Trade and Export Middle East

ISSUE 5 | MARCH 2012

A PRACTICAL GUIDE TO GOING GLOBAL

www.tradeandexportme.com

inside: EVENT LISTINGS COUNTRY FOCUS PERFORMANCE SURVEY COMMODITY WATCH INDUSTRY INSIGHTS POLICY WATCH

PAYBACK'S A HITCH?

ELIMINATE PAYMENT DEFAULTS THROUGH EXPORT CREDIT INSURANCE PLUS

IN ASSOCIATION WITH

AUTO SUPPLY CHAIN MANAGEMENT FREE TRADE AGREEMENTS PROTECT YOUR TRADE EQUITY

PUBLICATION LICENSED BY IMPZ

EDITOR’S LETTER

Publisher Dominic De Sousa Group COO Nadeem Hood Managing Director Richard Judd richard@cpidubai.com +971 4 440 9126 EDITORIAL Group Editor, CPI Business Ketaki Banga ketaki@cpidubai.com +971 4 440 9115 Editor Meghna Pant meghna@cpidubai.com +971 4 440 9130 Contributing Editors Mike Byrne mikeb@cpidubai.com +971 4 440 9105

Pack in the action Let me begin by thanking you for your wonderful response to our coverage of one of the world’s most prominent trade leaders: Pascal Lamy, Director General of the World Trade Organisation (WTO). We’re happy you enjoyed it as much as we loved interviewing him. In line with our promise, we have continued his interview in this issue, as he discusses the controversial Doha talks, the trade affairs of the Middle East, as well as the role that the WTO will play in this region.

Aparna Shivpuri Arya aparna@cpidubai.com +971 4 440 9133 ADVERTISING Commercial Director Chris Stevenson chris@cpidubai.com +971 4 440 9138 Business Development Director Francis Morgan francis@cpidubai.com +971 4 440 9136 Advertising Sales Executive Derrick Best derrick@cpidubai.com +971 4 440 9162 PRODUCTION AND DESIGN Operations Director James Rawlins jamesr@cpidubai.com +971 4 440 9108 Production Manager James P Tharian james@cpidubai.com +971 4 440 9146 Database and Circulation Manager Rajeesh M rajeesh@cpidubai.com +971 4 440 9147 Art Director Kamil Roxas kamil@cpidubai.com +971 4 440 9112 Designer Froilan A. Cosgafa IV froilan@cpidubai.com +971 4 440 9107 Photographer Cris Mejorada cris@cpidubai.com +971 4 440 9108 DIGITAL SERVICES www.tradeandexportme.com Digital Services Manager Tristan Troy Maagma Web Developers Jerus King Bation Erik Briones Jefferson de Joya

This issue also covers topics that could immensely help you with your trade business. We have gathered experts from diverse spectrums, like legal, finance, logistics and retail, to provide insights and guidance on pertinent subjects. So, if you’re an auto or logistics company struggling with managing your costs in this tight economic environment, despair not, for a new business software has been launched that will allow you to streamline your supply chain. With the Euro crisis continuing unabated, it is important for any export or import company with European operations to save itself from a further fall in the Euro currency. Similarly, with rising payment defaults across the globe, traders must learn to protect their business and eliminate the risk of not getting paid.

If you’re a novice looking to start a business and don’t know where to begin, then read our article that outlines the steps for a successful launch. If you’re a company embarking on importing or exporting, or both, then you must better understand what free trade agreements are, thus enhancing the scope of both your opportunities and revenues. If you’re looking for a new market to invest in, especially one that is far away from the turmoil in Europe, and presents fast growth opportunity, then read about Chile as we unveil why it’s a lucrative export destination.

As usual, we look forward to your comments and feedback, and will strive to make Trade and Export Middle East your go-to guide for all things exported and imported.

We hope you enjoy the read!

online@cpidubai.com +971 4 440 9100 Published by

Meghna Pant, Editor, Trade and Export Middle East

1013 Centre Road, New Castle County, Wilmington, Delaware, USA

Branch Office PO Box 13700 Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409 Printed by Atlas Printing Press LLC © Copyright 2012 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.

Talk to us: E-mail: meghna@cpidubai.com

Twitter: @TradeNExportME

Facebook: www.facebook.com/tradeandexportme

LinkedIn group: tradeandexportme

If you’d like to receive a free copy of Trade and Export Middle East every month, e-mail rajeesh@cpidubai.com requesting a subscription.

MARCH 2012

3

13 38

resources

28

10 4

MARCH 2012

updates

ISSUE 5

MARCH 2012

16

06

GLOBAL WATCH: International news and trends with domestic trading relevance.

08

POLICY: Updated standards and regulations from government and industry bodies.

10

snapshotS: A quick look at news and trends that will impact traders in this region.

14

LOGISTICS: Amidst the tug-of-war between costs and quality, a new business software has arrived to streamline auto supply chain management. Wolfram Schmid, Director, Industry & Product Marketing, Automotive Industries, shows auto companies how to apply this software to their business and what it means to their customers.

16

LEGAL: Does your trade business deal with European vendors or manufacturers? Do you make or receive payments in Euros? With the currency’s fate hanging in the balance, Melissa Forbes, an associate at the law firm Taylor Wessing, explains what steps you can take to protect your money.

20

HOW TO: Many people rush into setting up a business without really thinking about the steps that need to be taken before they undertake a venture. If you are an ambitious player with plans to expand overseas, then read on as Bedaya Centre explains how to develop a business idea, which forms the foundation of a successful entity.

resources trade talk

CONTENTS

22

FINANCE: Exporting can greatly help expand a business, provided the exporter gets paid! Schuyler D’Souza, Chief Commercial Officer at the Export Credit Insurance Company, explains how Export Credit Insurance helps eliminate the risk of not getting paid by a buyer, the underlying benefits of having an Export Credit Insurance Policy and how an insured exporter needs to manage such a policy.

28

INTERNATIONAL EXPANSION: A free trade agreement (FTA) is an agreement between two or more countries to increase the flow of trade and services, so as to bring about greater economic integration between them. FTAs offer companies an excellent opportunity to begin exporting and importing, while also boosting their revenues, says Dr Ashraf Mahate, Head of Export Market Intelligence at Dubai Exports, and Vice Chair of the Economic Policy Committee, Dubai Economic Department.

trade Guru: In the concluding part of our exclusive interview with Pascal Lamy, the Director-General of the World Trade Organisation discusses the controversial Doha talks, the trade affairs of the Middle East, as well as the role that global trade and the WTO will play in this region.

32

TRADE SECRETS: Trade and Export Middle East with Tickbox Surveys Middle East, conducts a survey to gauge the language skills required of traders across the region. Don’t forget to be a part of this.

38

COUNTRY FOCUS: As Chile shifts its export growth focus from South Asia to the Middle East – using its stronghold of food and beverage to successfully penetrate the market – various opportunities are presenting themselves for any astute trader, including the import of halal products.

Read on as Meghna Pant demystifies this far-away land and shows you where to best place your bets.

42

FOOD: For several centuries now, dates fruit trading has been the hallmark of the Middle East. With changing lifestyles and a complex trading environment, the rules for exporting and importing this commodity have altered. Muhammad Awais Chughtai, who is the Marketing Manager of Thamarat – a company that sells luxury dates – elaborates to Meghna Pant on how his company has stayed ahead of competitors and is striving to take the region’s dates global.

46

COMMODITY WATCH: Your guide to all things commodity.

focus

37

community

42

20

48

EXHIBITION FOCUS: As the GCC rapidly emerges as one of the most important transport and logistics hubs in the world, a trader will immensely benefit by understanding the latest trends and investment opportunities in maritime trade. The World Ports and Trade Summit, to be held in Abu Dhabi between 2-4 April, is a good place to start on this.

50

EVENTS CALENDAR: A snapshot of exhibitions and conferences around the world, which can help you spend less time planning and more time attending.

MARCH 2012

5

Updates global watch

UAE, South Korea trade reaches USD 23 bn Trade volume between the UAE and South Korea reached USD 23 billion in 2011, according to new figures released by Ideal Idea Events. Korean exports to the UAE amounted to USD 2.27 billion from January to April 2011, representing an increase of 53% compared to the same period in 2010.

Korean imports from the UAE during the time frame reached USD 4.58 billion, increasing by 14.4%.

The UAE is also one of the biggest markets for South Korea’s contracting companies. In 2010, the total value of contracts awarded to Korean companies in the UAE reached USD 25.6 billion, increasing from USD 16.8 billion in 2009.

“It is clear that bilateral relations

between the UAE and South Korea are moving from strength to strength as both countries continue to explore new avenues to promote mutual growth and development. The trade volume has established South Korea as one of the key trading partners of the UAE and opened more opportunities for socio-economic cooperation.

Made in Korea – an exhibition showcasing Korean products in Abu Dhabi – will create a dedicated networking platform to help further strengthen trade relations between the two countries, while offering a unique venue to enhance cultural understanding,” said Faisal Al Raisi, Managing Partner at Ideal Idea Events.

Guarana enters global beverage market Dubai Exports, an agency of the Dubai Department of Economic Development (DED), Government of Dubai, has assisted Guarana – a recently formed Dubai-based drinks producer – to become a strong player in the beverage sector in the UAE and the region.

Since its establishment a little over six years ago, Dubai Exports has successfully adopted a proactive approach to achieve its objectives of supporting not only the local exporting community but, more importantly, the new local products manufactured in Dubai and the UAE. Dubai Exports has been assisting Guarana in building their overseas strategy and formulating on-the-ground tactics since its establishment last year. An important aspect of the tactics provided by Dubai Exports has been to connect with companies in international markets that can

Brazil sets FDI record of USD 60 bn in 2011 UAE and other Middle East investors are looking more enthusiastic to expand their portfolio in Brazil after the Brazilian economy established a new national record in foreign direct investments, reaching USD 60 billion from January to November 2011.

Mauricio Borges, president of Investment Promotion Agency (Apex-Brasil) said: “Brazil has enjoyed relatively high economic growth rate, which is manifested by the high levels of production, income, employment and foreign investment.

According to recent statistics, the country’s middle class has jumped from 35% to 60% of the population over the last decade, which underlines the exemplary economic achievements of the country.

The favourable economic conditions have opened lucrative investment opportunities for foreign investors, particularly those from the UAE and across the Middle East who are looking to expand their investment portfolio in South America. The Brazilian Trade and Investment Promotion Agency,

6

MARCH 2012

in collaboration with key investors from the Middle East and Brazil, is therefore confident that we will have a very productive meeting at this year’s Brazilian Trade Mission to Middle East.”

High-profile investors from the UAE are already actively pursuing various investment projects in Brazil, particularly real estate projects in São Paulo and Rio de Janeiro, and in the Brazilian Stock Exchange. Companies from Brazil likewise have been actively investing in the UAE and across the Middle East, including Odebrecht, one of the largest Brazilian companies that was awarded a USD 285 million contract for the construction of the second lane of the Abu Dhabi airport in 2009. Meanwhile, TECOM Investments, a member of Dubai Holding, has signed a memorandum of understanding (MoU) with Apex-Brasil, laying the foundation for the Agency to mark a presence in Dubai Media City (DMC) and facilitate business synergy between Brazilian companies and TECOM Investments’ business parks.

support the Guarana product.

“We have been championing the cause of not only exporters but also newly founded firms in various industries in the country. We have developed a portfolio of innovative tools to meet their needs and eventually encourage them to expand into foreign markets,” said Mohammed Ali Al Kamali, Director of Export Markets Development, Dubai Exports.

“Guarana’s venture in the global beverage market is a great achievement for Dubai and is typical of the UAE’s capability of producing world class products. We are proud to be part of Guarana’s journey from establishment to overseas success. We are pleased that our portfolio of services has allowed for a local brand to be established in the first instance and then to be exported regionally. This is one example of how Dubai Exports has increased the value of exports in goods and services sectors from the emirate over the last six years,” he added.

Guarana was founded in June 2011 by a group of young Emiratis seeking to capitalise on the latest global trends in the beverage industry. In the very near future the company aims to launch Guarana products in Asian, African and European markets.

Updates policy

GCC maritime centre setup in Bahrain One of the initiatives taken by the region’s maritime authorities is the establishment of a GCC Maritime Centre in Bahrain. This centre aims to boost security in the Gulf, including that of vital shipping lanes for oil exports. Members of the GCC have agreed to share information and contribute assets to the centre.

“Approval has been given from all GCC leaders,” said Sheikh Saeed bin Hamdan Al Nahyan, Deputy Commander of the UAE Navy.

According to Lieutenant Commander Sheikh Mubarak Ali Y. Al Sabah, Chief of Maritime Operations, Kuwait Coast Guard, a

primary problem in the Gulf waters is drug trafficking, where a bust is made every two to three weeks. After each bust, the GCC nations share information about the incident and the lessons learnt.

Currently, an emerging concern in the region is piracy. There are no concrete laws that govern the intent to commit piracy. 15 pirates were captured by the UK at the start of January this year and about 100 pirates were captured by India in the past year. These pirates will be detained till a court is found to conduct their trial or a law is created under which to prosecute them.

“There is no international law against the conspiracy to conduct acts of piracy,” said Chris Trelawny, Deputy Director of the Maritime Safety Division of the International Maritime Organisation (IMO).

Trelawny further continued to say: “For a lot of pirates, their equipment is being taken off them and they are being sent back to Somalia.

It’s not particularly satisfactory but it’s a pragmatic reality.”

DMCC Tradeflow for inventory-based financing Dubai Multi Commodities Centre (DMCC), the Middle East’s leading commodity centre, has launched DMCC Tradeflow, a significantly enhanced platform to the previous multi award-winning Global Multi Commodities Receipt (GMR) that was introduced in 2004 as a commodity finance risk mitigation tool.

DMCC Tradeflow is an electronic system that brings together all parties involved in inventory based financing. Through the platform, owners of goods stored in rated warehouses in the UAE can request warehouse keepers to issue “Tradeflow Warrants” which represent the ownership of their goods. These warrants can be used by the owners to pledge beneficial ownership or transfer title of the stored goods to financiers as collateral in return for working capital.

The new DMCC Tradeflow platform has been designed following feedback from DMCC’s commodity members, regional banking institutions, UAE’s warehouse operators and the international marketplace. While building on the basic

8

MARCH 2012

principles and standardised contractual framework of the GMR, the changes put into place bring increased security features, enhanced user experience, and full audit trails of all user actions to the web-based service. All features of the platform have been developed according to international trade finance and banking best practices, in addition to facilitating financial institutions’ compliance with Basel III stipulations. As a direct result of demands from financiers from around the world, DMCC Tradeflow also introduced for the first time, a Warehouse Inspection and Ratings Programme for the international commodities industry.

Ahmed Bin Sulayem, Executive Chairman, DMCC, said:“In 2004, DMCC launched the multi-award winning GMR platform, meeting the needs of the global trade finance market. The enhanced platform, named DMCC Tradeflow, builds on our impressive track record and further delivers products and services to facilitate the global commodities trade. We expect to

witness increased access to trade finance for not only DMCC licensed companies but also for commodity traders throughout the world who use Dubai as a trading hub.”

The new Warehouse Inspection & Ratings Programme benchmarks warehouses against a 5-star rating model based on an extensive set of 400 unique criteria, allowing financiers and owners access to much greater transparency of storage risk.

Global logistics service providers Steinweg Sharaf Fze, RHS Logistics and RSA Logistics have already been issued with a Warehouse Rating Certificate. All types of warehouses from all levels can participate in the rating system as soon as they are registered on the DMCC Tradeflow service.

Paul Boots, Director, DMCC Tradeflow, added:“Given the increasing demand for global liquidity, a structured platform that facilitates financiers to lend with confidence in an environment where risks can be identified and mitigated is essential to ensuring the continued flow of global trade.

With DMCC Tradeflow we provide just that.”

DRIVING YOUR BUSINESS AMBITION FORWARD.

ADCB BUSINESSEDGE COMMERCIAL VEHICLE LOAN To be successful, every business needs to move fast and keep up with their competitors.

ADCB introduces the ADCB BusinessEdge Commercial Vehicle Loan, a unique facility that will help you fund your world-class fleet of commercial vehicles, which ensures that your business stays ahead of the competition.

Key features: • • • • •

Up to 90% funding available at competitive rates Minimum documentation and quick approval Shari’ah compliant products also available Funding available across wide range of brands and vehicles ‘Loanshield’ and Equipment Insurance available

For more information on ADCB BusinessEdge Commercial Vehicle Loan, please SMS CVL to 2626 or visit www.adcb.com * Terms and Conditions apply. Credit at sole discretion of the Bank.

BEST SME BANK IN MENA WINNER OF THE BANKER MIDDLE EAST INDUSTRY AWARDS, 2010.

ADCB BUSINESSEDGE WINNER OF THE BANKER MIDDLE EAST PRODUCT AWARDS, 2011.

Updates snapshots

Pan Emirates, Barloworld Logistics partner in retail supply chain

Pan Emirates, a regional brand in home furniture, accessories and decor retail has partnered with Barloworld Logistics to offer greater value to its customers across the GCC through the optimisation of their inbound and outbound distribution. With 20 years of experience in home furnishing retail, PAN Emirates has been steadily embracing new strategies in their relentless endeavour to be the best in the industry.

Mr. Mohammed Katawala, the Group

Finance Director of PAN Emirates said, “We are in the process of an aggressive growth strategy in the GCC and recognised the need to align our supply chain strategy to our business strategy. Supply chain costs form a big part of the final product cost, and if not managed properly, could prevent us from achieving our goals and ultimately put the business at risk. We wanted to have an expert look at our supply chain holistically to optimise it and align it to our business needs.”

Etihad to double freight fleet Etihad Airways, the national airline of the United Arab Emirates, is doubling the size of its Airbus A330-200 Freighter fleet. The carrier said it had ordered two more A330-200Fs in a deal worth USD 423 million at current list prices.

“We are strongly committed to building our presence in the cargo sector with the platform of Abu Dhabi as our hub to connect global trade lanes,” Etihad Airways President and Chief Executive Officer James Hogan said. “The A330-200F has been a key part of our recent success in the

10

MARCH 2012

market. We are very pleased with its high reliability and versatility, and that’s why we are keen to expand this fleet type,” he added.

Etihad Airways was a launch customer and the launch operator of the A330200F, having taken delivery of its first aircraft at the Farnborough International Airshow in 2010. The A330-200F, which has just celebrated a successful first year of operation, can carry up to 70 tonnes of payload and offers a range of up to 4,000 nautical miles.

Etihad Airways operates its A330200Fs on routes to Addis Ababa,

He further adds, “We have chosen Barloworld Logistics as our partner with the objective of improving operational efficiency and service excellence in our logistics and distribution facilities.

By focusing on this aspect of our retail business, PAN Emirates will stand out and perform more effectively in today’s highly competitive market.”

Barloworld Logistics is one of the leading logistics and supply chain management businesses in South Africa, with full-fledged operations in UAE, China, Spain, Portugal, Germany and the United Kingdom.

Mr. Frank Courtney, CEO of Barloworld Logistics Middle East and Asia said, “Long-term partnerships with blue chip clients not only highlight our capabilities, but also our commitment to delivering smart supply chain solutions that work well into the future. The first six months of our engagement with PAN Emirates will be used to map, design and implement the solution; the second six months will be for the deployment and entrenchment of best practices in the business.”

Almaty, Beijing, Erbil, Frankfurt-Hahn, Hong Kong, Johannesburg, Milan and Nairobi.

“This repeat order by Etihad Airways underlines the key role the A330-200F is playing alongside larger freighters. The A330-200F enables Etihad Airways to optimise its network by addressing markets which do not make business sense with large freighters,” said John Leahy, Airbus Chief Operating Officer.

“In a challenging economic environment, with high fuel prices and yields under pressure, the A330200F helps match capacity neatly with demand which, allows for efficient cargo operations.”

Updates snapshots

Middle East coffee distributorship increases The Middle East is cultivating more and more coffee drinkers, making it one of the fastest growing markets in the world for coffee consumption, according to Severin’s Eric Berchtold, Area Director, Middle East and Africa for Severin, the German maker of small domestic appliances He said that the UAE alone is tipped to grow 80% up to 2014. “We can see sure signs of this growth as demand for our coffee machine range continues to rise. Indeed, this is the perfect time to be introducing our first fully-automatic beanto-cup coffee machine to the market,” he said.

Severin, the leading German brand for beanto-cup coffee machines has launched the fully automatic S2 One Touch coffee machine in the UAE to more than 50 regional distributors and retailers from the UAE, Oman, Kuwait, Jordan, Lebanon, Saudi Arabia, Bahrain and Qatar at the Westin Dubai, Mina Seyahi Beach Resort & Marina. They also attended an intensive two-day Severin Coffee College.

“Coffee’s roots are in Arabia. Indeed, for centuries, coffee drinking has been regarded with high cultural importance,” Berchtold said.

He explained that good coffee demands a premium coffee machine; stressing that Severin defines premium through quality, not price.

“For more than 60 years, Severin has been manufacturing an extensive range of valuefor-money small domestic appliances that are

Dubai Industrial City expands logistics facilities Dubai Industrial City (DI), the region’s leading manufacturing and logistics destination and a member of TECOM Investments, launched the second phase of its warehouse and showroom development, offering state-of-the-art storage facilities that will augment the growing logistics industry in Dubai and the UAE. Built at a cost of AED 750 million (USD 204.21 million), the new phase comprises 3.5 million square feet of warehouses and retail showrooms equipped with back storage, featuring units measuring 5,000 and 10,000 square feet.

These new facilities double the present size of the current storage facilities, and along with an additional 3 million square feet of open storage yards that are equipped with asphalted tarmacs and round-the-clock security, bring the aggregate amount of current storage at the light to medium industrial destination to 10 million square feet – the largest-of-its-kind under one area in the UAE. Dubai Industrial City now features a total of 627 eight-meter high warehouses, and 122 retail showrooms with amenities for temperature-controlled and chemical storage, workshops for light industrial activities and machinery operation, in

addition to warehouses for general-use.

Abdulla Belhoul, Managing Director, Dubai Industrial City, said: “There is an increasing demand for quality and specialised storage facilities in the market, with a heightened emphasis on health and safety. The launch of the second phase of warehouses at Dubai Industrial City addresses such needs, and will further consolidate Dubai’s position as the current logistics hub in the UAE and the Middle East. It will also spur growth in the nation’s industrial sector, which has grown by approximately 11% in 2011, making it the second largest contributor to the UAE’s economy after the hydrocarbon sector.”

Underlining the health and safety dimension of the warehouses, Belhoul added: “The warehouses are engineered to respond to the sophisticated industrial and safety needs of the diverse light and medium industrial units operating at Dubai Industrial City, such as food and beverage, machinery and equipment, as well as base metals and chemicals. The units are subjected to periodic monitoring and supervision by Dubai Industrial City’s Health, Safety and Environment Department to ensure full compliance.”

lifestyle-relevant. Indeed, many are lifestyle enablers and new S2 looks to re-enforce this message.”

Severin has recently reinforced its regional presence with the opening of its Dubai-based office. Berchtold confirmed that he is looking to further expand distribution channels, as well as develop a Severin-managed after-sales network throughout the region over the coming year.

Bahrain rates attract logistics provider Samel, a leading specialist for dry bulk solutions in the Middle East, has chosen Bahrain as its logistics hub for the Gulf Region.

“This strategic partnership allows Samel and the Bahrain Logistic Zone (BLZ) to open the gates for highly specialised logistics in this region, with Bahrain playing an important role as a distribution hub for the GCC,” Dr. Wolfgang Hoppmann, Samel CEO, said.

Factors such as Bahrain’s competitive rates, world-class import/export services and close proximity to the Khalifa Bin Salman Port, led to Samel’s decision, Hassan Ali Al Majed, the director general of BLZ, said.

Dr. Wolfgang expects that others businesses, particularly in the bulk goods industry, will quickly follow his company’s path as Bahrain’s competitive rates and investment opportunities become better known.

“Ultimately, this will lead to a drastic increase in the number of companies with specialised expertise and operational skills, especially in the bulk market, setting up shop in Bahrain, which will help support Bahrain’s economy in the future,” Dr. Wolfgang Hoppmann, Samel CEO, said.

MARCH 2012

11

Updates snapshots

Mars to invest USD 150 mn in GCC Mars Saudi Arabia is building a stateof-the-art manufacturing facility in King Abdullah City, Saudi Arabia. The facility will be the second factory Mars has built in the region, with the first based in Dubai. The facility will be one of the largest chocolate factories in the GCC region.

Mars KSA has made an initial investment of USD 60 million with an additional USD 150 million planned over the next 10 years.

The facility will be built to LEED Green Building standards and initially employ 60 Mars associates on the project team. A further 300-400 associates are anticipated to be brought onboard once the factory is fully operational. Mars will be developing and nurturing Saudi talent by offering training, internships and partnerships with local educational establishments.

The project will particularly open up opportunities for Saudi women in fields such

as marketing, sales, finance, engineering, as well as research and development.

Mohamed Safieddine, General Manager at Mars KSA, said at the launch: “The construction of a new chocolate manufacturing site in the region is a key enabler of our roadmap to growth strategy.

With our network operating at capacity, we have made the decision that this investment is the best way forward for us to create capacity. The new site will increase our capabilities and flexibility, allowing us to compete effectively in a growing market, and to deliver fresh product to our consumers throughout the GCC and beyond. King Abdullah City will offer us the logistical infrastructure, including the largest sea port in the region, to transform our KSA operation into one of our main regional hubs to service neighboring markets.”

Steel mills provider enters Dubai TMS International, the parent company of Tube City IMS Corporation, a leading provider of outsourced industrial services to steel mills globally has opened a trading office in Dubai, United Arab Emirates.

The opening of the office follows the company’s recently announced sevenyear contract for a variety of outsourced services with a leading regional steel company in Abu Dhabi.

J. David Aronson, President and Chief Operating Officer of the company’s Raw Material and Optimisation Group, said the Middle East/North Africa region is an increasing important market. “We believe the steel industry will continue to grow in the Middle East/North Africa countries during the coming years,” Mr. Aronson added. “The opening of this office, linked with our trading offices throughout Latin America, Europe and the Asia-Pacific, will provide the company with a worldwide platform to serve customers in these

12

MARCH 2012

regions in addition to our significant historic presence in North America.”

Heading up the newly-opened office is Anthony Rupert “Butch” Zeederberg, as Manager of Scrap/Raw Materials in the Middle East/North Africa region. “Butch is a seasoned steel trading veteran with a wealth of knowledge in the international marketplace. He has more than 30 years of experience in management, steel trading and logistics,” Mr. Aronson said.

“His charisma, leadership and existing relationships with leading worldwide steel producers will help facilitate the company’s expansion into the growing Middle East/North Africa Region.

“With Butch on board, we will continue to pursue further commodity diversification into the scrap and steel products arena. His presence will expand our global network of professionals across the five continents with extensive knowledge of and deep experience in raw material and steel products.”

Gulf Air closes underperforming routes

Bahrain’s national carrier Gulf Air is announcing the closure of its services to four destinations; Damascus, Athens, Milan and Kuala Lumpur. Services to Damascus will be stopped from 02 March 2012, while flights to Athens and Milan will be stopped from 12 March 2012, and Kuala Lumpur will be from 25 March 2012. This follows the announcement of the closure of Entebbe and Geneva routes earlier.

The move comes as the airline seeks to address the economic challenges faced in recent times; in particular, the local and regional political situation, the high price of fuel and low passenger numbers.

The decision has been taken to allow the airline to use its fleet and resources in the most efficient way by concentrating on high-demand, high-yield routes to ensure that its core customer base is served effectively.

Gulf Air’s Chief Executive Officer, Mr. Samer Majali said: “It is currently a challenging business environment for airlines around the world. These closures are pragmatic commercial decisions aimed at focusing services on routes with higher passenger traffic.

Our commercial strategy, developed in 2009, delivered significant gains in 2010 but last year has been challenging.

Therefore, we are now adapting our approach to address the challenges on an urgent basis.”

Sports car manufacturer opens in Kuwait McLaren Automotive, a sports car manufacturer, opened its first showroom in Kuwait, the latest step in its programme to establish a global retail network.

Mark Harrison, McLaren Automotive’s newly appointed Regional Director for Middle East and Africa, said: “The launch of McLaren Kuwait is an exciting development for us as we build momentum around our expansion across the Middle East. The showroom, our second in the region, is a state-of-the-art facility and fully represents the McLaren Automotive brand. In Ali Alghanim & Sons Automotive Company, we are working with a partner that is well established and highly respected in the Kuwaiti market.

At McLaren, we have strong views on future growth – to offer great cars and an exceptional customer experience; I know our partners in Kuwait share a similar view and I welcome Ali Alghanim & Sons into the McLaren family.”

Ali Alghanim & Sons Automotive Company is one of the initial 35 retailers worldwide being appointed by McLaren Automotive to sell and service its range

of high-performance sports cars, starting with the ground-breaking MP4-12C. Founded in the 1960s, Ali Alghanim & Sons Automotive Company is well known for consistently providing the highest levels of service to its customers, and is expected to be a key part of the success of the British company in the GCC region.

With McLaren’s 50th anniversary on the horizon in 2013, a combination of over 100 years of experience, pedigree and success lies at the heart of this exciting

new automotive venture in Kuwait.

The Middle East is a key market for McLaren Automotive. In addition to the two showrooms now open in Kuwait (Ali Alghanim & Sons) and Dubai (Al Habtoor Motors), the company’s full regional network will include retailers in Abu Dhabi (also Al Habtoor Motors), Bahrain (Al Ghassan Motors), Qatar (Dana Motors) and Saudi Arabia (Al Ghassan Motors).

There will also be a service centre in Lebanon (Saad & Trad Sal).

SFZ has state of the art facilities, is centrally located on key global trade routes, and is well placed to act as an assembly point for both regional and international green products such as wind turbines or solar arrays destined for the GCC, wider Indian Ocean and surrounding countries such as Africa and India.

Ali Tabouk, Salalah Free Zone’s Chief Commercial Officer, said, “Proximity to these global markets, competitive costs on land and labour and Oman’s IP protection polices all lend themselves to attracting foreign investment in the development of alternative and renewable energy solutions.

Along with creating a perfect ecosystem for the development of alternative energy in the region, the presence of these investments will contribute to the transfer of power

technology into the region and will provide specialised products for renewable energy and environmentally friendly power which will satisfy Oman’s need to preserve natural gas reserves for the Sultanates strategic industrial projects.” As part of a Government-sponsored plan to diversify the Omani economy, SFZ has aligned its mission and strategy with the economic diversification reform program that aims to reduce the oil sector’s contribution to GDP to 9% by 2020.

Mr Tabouk added, “A few months ago Salalah Free Zone approved the design of its Administrative HQ and Investor Offices building, which has been specifically designed to use only the best-in-class sustainability and functionality standards.

This landmark building will embody the free zone’s commitment and adherence to Oman’s environmentally friendly policies.”

Steel mills provider enters Dubai

Salalah Free Zone (SFZ) is looking to attract foreign investment for the development of sustainable energy solutions in the region and become the regional hub for the alternative energy industry.

MARCH 2012

13

RESOURCES Logistics

Zoom through supply chain Amidst the tug-of-war between costs and quality, a new business software has arrived to streamline auto supply chain management. Wolfram Schmid, Director, Industry and Product Marketing, Automotive Industries, shows auto companies how to apply this software to their business and what it means to their customers.

T

he automotive industry has never faced such wide-reaching and difficult challenges. In addition to continued economic instability, mounting government pressure to produce new hybrid and electric vehicles (HEV) models, and escalating fuel prices, automotive suppliers are involved in some of the world’s most complex, demanding supply chains.

14

MARCH 2012

According to a report by Aberdeen about ERP in Automotive Suppliers (published in September 2011), in their quest to harness this complexity, automotive suppliers face pressure to manage growth expectations, become easier to do business with, reduce costs, and overcome inter-operability issues across multiple operating locations.

Furthermore, the majority of those surveyed in Aberdeen’s Enterprise Resource Planning (ERP) report cite a number of goals for their ERP system: standardisation of business processes (67%); the streamlining and acceleration of processes to improve efficiency and productivity (67%); greater visibility across functions and departments (39%); optimisation of capacity (17%); and modernisation of technology infrastructure and applications (33%). An effective ERP system is the key to overcoming these pressures, managing complexity and boosting profitability.

But the truth is that poor, disparate systems are hindering these initiatives, with more than a third of automotive suppliers using ERP systems which are at least seven years old, 4% using 15 year old ERP, and 19% with no ERP at all. When you consider what a decade old system might look like, it’s easy to see why systems are failing to meet today’s agendas.

Often staggered investment in niche software applications has resulted in disparate systems which hinder communication and visibility across

ABOUT

international supply chains. Typically the shortfalls of these systems means that processes operate in isolation, causing bottlenecks, delays, process duplication and ultimately incurring costs. The cost and complexity of integrating these systems has, until recently, been deemed counterproductive and automotive suppliers have therefore done a very good job of making the best of what they have.

Poor systems = poor decisions

When considering the fragility of the customer demand-supply chain relationship, and therefore the speed required to exercise decisions quickly and appropriately, it is easy to get an insight into how poor systems can result in poor decisions. And of course, poor decisions can lead to unnecessary (unaffordable) costs.

As an example, for a typical plant manager who is responsible for managing volatile customer demand combined with a volatile supply chain, there is little room for manoeuvre in the effective management of product planning and design, customer collaboration, advanced planning and scheduling, manufacturing and assembly, and supplier collaboration. For suppliers that manufacture and distribute globally, even a slight stalling in a particular process can have enormous ramifications.

In order to achieve comprehensive visibility into, and to facilitate vital, rapid responses to arising issues, it is imperative to use tools that allow full integration of the supply chain into key business systems, so production isn’t isolated from the rest of the business.

Yet this isn’t as easy as it sounds. While the last ten years have seen an explosion in the amount of data available to businesses, they have seen little development in the way that business systems contextualise and present this data to the user. Compare that to the transformation which has occurred in consumer technology and it’s fair to wonder why better progress hasn’t been made.

Wolfram Schmid is the Director of Product and Industry Marketing at Automotive Industries. He is an 18-year veteran of the automotive industry. Schmid joined Infor (as Agilisys) in 2002 and is responsible for maximising Infor’s presence in the automotive manufacturing segment. He is in-charge of bringing new Infor solutions into the market by providing commentary and insight into the sales and marketing function.

Schmid began his career with R+H (later BRAIN AG) as an automotive ERP consultant. He was then promoted to product manager. He became the first chairman of ITA (Information Technology for the Automotive Industry) between 2000–2002, then the vice chairman of ITA (2002–2004), and is still a member of the ITA Steering Committee.

Rewriting history Of course it is impossible to change past decisions. But it is now both possible and feasible to rectify these decisions and change the future. The business software market is currently undergoing a revolution which stands to drastically remove the ‘dead wood’ generated by legacy systems, and in fact change the way in which automotive companies operate.

Business software is starting to catch up with consumer software and industryspecific software suites which use lightweight middleware to enable multiple applications to talk to each other in the same place, at the same time, with a single log-in, are now coming of age.

Imagine for example, being able to communicate information from across manufacturing, supply chain and maintenance systems in real-time with multiple local partners and multiple tier suppliers from across the world, introducing real-time alerts (think a Twitter style workflow rather than e-mails) to supply chain problems.

Through a unified view of the business, distinct underlying applications that would historically have been accessed through separate log-ins can be viewed as one system – aggregating information geared to improve decision making and speed. There is no juggling of log-ins, referring to manual reports, asking other department managers for information before taking action. All of the information is available in one place and can be personalised for the individual needs of the user.

This level of system cohesion facilitates a holistic understanding of exactly what is going on in the business, providing highly detailed control of all modes of manufacturing.

For example, a plant manager may be aware of an inbound shipment for a critical raw material delivery and he wants to ensure it’s on track. Using the single log-in screen, he can access dashboards which monitor the status of this shipment and the other interdependent or critical business processes from his desktop or equally his mobile device. He might notice a short shipment transaction going on, and through being made aware of this instantly, he can refer immediately to other systems to ascertain why this might be the case, and take action to rectify. It may be the case that scheduled production downtime might be the cause of the shortfall, in which case, he becomes empowered to reschedule a routine maintenance works order.

Speed equates to growth

As volatile markets, increasing supply chain complexity and a lack of predictability continue to threaten automotive suppliers, it is imperative that they are equipped with tools to react quickly, appropriately and consistently to any changes or anomalies in operations.

The new generation of enterprise software technology can really facilitate the speed needed to survive in today’s fast paced climate, and help organisations to capitalise on opportunities.

MARCH 2012

15

RESOURCES LEGAL

The Euro trade Does your trade business deal with European vendors or manufacturers? Do you make or receive payments in Euros? With the currency’s fate hanging in the balance, Melissa Forbes, an associate at the law firm Taylor Wessing, explains what steps you can take to protect your money.

A

s the Eurozone crisis continues to deepen, businesses should consider taking action to protect their trade activities from the potential fallout of a depreciating Euro. With Europe’s rising sovereign debt levels and mounting concerns about the ability of European states to repay their debts, there is a risk that countries will begin to withdraw from the European Union and that certain member states will abandon the Euro and re-introduce their own local currencies. Therefore, it is important – especially if you have any commercial transactions in Europe – to act now by deploying contractual protection or otherwise using currency hedging.

Contractual protection

Melissa Forbes, an Associate at Taylor Wessing, suggests that where a business

16

MARCH 2012

ABOUT

receives payments in Euros it may wish to consider amending its contracts.

This will ensure that the business is protected against any potential currency conversion loss, if one or more countries start to pull out of the European Monetary Union, or in the less likely event that a dispute arises between parties as to which currency shall apply in the event that the Euro no longer exists.

Likewise, it may be prudent to insert a similar provision in agreements where payments are made in Euros, for example to a supplier or a service provider, which shall apply if the Euro as a currency ceases to exist. Even if the default currency falls in value (which would benefit a business that is obliged to make payments to other parties in Euros), there is potential for uncertainty in case more than one European jurisdiction is connected to the contract.

For example, a contract where products from a manufacturer in Germany are sold to a purchaser in France, in which case two European currencies will be connected with the contract.

(a) Payments received in Euros

For contracts where payments are to be received in Euros, you could nominate a currency that applies, in case the Euro ceases to exist, or if a country pulls out of the Euro, or a country introduces a second local currency. Ideally, you should choose a currency that is most likely to appreciate in value, or at least maintain its value over the term of the contract.

The calculation date for the conversion of the currency should be set at a time that is reasonably prior to the date on which the trigger is to occur (i.e. the date

Melissa Forbes is an associate in the corporate department of Taylor Wessing’s Dubai office. She has worked as a legal consultant in Dubai since 2008 and, before that, worked for a number of years in London and Australia.

Melissa has advised on a number of cross-border and domestic corporate transactions, including mergers and acquisitions, corporate reorganisations, private equity investments, joint ventures and divestitures. She has also advised on a variety of commercial matters relating to issues such as corporate governance, regulatory compliance, management incentive schemes, shareholder disputes, agency and brokerage agreements, licensing, company formations and de-registrations, as well as various commercial and property related disputes.

Melissa is qualified as a solicitor of both the Supreme Court of England and Wales and the Supreme Court of New South Wales in Australia.

Taylor Wessing is a leading International law firm, based primarily in the UK, Germany, France, the UAE and Belgium, with representative offices in Beijing and Shanghai. They also have well-established alliances with BSJP in Poland and RHT Law in Singapore.

Taylor Wessing started in 1782 as a firm run by a sole practitioner, Thomas Smith. The first Taylor joined him as a partner in 1788. Its clients include leading financial institutions, major corporations, public sector bodies, as well as wealthy individuals and families.

on which the Euro may cease to exist or the date on which a member country of the European Monetary Union may begin to recognise a second form of currency as the legal tender for such country). This is imperative as the Euro may decrease in value in the period immediately prior to the trigger date. Setting the calculation date reasonably prior to the trigger date may reduce the potentially adverse effects of a currency conversion.

(b) Payments made in Euros

Where payments are to be made in Euros, the provision should ideally be

drafted so that it is exercised only if the Euro disappears completely, rather than if a particular country drops out of the European Monetary Union or adopts a dual currency system. This would allow your business to benefit from the currency drop that is likely to ensue where countries drop out or adopt a dual currency system.

Similarly, the conversion would ideally occur based on the price at the time of the Euro expiration rather than a certain period beforehand. This will allow your business to benefit from the currency drop that is likely to ensue in

For contracts where payments are to be received in Euros, you could nominate a currency that applies, in case the Euro ceases to exist, or if a country pulls out of the Euro, or introduces a second local currency. Ideally, you should choose a currency that is most likely to appreciate in value, or at least maintain its value over the term of the contract.

MARCH 2012

17

RESOURCES LEGAL

the period prior to the expiry of the Euro.

“However, you need to consider the contract as a whole in order to ensure that your position is adequately protected under the contract,” Forbes cautions. “For example, review the governing law and jurisdiction, to ensure that the contract is subject to a legal system that is likely to enforce such a provision. There may also be a material adverse change provision or a force majeure provision in the agreement. If so, it would be prudent to ensure that such a provision is not drafted so broadly that it is triggered by the break-up of the Euro, a change of currency, or a drastic drop in currency value where payments are to be received in Euros.”

Review the governing law and jurisdiction, to ensure that the contract is subject to a legal system that is likely to enforce such a provision. There may also be a material adverse change provision or a force majeure provision in the agreement.

Use of derivatives Regardless of whether the Euro fails or not, it is likely that if tensions in Europe keep mounting, the Euro will significantly fall in value.

Mehdi Al Amine, a Director of deNovo Corporate Advisors, suggests that foreign exchange derivatives could be used as a solution to protect businesses against the effect of a potential drop in the value of the Euro.

A foreign exchange derivative instrument is an option in a contract, a sort of insurance, that allows a party to force its counterparty, the bank, to buy or sell a

18

MARCH 2012

currency (in this case, the Euro versus the US dollar) for a particular price.

Say, for example, a company expects to receive a payment in Euros after one year. At the time of entering into the agreement the exchange rate of US dollars to Euros is USD 1.2750: EUR 1. As Amine explains, the company could pay a percentage of the notional amount as a premium in order to buy the protection and, if the Euro falls, this will force the bank in one year to buy the Euros for a pre-agreed level.

Let’s say, for illustrative purposes, the level is USD 1.25: EUR 1 and the

premium is 4.5%. If the value of the Euro drops to USD 1.10, at the end of that one year period, the company will be protected from the USD 0.15 currency conversion loss per Euro that it would have otherwise incurred had it not entered into the derivative agreement.

The cost of hedging the currency varies, depending on the exercise level of the option and other variable factors, but would usually be between 1-5% of the amount to be hedged.

Thus, there are many alternative and cheap solutions available for businesses that seek to protect themselves against a deepening of the Eurozone crisis that would lead to a strong depreciation in the Euro. These solutions are different from what a business can use to manage a small decrease in Euro value. Given the uncertain times that companies in the trade business face with the Eurozone crisis, it is only prudent to employ a risk management policy that explores and implements practical solutions.

RESOURCES HOW TO

Basic elements of a business idea A good business idea is market driven and it comes from the needs and demands of the end users who could be individual consumers (B2C) or businesses (B2B).

Secondly, the market should be of sufficient size to satisfy the vision of the new start up. There may be a niche in the market but is there a business in the niche. Entrepreneurs also need to know if they can develop the business idea alone or need to bring a team together.

Importance of personality traits

What’s on your mind?

Many people rush into setting up a business without really thinking about the steps that need to be taken before they undertake a venture. If you are an ambitious player with plans to expand overseas, then read on as Bedaya Centre explains how to develop a business idea, which forms the foundation of a successful entity.

20

MARCH 2012

The perennial question is whether entrepreneurs are born or nurtured.

Increasingly there is a viewpoint that many people want to be entrepreneurs and that the talent can be nurtured.

Some recent examples across the Middle East include the entrepreneurship postgraduate certificate at Carnegie Mellon University at Education City in Qatar and the Technology Innovation and Entrepreneurship Programme run

by Qatar Science & Technology Park.

These are very practical programmes that take the participant through the complete business planning stage, from securing the equity funding to launching the business. It is also useful to join networking groups in your area to meet and network with like-minded people.

Lots of buzzwords are mentioned on the personality traits of successful entrepreneurs. A sample includes hard worker, risk-taker, able to multi task, customer focused, attention to detail, team builder, able to plan, takes the long-term view and so forth. Most

ABOUT entrepreneurs have only some of the characteristics and this gap can be filled by deploying a strategic teamz.

The Bedaya Centre is a partnership between Silatech and Qatar Development Bank. With the tag line “for entrepreneurship and career development” it has a prime focus to encourage young Arabs to set up their own businesses and look at the many opportunities presented by the World Cup 2022.

This article was originally carried in our group publication Private Sector Qatar. For more information please visit: www.privatesectorqatar.com

Passion vs. profitability

Passion is a great motivator provided it is founded on logic. If the idea is feasible, then entrepreneurs should follow their passion; it will carry them through many tough times. However, if the market is telling you that the idea is bad and no profit can be made it may be time to listen and change track.

Risk assessment

The market is the great unforgiving arbitrator.

The business idea must satisfy the needs of a customer. Many products fail to satisfy the market. Some reasons for failures include: • No market research on the product or market; • Most of the budget is used to create the product; little is left for launching, marketing and selling the product; • The product is interesting but lacks a focus market; • The product’s key differentiators and advantages are not easily articulated.

The product defines a new category, so consumers or customers will need considerable education before it can be sold; • The sales force does not believe in the product and isn’t committed to selling it; • If the target audience is undefined, the marketing campaign will become unfocused;

• Distribution takes longer than expected and lags behind the launch; • Sales channels are not educated about the product and thus slow to put it on the shelves; • The product lacks formal independent testing to support claims; • The marketing campaign is developed in-house by the manufacturer and lacks objectivity; • The product is untested by consumers; only the company can assert its benefits; • The website is the primary place to order, but the product description is unclear and the site isn’t fully functional.

However, entrepreneurs should not be afraid of failure. If you study the biographies of many of today’s most successful business heroes, you will find a personal story of failure and recovery.

It is not important that you failed but how you picked yourself up and learned from the experience.

Do’s

• Put your customer first all the time; • Listen to your customers; • Conduct quality market research;

Passion is a great motivator provided it is founded on logic. If the idea is feasible, entrepreneurs should follow their passion; it will carry them through the many tough times. However, if the market is telling you that the idea is bad and no profit can be made it may be time to listen and change tack.

• Test the market before you fully launch; • Involve potential customers at the early design phase; • Provide maximum value consistent with the sales price.

Don’ts

• Believe your own marketing PR; • Underestimate your customers; • Assume that “because I can make a better mouse trap, the market will agree.”

• Build your dream team only with friends; you need people with specific talents to complement the team.

How to capitalise on opportunities No matter what size your business is there are opportunities for all sorts of businesses, both large and small.

For instance, a unique opportunity has arisen because of the World Cup 2022 that will be held in Qatar.

Business owners can actively engage in research and brainstorm on potential opportunities. Construction projects, related to World Cup facilities, will present major opportunities in terms of new stadia, infrastructure, and new hotels among others. However, there will be many service requirements in design, IT, hospitality and tourism, sports and other education services, to name just a few.

Start-ups may wish to diversify their service or product offerings after researching the market opportunities leading up to 2022. Additionally, smaller companies, with limited resources, may wish to partner with overseas vendors who have specific expertise and greater financial muscle.

MARCH 2012

21

RESOURCES Finance

Give credit when it’s due Exporting can greatly help expand a business, provided the exporter gets paid!

Schuyler D’Souza, Chief Commercial Officer at the Export Credit Insurance Company, explains how export credit insurance helps eliminate the risk of not getting paid by a buyer, the underlying benefits of having an Export Credit Insurance Policy and how an insured exporter needs to manage such a policy.

T

he word ‘credit’ means different things to different people, from the acknowledgement of academic excellence, an individual’s personal contribution, the talk time remaining on a mobile phone, or a credit card that let’s shoppers spend money that they don’t actually have. In modern day trade, export trade credit connotes the agreement to get paid for goods or services supplied to overseas buyers at a predetermined date, after the goods or services are delivered to the buyer. It plays a crucial role in insuring

22

MARCH 2012

exports against the associated risk of non-payment.

But, the essence of credit includes the element of trust and confidence that the buyer will pay. These two elements are very central to the sale of goods and services on credit terms, because that is what creates a business relationship that is vital to successful trade. Trust needs time to grow, so for businesses just starting up, exporters are unlikely to offer credit immediately, and may insist on full or partial cash in advance or cash on delivery as a matter

of prudence. While, an insistence on cash terms has many drawbacks, it can also mean that cash discounts can be negotiated, and once a few successful transactions have given the exporter confidence in the buyer’s financial strength, the possibility of sales on credit terms can become a reality, leading to a host of advantages and some drawbacks too.

The advantages for a buyer:

• A reduction in capital requirements; • An improvement in cash flow;

ABOUT

• The opportunity to add value and sell goods at a profit before payment is due; • The prospect of growth without the impediment of immediate payment.

The advantages for an exporter: • Attractive terms of payment; • Developing and sustaining long-term relationships with good customers.

The downside risk is that if a buyer defaults on payment obligations or delays payment, it will adversely impact an exporter’s cash flow.

Minimise credit risk, maximise gain

Exporting successfully involves a delicate balance between minimising the risk of non-payment while maintaining a competitive edge. Exporting goods or services is a more intricate and complex process than trading domestically. While numerous parts of the sale process are common to both, there are many more issues and risks involved with exporting.

The two most important moments in any sales transaction occur at the beginning and the end. These are the negotiation of the sales contract and payment terms before goods are shipped or services provided, and the receipt of payments at the end of a transaction. The former will materially affect the fulfillment of the latter and, needless to say, without payment there is no profit. Therefore, mitigating credit or non-payment risk associated with exporting goods or services becomes critical.

The most straightforward and traditional way to mitigate nonpayment risk is to ask the importer/ buyer to either pay cash upfront or provide a Letter of Credit (L/C), which is confirmed by the exporter’s

Schuyler D’Souza is the Chief Commercial Officer at the Export Credit Insurance Company of the Emirates (ECIE). He is a founding member of Dubai Government’s export credit agency that he joined in 2008 to start, manage and develop operations. ECIE provides trade credit risk solutions to the business community of the UAE. Schuyler’s extensive industry background includes several years of strategic marketing and business development.

Prior to this, Schuyler was the Country Sales Manager of Atradius Trade Credit Insurance, where he successfully built and managed the world’s leading trade credit insurer’s business in the UAE. In the past, he has also held key positions with Emirates NBD, Firmenich and Bayer.

Schuyler is an MBA in Marketing and Sales from the Narsee Monjee Institute of Management Studies in Mumbai, and a Post Graduate in General Management from the prestigious Berufsakademie in Germany. He is a Certified International Credit Professional and a member of the Association of Finance, Credit & International Business Professionals.

bank and can easily be discounted to obtain finance for that shipment (since payment risk is with the importer’s bank and not the importer). However, both these options create impositions on the buyer, either to come up with cash upfront (and the financing costs involved with that) or incur the costs of setting up an L/C and tie-up bank credit lines.

The trend in international trade is increasingly towards exporters providing open account credit terms for up to 180 days. This involves a higher risk of non-payment. Moreover, the exporter’s bank will find it difficult to provide finance without security or investment grade guarantee.

In the current global financial landscape, open credit is difficult to obtain and exporter’s face pressure

to offer this or risk losing business to a competitor. Hence, export credit insurance can provide maximum benefits to an exporter.

An export credit insurance policy covering commercial and/or political risks is an important tool as it helps an exporter to accurately assess a buyer’s ability to pay, and eventually compensates the exporter if the buyer fails to pay. In today’s times, it is a necessary precaution to take when dealing with high-risk buyers and/or countries, as it provides a safety net to exporters and their banks.

Banks and financial institutions may advance funds up to 80% of the invoice value against open account sales, and the exporter certainly stands a better chance of getting its case for financing approved by a bank/trade financier,

The most straightforward and traditional way to mitigate non-payment risk is to ask the importer or buyer to either pay cash upfront or provide a Letter of Credit, which is confirmed by the exporter’s bank and can easily be discounted to obtain finance for that shipment.

MARCH 2012

23

RESOURCES Finance

An export credit insurance policy covering commercial or political risks is an important tool as it helps an exporter to accurately assess a buyer’s ability to pay, and eventually compensates the exporter if the buyer fails to pay. In today’s times, it is a necessary precaution to take when dealing with high-risk buyers or countries, as it provides a safety net to exporters and their banks.

if the exporter has an export credit insurance policy in place. Moreover, this is generally a cheaper form of trade receivables protection and financing.

How Export Credit Insurance Works Export Credit Insurance is a contract that protects exporters of goods or services against the risk of nonpayment by their overseas buyers.

It covers commercial risks as well as political risks. Commercial risks include buyer insolvency and late payment or protracted default, which is a failure on part of the buyer to pay within a set number of days (payment due date). Political risk involves nonpayment on an export contract or

project due to actions by an importer’s local government. These actions can range from subtle policy matters, like a change in licensing processes,

to the full-scale nationalisation and expropriation of a business.

The distinction between political and commercial risk is sometimes hazy,

Export Credit Insurance covers manufacturing, trading and service organisations against the risk of loss due to non-payment by their overseas buyers.

ods f go

>> Cover can also be extended against political risks associated with exports, for example action by a buyer’s or seller’s government that impacts a contract, a war, or currency inconvertibility;

and es

vic

Insurance Policy

ser

EXPORT CREDIT

Buyer (Risk) Credit risk assessment & granting/ refusing credit limits to the Exporter/Seller

2

24

3

ry o

1

Insurer (Risk Transfer)

>> It offers protection against non-payment due to commercial risks (insolvency of customer) or late payment (protracted default) of trade debts;

live De

Exp cov ort Cr erin edit g n Ins on- ura pay nce me Po nt r licy isk

Exporter/Seller (Insured Party)

MARCH 2012

>> It is a risk management tool, protecting a company’s balance sheet from the impact of losses due to bad debts.

and nowadays the two types of risks are more interrelated than ever before.

Export trade credit coverage of sales to major buyers in both advanced and emerging markets is a rapidly growing business that export credit insurers write, only if they deem the customer creditworthy. But an increasing number of creditworthy companies are in risky region, which shifts the focus from corporate credit to political risk.

The need for export credit insurance arises from the common practice of selling on credit. Outstanding payments from these sales generally represent around 40-45% of a typical company’s total assets. About 90% of global trade is conducted on a cash basis, or with short-term suppliers’ credit of up to 180 days. In a competitive trading environment, providing credit to buyers is a more attractive proposition than demanding advance payment. Furthermore, in international trade, buyers tend to be reluctant to make advance payment as there is a possibility that they may not receive the goods or services. Of course, foreign buyers can issue a Letter of Credit (L/C) through their bank but the costs involved tend to be relatively high.

Therefore, more favorable terms of payment such as Documents Against Payment (DIP), Documents Against Acceptance (D/A), and Open Account (0/A) tend to play an important role in international trade to supplement product quality and pricing.

A business selling to a customer on open account terms effectively grants credit just as a bank does. However, because businesses are rarely able to take as many precautions as banks before extending credit, they face substantial risks of buyer non-payment.

Around 25% of all business failures in major OECD markets, result from the payment default by customers. Growth

In a competitive trading environment, providing credit to buyers is a more attractive proposition than demanding advance payment. Furthermore, in international trade, buyers tend to be reluctant to make advance payment as there is a possibility that they may not receive the goods or services.

in international trade accentuates the need for reliable business intelligence and protection against the risk of nonpayment, as the opportunity to increase sales also increases the probability of such a risk occurring.

Apart from credit risk protection, export credit insurers provide services in related areas such as credit information and receivables management. For a nominal fee, clients can obtain company information, credit risk reports, or access to a credit insurer’s debt collection and management expertise, on a case-by-case basis. Credit insurers specialise in assuming credit risk and checking customers’ creditworthiness before, and monitoring performance after they are granted credit. As trade credit specialists, credit insurers can do this at a lower cost than individual exporters.

As stated earlier, while more favourable terms of payment such as D/P, D/A and Open account increase sales, they also pose a much higher risk to exporters, given the higher probability of non-payment risk occurring. Hence, due to increased nonpayment risk, many exporters do not extend credit terms to their buyers and this has a corresponding impact on their export sales. A logical option available to exporters is to extend credit terms to their buyers after having put in place an export credit insurance program covering non-payment risk. Export

Credit Insurance is also known as Foreign Accounts Receivable Insurance, as it protects an exporter against the failure of its overseas customer to pay debts, which can happen either because the customer (the importer) becomes insolvent or, because the customer fails to pay within the predetermined time frame.

In the UAE, export credit insurance is provided by the Dubai Government owned Export Credit Insurance Company of the Emirates (ECIE), the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), and global trade credit insurers – Atradius, Euler Hermes and Coface – who cover the risk of non-payment of UAE exports to over 170 countries, as well as to domestic trade of products and services. Without such a facility, exporters would have to bear the consequences of non-payment risk on their own and restrict the growth of sales because of the potential increase in the probability of payment defaults which is currently at a high.

It is important to note that the most profitable and lucrative countries tend also to be the most risky as far as payment is concerned. Therefore, export credit insurance can enhance the confidence of the trading community by ensuring that exporters holding an export credit insurance policy get paid.

MARCH 2012

25

WORLD

P RTS & TRADE 2 − 4 April 2012, ADNEC, Abu Dhabi

SUMMIT

Registration now open Join thousands of experts to debate and shape the future of the global ports and shipping industries.

“The industry needs a global event to sound check business initiatives, promote current projects and discuss issues and solutions. WPTS provides this international stage.”

Sheikh Dr. Sabah Jaber Al Ali Al-Sabah, Chairman, Arab Seaports Federation

Supported by:

In association with

Register today at www.WorldPortsAndTrade.com

Speakers include: H.E. Sultan Bin Saeed Al Mansouri, Minister of Economy, UAE Jonathon Porritt, Founder Director, Forum for the Future H.E. Jamal Majid Bin Thaniah, Non-Executive Director & Vice Chairman, DP World Bill Farren-Price, CEO, Petroleum Policy Intelligence, UK Professor Fabiano Mielniczuk, Research Coordinator, The BRIC’s Policy Centre, Brazil Katharine Pulvermacher, Associate Director Africa, Economist Corporate Network, SA

Platinum sponsor:

Sponsored by:

Jeffrey Landsberg, President, Commodore Research and Consultancy, USA Peter Ford, CEO, Port of Salalah Steve Kelly, Director Ocean Freight EMEA, UPS SCS (Belgium) NV Michael Dempsey, General Manager, Marine & Intermodal, Identec Solutions Dr. Yvo A. Saanen, Founder & Managing Director, TBA B.V Michael E. Sarna, Senior Vice President, Purvin & Gertz Inc, UAE Thomas Leavers, CEO, Dubai Mercantile Exchange, UAEÂ

Organised by:

To exhibit please contact: Mohanad Terkawi T: +971 (0)2 401 2786 E: m.terkawi@turretme.com Chris Adams T: +44 (0)1206 545121 E: cadams@seatrade-global.com

Destination partner:

RESOURCES International expansion

Feel free to trade A free trade agreement (FTA) is an agreement between two or more countries to increase the flow of trade and services, so as to bring about greater economic integration between them. FTAs offer companies an excellent opportunity to begin exporting and importing, while also boosting their revenues, says Dr Ashraf Mahate, Head of Export Market Intelligence at Dubai Exports, and Vice Chair of the Economic Policy Committee, Dubai Economic Department.

28

MARCH 2012

I

t is generally thought that competitivelypriced products with unique selling properties that are successful in their home country experience few, if any, barriers in foreign markets. However, the reality is very different and success at home does not mean that firms will not experience obstacles in foreign markets. The typical obstacles that firms face in foreign markets can range from transparent tariffs and taxes, which impose a price that is disadvantage compared to the domestic products, to the more opaque nontariff barriers. Various attempts have been made to remove such trade impediments through the World Trade Organisation (WTO).

Unfortunately, the most recent series of negotiations, namely the Doha Round, which began in 2001, have made little progress in removing trade barriers. As a result a number

ABOUT

of countries have sought to establish free trade agreements (FTAs) as a mechanism towards a better trade environment.

What is an FTA?

A FTA is an agreement between two or more countries to increase the flow of trade and services, so as to bring about greater economic integration between them.

FTAs seek to encourage and assist trade between the signatory countries through the requirement that their firms have preferential access to each others’ markets. All FTAs have three strands, namely liberalisation in the trade of goods, services and investments. As such, FTAs seek a reduction or removal of tariffs and non-tariff barriers including taxes, subsidies, regulations, and so on, that give domestic firms an unfair advantage. In some cases, the FTA deals with free access to the markets of the signatory countries through an end to any domestic government-imposed monopoly or oligopoly. In addition, FTAs may also cover protection of intellectual property rights, ensuring equality in government procurement processes and procedures, as well as dispute settlement and the free movement of labour and capital.

The benefits

FTAs offer companies an excellent opportunity to not only enter the world of exporting but also, if they have already taken that step, to boost their revenues. The

Dr. Ashraf Mahate is the Head of Export Market Intelligence at Dubai Exports, which is an agency of the Dubai Economic Department. Dr. Mahate is also the Vice Chair of the Economic Policy Committee with the Dubai Economic Department. He has written a number of journal articles and book chapters, as well as edited books in the areas of economics, finance and banking. He has also presented papers at major international conferences.

Dr. Mahate provides extensive consultancy services to various organisations in the areas of banking, economics and finance. He has been a director of a number of companies including a venture capital company and a private equity fund.

Dr. Mahate received his doctorate from Cass City University Business School in London (UK), which was ranked by the Financial Times newspaper as the twelfth best university in the world for finance. He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London). He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS).

For more information on Dubai Exports, please visit: www.dedc.gov.ae.

reduction in trade impediments means that FTAs provide a faster and more effective market access to signatory countries.

Various studies have shown that once an FTA has been signed, the level of trade with the signatory countries tends to increase.

However, in some cases, the real benefits may take time as there may be a short-term pain that companies could experience in terms of greater competition from imports with signatory countries. Nevertheless, studies show that over the long term, benefits outweigh losses, as the end result is low trade barriers and tariffs for both exporters and importers. This is truly a win-

Even if companies have heard of FTAs, they tend not to use their scarce resources in researching the necessary information.

However, for UAE-based companies, who operate in a market with a limited size, this is not a luxury they can afford. If a company really wants to grow its business and capitalise on creating overseas strategic alliances, it needs to devote time and attention to learn about FTAs.

win outcome as exporters have improved access to markets of the signatory countries and domestic producers become more competitive in the international arena due to lower cost structures as a result of lower home country trade barriers for imports.

The reluctance

Although, the benefits of FTAs may be obvious, the question that arises is why companies do not use them to generate overseas revenue and increase their exports by entering new markets.

International studies show that of the enterprises – especially smaller sized companies – that export, about two-thirds do so to only one country. This is in sharp contrast to larger companies where half of them export to five or more countries. The main reason for the difference in foreign market performance between smaller and larger companies is that the latter have the financial and human capital resources to establish overseas affiliates to bypass most trade barriers and so gain access to the foreign market.

The first reason cited by companies is that there are administrative and documentation issues. In order to utilise the FTA, the company needs a preferential certificate of

MARCH 2012

29

RESOURCES International expansion

origin (PCO). On the basis of this certificate, the importing country’s customs department will decide whether the goods can benefit from the preferential treatment accorded in the FTA. In the case of smaller entities, the lack of human resources prevents them from using FTAs as firms need to prepare considerable documentation. The documentation needs to prove that the goods have had a significant value add in the country before a PCO can be issued. Furthermore, smaller companies tend to be very sensitive regarding the provision of what they may consider confidential information and, hence, this acts as a major impediment. Moreover, various surveys of behaviour show that where procurement source is required in order to obtain the PCO, firms tend to shy away from using the FTA.

Knowledge is power

Although the administrative and documentation issues may hinder company use of FTAs, the real problem is a lack of knowledge or awareness of the FTAs. More importantly, even if companies may have heard of the FTAs they tend not to use their scarce resources in researching the necessary information. However, for UAE-based companies, who operate in a market with a limited size, this is not a luxury they can afford. If a company really wants to grow its business and capitalise on creating overseas strategic alliances, it needs to devote time and attention to learn about FTAs. The first point of call should be Dubai Exports, which is an export promotion agency. Second, companies can download copies of FTAs from the WTO website (www. wto.org). This is made much easier for UAEbased firms as the country has signed the Gulf Co-operation Council customs union which includes Saudi Arabia, Kuwait, Oman, Bahrain and Qatar. As a part of the GCC three FTAs have been signed, which are the Greater Arab Free Trade Agreement (GAFTA) that includes 18 Arab countries and four associate members from the Organisation

30

MARCH 2012

An FTA by itself will not ensure success for the company in foreign markets. What an FTA does is open the door, but the company then has to be able to capitalise on the opportunities available. This means that exporters need to ensure that they have a well thought-out export strategy, provide adequate resources to meeting the needs of the overseas activity and ensure that their product meets the needs of the country in question. of Islamic Countries; the GCC and Singapore Free Trade Agreement (GSFTA) and the GCC and European Free Trade Association Free Trade Agreement (GCC-EFTA FTA) which includes Iceland, Norway, Switzerland and Liechtenstein. The UAE has also signed bilateral trade agreements with Syria, Jordan, Lebanon, Morocco and Iraq, whereby the UAE and its partners accord each other preferential access for specific goods.

Profitable partnerships

The key benefits for UAE exporters under the GCC customs union are: • A common external customs tariff (CET); • Common customs regulations and procedures; • Single entry point where customs duties are collected; • Elimination of all tariff and non-tariff barriers, while taking into consideration laws of agricultural and veterinarian quarantine, as well as rules regarding prohibited and restricted goods; • Goods produced in any member state shall be accorded the same treatment as national products; • Unification of import and export rules and procedures; • Adoption of unified standards and specifications for all products, according to the Charter of the GCC Standardisation and Metrology Organisation; • Elimination of all procedural obstacles encountering joint projects and according

them, at a minimum, the same treatment given to similar national projects; • Provision that no member state may grant to a non-member state any preferential treatment exceeding that granted herein to member states, nor conclude any agreement that violates provisions of this agreement; • Unification of all investment-related laws and regulations; • Accord of national treatment to all investments owned by GCC natural and legal citizens; • Integration of financial markets in member states, and unification of related legislation and policies.

The GAFTA free trade agreement has the following provisions for exporters: • Goods produced by any member country shall be treated as national goods as far as the rules of origin, specifications and measurements, health and security safeguard clauses, as well as local charges and taxes are concerned.

However, each member country would need to observe international rules and provisions for setting safeguard measures as well as subsidies; • International rules and practices will be observed as far as defining and dealing with cases of dumping are concerned; • The ability to facilitate “the funding of interArab trade and settlement of payments resulting from such trade” (GAFTA, Article

II – as reported on the official website of the Arab League); • The removal of all non-tariff barriers for member country products; • Allowing member countries to implement agricultural calendars so as to be able to suspend tariff reductions on a maximum of 10 agricultural commodities during the months of peak production.

The GCC-Singapore FTA provides for the following:

• No new customs duties shall be introduced in trade between the GCC States and Singapore, except for those contained in the Agreement; • Singapore shall, on entry into force of this Agreement, abolish all customs duties on imports of originating products from the GCC; • Each party shall, in accordance with its respective domestic laws, grant temporary admission free of customs duties goods intended for display or use at exhibitions, fairs or other similar events, including commercial samples for the solicitation; • The parties shall strengthen their co-operation in the field of technical regulations, standards and conformity assessment procedures, with a view to increasing the mutual understanding of their respective systems and facilitating access to their respective markets;

• For the purposes of the fulfilment of its standards or criteria for the authorisation, licensing or certification of services suppliers, a party may recognise the education or experience obtained, requirements met, or licenses or certifications granted in another signatory country; • The signatories to the Agreement have sought to provide adequate, effective and non-discriminatory protection of intellectual property rights, including effective means of enforcing such rights against. In this regard each signatory shall treat companies no less favourably than that it accords to its own nationals; • The Agreement provides that countries do not treat companies on an equal basis as far as government procurement is concerned.

The GCC-EFTA FTA has agreed on the following:

• No new customs duties shall be introduced in trade between the EFTA States and GCC, except for those contained in the Agreement; • Both parties that are the GCC countries and the EFTA countries shall, on entry into force of this Agreement, abolish all customs duties on imports of originating products from the other party country; • Under the terms of the FTA a signatory

country is permitted to introduce or keep an existing import duty or measure if it feels that it is important. However, the signatory country needs to inform the Joint Committee of all export duties applied.

In this case a customs duty is defined as any duty or charge of any kind imposed in connection with the importation of a product, including any form of surtax or surcharge, but does not include any charge imposed in conformity with Articles III and VIII of the GATT 1994; • The signatories to the Agreement have sought to provide adequate, effective and non-discriminatory protection of intellectual property rights, including effective means of enforcing such rights against. In this regard each signatory shall treat companies no less favourably than that it accords to its own nationals. The only exception is that provided for under Articles 3 and 5 of the TRIPS Agreement; • The Agreement provides that companies in the signatory countries shall: a) Be liable to all laws, regulations, procedures and practices regarding government procurement as national entities; b) Not treat a locally-established supplier less favourably than another locallyestablished supplier on the basis of the degree of foreign affiliation to, or ownership by, a person of another party.

If an entity is to enter the world of exporting, then countries with which the UAE has an FTA is a good route to acquiring the necessary skills and expertise. Of course, an FTA by itself will not ensure success for the company in foreign markets. What an FTA does is open the door, but the company then has to be able to capitalise on the opportunities available. This means that exporters need to ensure that they have a well thought out export strategy, provide adequate resources to meeting the needs of the overseas activity and ensure that their product meets the needs of the country in question. Once exporters bear these points in mind then the world is their oyster.

MARCH 2012

31

trade talk Trade Guru

A shining beacon In the second and final instalment of Trade and Export Middle East’s exclusive interview with Pascal Lamy, Director-General of the World Trade Organisation (WTO), Meghna Pant asks the former political and economic advisor to the French Prime Minister about the controversial Doha talks, the trade affairs of the Middle East, as well as the role that global trade and the WTO will play in this region.

How would you say the Doha Development Agenda concluded this year? What do you expect from it going forward?

We are at an impasse and Ministers said at our Ministerial Conference last month that the round will not be concluded “any time soon.” I expect, this year, to see negotiators probing each other and seeing how they might be able to move the process forward in small rather than big steps. Perhaps they will look at trying to reach consensus on specific areas rather than the entire round. Perhaps they will look at whether they can reach an agreement among a smaller group of countries rather than all the members.

There are difficulties with either approach but they should not be insurmountable.

But make no mistake, trade opening will continue; the question is: will it happen here at the WTO?

As per a WTO estimate, the successful conclusion of Doha talks could boost global trade by upto USD 200 billion within a year. In order to end the impasse of the talks, what steps can be taken by the WTO? Is bringing the talks to an end a way forward?

Not one country, not one delegate has suggested this. What everyone has said is

32

MARCH 2012

ABOUT

that we need to explore new approaches.

Perhaps that means trying to gain agreements piece by piece, in specific areas, rather than concluding this entire behemoth of a negotiation at once. But we will have to see what the members can agree this year in terms of the approach.

The US and other developed countries are seeking more market access in developing nations, including India, while these nations are trying to protect their fledgling agricultural and industrial markets. What do you think is the best way to resolve such a conflict of interest?

In fact, this is the essential question. Within the trading system today there are different views as to what constitutes a fair balance of rights and obligations among Members with different levels of development. What is the right share in the contributions and aspirations of advanced economies and emerging markets? What is the right combination of reciprocity among trade partners with similar levels of development and flexibility, which would provide weaker Members with space to adjust to greater competition? These are essentially political questions that will need political answers.

What are your expectations of non-oil trade from the Middle East and more specifically the Gulf countries? What do you feel needs to be done in order for the Gulf countries to increase their level of non-oil exports?

Many highly export-oriented Arab countries are very dependent on oil and gas exports.

These are vulnerable sectors in an interdependent world. With fast-growing populations, Arab countries need to find ways of creating more, and better paid jobs.

These can’t be found in the energy sectors alone, so more attention should be paid

Pascal Lamy has been the Director-General of the World Trade Organisation (WTO) since September 2005. Lamy holds degrees from the Paris-based Ecole des Hautes Etudes Commerciales (HEC), the Institut d’Etudes Politiques (IEP) and from the Ecole Nationale d’Administration (ENA). He began his career in the French civil service at the Inspection Générale des finances and at the Treasury. He then became an advisor to the Finance Minister Jacques Delors, and subsequently to Prime Minister Pierre Mauroy.

In Brussels from 1985 to 1994, Pascal Lamy was Chief of Staff for the President of the European Commission, Jacques Delors, and his representative as Sherpa in the G7. In November 1994, he joined the team in charge of rescuing the French bank, Credit Lyonnais, and later became CEO of the bank until its privatisation in 1999.

Between 1999 and 2004, Pascal Lamy was Commissioner for Trade at the European Commission under Romano Prodi.

After his tenure in Brussels, Pascal Lamy spent a short sabbatical period as President of “Notre Europe”, a think tank working on European integration, as associate Professor at the l’Institut d’études politiques in Paris and as advisor to Poul Nyrup Rasmussen (President of the European Socialist Party). He was reappointed DirectorGeneral of the WTO by its Members for a second mandate in May 2009.

The World Trade Organisation (WTO) is the only global international organisation that deals with the rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal of the organisation is to help producers of goods and services, exporters, as well as importers conduct their business.

to developing industries in the services and manufacturing sector. Recent studies illustrate that several Arab countries have embarked on this path and the result of these reforms and strategies are now bearing fruit, particularly in the Gulf countries. The diversification that has taken place sees growth in specific sectors, such as tourism, transport and construction.

What specific role has the WTO played in the Middle East and the UAE in order to boost trade, especially non-oil trade?

The current Doha negotiations offer a unique window of opportunity for Arab countries to integrate more fully into the

multilateral trading system, as well as expand and diversify their exports. And of course, consumers and import businesses would benefit if the relatively high bound tariffs that many Arab Members still have in place are lowered. We often forget that the impact of tariffs is borne by domestic consumers, as well as user industries in the form of more expensive goods and services. The poorest of consumers tend to be the hardest hit and user industries become less competitive. In the same context, the UAE has tabled a proposal to eliminate all tariffs on raw material including aluminium. This will further open existing markets and create new market access opportunities.

WTO is the means through which the Middle East region can integrate more fully into the global trading system and through that help diversify these economies.

More open trade can contribute to growth and job creation in this region.

MARCH 2012

33

trade talk Trade Guru

Which are the most trade dynamic countries in the Middle East and the Gulf, and why?

Those Arab countries, particularly in the Gulf, with critically anchored trade policy and trade priority areas – either in overall national development plans and/or in strategies for poverty reduction – are certainly becoming more dynamic. In the absence of effective integration of trade into development planning and strategies for poverty reduction, trade cannot work for development.

How would you assess the WTO’s role in the Middle East region?

A feature of this region is that a number of countries are still negotiating their accession to the WTO. This is the case of Lebanon, Syria and Lybia. Some others are newcomers to the WTO family, such as Saudi Arabia and Oman. WTO is the means through which this region can integrate more fully into the global trading system and through that help diversify these economies. More open trade can contribute to growth and job creation in the Middle East region.

Do you think that countries in the Middle East should further liberalise their economies and open them to more foreign investment and trade?

It has been widely recognised that trade opening could make a tremendous contribution to development. However, trade opening is not an end in itself.

When supported by appropriate policies, including, stable macroeconomic policies, pro-growth regulation and competition policy, investments in infrastructure, human resource development, good governance and the rule of law, it makes an essential contribution to pro-poor growth and sustainable development.

These measures enhance a country’s access to goods, services, technologies and knowledge. And by stimulating

34

MARCH 2012

Those Arab countries, particularly in the Gulf, with critically anchored trade policy and trade priority areas – either in overall national development plans or in strategies for poverty reduction – are certainly becoming more dynamic.

In the absence of effective integration of trade into development planning and strategies for poverty reduction, trade cannot work for development. the activities of the private sector, they create jobs, foster learning processes, attract investment, increase foreign exchange earnings and generate resources for sustainable development and alleviation of poverty.

Moreover, Arab countries are not identical in their levels of development, structure of economies and trade priorities though they have considerable common ground on policy that warrants a great deal of coordination among them. It is crucial that regional and multilateral initiatives are mutually supportive in building a more open world economy, rather than a world divided into protectionist trading blocks. And this is one of the most important challenges facing trade policy makers today. Regional trade agreements, such as the Greater Arab Free Trade Area (GAFTA) and the Gulf Cooperation Council (GCC) Customs Union, can be a good thing, and besides they are a reality of the international trading scene. The attraction – both political and economic – of securing deeper economic ties with neighbours and important trading partners is easily understood.

Do you feel that the WTO should be an organ for Fair Trade, especially in the case of the poorer countries?

This is a very important question and the answer to it depends on what your

definition of Fair Trade is. Does Fair Trade mean transparent rules, nondiscrimination among and between trading partners? Does it mean resolving disputes in a fair and responsible way? Does it mean public standards?

Private standards? Or does it involve social equity, fair wages, environmental standards, and animal rights? While there is agreement among governments that transparent, non-discriminatory rules are essential to a healthy trading system, there is considerably greater divergence of views on whether social or environmental issues should be more deeply integrated into global trade rules. If governments can agree on new multilaterally rules at the UN Climate Change negotiations or at the International Labour Organisation (ILO), the WTO system is flexible enough to adapt. Where the danger lies is in the unilateral imposition of standards that have not been agreed multilaterally.

Do you feel that the relative strengths of some countries in global trade, such as China, may endanger its future growth of exports?

No. China’s economic strength is based on a great deal more than exports and you are already seeing evidence of this. China’s trade surplus in 2011 was USD 155 billion, its smallest since 2005. Imports last year grew more sharply than exports and

trade talk Trade Guru

The current Doha negotiations offer a unique window of opportunity for Arab countries to integrate more fully into the multilateral trading system, as well as expand and diversify their exports. In the same context, the UAE has tabled a proposal to eliminate all tariffs on raw material including aluminium. This will further open existing markets and create new market access opportunities.

this is another indication that domestic demand in the country is growing. Exports will continue to rise in China – assuming overall economic conditions are reasonably stable – but so will imports and domestic sales. This is what happens when a country grows richer.

Some critics of the WTO claim that it is a problem and a tool of the rich countries to place trade above all other issues. How would you respond to such criticism?

There may have been some truth to this statement 15 years ago, but it’s actually an argument we hear less and less today. Perhaps one of the reasons for that is that now developing countries, even the poorest among us, have a voice that is heard. This has been true since we launched the Doha round in 2001.

Evidence of this could be seen in 2003 when we amended the intellectual property agreement to ensure access to essential medicines in the poorest countries. At the Ministerial Conference in December ministers took important decisions that granted Least-Developed Countries (LDCs) greater breathing space, as well as special treatment in areas pertaining to services, protection of intellectual property and the accession of LDCs to the WTO. We do not have weighted voting and we do not have a Security Council. Through the consensus system all our members have equal say through which decisions are made. Developing countries often work in groups, organised around shared geography or sectoral interests, and there is indeed strength in numbers.

This explains the success of developing countries in shaping the WTO agenda across the spectrum. It also explains why so many developing countries feel more comfortable in the WTO environment than they do in bilateral or regional trading arrangements.

36

MARCH 2012

TRADE TALK

Powered by

SURVEY

WE NEED JUST FIVE MINUTES OF YOUR TIME!

TRADE and EXPORT MIDDLE EAST aims to keep the regional trading community up to speed with the latest information.

Over the following months we will delve into industry trends, pinpoint key data and analyse the most pertinent issues to ensure that our readers are armed with real insights from within the industry.

And we need your help for this!

We will conduct regular reader surveys and then share key trends and analysis back with you. This is your chance to be heard and to share your experiences to help the industry.

Of course, your responses will be held in the strictest conďŹ dence.

Have your say!

Visit www.tradeandexportme.com to take the survey.

OCTOBER 2011

39

Focus Country

Go nuts!

As Chile shifts its export growth focus away from South Asia to the Middle East – using its stronghold of food and beverage to successfully penetrate the market – various opportunities are presenting themselves for any astute trader, including the import of halal products. Read on as Meghna Pant demystifies this far-away land.

F

or most people, Chile represents a land known for its wine, the Andes, Pinochet, fjords and a devaluating currency. While the Chilean peso has recovered from its losing streak to emerge in value against the US dollar and other major currencies, its market-led economy

38

MARCH 2012

has had a similar rebound – especially over the last twenty years – and the country is now following a liberalised trade policy with low tariffs. Over the last few decades, the South American country has survived inflation of 200% and import deposits of 10,000% to adopt a successful trade

reform and an ensuing boom in industries like salmon and global services. Walnuts, fresh fruits and salmon are infact among the most exported products from Chile.

As its economic growth and diversification away from niche sectors continues, Chile has already acquired the strongest sovereign bond rating in South America. Despite the global recession and a devastating earthquake in 2010, the country’s GDP grew more than 5% in 2010 and 6.3% in 2011.

This has been primarily due to a low rate of inflation, high copper prices, solid export earnings (particularly in forestry, fishing, and mining), and growing domestic consumption. Chile also attracts a lot of foreign direct investment (FDI), though most of it is in gas, water, electricity and mining.

Exports account for more than a quarter of GDP, and three-fourths of this is in commodities. Since the country has a high level of foreign trade, it is widely regarded as an important nation

ABOUT

ProChile, the Chilean Trade Commission, is part of the Directorate General for International Economic Affairs of the Ministry of Foreign Affairs. It is responsible for implementing and enhancing Chile’s trade policy. ProChile strives to reinforce and project the country’s trade policies under four fundamental concepts: supporting small and medium companies in their process of going international; taking advantage of the opportunities arising from the country’s trade agreements; association between public and private organisations and positioning the country’s brand image in other markets. For this, ProChile has a network of more than 50 offices and commercial representations, strategically located in the world’s most important markets spread over more than 40 countries. For more information, please visit: www.chileinfo.com.

for this success, which stood at about USD 12 billion, thus leading to estimates that exports may reach USD 20 billion in 2015, making Chile one of the top 10 food suppliers worldwide.

Middle East FOCUS

While most of Chile’s products are exported to various parts of the world, with a particular focus on Far Eastern and Asian countries, it is increasingly focusing on the Middle East, especially

Chile has signed 21 Free Trade Agreements with 58 countries, including China, Japan, Korea, the European Union, USA, Mexico and Brazil, enabling it access to billions of consumers and almost 86% of the global GDP. for most exporters and importers. It is regarded as one of the most stable and transparent country’s in the region, with a reputation for being a good business ally and safe for investments.

These key factors have allowed Chile to sign 21 Free Trade Agreements (FTAs) with 58 countries, including China, Japan, Korea, the European Union, USA, Mexico and Brazil, enabling it access to billions of consumers and almost 86% of the global GDP. During 2011, Chilean exports stood at around USD 80 billion, up by 17% as compared to 2010. Food exports were in great part responsible

as an important market for Chilean food products. Carlos Salas, Trade Commissioner of ProChile, the Trade Commission of Chile, responsible for increasing Chile’s trade profile, says that the country is focusing on the UAE, particularly Dubai. This is because it sees it as a gateway and export hub to the Middle East, a destination for re-exports through its free zones, and as providing accessibility to the Indian sub-continent due to its proximity, thus enabling access to millions of consumers. In order to further cement these ties, the country has set up a trade commission office in

Dubai with the aim to increase business opportunities by understanding local businesses, allowing regional companies to become familiar with Chile and to collaborate with the business community to discover opportunities between Chile and the UAE. 50% of Chile’s exports to the UAE during 2011 were foods, amounting to USD 59.16 million (AED 215.93 million), whereas total Chilean exports to this market have increased 4.4% annually during the last five years. Total exports to the GCC reached to USD 381 million (AED 1.39 billion), representing a dramatic increase of 62% as compared to 2010. Among the leading exported products from Chile to the UAE are fresh apples, fresh grapes, kiwifruit, plums, walnuts, almonds, raisins and wine.

The country is venturing into exporting halal meat products as well, and this is especially designed for this region.

Currently, eight Chilean beef and lamb packing plants are certified for export to the UAE, as a result of an inspection tour by officials of the UAE Ministry of the Environment and Water in November 2010. Also, 38 Chilean food companies are halal-certified. Among Chile’s main objectives in the coming years is to become a strong player in exporting halal meat products in this region.

Chilean walnuts in the UAE

In Chile’s exports to Middle Eastern region, Turkey has seen a 257% increase in prunes, and a 29% rise in walnuts exports in 2011 as compared to 2010.

MARCH 2012

39

Focus Country

In Chile’s exports to the Middle East, Turkey is highlighted with a 257% increase in prunes and a 29% rise in walnuts exports in 2011 as compared to 2010; whereas an increase of 573% of walnuts exports to the UAE positioned it as Chile’s 4th destination market after Turkey, Brazil and Italy.

The UAE has also seen an increase of 573% of walnuts exports, positioning it as Chile’s 4th destination market after Turkey, Brazil and Italy. Chilean walnuts exports to the UAE amounted to USD15 million (AED 54.75 million), some of which were re-exported during Ramadan to neighbouring countries such as Saudi Arabia and North Africa.

The dried fruit sector has likewise been a huge market for Chile as it posted a huge growth of 433% in 2011. Other products exported from Chile to the UAE are fresh apples, fresh grapes, kiwifruit, plums, berries, almonds, raisins and wine.

40

MARCH 2012

“The Chilean dried fruit industry is growing fast. We expect to see USD 1 billion exports by 2015 with the main products being walnuts, prunes, almonds, hazelnuts and raisins. This will position Chile as an important player in the international dried fruit supply. Today, Chile is the number one prune exporter and number two walnut exporter worldwide, increasing volume with the highest quality that suits an attractive market as Middle East, with its huge dried fruit consumption and growing economy,” commented Andrés Rodríguez, Executive President of Chilean Walnut Commission and Prune Processors and Exporters Association (APECS).

Exhibit yourself ProChile is further making in-roads into the Midle East by participating in exhibitions, such as the recently concluded Gulfood Exhibition, which is the largest annual trade show for the food and beverage industry in the region. Carlos Salas says that it is a great venue that allows Chilean companies to showcase their products – such as nuts, non-alcoholic beverages, seafood (particularly salmon), meat, olive oil, fruit preserves, dairy and gourmet products – to over 62,000 trade visitors from more than 150 countries. From bringing six Chilean companies to participate at the exhibition five years ago, the Chile Pavilion had 17 companies in 2012, making it the biggest so far. Salas feels that Gulfood has helped to almost double Chile’s food exports to the regional market, as exports have gone from USD 33 million in 2008 to USD 61 million in 2011.

ProChile is also participating at the Food Leaders’ Summit with the purpose of outlining the Chilean food and beverage supply chain, along with the country’s industrial trends as a food powerhouse, such as modern technologies implementation, traceability measures during the whole production process, and sustainability measures in order to comply with the highest international standards.

For UAE-based traders it’s not just dried fruit, salmon and halal products that they can trade in. There are many other sectors that also offer commercial and trading opportunities. For instance, Chile is often used as a source of fresh water as it has one of the largest supplies of pure drinking water in the world. With wide water shortages expected in the region, this can also be an interesting avenue to explore.

Focus FOOD

A fine date!

For several centuries now, dates fruit trading has been the hallmark of the Middle East. With changing lifestyles and a complex trading environment, the rules for exporting and importing this commodity have altered. Muhammad Awais Chughtai, who is the Marketing Manager of Thamarat, a company that sells luxury dates, elaborates to Meghna Pant on how his company has stayed ahead of competitors and is striving to take the region’s dates global.

T

hamarat was established in 2010

by Nabil A. Kamalboor, an electrical engineer turned dessert-preneur.

Like most people, Kamalboor enjoys dark chocolate for its taste as much as its health benefits, and like every Middle Eastern, dates are a part of his diet. When he couldn’t find a product in the market that blended the two ingredients to his taste, he decided to create his own company – Thamarat – that created chocolate-coated dates.

Accordingly, he set up an HACCPcertified factory in Dubai. He did market

research and decided to position Thamarat as a luxury date company that targetted high-end consumers who would be willing to pay for premium-quality, unique products that were natural and healthy. He wanted Thamarat to stand out as the only brand that served a healthy and pure dark chocolate delicacy.

The main ingredient for the products are 100% dark chocolates that do not contain sugar, flavourings, colourings or preservatives, and are free from trans-fat and genetically modified food

The Middle East is one of the top 10 markets for confectionery products in the world. The total Middle East confectionery market is valued at USD 113 billion and the market has grown by 15% over the last three years.

42

MARCH 2012

sources. Kamalboor marketed that as Thamarat’s unique selling point.

He marketed his products as those that were not only differentiated, but were also borne out of high quality production.

Hence, Thamarat has been priced in the premium range which meets the expectations of target consumers.

Prices are kept in line with the category of dark chocolate products.

To reach out to these target consumers, Thamarat secured a retail channel through upmarket chains such as Spinneys and Waitrose. The company started from Dubai, and has now expanded to Abu Dhabi and Sharjah.

Launch in Dubai

Dubai was used as the launch pad for Thamarat in September 2010. It was a natural step as the company proprietor is from the city. This, coupled with the fact that Dubai is known for its

ABOUT

luxurious lifestyle, allowed Thamarat to position itself as a premium brand.

Familiarity with the local business culture allowed the entity to enter the market seamlessly.

However, most importantly, the United Arab Emirates (UAE) was a perfect location of choice due to its existing demand. The chocolate market in the UAE is worth AED 546 million with a growth of 27% based on value and 14% by volume, according to recent figures released by AC Nielsen’s Retail Audit.

The UAE is also the largest trade destination in the Arab world, as well as the world’s third largest reexporter. According to Thamarat, if UAE is the soul, then Dubai is its heart.

As a dynamic trading hub, Dubai is a strategic entry point into lucrative markets in the Middle East, including Bahrain, Kuwait, Oman, Qatar and Saudi Arabia. That is why, Kamalboor felt that having a base in Dubai could help pave the way for Thamarat to branch out further into the Middle East.

Consumer marketing

Thamarat has established a simple marketing plan by using direct marketing channels for consumers.

Below-the-line activities like sampling promotions are run with supermarket

Muhammad Awais Chughtai is the Marketing Manager of Thamarat. He has managed brand development, business development, and sales and marketing for diverse brands and products, for over 10 years, across the UK, Pakistan and the UAE. Launched in March 2011, Thamarat is a passionate creation of Nabil A. Kamalboor, a local-based electrical engineer and entrepreneur.

Thamarat Sweet Factory is primarily engaged in the production of dark chocolate dates with almonds. The company’s all-natural ingredients are sourced from the world’s trusted producers and are untouched by the genetically modified process undergone by many food products found on shelves today. The quality of Thamarat is further ensured through strict checks and controls at its HACCP-certified manufacturing base in Dubai.

Thamarat is available across major outlets of Spinneys/Waitrose in Dubai, Sharjah and Abu Dhabi and selected Union Coop outlets in Dubai. Thamarat employs a workforce of around 20 dedicated staff.

chains to allow consumers to sample Thamarat products. Such promotional activities are especially successful during the holy month of Ramadan, company executives feel, as it fulfils the consumers’ desire to stay healthy while enjoying sweet treats.

The marketing plan also includes digital media. Therefore, the company is trying to create an active online presence. The first step is to create a Thamarat fan page on Facebook, where consumers are encouraged to share their experiences. This has already yielded positive results and widened Thamarat’s reach. Consumers as far as Australia have placed orders to have boxes of Thamarat shipped to them.

Thamarat also actively gathers

The Kingdom of Saudi Arabia boasts a confectionery industry worth USD 544 million, clocking in an annual growth of 5%. Nearly 70% of Saudi Arabians are under the age of 30 and the middle class continues to expand, leading to a rising disposable income per capita and creating ample scope for expenditure on luxury items. Taking these statistics into account, there’s a huge potential for Thamarat to thrive in the Kingdom.

feedback from consumers. In keeping up with customer needs, Thamarat recently made two product enhancements; one was adding crunchy almonds, as per consumer demand, and also creating a grab-and-go 45-gram pack for consumer convenience.

Apart from this, Thamarat has generated exposure by participating in specific exhibitions like the Middle East Natural and Organic Products Exhibition (MENOPE) and BioFach Japan.

Thamarat has received encouraging feedback from its latest consumer outreach initiatives. This demonstrates the importance for companies to stay in touch with consumers.

Expanding to Saudi Arabia

The Middle East is one of the top 10 markets for confectionery products in the world, with a high per capita consumption of chocolate. The total Middle East confectionery market is valued at USD 113 billion and the market has grown by 15% over the last three years.

Leading the pack in this lucrative market is Saudi Arabia. The Kingdom boasts a confectionery industry worth USD 544 million clocking in an annual growth of 5%. Nearly 70% of Saudi Arabians are under the age of 30 and the middle class continues to expand,

MARCH 2012

43

Focus FOOD

leading to a rising disposable income per capita and creating ample scope for expenditure on luxury items. Taking these statistics into account, there’s a huge potential for Thamarat to thrive in the Kingdom.

Thamarat has also set its sight on Qatar. Along with Saudi Arabia, Qatar has charted the largest growth in the Middle East, growing by 24% in the past three years.

Sales for chocolate in the Middle East, particularly in the Gulf Cooperation Council (GCC) countries, are rapidly growing on a year-on-year basis, while sales in traditional chocolate-loving countries like Europe are levelling off.

One of the factors attributed to this growth is that consumers have access to a lot more choices with the influx of foreign chocolate brands.

The Middle East has a one-billion strong population and has among the highest gross domestic product (GDP) per capita in the world. Its countries depend heavily on imports to fill the gap between their limited but expanding domestic food production, in order to serve a massive population growth. Therefore, Thamarat has decided to focus on this region for its growth plans.

Challenges and opportunities The current challenge for Thamarat is to expand to overseas markets. Like many small and medium enterprises (SMEs) with a modest amount of resources, Thamarat is looking to achieve this goal by forming trade partnerships.

Although Thamarat has been on the lookout for trading partners, it faces setbacks as many potential partners have proved to be unreliable and untrustworthy. Such experiences have made the company proceed with a higher degree of caution. It now conducts solid background checks on leads and obtains references from those who can vouch for the integrity

44

MARCH 2012

Although Thamarat has been on the lookout for trading partners, it faces setbacks as many potential partners have proved to be unreliable and untrustworthy. Such experiences have made the company proceed with a higher degree of caution. It now conducts solid background checks on leads and obtains references from those who can vouch for the integrity of the traders in question. In short, the company ascertains the authenticity of those to potentially do business with.

of the traders in question. In short, the company ascertains the authenticity of those to potentially do business with.

In this hunt for genuine partners, Thamarat got in touch with Dubai Exports. The government agency that assists potential exporters in the region to expand, placed Thamarat under the Export Assistance Programme. This helped open up myriad opportunities for Thamarat.

For example, aware that Thamarat was keen to enter the Saudi Arabian market, Dubai Exports put Thamarat in contact with potential clients from the region. Due to this, Thamarat is in the process of signing exclusive right deals with traders in the Kingdom.

Through the Export Assistance

Programme, Thamarat has also been given access to all the major Food and Beverage (F&B) exhibitions around the world, either as an exhibitor or a visitor. Thamarat is planning to participate in SIAL 2012, the world’s largest food exhibition, which will be held in Paris during October this year.

This will provide a platform for Thamarat to explore venturing into various markets in the future.

The Export Assistance Programme also provides assistance in conducting market feasibility studies for any prospective market that Thamarat wishes to enter.

Bolstered by this support, Thamarat is planning an aggressive global expansion plan to allow people the world over to sample some of the finest products from this region.

22-25 APRIL 2012 Jeddah Centre for Forums & Events Co-located with

Saudi Building & Interiors Exhibition

Gold Sponsor

Saudi Diesel Equipment Co., Ltd.

BOOK YOUR STAND NOW!

With over 20,000 sqm of space showcasing: Crawler Cranes, Mobile Cranes, Tower Cranes, Graders, Loaders, Compressors, Crushers, Fork Lifts, Skid Steers, Piling Rigs, Excavators, Access Platforms, Bull Dozers, Concrete Pumps, Cement Mixers, Grabs, Trucks, Material Handling Equipment, Front Shovels, Cherry Pickers, Rollers, Communication & Navigation Systems, and more...

Contact Us +971 4 440 9129 info@constructionmachineryshow.com

The region’s largest heavy equipment exhibition The Construction Machinery Show will be the largest heavy construction machinery event in the region. There will be a wide variety of products on show ranging from heavy equipment to machinery and generators including service providers. There are plans of a live auction and demonstration area for visitors to get a real idea of the capabilities of the equipment. This event is dedicated to the construction machinery sector and will provide an invaluable platform for customers in the Arab world bringing manufacturers, distributors and buyers together.

In 2012 the Construction Machinery Show will be co-located with the Saudi Building & Interiors Exhibition. SBIE is an ideal business platform to find out about the latest building and interiors industry developments, assess the competition and network with specialist contractors, equipment and material suppliers, as well as solution providers.

We will be in Jeddah next April. Will you?

Find out more. Visit www.constructionmachineryshow.com The Construction Machinery Show and Construction Machinery Middle East and their entities are registered trademarks.

The Construction Machinery Show is held alongside the Saudi Building and Interiors Exhibition under the patronage of the Saudi Ministry of Municipal and Rural Affairs. Š 2011 CPI Limited. All rights reserved.

ORGANISED BY

Focus commodity watch

Commodity prices snapshot Reem Aboul Hosn, Senior Financial Analyst at Zawya, tells us how key commodities performed over the month of February 2012.

NATURAL GAS Natural gas prices zigzagged over the month of February, before changing direction towards month end and rising slightly. The extraction of natural gas from storage is picking up as compared to extraction in February 2011.

BRENT

Brent Crude futures slipped below USD 125 on 25th February after peaking on 24th February.

Prices eased after Saudi media reports denied news of a pipeline fire.

46

MARCH 2012

Data provided by Zawya

Focus commodity watch

GOLD Gold rose sharply during most of the month, especially in the last week, where it gained 3.6% to reach a one-month high of USD 1789.7. News of the European Union approving the bailout package for Greece brought back confidence in the financial markets.

Silver Silver posted a sharper increase than gold during the last week of the month, rising to USD 37.21 from USD 33.5, a 10% increase from the previous week. This increase was also attributed to the Greek bailout news that led to the appreciation of the Euro against the Dollar.

Data provided by Zawya

MARCH 2012

47

Community eXHIBITION FOCUS

The World Ports and Trade Summit As the GCC rapidly emerges as one of the most important transport and logistics hub in the world, a trader will immensely benefit by understanding the latest trends and investment opportunities in maritime trade. The World Ports and Trade Summit, to be held in Abu Dhabi between 2-4 April, is a good place to start.

O

ver the past few weeks, trade and port activity has gathered renewed interest amid concerns of economic stagnation in the Eurozone, geopolitical strife in Iran and Southwest Asia, and piracy in international waters. While there is no denying that these will impact the flow of international freight and commodities in 2012, the GCC is rapidly emerging as one of the most important transport and logistics hubs in the world.

As a percentage of world trade, the GCC today represents about 3% of imports and 5% of exports. Middle East seaports are expanding vigorously, in line with this trend. Over the past few years, a total of USD 46.5 billion has been committed to develop 35 ports in the region.

There are two major reasons driving this growth. On one hand, the favourable geographic location of the GCC countries provides them with a strong opportunity to serve as hubs not only along the Europe–Asia shipping lanes, but also for northern and central Africa. On the other hand, the region’s ongoing economic diversification has meant the upgrade of existing infrastructure across all transport modes. On both these counts, the benefits accruing to the region are long-term in nature.

The emergence of India and China has presented the GCC with substantial opportunities as hubs. As a result, GCC ports need to ramp up capacity, not only to cater to their own increasing needs,

48

MARCH 2012

but also to develop a hub strategy. Most of them are ideally placed as a trade platform between Asia and the Far East on one hand, and the West, Central Europe, and Africa on the other.

All the above factors point towards the importance of focusing attention and taking stock of the critical issues facing this part of the infrastructure and the challenges to sea trade. The World Ports & Trade Summit is one such platform, which has been conceived with the goal of addressing all the key issues and themes relating to ports and sea trade besides acting as the leading platform for exhibiting the latest products and services within the sector. It is only fitting that such an event be held in the emerging hub of global trade: UAE. The first World Ports and Trade Summit hosted in Abu Dhabi in 2011 drew over 3,000 delegates from 52 countries, including board presidents and chief executives from sectors ranging from ports, cargo and logistics operations, infrastructure development to investment finance.

By bringing together key decision-makers and solutions providers across a series of brainstorming and networking sessions, the summit will offer the latest project updates and the opportunity to influence investment and purchase decisions in the fast-expanding ports and sea trade sector in the Middle East. To highlight the industry outlook and latest trends in maritime trade and investment the summit will have three dedicated forums, featuring cargo owners, shipping companies, third-party logistics providers, freight forwarders, port authorities and business consultants.

There will be discussions on newly evolving trade patterns resulting from the economic realities and infrastructure projects of the emerging market economies. Industry leaders from container and liner shipping will discuss the pattern of investment in new capacity and its implications for the supply/demand of this sector.

Insights will also be given into how successful ports in the world have effectively introduced automation for added efficiency in infrastructure and cargo handling, and the challenges they have experienced in meeting the needs of the logistics industry in infrastructure development, shore-side transport links and cargo handling technology. The World Ports & Trade Summit will take place between 2-4 April in Abu Dhabi. For more information, please visit: www.worldportsandtrade.com.

WHAT WILL YOU

DISCOVER?

QlikView’s Business Discovery approach delivers on the promise of BI by putting the business user in control. Unlike traditional BI, where just a few people are involved in insight creation, Business Discovery enables everyone to generate insight. It’s about workgroups, departments, and entire business units having access to the data they need to make better decisions.

With QlikView, businesses can take insight to the edges of their organization, enabling every business user to do their jobs smarter and faster than ever.

qlikview.com

Community events calendar EXHIBITION

DATE

LOCATION

India Chem

4th - 6th

India

Foodtech Packtech

9th - 11th

New Zealand

Analytica China

16th - 18th

China

2011 UFI Congress

1st

Abu Dhabi

AutoRomania

1st

Romania

Oil & Gas Ukraine

1st - 3rd

Ukraine

Abu Dhabi International Petroleum Exhibition

5th - 8th

Abu Dhabi

World Hospital Congress

8th - 10th

Dubai

Dubai International Jewellery Week Exhibition

10th - 13th

Dubai

Dubai International Motor Show

10th - 14th

Dubai

Dubai Air Show

13th - 17th

Dubai

October 2012

Save the date!

We know that you are a busy trader with a demanding events diary. Therefore, we are providing you with a snapshot of exhibitions and conferences around the world, so you spend less time planning and more time attending.

EXHIBITION

DATE

LOCATION

March 2012 LogiPharma Europe

1st

USA

International Tourism Exhibition (ITE)

14th - 16th

Abu Dhabi

CeBIT 2012 (IT)

6th - 10th

Germany

Roadex/Railex 2011

18th - 20th

Abu Dhabi

International Security National and Resilience

19th - 21st

Abu Dhabi

2011 World Robot Olympiad UAE

18th - 20th

Abu Dhabi

Doha International Maritime Defence

26th - 28th

Qatar

The Middle East HR Summit And Expo 2011

20th - 24th

Dubai

HR Best Practices in Oil, Gas and Petrochemicals

21st - 22nd

Kuwait

Motexha

1st - 3rd

Dubai

Gulf a la Carte 2011

21st - 23rd

Abu Dhabi

The World Ports & Trade Summit

2nd - 4th

Abu Dhabi

SIAL Middle East 2011

21st - 23rd

Abu Dhabi

The Internet Show Middle East

17th - 18th

Dubai

FM Expo + Big 5 Show

21st - 24th

Dubai

Thailand Auto Parts and Accessories

26th - 29th

Thailand

Milipol

26th

Qatar

Arabian Travel Market

30th - 3rd

Dubai

Middle East Manufacturing Exhibition 2011

28th - 30th

Abu Dhabi

Project Qatar

30th - 3rd

Qatar

SIM - Signage, Imaging & Media Show 2011

28th - 30th

Abu Dhabi

Airport Exchange 2011

29th - 30th

Abu Dhabi

29th - 1st

Dubai

April 2012

May 2012 Multimodal

1st - 3rd

England

Global Water and Beverage Technology Congress

Arab Market 2012

1st - 12th

Abu Dhabi

December 2012

Cards and Payments Middle East 2012

15th - 16th

Abu Dhabi

World SME Expo

1st - 3rd

Hong Kong

The Hotel Show 2012

15th - 17th

Dubai

“China Import & Export Commodities Exhibition“

1st - 4th

Malaysia

Made IN Korea (MIK) UAE 2012

21st - 23rd

Abu Dhabi

World Green Tourism 2011

5th - 7th

Abu Dhabi

Dubai Airport Expo

22nd - 24th

Dubai

Middle East Natural & Organic Products Exp

5th - 7th

Dubai

National Exhibition for Small & Medium Enterprises

5th - 8th

Abu Dhabi

The Franchise and Business Opportunities Expo

2nd - 3rd

USA

International Real Estate & Investment Show

7th - 10th

Abu Dhabi

World Gas Conference & Exhibition

4th - 8th

Malaysia

Airport Suppliers Conference

11th - 12th

Dubai

COMPUTEX Taipei

5th - 9th

Taiwan

Abu Dhabi International Motor Show

19th - 23rd

Abu Dhabi

AIBTM 2012

19th - 21st

USA

January 2013 7th - 10th

Dubai

June 2012

Tekno Tube Arabia

July 2012 Doha Trade Fair

1st

Qatar

Arab Plast

7th - 10th

Dubai

CIS Travel Market

27th - 28th

Russia

Domotex Hannover

12th - 15th

Germany

Ramadan & Eid 2012

29th - 19th

Abu Dhabi

Offshore Middle East

21st - 23rd

Qatar

PROMAT

21st - 24th

USA

Trans Oman

28th - 30th

Oman

August 2012 ACBW 2012

2nd - 4th

Australia

February 2013

September 2012 Furniture Manufacturing & Supply China

11th - 12th

China

The NAFEM Show 2013

1st

USA

50th Bangkok Gems & Jewelery Fair

14th - 18th

Thailand

Printpack India

5th - 10th

India

Thailand International Logistics Fair

19th - 22nd

Thailand

Regional Consumer Goods

15th - 17th

Germany

Private Label Middle East Dubai 2011

23rd - 25th

Dubai

IDEX 2013

17th - 21st

Abu Dhabi

Paper Arabia

23rd - 25th

Dubai

Australian Oil and Gas Exhibition

20th - 22nd

Australia

50

MARCH 2012

Get in touch! Would you like to list your event here? Or better still, list your detailed event profile? If yes, then please contact: meghna@cpidubai.com

November 2012

ANALYTICS Find the delicate balance.

Sharp skepticism and increased regulatory pressures call for a firmwide approach to managing risk. SAS helps you integrate strategies throughout your business cycle and focus on long-term growth. Decide with confidence. ®

sas.com/balance

SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. © 2011 SAS Institute Inc. All rights reserved. S71591US.0411