads in the event of bad luck striking your business. This insurance can also cover the immediate extra expense of getting your business going again as quickly as possible to ensure that customers are not lost. The risk of losing customers is high during this period, so a good business interruption policy will also cover the loss of income due to loss of custom.

About Clint Draper is the Head of Small Business Middle East for Zurich.

Clint has 12 years insurance industry experience and most recently was the SME Underwriting Manager for Zurich Australia.

He was instrumental in re-positioning the Small Business proposition in Australia, taking it back to a market leading share.

Zurich Insurance Group is a leading multi-line insurance provider with a global network of subsidiaries and offices offering a wide range of general insurance and life insurance products and services for individuals, small businesses, mid-sized and large companies as well as multinational corporations.

Types of insurance to consider for your business

Professional Indemnity protects professionals and their business in the event of claims made by a client (or third party) Business Interruption provides cover against a loss of “gross profit” which in insurance terms means simply, net profit and overheads

Employee Fidelity protects from loss of money, securities or inventory resulting from a crime

Workers Compensation provides benefits to employees who are injured on the job (workers receive benefits and medical care)

Commercial Property insurance protects business premises from such perils as fire, theft and natural disaster

A wise investment Following an unforeseen disaster hitting your premises, a combination of property and business interruption insurance should ensure you can get your business back up and running, while maintaining a positive cash flow. The cost of these insurance policies is miniscule compared to the cost of trying to rebuild your company (and cash flow) following a business tragedy.

Workers compensation insurance will protect your employees if they are injured on the job. As well as covering the cost of medical bills and providing financial compensation to the employee, it will also prevent employees from filing negligence lawsuits against you, the employer, for any injuries they sustain at work.

Another insurance worth considering is professional indemnity. It protects businesses from financial losses that could result from malpractice and negligence. For instance, if you hired a roofing company to re-tile your roof but they didn’t use adequate weather protection, resulting in severe water damage, you could make

30 marketwatch

Machinery Breakdown insurance covers plant and machinery, including the cost of repairs or replacement of damaged parts

a claim against them for compensation to pay for repairing the damage.

Think of the worst possible scenario for your business, and you’ll find that there is an insurance policy that can protect you. Running a business is a difficult pursuit leading to many sleepless nights. Having the right insurance cover for your business can ensure you receive at least one additional good night’s sleep.

What to do next?

Spend some time identifying the risks that could harm your business, and assess the likely cost in the event of a disaster. Small businesses often underestimate the value of their contents or the cost of rebuilding their premises, which leaves them at risk of being under-insured. So, seek out the advice of a reputable insurance professional (broker or insurance company), preferably with small business experience.

They can help you assess and monetise your business risks to ensure you are properly covered if the worst ever happens.

HELPING YOU BUILD YOUR BUSINESS AMBITIONS.

ADCB CONSTRUCTION EQUIPMENT LOAN

If you wish to secure the future of your business or invest in equipment, then the ADCB Construction Equipment Loan is the perfect financial solution for you.

Key features: • • • • • • • •

Funding up to 90% of the equipment cost Refinance option available for existing assets Higher loan amount Minimum documentation requirements Quick approval time Competitive rates Funding available across wide array of brands and equipment Shari’ah compliant products also available

For more information on ADCB Construction Equipment Loan, please SMS CEL to 2626 or visit www.adcb.com Terms and Conditions apply. Credit at sole discretion of the Bank.

We are the new AIG

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