DU’S OSMAN SULTAN / ENTREPRENEURSHIP IN THE GULF

Vol. 15 Issue 9 January 2011

TOP 10
PLACES TO
WORK IN
THE UAE
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10

The region’s first ever workplace survey

AVAILABLE AT:

Omega boutiques (BurJuman, Deira City Centre, Dubai Mall,

Mall of the Emirates, Mirdif City Centre, Sahara Centre, Wafi)
and at select Rivoli Stores. Toll Free: 800-RIVOLI
 [Link]
GEORGE CLOONEY’S CHOICE.
 CONTENTS
Vol. 15 Issue 9 January 2011

GCC NOW
8
Top 10 places to work
The round-up
News, numbers and people from
in the UAE
around the region.

COMMENT
18
Michael Preiss
Welcome to the war of the economic
worlds 2011.

20
Matein Khalid
Qatar’s World Cup will command a
frenzy of hungry investors.

22
Tommy Weir
Why CEOs must join Facebook, Twitter
and LinkedIn.
The Great Place to Work Institute,
25 in collaboration with Gulf Business,
Mishal Kanoo
Good leaders should think about what
happens when they’re gone.
reveals the UAE’s first ever survey of
Top 10 Places to Work. 43
26
Nasser Saidi 36
DIFC chief economist says GCC FEATURES
transparency efforts not enough. Qatar’s game plan
SPORT How Qatar will set itself up 54
28 for the World Cup. Show me the money
ENTREPRENEURSHIP A look at
Michael Hasbani
Strategies for entrepreneurs to keep the 38 global start up funding initiatives.
creative spark alive. Private jets take flight 58
AVIATION The MEBA show saw a
Smooth operator
strong appetite for luxury jets.
PROFILE Telecoms veteran Osman
ANALYSIS Sultan, CEO of du.

32 62
Eastern promises Pass the parcel
ECONOMY WEF urged developing PROFILE DHL’s Hermann Ude
countries to respect the earth. reveals his plans to cut costs.

34 67

36
Safe as houses? When will water run out?
REAL ESTATE The benefits and risks WATER The world is perilously
of Real Estate Investment Trusts. close to drying up in the next decade.

January 2011 gulfbusiness 5

F

70
Editor-in-Chief
Obaid Humaid Al Tayer
Group Editor and Managing Partner
Ian Fairservice

Group Senior Editor

Gina Johnson
Group Editor
Catherine Belbin

Editor
Alicia Buller alicia@[Link]
Business editor
Karen Remo-Listana karenr@[Link]
Chief Sub-editor
Iain Smith iains@[Link]
Editorial coordinator - business
Concessa D’Souza concessa@[Link]
Senior Designer
B Raveendran raveendran@[Link]
Contributors
Ryan Harrison; Martin Morris;
Adrian Morley; Robert Bailey.

General Manager Production

and Circulation S Sasidharan
LIFESTYLE Production Manager C Sudhakar
General Manager Group Sales
70 Anthony Milne anthony@[Link]
Senior Advertisement Manager
Travel Abraham Koshy abraham@[Link]
Dress up for Venice Carnival and join Advertisement Manager
in the festivities. Ajay Mathews ajay@[Link]
Deputy Advertisement Manager
Melroy Noronha melroy@[Link]
72 General Manager – Abu Dhabi

73
Cars Joe Marritt joe@[Link]
Glenn Freeman discovers that
Maserati’s 2010 Quattroporte Sport
GT S lives up to its proud history.

REGULARS
73
Art 30
Qatar has created the region’s first Letters Head Office:
fully-fledged museum for savouring PO Box 2331, Dubai, UAE
the great modernists of Arab art. 40 Tel: +971 4 282 4060, Fax: +971 4 282 4436,
motivate@[Link]
Executive moves Dubai Media City: Office 508,

72
5th Floor, Building 8, Dubai, UAE,
75 Tel: +971 4 390 3550, Fax: +971 4 390 4845
Data monitor Abu Dhabi: PO Box 43072, UAE,
Tel: +971 2 677 2005, Fax: +971 2 677 0124,
motivate-adh@[Link]
81 London: Acre House, 11/15 William Road,
Hotels London NW1 3ER, UK,
motivateuk@[Link]
80 Editorial syndication details,
Events Tel: + 971 4 2824060
gb@[Link]

82
In your shoes
Karen Remo-Listana boards a
seaplane with dotcom GoNabit’s Printed by Emirates Printing Press, Dubai
Sohrab Jahanbani.

6 gulfbusiness January 2011

GulfBusiness@[Link]
 IN THE NEWS JULIAN ASSANGE
Julian Assange, the which in its massive leak greater than the danger
founder and public of US diplomatic cables of stopping it.”
face of WikiLeaks, was revealed that several Kuwait interior minister
born in 1971 in the city of Arab leaders have been Jaber Khaled Al Sabah
Townsville, North Eastern pressing for military believes “the US will not
Australia where he was action against Tehran. be able to avoid a military
mostly homeschooled. By In an April 2010 memo, conflict with Iran, if it is
the time he was 14, he and Saudi King Abdullah has serious in its intention
his mother had reportedly repeatedly pressed the to prevent Tehran from
moved 37 times. United States to attack achieving a nuclear
When Assange turned Iran to halt its nuclear weapons capability,”
16, he began hacking programme, saying the US according to a February
computers under the name should “cut off the head 2010 report. Meanwhile,
“Mendax”. At the age of 20, of the snake”. Dubai’s ruler Sheikh
he broke into the master Saudi Foreign Minister Mohammed bin Rashid
terminal of Nortel, the Prince Saud Al Faisal Al Maktoum is not in
Canadian telecom company. stresses tougher favour of military action,
Citing Assange’s “intelligent sanctions over a military worrying about the “dire”
inquisitiveness”, the judge response. consequences for the
sentenced him only to pay Abu Dhabi’s Crown region, according to two
the Australian state a small Prince Mohammed bin 2007 memos.
sum in damages. Zayed, as early as 2005, WikiLeaks has
He studied maths and expressed support for been involved in the
Julian Assange, the founder and
physics at the University military action against public face of WikiLeaks. publication of material
of Melbourne, though Iran. “I believe this guy is documenting extrajudicial
he dropped out when he
became convinced that
going to take us into war,”
he said in 2006 of Iranian King Hamad of Bahrain
F killings in Kenya, toxic
waste dumping on the
defence contractors and President Mahmoud told US General David African coast, Guantanamo
militaries were using Ahmadinejad. “Al Qaeda is Petraeus in November Bay procedures, the July
the department’s works. not going to get a nuclear 2009: “That programme 12, 2007 Baghdad airstrike
In 2006, he founded the bomb; Iran is a matter of must be stopped…The video, and materials
whistleblower website, time,” he said in 2009. danger of letting it go on is involving large banks.

SOAPBOX
Your power in the region I would like to see proof that The world is still in the intensive
is our power and our power tens of thousands of Canadian care station. We just rushed
is your power. jobs are going be lost. Ireland, another patient.

Manouchehr Sultan Al Klaus Schwab,

Mottaki, Iranian Mansouri, World Economic
foreign minister UAE economy Forum founder
sought to reassure minister says and chairman
Arab neighbours the country has says the world
that the Islamic “exhausted” economy has to
republic poses six years of prepare for the
no threat to the negotiations new dimensions
region. with Canada. of reality.

GCC AND THE WORLD

$809
Thanks to strong crude based Institite of Qatar Investsment Authority
prices allied with a International Finance, Abu are expected to reach $809
recovery in global markets, Dhabi Invesment Authority billion in 2010, and $894
combined assets of sovereign was projected to gain billion this year, from $728
wealth funds (SWFs) in Gulf
oil exporters increased by
around $30 billion at the
end of 2010. The combined
billion billion in 2009. The increase
follows a sharp fall in 2008
nearly $81 billion. assets of Adia, Kuwait GCC’s SWFs in 2010 ($630 billion) from $724
According to Washington- Investment Authority and billion in 2007.

8 gulfbusiness January 2011

 UNITED ARAB EMIRATES

Axiom Telecom backs out from IPO Emirates stake

sale considered
Dubai’s government
is considering selling
some of its most prized
assets, including a stake
in Emirates Airline, the
director general of the
Dubai Ruler’s Court, said.
“The possibility of offering
a stake in Emirates Airlines
to the public is always there
and is being studied and
considered,” Mohammed
Ibrahim Al Shaibani said.
However, Dubai is reluctant
Axiom’s IPO would to sell assets at the current
have been UAE’s first
gulfpics

time given the weak market

in two years.
conditions.

Dubai-based Axiom withdrew the offer “to market opener. While IPOs
Telecom has pulled protect” current and globally are fuelled by ADCB sues Credit
its planned initial future shareholders. There expansion plans, Axiom Suisse, S&P
public offering two days were sufficient orders to plans to use most of Abu Dhabi Commercial
before the listing, citing fully cover the IPO book, the funds to pay debts. Bank said it is suing Credit
“widespread concerns primarily subscribed by In a market dominated Suisse and credit rating
about market conditions institutional investors in by retail investors, it agency Standard & Poor’s,
and liquidity”. Europe and the US. excluded individuals from alleging it was misled
In what would have Analysts, however, subscribing. As a retailer, over a 2007 investment
been the UAE’s first IPO believe Axiom’s business it also does not market any that went sour. The bank
in two years, the board model is not an ideal proprietary technology. alleges that Credit Suisse
failed to disclose conflicts
SPOTLIGHT of interest and provided
misleading information
Ex-Shell boss revamps energy policy when packaging and
selling structured
After joining the Dubai Zaafrani previously investment vehicles,
Supreme Council worked as president at known as Farmington. It
of Energy in May, Nejib Phoenix International also alleged S&P made
Zaafrani has helped expedite Consultancy, chairman and inaccurate assessments.
the emirate’s long-needed managing director at Shell
strategy revamp. Abu Dhabi and business UAE not to join
Since his appointment development vice president
as the secretary general and at SIEP Middle East. He has
monetary union
The UAE central bank
CEO, Dubai has decided to its water and electricity a Master in Physics from governor Sultan bin
meet 40 per cent of its needs tariffs by 15 per cent and Université Denis Diderot Nasser Al Suwaidi said
from nuclear and clean coal introduced additional fuel (Paris VII) and enjoys tennis, the country does not plan
by 2030. It also increased surcharge charges. swimming and reading. to join the Gulf monetary
union at least for the time
INNUMBERS

30
being. “We don’t think it is

Dhs1 trn
the proper time to discuss
Dubai’s rank in the UAE going back to the
the list of 32 most project of the single GCC
expensive cities currency,” he said, adding
in the world, that pegging the dirham
Estimated UAE GDP in 2010,
according to to US dollar is still the
according to economy minister
PriceRunner, a price best choice for the Gulf oil
Sultan Al Mansouri.
comparison site. producing country.

January 2011 gulfbusiness 9

 SAUDI ARABIA

Saudi succession back on agenda US schooling

scales up
There are 38,000 Saudi
students in the United
States, higher than
the number registered
before the 9/11 attack,
a senior trade official
said. “There was a drop
in the intervening years,
but I am happy to say
that number has gone
up,” Francisco J. Sanchez,
US undersecretary of
commerce for international
trade, said.
The Saudi ruler and
senior princes are
ageing and ailing. $1.2 billion for
iStock

war damage
Speculations have once charging his half-brother, ministry and Salman, Saudi Arabia received $1.2
again surfaced on who Crown Prince Sultan, in who has governed Riyadh billion from the United
will lead the world’s largest his absence. But Sultan, have also recently been Nations in compensation
oil exporter. The ruler and who has served as defence ill. Saudi kingship doesn’t for the damage caused
other senior princes are
now ageing and ailing.
minister since 1962, has
also spent the past several
automatically transfer
from father to eldest son,
F by the 1991 Gulf War to
the environment in the
Although the herniated years trying to recover but has moved down a Eastern Province of the
disc operation of King from a serious illness. long line of brothers born kingdom. Prince Turki Bin
Abdullah went well, he His full brothers Nayef, to the country’s founder, Nasser Bin Abdul Aziz,
took the precaution of who has run the interior Abdelaziz Ibn Saud. head of the Presidency
of Metrology and
PROJECTFOCUS Environment Protection
said the compensation
Saudi focuses on gas-fired projects was taken from the Iraqi
government.
Saudi Electricity Co. and development strategy, lift its generating capacity The money will be spent
(SEC) has set February the kingdom hopes to move from about 50,000MW at on cleaning the affected
28 as the bid submission several more gas-fired present to 70,000MW by areas.
deadline for its $1.8 billion power projects forward, in a 2020 at a cost of about $80
Al Qurayyah independent process that is much more billion. Saudi cuts
power plant project. The economically efficient, and
gas-fired plant is planned environmentally sound, than
Demand is expected custom duties
to triple to 121,000 MW Saudi Arabia is
to have a power generation having to resort to heavy oil by 2032. Saudi, which implementing the fifth
capacity of 1,800MW to feedstock. spent SAR50 million and last phase of reducing
2,100MW when completed At the same time SEC on subsidies, may raise customs duties on
in June 2014. needs to meet continued electricity tariffs as it imported goods as part of
With gas now at the top of spiralling Saudi power seeks to improve energy commitments the kingdom
Saudi Aramco’s exploration demand growth, forcing it to efficiency. made when it joined the
World Trade Organisation
INNUMBERS in 2005. The 7.6 to 20 per

51.8m 17 per cent

cent duties on consumer
goods will be slashed
to 5.5 to 6.5 per cent,
while duties on imported
agricultural products will
Saudi’s mobile subscriptions Saudi’s share in the Middle East and Africa’s be reduced to 15 per cent
in 2015, up from 42.5 million in 2010, total power generation by 2014, according to from 25 per cent, local
according to Pyramid Research. Research and Markets. media reported.

10 gulfbusiness January 2011

 QATAR

Qatar-linked
group buys
Miramax
Entertainment giant The
Walt Disney Company
has sold its Miramax
Films subsidiary to
an investment group
including Qatar Holding,
the investment arm of
Qatar’s sovereign wealth
fund. Filmyard Holdings
LCC, whose partners als
Solar power will be used include Thomas J. Barrack
for Qatar’s air-cooled Jr., Colony Capital LLC
modular stadiums. and Ronald Tutor, paid
Getty

$663 million for the

Qatar to spend $50 billion

film company. The sale
includes the rights to 700
films and non-film assets

on World Cup and the “Miramax” name.

Qatar will spend $50 used for air-cooled modular House says South Africa’s Qtel consortium
billion on infrastructure
upgrades and $4 billion to
stadiums, which would
be later dismantled and
preparation for the 2010
World Cup has added
F in Tunisian M&A
A Qatar Telecom
build nine stadiums and donated to developing between 0.5 per cent and 2.2 consortium has acquired
renovate three others. As per countries. per cent to South African Orascom Telecom Holding’s
the proposed plan for the The massive renovation GDP. Overall, it had created (OT) 50 per cent stake
2022 World Cup, no stadium and new construction is more than 300,000 jobs in Tunisian telecom
is expected to require more likely to boost all sectors since 2006 or a 2.7 per cent operator, Tunisiana, in a
than one hour of commuting in the GCC. Citing a report contribution to employment deal worth $1.2 billion.
time. Solar power will be by UBS, Global Investment figures. Tunisia’s Princesse Holding
and Qtel’s subsidiary
SPOTLIGHT Wataniya Telecom acquired
Orascom Telecom’s entire
Qatar marks milestone in LNG production shareholding in Orascom
Tunisia Holdings and
Qatar last month at about 890 trillion the massive offshore Carthage Consortium,
officially became cubic feet (tcf) as of North Field, the world’s which own 50 per cent
the world’s largest LNG January 1, 2009. Qatar largest non-associated of Tunisiana.
producer after reaching holds almost 15 per cent natural gas field. The
its most coveted target of the worlds natural gas North Field is a geologic Qatar exchange
of producing 77 million reserves and is the third extension of Iran’s South to boost listings
tonnes per year. largest in the world Pars field, which holds The Qatar Exchange (QE)
According to Oil & Gas behind Russia and Iran. an additional 450 tcf of aims to boost the number
Journal, Qatar’s proven The majority of Qatar’s recoverable natural of listed companies
natural gas reserves stood natural gas is located in gas reserves. to 70 in coming years,
Abdul Aziz Al Emadi,
INNUMBERS director of QE’s listing
department, said. “QE has

$90 bn $129 bn
43 companies listed on our
market as of today but we
have ambitious growth
targets in this area,” he
Qatar’s external debt by the end of 2010, Qatar Investment Authority’s funds this said. He added Qatar plans
the Saudi American Bank Group, year, according to the Institute to increase the types of
said in a study. of International Finance. companies to be listed.

12 gulfbusiness January 2011

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 KUWAIT

Dar’s debt
team quits
The coordinating committee
representing most of the
creditors of Investment
Dar Co., part-owner of
luxury British carmaker
Aston Martin, has resigned
amid disagreement
over the company’s
debt restructuring. The
committee’s proposal
involved the equitisation of
Areva supplies MOX fuel
assemblies to Japan’s KWD475 million, about half
Tomari Nuclear Power the company’s total debt,
Plant. KIA now controls for 90 per cent of Dar’s total
4.8 per cent in Areva.
gulfpics

shareholder equity. Dar said

the plan is not aimed at

Areva approves Kuwait stake reaching an agreement on

debt settlement.

The supervisory remaining Euro300 million. and KIA provides for the
board of French The recapitalisation values stability of the latter’s Global pays
nuclear reactor builder Areva at Euro11.5 billion, stake for 18 months. principal
Areva approved the capital
increase of Euro900
of which KIA will now
control 4.8 per cent. KIA
The French government
holds 93 per cent of Areva
F Global Investment
House made a principal
million ($1.2 billion). will not have a seat on and discussions about repayment of $27 million
Euro600 million came from the supervisory board. attracting other investors, in relation to its bank
the Kuwait Investment However, under the deal, including Qatar and Japan’s debt value date December
Authority (KIA) while the a shareholders’ agreement Mitsubishi, have been 13, 2010. As per the debt
French state bought the between the French state underway for some time. restructuring deal on
December 10, 2009, Global
is required to settle 10
PROJECTFOCUS
per cent of its debt with

Politics cripple energy investment 53 banks ($172.5 million)

within the first year. In
January 2009, GIH said,
Kuwait Petroleum of standstill. The deadlock “The five-year plan is
it was in default on
Corporation’s (KPC) between parliament and an ambitious programme
majority of its financial
$90 billion, five-year government in Kuwait has for KPC following years
indebtedness, which
investment programme led to many normal upgrade of disappointment.
totalled about $3 billion.
is highly ambitious, and expansion projects Politics still remains the
analysts say. being cancelled across the stumbling block with
According to IHS, sector, leaving Kuwait with some signs pointing again Kuwait to spend
Kuwait is now crumbling facility integrity to growing government- $21bn on power
significantly a more levels and inefficiencies. parliament acrimony,” Kuwait plans to spend
dangerous workplace than Going forward, any IHS Senior Middle East KWD6 billion ($21.25
in any of its oil-producing upgrades or expansion is Energy analyst Samuel billion) in the next four
neighbours due to decades still likely to be slow. Ciszuk, said. years on electricity and
water projects.
INNUMBERS Mohamed Boshehri,
director of planning and

$250m 20 per cent

power station projects
at Kuwait’s electricity
ministry, said the ministry
was expanding a power
The amount KFH paid as an early The interest sold by Kuwait Energy Co plant in Al Zour and was
instalment for the $850 million from its share in Burg El Arab concession planning to add 400 MW to
Murabaha it secured in 2006. to East West Petroleum Corp. the existing 800 MW.

14 gulfbusiness January 2011

 BAHRAINOMAN

30
30 seconds to
make sense
of… the perfume
business.

Photo: Naveed Ahmed

Esteban Rodés Monegal
President of Idesa Parfums

How big is the global perfume market and what

is the GCC’s share?
It is difficult to provide something more than an
approximate answer, as many markets do not provide

gulfpics
reliable information, but I would say that the global
selective market is worth around $20 billion. The GCC

Alba lists on London, Bahrain represents between 10 and 15 per cent of that total.

Aluminium Bahrain (Alba), the world’s fourth-largest Tell us about the growth rate and the drivers behind it.
producer of aluminium by capacity, listed on the The growth in this region was enormous until 2009.
London Stock Exchange and Bahrain Stock Exchange. The The crisis has affected the consumption to a reasonable
total value of the company’s global depositary receipt level but the entire region has just started to recover. The
offering in London was $174.7 million, and was made
development of an excellent network of retail chains, in
alongside an ordinary share offering on the Bahrain Stock
Exchange, raising a total of about $339 million. F
terms of quantity and quality, also impacts positively.

Does the GCC’s low tax environment translate to

Bahrain’s positive ratings affirmed cheaper perfumes?
There is certainly some impact on retail prices, but the
Standard & Poor’s has affirmed it’s A long-term and
difference of prices, compared to Europe and America, is
A-1 short-term sovereign credit ratings on Bahrain,
rather insignificant.
citing the government’s net financial asset position,
renewed development of its hydrocarbon resources, and
strong international alliances. “Oil revenues have been What is the largest source of imported perfumes? Can
budgeted on the basis of an $80 per barrel oil price for both the Middle East compete on this front?
2011 and 2012, and we estimate the general government The largest sources are, there is no doubt, France,
deficit at 1.7 per cent and 1.2 per cent of GDP respectively USA, Italy and Spain. It is difficult today to say
in those two years,” the rating agency said. whether the Middle East may compete with these
sources, as more than 90 per cent of the global brands
Oman won’t sell stakes are linked to international fashion names. However,
I have a great respect for Arabic perfumes, which have
Oman has no immediate plans to divest stakes their own personality and rich smell. I am quite sure
in state-owned companies, especially those that
Arabic fragrances have a nice piece of the cake in the
operate in essential commodities. “I don’t think the
Middle East.
time is right for divesting government stake because
the world is still in crisis,” Abdul Malik bin Abdullah
Al Hinai, undersecretary for economic affairs at the How do fragrances differ from one another?
Ministry of National Economy. “Financial markets across The difference is established by the percentage of
the globe have not yet fully recovered to normal levels concentration of essential oil with the alcohol. A perfume
and the global economy is still in bad shape.” (used to be called extrait) can have a concentration of
over 20 per cent, an eau de parfum between 10 and 20
INNUMBERS per cent and and eau de toilette, between five and 12 per

278,741
cent. Such a difference is also reflected in the retail price.

What are your tips for wearing perfume?

Remain as curious as possible when choosing a new
Subscribers of the fixed phone service in Oman fragrance, and do not hesitate in trying products from
at the end of September 2010, 7.1 per cent down lesser known brands.
from 300,139 in 2009.

16 gulfbusiness January 2011

COMMENT

WAR OF THE ECONOMIC

WORLDS 2011
Welcome to the third economic super cycle, where supercharged growth in the
East will trump the West’s ailing economies and floundering Euro.
MICHAEL PREISS

A
s we begin 2011, the global macro economic collapse and credit crunch, the differences between
environment has stabilised. While the biggest developed markets and the emerging countries look stark,
immediate worry in the West is a double-dip, and in 2011 they will increasingly become more obvious.
we do not think it will happen. Meanwhile, the While the situation in the US is expected to improve,
balance of economic and financial power continues to shift the uncertainty in the peripheral euro-area economies is
towards the East. again heightened, and is reflected in Standard Chartered
But risks abound, including geopolitical tensions on Global Research’s revised forecast for the euro at 1.20.
the Korean peninsula and in the South China Sea, over- Euro area negatives most probably will be a major focus
regulation, another debt crisis in the West, inflation for FX markets in 2011.
bubbles across Asia and trade protectionism.
Although it is vital not to underestimate the risks, it
is equally important to recognise the upside potential.
That means it is paramount for investors to combine local
knowledge with global perspective.
This year will be characterised by an uneven recovery
in the world economy, leading different authorities to
adopt diverging policies. This may raise conflicts and
uncertainties, but also bring opportunities.
Financial markets increasingly are focusing on the story
of a rich world struggling with a weak and jobless recovery
and an emerging world, including the rising economic giants
China and India, challenged by inflationary pressures and
negative real interest rates. We expect interest rates in the
West to stay close to record lows in 2011, but in the East there
is pressure on interest rates to rise.

getty image
In 2011, the West will struggle with debt, deflation and
deleveraging. The US is past the worst, but it faces a below-
trend recovery bordering on stagnation. Europe, especially
the periphery, is the big problem area. Europe is divided A bank employee carries a bag of euro coins from the
headquarters of Greece’s central bank.
between the solid centre of its euro zone and a weak PIIGS
(Portugal, Ireland, Italy, Greece and Spain) periphery. The
euro is likely to collapse at some stage, if the euro area fails UNPRECEDENTED GROWTH
to become a political union. Despite the current economic challenges, it important to
Last year was a challenging year for global financial recognise that the world is in the middle of a super-cycle.
markets with post sub-prime challenges, a European This is a period of historically high global growth, lasting
sovereign debt crisis and recently renewed tensions on the a generation or more. There are several fundamental factors
Korean peninsula. It was a year when many economists driving this, including rising trade, high rates of investment,
and market commentators spoke about the possibility of rapid urbanisation and technological innovation. Super-
a “double-dip”, the fear that the global economy could fall cycles are also characterised by the emergence of economies
back into recession and deflationary pressures. However, the enjoying rapid growth, such as China, India, Indonesia, the
world economy has moved into a recovery phase, albeit that Middle East and several African economies now.
the growth momentum is weaker than in past recoveries, The world economy has twice enjoyed super-cycles
especially in the advanced economies. By contrast, growth before. The first, from 1870 to 1913, saw a significant pick-
momentum is strong in the emerging markets. up in global growth, with the world growing on average
Before the financial crisis, many economies around each year by 2.7 per cent, a full one per cent higher than
the world were booming in unison. After the sub-prime previously seen.

18 gulfbusiness January 2011

 That cycle was led by the emergence of the US and saw a third of global trade within the next 20 years. The Middle
increased trade and greater use of technologies from the East will outstrip the US as Asia’s leading trading partner,
Industrial Revolution. The second super-cycle, from 1945 to while China will see Africa as a more important trading
the early 1970s, saw growth averaging five per cent and was partner than Europe within the next two decades.
characterised by the post-War reconstruction and catch up Indonesia is an economy that has surprised many
across large parts of the globe. It saw the emergence both investors. JCI (Jakarta Composite Index) rose +51 per cent
of a large middle class in the West and of exporting nations in 2010 making it the world’s fourth best performing equity
across Asia, led by Japan. market. In the super-cycle we expect that Indonesia will
For many investors the thought of a super-cycle may continue to be a star performer. The 28th largest economy
sound strange, given the present problems confronting in 2000, Indonesia may be the world’s 10th largest in 2020
the world economy. Yet the reality is the world economy is and fifth largest in 2030.
now worth over $62 trillion, about twice the size it was a
decade ago, and it has already exceeded its pre-recession AFRICAN ASCENT
peak. Over the last two years, the economic rebound has For 2011, we expect positive surprises to emerge from
been driven by quantitative easing in the West and by Africa. Many of the promising countries that we refer to as
stronger growth in the emerging markets. Indeed emerging the “Seven per cent club” are in Africa. The “Seven per cent
economies, which are one-third of the world economy, club” are countries that are expected to achieve +seven per
currently account for two-thirds of its growth. This trend cent growth on average for several years. The reason why
looks set to continue. this matters is that growth doubles in a decade.
The biggest concentration of overlooked markets that
CHINA AND INDIA could grow over seven per cent are in Africa.
By 2030, the world economy could grow There are, of course, risks to this
to $308 trillion. Excluding inflation, that The combined outlook. Avoiding a hard landing in
would equate to $129 trillion in today’s China is crucial. Avoiding deflation in
prices, and to $143 trillion, keeping prices
share of the US, the US is another necessity. The greatest
constant but allowing for some emerging the EU and Japan risk is protectionism. Protectionism
market currency appreciation. and different combinations of fiscal
The balance of the world economy is set
in the global austerity and monetary polices could
to reverse, with the combined share of the economy will bring turbulence to currency markets.
US, the EU and Japan shrinking from 72
per cent in 2000 to 29 per cent in 2030.
shrink to 29 per Escalation of currency intervention in
the developed markets as well as the
China will provide 20 per cent of global cent by 2030. emerging world could be a potential
growth in the next 20 years, the largest policy mistake.
chunk, and it will be the world’s largest economy by 2020. How long the current deflationary environment
By 2030, China will be nearly twice the size of the US, but its persists, and how well the exit from quantitative easing is
income per head will still only be half of the US, leaving room implemented will determine the relative performance of
for further catch-up. China will also drive growth in Africa the three principal asset classes: fixed income, precious
and Latin America as it seeks commodities. metals and equities. Longer-term, we expect that large-cap
India will become the fastest growing major economy in equities with significant sales to emerging markets will be
the next 20 years, with growth rates overtaking China by the preferred asset class.
2012. Not even in the top 10 in 2000, India will overtake The countries that will succeed are those with the cash,
Japan as the world’s third-largest economy by 2030. India the commodities and the creativity. It is still possible for
will have the single largest tertiary-educated population by the West, including American and European companies,
2030. These factors underpin our structural bullish view on to do well in this environment, particularly if they are
the Indian rupee and Indian assets. creative. Yet it is the emerging and frontier markets that
The growing emerging markets’ middle classes will help appear to be the clear winners.
fuel commodity prices, with energy and food continuing to We believe the world economy is on an upward path,
become more expensive. As purchasing power increases which is albeit not always a straight line. In the final
across the emerging world, trade amongst Asian economies analysis, and in the words of a Chinese proverb: “Fortune
and Asia’s trade with the Middle East, Africa and Latin favours the brave and the prepared mind.”
America will increasingly dominate world trade, overtaking Welcome to the third super-cycle.
trade with the developed world. Michael Preiss, chief equities strategist, Standard
These ‘South-South’ trade corridors will account for over Chartered bank.

January 2011 gulfbusiness 19

COMMENT

EUPHORIA, SPORT AND

EMERGING MARKETS
Qatar and Russia’s World Cup event announcements are set to command
a frenzy of hungry investors in the coming years.
MATEIN KHALID

H
osting the World Cup will be a seminal event finance, Eurobond/sukuk issuance and syndicated
for both Qatar and Russia, even though 2018 lending that will define Qatar’s pre-World Cup borrowing.
and 2022 are not exactly imminent. Qatar and The exponential rise in population and power capacity
Russia are both fabulously rich oil and gas will also benefit QEWC, where the government is the
exporters, with high growth economies who will influence largest shareholder.
international finance in the decade ahead. I fail to understand why investors want to buy Drake
Several Qatari and Russian shares rose five to eight and Skull or Arabtec in the UAE as their Qatari contracts
per cent the moment FIFA announced the success of their are a miniscule proportion of their construction order
respective bids. Is the euphoria justified? I think so. book and their core challenge is cancelled projects and
Qatar will accelerate a $50 billion infrastructure bad debt receivables in the UAE. Logic, not euphoria,
spending spree in 2013 just as its LNG industrial should govern investing, even in the retail, hyper-kinetic
constellation finally matures. This means Qatar can exchanges of the Gulf.
continue to deliver 10-12 per cent GDP growth rates in Russia, the host of the 2014 Winter Olympics and the
the next five years as long as the world economy does not 2018 World Cup, is the cheapest major emerging market
slip into double digit recession. So Qatar will retain its in the world.
role as one of the world’s highest growth economies in It is ironic that, despite $90 oil and the Kremlin’s
the next decade. return to the global debt market for the first time since
The country has also pledged to the August 1998 rouble devaluation,
build 90,000 hotel rooms, develop a The World Cup will Russia trades at a mere seven
metro/light rail transport network benefit Russian air times 2011 earnings on its
and construct high tech, air bellwether RTS index.
conditioned stadiums. lines, airport operators, At a time when India trades at
The first World Cup in the Arab hotels, advertising 20 times and China at 15 times
world necessitates that Qatar spend earnings, Russia trades at a
$50 billion to make it a success. As agencies, TV and Cinderella valuation even though,
Brazil and South Africa illustrated, broadcast media unlike India’s RBI and China’s
investing in World Cup themes Peoples Bank, the Russian
is a winning strategy in the
and, above all, mobile central bank is not engaged in
emerging markets. phone companies. monetary tightening.
History proves that nothing The World Cup will benefit
excites the animal spirits of capitalism (global fund the Russian steel and construction industries, airlines,
managers!) than the opportunity to invest in a World airport operators, hotels, advertising agencies, TV and
Cup host nation in the emerging markets. History could broadcast media and, above all, mobile phone
rhyme, if not repeat, in Moscow and Doha. companies. Russian infrastructure and consumer
Qatar is the smallest state to host the World shares could well outperform their peers in the
Cup since Uruguay in 1932. The event will give a emerging markets.
permanent boost to its non-oil and gas economy, The Kremlin could use this opportunity to project the
particularly tourism. image of a kinder, gentler Russia, another catalyst that
Qatar will access the international bond and could lead to a bull run in Moscow.
syndicated loan market to finance its pre-World Cup Gazprom trades at all off four time earnings. MBT
infrastructure spending, just as it has financed its LNG has 65 million wireless subscribers across the former
rollout since the mid 1990s. Soviet empire. Sberbank controls one half of all Russian
The natural World Cup beneficiaries are Qatari banking. It goes without saying that the smart money will
banking, power and construction shares. I have long rerate Russia in 2011.
been bullish on QNB, the Qatar national champion. This Matein Khalid, fund manager in a royal investment
bank will benefit most from the escalation in project office and writer in finance and geopolitics.

20 gulfbusiness January 2011

COMMENT

WHY CEOS MUST JOIN

THE SOCIAL MEDIA CLUB
In a world without borders, it’s imperative that leaders use Facebook and
Twitter to communicate with customers and keep in the loop.
DR. TOMMY WEIR

W
e recently moved back to Dubai from our The benefits of using social media for these early
house in Beirut and what an experience adopters (the CEO’s personal usage, not just for the
it was! Every international move is full of business) include:
surprises, but this move was complicated 1. Being informed about what others are saying and
by our selection of an international transportation and thinking – the insights gained from following the right
logistics provider who recently expanded into a non-core people are magical. Instead of relying only on structured
area – household moves. They have an outstanding brand focus groups to hear from the market, you can listen to
reputation in their core business area and we were hopeful them directly and from a distance. Social media is full of
that we would have the same experience with our move. sneak peeks into real-life insights.
Well, you have probably guessed – we did not. I’m not 2. Engaging directly with your customers – It is one
exaggerating when I say, it was the worst experience I have thing for a consumer to feel they have a relationship with
had with any move, or any move that I have heard of. a brand, but the power is intensified when they feel they
After the deposit was paid, the workers arrived to pack are connected to a senior leader in an organisation. Social
the house – only they were not employees of the company, media changes the structure of relationships that have
they were day labourers selected from the street labour historically been dependent on proximity. Now, and into
pool. So we had painters and construction workers trying the future, relationships will be based upon connections,
to pack our goods – a beggar from the street even came in and as a CEO you can use social media to get into your
to accumulate our unwanted items customers’ world.
and the supervisor didn’t even know Success in social 3. Building brand ambassadorship
it. Now that you are beginning to
sense what our frustration level was,
media is about – One of the primary actions of any
CEO is advocating your brand. Other
I will not bore you with the rest of being personal, not people are talking about your brand,
the details. Let’s get to the point of just using scripted your marketing department is talking
CEOs and social media. about it and social media allows
I tried to call the mover’s customer corporate speak. you to make it personal and talk to a
care centre and wanted to solve a Allow your followers broad audience.
problem related to a letter that was Success in social media is about
being couriered and they informed to see who you are being personal, not just using
me that it was ok, but it wasn’t. I and how you think. scripted corporate speak. Allow your
had no option but to take matters followers and fans to see who you
into my own hands and I logged onto @tommyweir and are, what you do and how you think. You can still have a
tweeted about it. Within minutes of broadcasting my private life, but let people see who you are and connect
problem to my social network, I got a corporate reply but with you through your public profiles.
no resolution. So my next action, and experiment, was to Had the CEO of the logistics and transport company
include their famed CEO by name in my tweet. To his credit not been active in social media, I would be writing today’s
he jumped right in, solved the problem and recovered a article as an irritated consumer and sharing leadership
distraught customer. lessons we can learn from their mistakes. Instead, we are
This instance made me stop and think about what the discussing how we can change our connection strategy and
CEO’s role should be in social media. lead a broader audience than could have been imagined a
Some CEOs are famous for their usage of social few years back.
media and are gaining a strong following. For example, So go engage your customers, get close to them, get into
former CEO of Microsoft Bill Gates has 1,859,548 their world. Twitter, Facebook and LinkedIn are calling
followers on Twitter. Dishearteningly, only a couple [Link] can find me on Twitter @tommyweir, LinkedIn
of the regional powerhouse CEOs have jumped on the tommy-weir, or Facebook.
social media band wagon and become active, one of Dr Tommy Weir, vice president of leadership solutions at
which I referenced earlier. Kenexa and author of The CEO Shift.

22 gulfbusiness January 2011

COMMENT

HOW TO PLAY THE LONG

LEADERSHIP GAME
Good leaders think about what happens when they’re gone and how to keep
the company in good stead for decades to come.
MISHAL KANOO

O
ne of the most subjective matters in business be better for a company than if the leader starts the
today is the issue of leadership. It is subjective ball rolling on actively finding people who are smart,
because it is vague. Thus one person’s version of intelligent and have the personal strength to weather
a good leader is another’s example of a bad one. the shocks and hits that will come with challenging the
However, there are a few factors that one can gauge to try current leadership, not for the want of greed or power,
to move the issue from a subjective one to an objective but for the need to see their company prosper.
one. Factors such as past company performance under Good leaders have the ability to move things. Great
his leadership, personal accomplishments, educational ones have that, and the strength to demand that their
background and the such, while not perfect, can give a peers push them to be even greater than what they are by
certain amount of objectiveness to the issue. constantly challenging them.
One of the best ways of knowing whether a leader Feeble minded leaders, those who will eventually
was good or bad is the company performance post their collapse a company, will never take to being challenged.
departure. Case in point is that of GE. When Jack Welch In fact, they will resent it. The reason is they are not sure
took over, he revamped the company in a manner that best of themselves and live in fear. Fear that they will lose their
suited his style of leadership. He had a goal – be in the top perceived power. Fear that they will not be able to control
three of their line of business or leave it. While many of things. Fear that others will discover their true nature –
the divisions of GE were profitable, they did not meet his they are cowards. Those who believe in greatness don’t care
set criteria. So he forced the company for these issues as they know deep in
to refocus all its efforts in moving in Feeble-minded themselves that the only thing that
that direction.
The immediate effect was a
leaders, those who will can bring them down is themselves.
But what do you do when you are
downturn in profits as certain eventually collapse a faced with leaders who cannot lead?
divisions were gradually spun off. firm, will not take to Do you accept them and move along
However, as they persevered, biding your time to take over, or do
focused purely on what they wanted being challenged. They you try to help them understand
to focus on, they gradually began to will resent it personally the enormity of their task and push
dominate the spaces they were in. So them ever so gently to recognise that
far, so good. and not think of the help is not sign of weakness, but
But like the true leader he was, he company overall. that of strength.
surrounded himself with like minded We all need help and we all
people who would see this strategy going forward and need people to support us at one time or another. Great
beyond his time. leaders realise this and use it to their advantage, not in
This paid off as GE is now still dominant in the areas a personal capacity, but looking beyond that in terms of
that they focused on years after Welch had left. The what legacy they will leave behind.
legacy of a true leader is that his ideals should not end The worst situation to be in is when those who are not
with his era, but prosper beyond it. That can only be capable of leading try to take the mantle of leadership
achieved when one appoints the right leaders who believe but are completely oblivious to the demands of the task.
in the strategy set out and have the strength to find like They truly believe that they can lead, not because they
minded people who are not yes-men, but titans who can have a vision or a drive, but because they have a personal
stand on their own feet. Moreover, great leaders cause interest vested in taking control.
people to buy into an idea and not force it upon them. I cannot emphasise enough the malice that will cause a
This is why evolution, and not revolutions, last and the company when such a person becomes the leader. When
people who lead them prosper. great leaders take office, you can feel their drive and their
In my time, I have seen many leaders who do not have ambition. They run marathons, not 100-metre sprints.
the moral strength to allow strong willed people to be Mishal Kanoo, deputy chairman, Kanoo Group.
part of their team for fear of a revolt. Nothing could mishal@[Link]

January 2011 gulfbusiness 25

COMMENT

GCC TRANSPARENCY
EFFORTS NOT ENOUGH
Regional regulators must show their teeth and send strong signals that
corporate governance improvement is a priority.
DR. NASSER SAIDI

A
ddressing transparency issues in the GCC is key from a very low base – of GCC listed companies’ investor
to the full development of the region’s capital relations and disclosure practices. We have seen cases
markets and to restoring investor confidence. where companies have gone from disclosing bare summary
Investors, as part of their due diligence, require financials to more encompassing annual reports. Since
information about companies’ performance, decision- better disclosure is at the prerogative of companies, this
makers, business model and risks, and how the company improvement signals changing attitudes of some regional
ensures that their rights are being protected. The case for companies towards transparency.
better transparency and disclosure is uncontroversial and While improvements are happening in some companies,
widely accepted, particularly with regards to the GCC. the region still has a way to go. Consider some of the eye
However, is the GCC doing enough to address transparency opening findings from our review of disclosures of over 600
issues? On a regulatory level, corporate governance regional companies:
frameworks for listed companies have been put in place Only 10 per cent of GCC listed companies provide information
in most GCC countries, except for Kuwait. These corporate about their board members and executive management, beyond
governance frameworks call for companies to disclose more their names on the websites and annual reports
information beyond their financials. This higher level of Only 22 per cent identify their executive and non-
disclosures is a key for existing and potential investors to executive directors
know more about the company, its key officers, and help ensure Only four per cent of listed companies hold investor
the accountability of the company. analyst meetings or conference calls
However, these governance 14 per cent of GCC 14 per cent of GCC listed companies
frameworks, and the disclosures
companies have to provide to the
listed companies do do not have a corporate website
Only 30 per cent of companies
regulator, are only as good as the not have a corporate provide a summary of their financial
‘teeth’ the regulators have and website and only 30 performance
use to ensure the frameworks are Clearly our region’s companies
implemented and that the disclosures per cent of companies need to improve their disclosure
provided are critically reviewed. The provide a summary practices. In a region where
credibility of regulators hinges on transparency and disclosure
their willingness to act independently of their financial practices are measurably below
from outside pressures and vested performance. international standards, regulators
interests and to enforce rules and must send strong signals to the
regulations with full transparency and timeliness. companies they oversee that corporate governance
Recently, some regulators, particularly Saudi’s Capital improvement is a priority. An unambiguous policy
Market Authority and the Dubai Financial Services signal is critical in order to engineer the required shift
Authority, have rightfully showed their resolve to in corporate behaviour and change in business culture.
implement governance guidelines and have imposed fines Adopting and complying with IFRS would be a good
on companies and on individual directors, a necessary starting point. Regulators should take the lead to ensure
reminder that the latter are personally liable and that the frameworks they have designed are effectively
accountable for not effectively overseeing the development implemented. Companies and their boards need to view
and implementation of firm-level corporate governance. disclosure as a fiduciary, and indeed moral and ethical,
But this is not enough. Hawkamah and The National responsibility to their shareholders. We are moving
Investor (TNI) developed a ranking methodology for GCC forward on our disclosure practices, but reform efforts
listed companies called Behavioural Assessment Score have lacked teeth and progress is too timid. Reform is
for Investors and Companies (BASIC) based on publicly imperative in order to help restore investor confidence in
available corporate information and focusing on their the aftermath of the international financial crisis.
transparency and disclosures to the market. Over 2008- Dr Nasser Saidi, chief economist and head of external
2009, we tracked a significant improvement – although relations, Dubai International Financial Centre.

26 gulfbusiness January 2011

COMMENT

HOW TO KEEP THE

CREATIVE SPARK ALIVE
Successful entrepreneurs know that innovation is too important to leave to chance
and they use tried-and-tested strategies to keep the creative juices flowing.
MICHAEL HASBANI

A
round 30 years ago, a young Saudi entrepreneur 3. Good ideas are too valuable to waste: Game-changing
dreamt of opening a prawn farm about five times ideas are like gold dust: hard to find and easy to lose.
the size of Bermuda in the desert. Everybody said it Your search for them, and your process for developing
was doomed to fail, everyone except the entrepreneur them, should be rigorously managed company-wide.
himself. Only one person had to believe it was possible. Four in 10 entrepreneurs felt they innovated well in ‘hot
Today, that experiment, National Prawn Company, spots,’ but not across their organisation.
distributes its produce across Europe and is Saudi Arabia’s
second biggest export to Japan after oil. One of the biggest 4. Balance blue-sky and bottomline: Fast-growth
integrated prawn farms in the world, its capacity will companies must connect creativity and profit. If you
increase to 43,000 tonnes a year by 2012. For an idea to cannot turn your new ideas into products and services
turn into reality takes a lot more than just hard work. It that contribute to the bottomline, your journey to
takes innovation at every stage of growth. market leadership will slow or stop. Innovation, ‘for
Famous stories of entrepreneur innovation follow a the sake of it,’ is often essential but the speed at
similar pattern. An inspired idea, often discovered by which entrepreneurs will move forward depends on
accident in a ‘eureka moment’ is rejected out of hand. Only their ability to connect creativity to profit. While
with the support of a determined backer does it finally get most entrepreneurs felt they had the right balance
to market, where it suddenly takes off. Such stories are between money-making and creative thinking, many
interesting and inspiring. But as an were not sure.
account of how innovation generally Game-changing ideas
works, they illustrate the exception 5. Rethink how the business
rather than the rule. If you want to are like gold dust: works, not just what it does:
build a company that has innovation hard to find and easy Entrepreneurs are often brilliant
at its core, you can’t just rely on at thinking up new products and
happy accidents and coincidences.
to lose. Your search services. But to stay on a fast-
We conducted a survey among for them, and your growth path, you need to apply
the world’s leading entrepreneurs.
Unsurprisingly, they told us loud
process for developing that same innovative zeal to how
you run your business, not just to
and clear that innovation is central them, should be what it does.
to their future business success rigorously managed.
and their ability to innovate was Unfortunately, knowing how
the one key factor that set them important innovation is doesn’t
apart from their competitors. In our conversations with make the process of coming up with new ideas any
these entrepreneurs, five mantras to keep the flames of easier. Entrepreneurs listed a series of innovation
innovation alive emerged. ‘roadblocks.’ Chief among them was a lack of time
and resources, followed closely by a lack of capital.
1. Don’t leave innovation out of strategy: Innovation is Half of them said that as their organisation had
the fuel that will power your fast-growth company to become bigger and more complex, innovation had
market leadership. Many businesses fail to set strategic become harder. To keep the spirit of innovation alive,
priorities for innovation, or do this badly. Make they were recruiting creative people, developing
innovation a boardroom issue. alliances with fresh-thinking outsiders, and offering
staff dedicated ‘ideas time.’
2. Your power to integrate makes you unique — don’t Efforts to encourage innovation need to become a
lose it: As your business grows, you need to keep the priority. We cannot and should not rely on ‘eureka’
spirit of creativity alive. Bureaucratic thinking can kill moments alone. Innovation is too important for that.
innovation in a blink. It’s the leader’s responsibility to Michael Hasbani, partner, strategic growth markets,
foster a creative culture. Ernst & Young MENA.

28 gulfbusiness January 2011

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F LETTERS

LETTER OF THE MONTH

SPECIAL REPORT: THE LUXURY INDUSTRY REBOUNDS CEOs must open up

As always, your annual CEO cover story was satisfactorily meaty
Vol. 15 Issue 8 December 2010

with facts, opinions and forecasts (Gulf Business, December 2010). I

do support the common proposition that the worst is over and we’re
now on the road to recovery. But perhaps next year, the featured
CEOs would be open to talk about the real issues. Or, perhaps Gulf
Mohammad Omran
ETISALAT
Riad Kamal
ARABTEC
Abdul Aziz Al Ghurair
MASHREQBANK
Samer Majali
GULF AIR
James Hogan
ETIHAD
Sameer Al Ansari
SHUAA CAPITAL
Business can invite an independent panel of analysts and assess the
essays of these “leading business minds”.
Mr Omran of Etisalat, for example, could shed a light on the bonuses
Abdulla Al Awar Dave Lesar Joseph Anis Ammar AlKhudairy Tarek Sultan
DIFCA HALLIBURTON GENERAL ELECTRIC AMWAL ALKHALEEJ AGILITY

the board received during the recession period? Talking about mobility
CEO PREDICTIONS and connectivity entails a great deal of open markets, which I doubt the

2011
The region’s leading business
minds share their hopes, fears UAE now enjoys. Mr Kamal of Arabtec might want to explain a bit on
and strategies what really transpired on the proposed merger with Aabar Investments
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
and why the markets have been on an upswing days before the
announcement of the proposal. Shouldn’t that be confidential?
UAE.................. DHS 10

GB Regional December 2010 [Link] 1 12/6/10 [Link] AM

There could be no better man than Mr Al Ghurair of Mashreq

Bank, being the largest issuer of credit cards in the UAE, to let
readers know the real status of the banking sector. Will there be more
defaults? And a long list of questions to ask Mr Al Ansari of Shuaa
Capital, then there’s chief of the beleaguered DIC. Thank you.
Geneveve Peralta, Dubai, UAE

Why punish good customers? economies leveraged the input deserves to be remembered for his
Mishal Kanoo’s suggestion that we of business schools in ensuring contribution to the telecom industry.
can get through the financial crisis by the grassroots movement of He was also recently praised by
changing our attitudes is quite vague, sustainability marketing – from another business publication and I
if not ambitious. But there’s no other the headquarter status for IRENA know his family and friends would
way. His analysis is so true. Why did at Masdar City in the UAE, to the be proud of him.
people believe property prices would economic cities in Saudi Arabia, Abdul Malik Tamimi
continue to double and banks continue the World Trade Centre building Doha, Qatar
to lend without strings attached? in Bahrain and the International
Thankfully, the UAE has approved Finance Centre in Kuwait and Energy
the credit bureau and banks are now City in Qatar? Email: Write to the editor,
studying carefully prospective clients To what extent are we being waste
Gulf Business, alicia@[Link]
before offering a loan or credit card. aware in the region and the UAE?
and the letter of the month wins
They are only concentrating on those Is the Masdar initiative the sole
with good financial records, which preserve of engineering minds? What an Alessi watch.
includes me. However, these banks are role can business and management
so obnoxious and so pushy that not a academics and practitioners play
day passes without a call from them. in fostering the long-term effect
Now I wonder, why do good customers of Masdar? These are pertinent
have to be punished as well? questions that we need to solicit
Mohammad Singh answers to.
Abu Dhabi, UAE Dr Nnamdi O. Madichie
Assistant Professor of Marketing
The green dilemma College of Business A
The Green Report (Gulf Business,
December 2010) raises a legitimate Vodafone’s CEO tribute
concern to all Gulf residents. It was good to see a tribute to the
To what extent have the Gulf late Grahame Maher of Vodafone. He

30 gulfbusiness January 2011

ANALYSIS ECONOMY

Eastern promises
As economic power shifts from West to East, delegates at the World Economic Forum urged
developing countries to respect the earth amid rapid growth.

Copyright © World Economic Forum/Photo: Norbert Schiller

The World Economic Forum’s
Summit on the Global Agenda 2010.

T
here is nothing that alarms the One of the main challenges will political balance, or imbalance, is
international community more be making developing economies set to change. The survey says
than the rise of new powers. more responsible and transparent to inequality and growing income
Step forward China and India. meet the standards set by developed distribution disparity, both in
The rise of emerging markets is the countries, says Zhan Yunling, director, developed and developing countries,
biggest trend to impact the global international studies at the Chinese is a concern, and this could boil
economy, according to a survey of Academy of Social Sciences. down to bigger conflicts.
570 leaders who attended the World “In the past, global governance “There is a big gap between
Economic Forum (WEF) in Dubai. was done by the developed countries, developed and developing countries,
The global power shift – reflected in through the G8 or G7,” he says. “Now which in the future could lead to
the formation of the G20 – will be the we have the G20. I am not sure if tensions,” Mari Elka Pangestu,
top issue over the next 12 to 18 months, the G20 can meet all of the global Indonesia’s minister of trade, says.
experts from the 72 WEF global agenda concerns, but the fact that the G20 has John Lipsky, first deputy managing
councils, say. These councils are replaced the G8 means there will be director of the International Monetary
comprised of leaders from business, more emphasis on the interests of the Fund (IMF), says people should
academia, civil society and government developing world.” not forget that the rapid growth in
and are dubbed by Klaus Scwab, WEF The emergence of new economies emerging economies is the only way
founder and executive chairman, as the also means the US will no longer be that poverty will be eliminated and
“intellectual backbone” of the forum. the sole dominant power, hence, the greater equality will be achieved.

32 gulfbusiness January 2011

 “The G20 is one important a population of 13 million – urban
manifestation of this change,” he planners are using a mix of old and
says, noting that changes in the world new technologies, according to the
economy have also modified the way city’s Vice-Mayor Ren Xuefeng. Half
the G20 serves it purpose. On October of the city’s budget will be invested in
23, 2010, the G20’s Ministers of Finance, sustainable growth.
governing most of the IMF member Some suggest spectacular but
quotas, agreed to reform the IMF and energy-hungry designs should be
shift about six per cent of the voting abandoned in favour of energy
shares to major developing nations and saving buildings. “Being the biggest,
countries with emerging markets. fastest, highest and the richest is
“Today, the top 10 shareholders a thing of the past,” says Konrad
in the IMF are the US, Japan, China, Otto-Zimmermann, Secretary-General
Brazil, India, Russia and the four of ICLEI – Local Governments for
large European economies. There is Sustainability, Germany.
a commitment that going forward, With the world population set to hit
rebalancing will continue,” Lipsky adds. nine billion by 2050, the diversification
As developing nations rise, so does of energy sources will be vital for
the expectation that they will become meeting increasing energy needs. To
more environment-friendly, too. this end, cooperation among MENA
While developed nations have been countries should be a key strategy to
championing the use of subsidies for John Lipsky, first deputy managing ensure that new energy models are
renewable energy and taxes to cut director of the IMF. viable and sustainable.
carbon emissions, most emerging Currently, 1.4 million people in the
countries continue to see growth, due solutions, then they will embrace MENA region are living in “energy
in part to water and energy subsidies them,” he says. “For industries poverty” and that number will only
and lack of regulation. that continue to generate excess increase if more resources are not
“The new growth model should thus greenhouse gas emissions, such as funnelled into developing sustainable
focus on the clean and sustainable the concrete industry, it is a matter of sources of energy. Research and
use of energy,” ?Yunling says. “These tougher regulation or more incentives.” development must be aimed at all
economies have different problems The government, or the state, should potential sources of energy – including
from the developed markets and to initiate the move while the private oil and gas, coal, solar, biofuels, wind
face the paradigm shift, they need sector is still hesitant to invest in and nuclear.
to create models of growth based on large-scale clean energy projects, “Don’t look at water alone, solar
clean energy, and this is not easy.” says Phil Gordon, Mayor of Phoenix, alone, coal alone,” says Nejib Zaafrani,
The desire to promote clean energy Arizona, the fifth most populated city secretary general and chief executive
officer of the Dubai Supreme Council
of Energy. “We have to look at the
Being the biggest, fastest and highest entire package and learn as we go
will become a thing of the past as cities along. We need integration and
collaboration. Some countries in the
move towards sustainability models. MENA region are poor in energy, some
are rich; some have more education
is there. During an open forum in in the US and one of the country’s than others. We need to work together
conjunction with the WEF’s Summit fastest growing urban centres. to set the vision and strategy.”
on the Global Agenda, panellists “We took leadership as 70 per cent The three-day World Economic
unanimously called for “sustainable of our citizens wanted Phoenix to be a Forum highlighted the fact the world
urbanisation”. But there is division on sustainable city with a high quality of is facing a long list of problems. The
how to achieve it and whether there is a life. The government cannot force it,” forum’s founders admit the world
strong business case for sustainability. he says. “We can lay the foundation, is still in the “intensive care unit”.
Khaled Awad, Founder of Grenea, build the infrastructure and provide Brainstorming by the world’s foremost
UAE, called for incentives for the education. If the public wants leaders and top policy and decision-
private sector to adapt new, green [sustainability] the market will follow.” makers may help find viable solutions.
technologies. “The public needs In the port city of Tianjin – one of But when our planet is resuscitated
businesses to come up with the China’s fastest growing cities with back to life remains to be seen.

January 2011 gulfbusiness 33

ANALYSIS REAL ESTATE

Safe as houses?
As Dubai Islamic Bank issues the region’s second Real Estate Investment Trust (Reit),
KAREN REMO-LISTANA explores the benefits and risks of the nascent investment tool.

P
re-2009, buying a property
through leverage and flipping
it to another for quick returns
was common-place. But as
the global financial wheels slowed,
people stopped buying and investors
suddenly learned that frenzied growth
was a risky substitute for a well-
strategised business plan – something
that real estate investment trusts, or
Reits, can offer.
Unlike property funds, which also
invest in property and property-related
assets, Reits are more attractive

Naveed Ahmed
because the majority of assets under
management are income-producing.
There are also tighter restrictions on
borrowing and listing is mandatory.
Jumeirah Lake Towers development, Dubai.
In DIFC, for example, 80 per cent of
income must be distributed each year on Nasdaq Dubai; and the Arabian act as a barrier to active portfolio
and borrowing must not exceed 70 per Real Estate Investment Trust (AREIT), management,” Laroche says.
cent of the fund’s NAV. established by HSBC & Daman in 2006. In addition, Brown says the
“Because it is listed, a Reit offers more Reits are usually associated with tax leveraging ratio of 70 per cent is
protection and liquidity,” says Lynette efficiency and because there is no or “very low” compared to gross asset
Brown, partner, Al Tamimi & Company. limited tax in this region, there was not value. Similarly, the rule that Reits
“Most of the assets are already income much incentive to issue one, Andrew can only invest up to only 30 per cent
generating and only up to 30 per cent of Charlesworth, head of capital markets, in property under development is
the fund can be invested in properties Jones Lang LaSalle MENA, said. “extremely low”.
under development. So it’s not a “The GCC markets are still going With a swathe of unfinished
speculative investment. through a maturing phase so one projects in Dubai, the least it needs
“However, they did not take off earlier challenge is getting the consumers to is a regulation that constraints funds
because there was no need for it,” she understand the benefits of a Reit as an to help these developments see their
adds. “Other investments offer higher alternative investment class,” he says. completion, analysts agree.
returns. Now people are more cautious “Reits will definitely be an important And there’s the issue of freehold.
and they want to spread their risks.” dimension to the local markets Because a Reit is deemed a foreign
Olivier Laroche, senior manager, at some point. The opportunity to entity, it cannot own freehold titles
A.T. Kearney Middle East, says returns indirectly own real estate through a in non-designated areas. There is a
range from five to 10 per cent – a yield liquid investment vehicle will be an possibility that once the Reit is listed,
preferred by long-term institutional attractive option.” it will have similar characteristics
investors, such as pension funds. “In The concept of Reit is so nascent in as a public joint stock company and
emerging markets, usually private the region that according to Laroche, Dubai Land Department could agree to
real estate funds come first, targeting only Dubai has a Reit regulation and offer an exemption. But there are still
institutional investors, and once the even this needs more ironing. no formal agreements.
market matures the public Reit market “Dubai has had the regulation in A favourable legislation will be
grows,” he explains. place since 2006, but the Reit market helpful but, crucially, the management
Despite its attractiveness, there are has been affected by limited sales teams must be able to deliver results
only two known Reits issued in this of distressed assets, as potential and provide the transparency required
region – the Emirates Reit, launched buyers and sellers price points by international investors. Given the
by Dubai Islamic bank and Eiffel don’t match, while complex regional ongoing uncertainty surrounding the
Management, set to be listed this year regulatory issues and ownership laws property market, this won’t be easy.

34 gulfbusiness January 2011

IF YOU LOVE STYLE, YOU’LL LOVE...
ANALYSIS WORLD CUP

Qatar’s game plan

The tiny Gulf country came up trumps with its winning World Cup bid. RYAN HARRISON takes a
look at how Qatar is set to gain from staging the beautiful game in 2022.

I
t’s unlikely Qatar will care about Sepp
Blatter’s press conference gaffes, the
furore over air conditioned stadia
or that its national team has never
qualified for a World Cup.
The fact is, its winning bid has
sparked an economic frenzy that will
directly benefit the population of just
under 1.7 million, as well as the Gulf
in general.
To kick off it will need to build at a
speed like never before. This includes
everything from infrastructure – roads,
bridges, sewage, distillation-cooling – to
hotels and “fan-zones”. Some estimates
put the spend at $100 billion, including a

getty images
$4 billion stadium building programme.
This includes the construction of the
86,000-seater Lusail Stadium, which
will host the tournament’s opening and To fund this expansion, Warren From January next year the DIFC will
final matches. said Qatar will draw on revenue from implement a revised set of operational
Qatar will build over 80,000 new the natural gas industry, overseas fees for companies based in the
hotel rooms by 2022, 10,000 to 15,000 investments, and its diversification business district – charging Dhs160 a
of which will be ready by end of 2010. into tourism and financial services. square foot, down from an estimated
The country could stand to earn $14 It does not plan to issue bonds to Dhs400 for the same space previously.
billion in immediate revenues, which fund the growth though, according According to figures by Bloomberg,
is modest compared to the long-term to Prime Minister Sheikh Hamad bin some 40 per cent of the DIFC’s office
economic uplift. To execute the game Jassim al Thani. Sheikh Hamad told space is currently vacant. Meanwhile,
plan, there’s no doubt Qatar will have reporters last month: “We don’t need the QFC has also been paring back costs,
to open its doors to the international [bonds] because most of our plan will particularly for asset management
construction sector, said Laura cover 70 to 80 per cent of what we need, and insurance firms, as it attempts to
Warren, legal director in the Middle which is all the infrastructure; the compete with the DIFC’s dominance.
East Real Estate and Construction airport, the port, the roads, the train.” With the huge number of
Group at law firm Clyde & Co. He said all transportation infrastructure projects set to kick-start
“To built it, I assume they would infrastructure for the World Cup will next year as a result of the World Cup
need those contractors who are be completed within seven years. win, Qatar is likely to see international
already here working and prequalified “What we need is a few stadiums, but investment banks, as well as a gamut of
for tenders, plus new companies that’s not a big deal if you compare it infrastructure service companies, look
coming into or coming back to the with all the infrastructure.” to get closer to the action. Game on.
Middle East market. These will include The backdrop to this epic growth
the big international boys as well as story is also a regional power struggle
2022 VOTING: WORLD CUP BID
regional and local players. between financial centres that’s
WINNERS AND LOSERS
“Although there may have to be a intensified behind the scenes since the
1st round: Australia 1 (eliminated); Japan 3;
revision of Engineering Law and Foreign news. Typically, this battle is between
United States 3; South Korea 4; Qatar 11
Investment Law, which currently places Dubai and any other Gulf hub.
2nd round: Japan 2 (eliminated); South
restrictions on international outfits In the case of Doha and Dubai, the
Korea 5; United States 5; Qatar 10
setting up onshore,” Warren added. Some DIFC drastically slashed its operating
3rd round: South Korea 5 (eliminated);
of the region’s largest infrastructure fees recently at a time when Qatar is
United States 6; Qatar 11
companies are based in Dubai, which is looking to aggressively develop its
4th round: United States 8; Qatar 14
also expected to benefit. financial sector.

36 gulfbusiness January 2011

ANALYSIS AVIATION

Private jets take flight

The Middle East Business Aviation show hosted a slew of new deals and the appetite for luxury
travel remains strong, writes PETER SHAW SMITH.

T
he Middle East Business Ali Al Naqbi, the founding chairman said that Switzerland-based Comlux
Aviation Association (MEBAA) of the Middle East Business Aviation The Aviation Group, already a major
and show organisers F&E Association, said the show was customer with 12 of its aircraft, had
Aerospace have again proved growing in popularity. “Everybody signed up for two Global Business
the resilience of the Middle East’s came to do business,” he said. Some 7000 business jets worth $130 million,
business aviation industry with their 53 aircraft were on show at the static while Germany’s Air Flug had placed
corporate jet extravaganza in Dubai. display “around 50 per cent of these firm orders for five mid-size Learjet
The fourth biannual show attracted were wide-body aircraft,” he added. 85s and two Challenger 605 jets, worth
6,200 visitors from 77 countries, “There were a lot of orders and a a total of $155 million.[1]
a 13 per cent increase on the 2008 lot of discussions, agreements and These are exciting times for the
event. Some 338 exhibitors from memorandums of understanding Middle East bizjet industry. The
33 countries attended, including were signed. We are in the Middle regional fleet increased from 140
original equipment manufacturers East and the nature of business business aircraft in 2004 to 335 by
(OEMs) and other service providers, [here] is that a good deal of privacy the end of last year, representing
as well as representatives of 15 fixed and confidentiality takes place. fleet growth of 19 per cent, according
base operations (FBOs), the industry From a market point of view, several to industry data. “The Middle East
term for airport terminals dedicated operators don’t want to show others is expected to be a significant
to business aviation. An agreement that they have money [to spend].” contributor to the expansion of
was also signed for the construction However, two European operators business aviation in the emerging
of an FBO facility at Dubai World were less reticent. Among major orders markets. Between 2010 and 2019,
Central in Jebel Ali. announced at the show, Bombardier the Middle East will receive 450

38 gulfbusiness January 2011

business jet deliveries. The 2009 fleet AIRCRAFT DELIVERIES (UNITS) 2009-10E
of 335 business jets will grow to 730 2009A 2010E Total Total %
aircraft by 2019 representing CAGR Bombardier 173 158 331 21.3%
of approximately eight per cent,” said Cessna 289 150 439 28.3%
Bombardier’s Industry Forecast. Dassault 77 80 157 10.1%
In addition to Canada’s Bombardier, Embraer 115 136 251 16.2%
the business aviation sector’s Gulfstream 94 107 201 13.0%
main manufacturers are France’s
Hawker Beechcraft 98 75 173 11.1%
Dassault, the US’ Cessna, Gulfstream
Total 846 706 1,552 100.0%
and Hawker Beechcraft, Brazil’s Source: JP Morgan, Business Jet Monthly, November 2010. A=actual, E=estimate
Embraer, and Boeing (US) and Airbus
(France). Although not a like-for-like BUSINESS JET MARKET INDICATORS IN 2010
comparison due to the variation in Global Billionaires Deliveries 2010-19
aircraft model types and size, Cessna North America 427 42.2% 4,400 41.9%
appears to be currently delivering the Europe 183 18.1% 2,500 23.8%
largest number of units. Boeing and China 107 10.6% 600 5.7%
Airbus also devote niche units to cater Russia & CIS 72 7.1% 650 6.2%
to the VIP market.
Asia & Oceania 72 7.1% 500 4.8%
At the end of 2009, JetNet estimates
Middle East 61 6.0% 450 4.3%
put global fleet size at 17,200 aircraft,
India 49 4.8% 325 3.1%
including 3,773 heavy, 4,426 medium
Latin America 36 3.6% 775 7.4%
and 9,000 small jets. A total of 706,
Africa 4 0.4% 300 2.9%
750 and 939 jets are expected to be
Total 1,011 100.0% 10,500 100.0%
delivered each year between 2010 and
Sources: [Link], February 2010; Bombardier Forecast Model, 2010
2012. Industry forecasts put the total
number of business jets coming to
market between 2010-19 at 10,500. Not less of a factor among regional elites, impact in terms of cyclicality.” He sees
surprisingly, there is a close correlation the likelihood is that private and the Saudi market as a key player as
between the geographical distribution business aviation will remain buoyant. well as the Gulf community in general.
of billionaires by region, and the “Saudi owners are taking “These are important clientele.”
expected number of business jet advantage of the recession to renew Todd Taylor, Dispatcher, Flight
deliveries over the next decade. While old fleets,” says Mohammed Al Zeer, Operations at Gulfstream, is optimistic
the Middle East accounts for six per Chairman of Saudi Arabia’s MAZ that the next 12 months are going to see
cent of the world’s richest people, it is Consultants. “Private jet prices are an improvement on the past two years.
expected to make up only 4.3 per cent of down around 20 per cent. The market, “We have seen a shift in sales from 60
aircraft dispatched to customers. in my opinion, is back to normal. per cent US, 40 per cent international
to 35 per cent US, 65 per cent
international.” The Savannah, Georgia-
Private jet prices are down around 20 based company sells a range of aircraft
per cent. Everybody wants to win clients. seating six to 18 persons costing
from $15-$65 million. The smallest is
This is just like the good old days. the G150 and the largest is the G650.
Middle East and Chinese business is
While less exhibitor space was Everybody wants to win clients. This still strong, while Russian orders have
taken up this year, there is quiet is just like the good old days.” fallen off of late, he says. He concedes
optimism that the Middle East “The impact [of the recession] that dollar weakness could be a factor
business aviation market will move has been much more severe on small behind the shift to international sales.
ahead. After all, typical business jet manufacturers than on our end of the As optimism throughout the
customers are seldom low net worth product line,” says Capt Stephen Taylor, industry grows, Dubai aviation events
individuals. Differing views prevail President of Boeing Business Jets, are sure to remain at the forefront of
about the cyclicality of the industry. who says his unit accounts for around OEM and service provider marketing
Some argue that high-end corporate two per cent of Boeing’s overall order strategies. Their next opportunity will
travel is the first to be sacrificed as book and that aerospace has had a come at the Dubai Air Show at Dubai
companies seek to cut costs. On the much better recession than many other Expo in 2011, while the next MEBA
other hand, because accountability is industries. “We have not seen the same event will be in December 2012.

January 2011 gulfbusiness 39

EXECUTIVE MOVES

Sheikh Ahmed bin Saeed

Al Maktoum has been
appointed chairman of
Dubai World, replacing
Ahmed bin Sulayem. Sheikh
Ahmed, who served as
head of the Supreme Fiscal
Committee, spearheaded
the Dubai World debt-
restructuring programme.
Mohammed Ibrahim Al
Shaibani, director general
of the ruler’s court, Ahmad
Humaid Al Tayer, governor
Dubai-based Rasmala Investment Bank has appointed of Dubai International Financial Centre, Abdulrahman
Anwar Abusbaitan (left) and David Woods as co-chief Al Saleh, director general of the Department of Finance,
executive officers, replacing Tamer Bazzari who resigned and Hamad Buamim, director general of the Dubai
from the CEO post in November. Abusbaitan joined Chamber of Commerce & Industry, were among those
Rasmala in 2004 where he most recently was the head of named to the new board.
placements. Prior to Rasmala, he held senior positions in
Merrill Lynch Bahrain, Jordan and San Francisco offices.
Woods joined Rasmala in 2009 as chief operating officer, Peter Riddoch was named
a role he continues to perform in addition to Co-CEO. He CEO of Khoie Properties
previously served as chief operating officer of ABN-AMRO while Frank T. Khoie
(Middle East), CEO of ABN-AMRO Securities (USA) and CEO fills the role of executive
of Alfred Berg Securities. chairman of Khoie Group.
Riddoch was previously
CEO of Damac Properties
National Bank of Abu Dhabi appointed Vasgen and most recently was
Edwards as the head of international corporate CEO of Egyptian real
banking. He joined NBAD from Lloyds Banking Group, estate Amer Group. “Now
where he was the managing director and head of that La Hoya Bay is in
corporate asset finance. Edwards also worked for GE such capable hands, I will have the time needed to grow
Capital where he headed a specialist credit team. He Khoie Group and to assist with the wider infrastructure
has a BA in European History and Swedish language. challenges which Al Marjan Island faces,” Khoie said.

SAS Scandinavian Capital IQ, the data and analytics unit of Standard & Poor’s,
Airlines appointed Stefan appointed Ted Vivian as head of client development for
Eiche as general manager Europe, Middle East and Africa. Vivian will be managing
for the UAE. Eiche, who global sales operations in London, Paris, Milan, Frankfurt
has been with SAS for 11 and Dubai. He joined Capital IQ from Thomson Reuters,
years, has spent the last where he was global head of commercial operations.
eight years as country
sales manager in his home
country of Germany. Rashid Abdulla was
Eiche held various appointed chief executive of
management positions in Batelco Bahrain. Abdulla,
the travel industry. who has been in the telecom
business for 30 years and
is currently the managing
director of Qualitynet,
Avaya appointed Mohammed Areff as managing director Batelco Group’s Kuwait
for the Gulf region, replacing Roger El Tawil, who has Operation, will assume the
joined his family’s businesses. Areff joined Avaya after new role at the end of this
12 years with NCR Corporation where he held several month. He joined Batelco in
leadership roles in sales, operations and services in the 1986 as engineering manager.
Gulf, Middle East and Africa.

40 gulfbusiness January 2011

 Top10 places
WORDS BY ALICIA BULLER, PHOTOS BY FAROOQ SALIK

work
to
in the UAE
January 2011gulfbusiness 43
 [Link]

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years
 Top 10places
to work

Welcome to the first ever Top 10

Great Places to Work in the UAE

N
ot only did I feel proud to national psyche, and so is the knowledge
mingle with this month’s winning that short-term gain and ‘low hanging
cover stars, I was abuzz with the fruit’ mantras left many companies on
sheer list of firsts being born their proverbial knees.
before our very eyes. The UAE boasts a uniquely diverse and
Here, in less than a week, we’d lured talented workforce, made up of around
some of the UAE’s brightest and best 80 per cent expat labour, but as the world
minds to Gulf Business towers for a same becomes increasingly globalised, the days
place, same time photo shoot. What’s of fly-by-night, quick-buck tenures will
more, they were all punctual and gracious weaken the competitiveness of the nation.
– even under the hot camera lights. The message is clear, sustainability is the
For anyone acquainted with organising only option; and sustainability arises from
a media shoot, particularly on these sandy the brains that you attract and retain in
shores, it was not only a coup, it was a your company. Nothing else will do.
near miracle of the corporate kind. It According to the UN, the Arab
struck me viscerally that these weren’t working world lags far behind the West
your average CEOs, these were the proud in productivity terms and the gap is
bosses of companies that focus on people. growing. Workers from the Gulf have the
And as you read on through the Gulf potential to create more wealth, but are
Business Great Places to Work report, constrained by a lack of investment in
you’ll see that a focus on ‘assets with training, equipment and technology.
shoes’ stems from a vision that permeates The UN is also making strong calls
an organisation and everything it touches. for the abolishment of the Gulf-wide
Bosses that run great places to work sponsorship system. The new UAE law
also know that success is born, without which limits the power of bosses to ban
exception, from attracting the best people. employees going to rival companies
More than most, they have an intrinsic will go some way to promote employee
understanding that the cream-of-the-crop freedom. Today, it is empowerment of
have choices. When the best brains make your employees that will spur growth, not
decisions on career moves, it involves enslavement.
more than simple remuneration. The companies that made the Top Ten
Superior employees are compelled by Great Places to Work in the UAE list
firms that exude excellence, longevity understand that a happy, empowered
and, most importantly, reputation. What team drives growth. But they also
greater validation than this national list. understand that it’s much easier to
And so the cycle goes: talented people, talk about it than to do it. That’s why
growth, sustainability, talented people... they’ve made it their core impetus to
Great Places to Work is a global push forward initiatives that explicitly
institution that has so far published foster transparency, communication,
similar data in 39 countries, including engagement, trust and respect.
the famous Fortune magazine Top 100 I, for one, am proud to recognise this
Places to Work list in the US. The fact that list as a springboard for the future. How
regional leader, Michael Burchell, and his do we become a country that excels in the
team have entered the region now is not global marketplace? We do it together.
insignificant. The UAE is on the cusp
of change. Alicia Buller,
As the recession resides, the memories Editor
of the boom times are still fresh in the Gulf Business

January 2011gulfbusiness 45
Top 10places
to work

People matter
For the first time in the region, GULF BUSINESS unveils the Top Ten Places to
Work, highlighting the crucial relationship between people and profits.

A
s the UAE The Institute publishes similar lists you have to think ‘how do I create
business mindset in 39 international markets, including loyalty so that doesn’t happen again in
shifts to thinking the Fortune “100 Best” in the US and top future?’ Pay does not equal employee
about the long- company lists in the Financial Times in engagement; this comes from
term, focusing the UK and Nikkei Business in Japan. interesting work.”
on people is This makes it the largest workplace While Burchell notes that while
paramount. evaluation tool globally, surveying multi-national companies topped
But whoever around 1.5 million employees every the list, the local companies
said that ‘people are your greatest year. Companies that regularly feature were also extremely strong in a
asset’ was wrong; it’s actually the on the Great Place to Work lists in other global context. “We found that the
‘right’ people that are your greatest markets include Google, Coca Cola, multinationals came top of the list
asset. And in order to attract the best Novartis, IBM, Cisco, Telefonica and because they have more resources
people, it’s important to have a great Microsoft (the software giant has made globally. But just because you’re a
place to work. it to the UAE list too). multinational, it doesn’t mean you’re
That’s why Gulf Business has tied Following the slowdown in the perfect,” he says.
up with the world’s most popular UAE labour market, when one in “The local companies were
employment survey to find out 16 professionals lost their jobs in very creative without having the
what’s really going on in the UAE’s 2009, measuring the extent to which resources of the multinationals. All
companies and publish the employee loyalty and engagement has the companies that made the list
country’s first annual ranking of the been maintained is key, says Dr. Michael worked hard to meet their employees
nation’s best employers. The survey Burchell, partner and director of the needs, including regarding religion
assessed the level of trust between UAE Great Place to Work Institute. and culture. They also had extensive
three key relationships within the “Now is the right time to bring the communications between the
local work place – employees and list to the UAE labour market. In the management and the ewmployees.
their managers, employees and their boom-times, there was a lot of job But there is still a need for senior
jobs, and between employees and hopping in the UAE,” Burchell adds. management to invest in staff and talk
other employees. “As finance and commerce rebounds, to their staff more.”
Burchell says while the companies
that made it to the list are solid,
ABOUT THE LIST there’s room for improvement across
UAE companies overall. The country

A ny UAE company with 50 or

more employees was eligible to
participate in the fee-based program.
response to the Great Place to Work
Culture Audit.
In accordance with Great Place to
may be made up largely of ex-pats
on relatively shorter-term tenures
but that’s no reason to neglect your
Any company that appears on the Work practices, the research firm may people policies. “There are employees
list is selected primarily on the basis not reveal details of companies that did that you want for longer than a year.
of their employees’ responses to not make this list, including whether There is a need for top talent to be
the Great Place to Work Trust Index, or not a company has participated retained for at least between three
a proprietary employee survey for selection on the list. Companies and five years,” he adds.
developed by the Great Place to interested in applying for the January, David Robert, partner and
Work Institute. In addition, the firm 2012 list may apply from February 1 at director at Great Places to Work UAE,
evaluates materials submitted by the [Link]/ best/nom- agrees that there needs to be more of
company, including the company’s [Link]. a focus on grass-roots strategy and
people policy.

46 gulfbusiness January 2011

 “There seems to be a lot of emphasis UAE PEOPLE CHALLENGES: WHAT THE EXPERTS SAY
on superficial tenets in the UAE, but a
good exterior is not sustainable if you
Hazel Jackson, CEO, Biz-Ability
don’t have good people,” he says. “In the business consulting firm
UAE, the focus has been on short-term
gains. However, the companies that
made the list are head and shoulders
above their peers, their HR practices
O ne of the biggest people challenges
for UAE companies is dealing with
the vast cultural diversity that exists
are integrated and robust. They are here. Having 204 different nationalities
good quality workplaces in every way.” means dealing with different
The UAE is a young, maturing and approaches to and understanding of
dynamic market and is at a critical HR policies, workplace culture and
stage in its development, which is why leadership.
it’s a pivotal time to be publishing the Effective people management is
Top Ten Places to Work survey. also impacted by weak leadership
“The main thing is that the UAE behaviour in a number of companies.
wants to be the best; to do this, This can be attributed to the rapid
they need the right leaders, the growth of the economy that forced
right products and great places to companies to source talent from
work,” says Burchell. “If you want to within the organisation to meet
get ahead in a global economy, you urgent business demands. While this can revise them to promote better
absolutely have to think about how meant more opportunities for young employee welfare. It is only recently that
people drive your business.” ■ individuals, companies have made the HR function has started to be taken
some compromise on the skills set and seriously by companies in the UAE.
experience of their people in leadership While there is a lot of awareness about
positions. better workforce management, the HR
ABOUT THE GREAT PLACE
Companies should begin by analysing industry in the UAE is still developing.
TO WORK INSTITUTE UAE their HR policies and procedures to Grey areas will definitely exist during
discover loopholes and see how they this transitional phase.

T he Great Place to Work

Institute is a global research
and management consultancy that
Philip Anderson, professor of
entrepreneurship, INSEAD,
recognises the best workplaces in Abu Dhabi
39 countries worldwide and provides
business and advisory services.
The Institute was founded in 1991
to provide a simple, research-driven
T he top challenge usually is attracting
talented Emiratis. Most firms want to
emiratise their work forces, so competition
methodology that could be widely for high-quality local talent is quite fierce.
used to understand and assess Consequently, retaining Emiratis is also
organisations. A proprietary employee an issue, particularly since many are not
survey and assessment of HR policies primarily motivated by money, due to the
form the foundation of the Institute’s wealth of the country. Firms must find other
research and consulting services and ways to attract and retain them, through
has been used by companies from interesting work and professional growth
all over the world to create strong opportunities. The next greatest employee
workplace cultures based on trusting challenge is managing a diverse workforce.
relationships. The UAE has attracted people from many management has its strengths, but it can
Following increased demand from different geographies, which provides lead to delays, especially when senior
the GCC countries for its workplace opportunities for value-creation but is not leaders juggle many commitments, and
evaluation services, Great Place to simple to manage. to a stop-and-go pattern of change.
Work Institute expanded to the UAE The most common complaints we hear Because senior leaders are expected
in March 2010. By 2012 Great Place are about lack of consistent direction and to know all the details of the operations
to Work Institute plans to publish ‘Top micro-management. Both spring from the they supervise, they tend to use a lot
Companies to Work For’ lists in each tendency in the region for organisations of reports and approvals compared to
of the GCC countries. to run in a very top-down way. Top-down companies in the West.

January 2011gulfbusiness 47
 Top 10places
to work
“Never underestimate anyone’s role”
Microsoft

M
icrosoft is no stranger to poll that collects suggestions and
the Great Places to Work feedback from all its employees and a
award, having already staff member is nominated to make
scooped the top place in last year’s the final recommendations to the
Europe list and a regular spot in general manager.
Fortune magazine’s US rankings. The ”One of the results of this survey
company’s chairman, Bill Gates, got was a mandate not to bombard each
it right – he invested in his people. other with emails over the weekend.
And it shows. We sent out a communication that
“We are focused on growing the said ‘does that email you’re sending
company and enabling people to really need to be sent now or can
reach their potential – inside and it wait?’,” Latif says. “We wanted
outside the office. Taking care of to assure our staff that it’s not an
people is one of the top priorities; expectation to read an email at the
everyone contributes to the company weekend.”
strategy regardless of their position,” In addition, Microsoft has its own
says Samer Abu Latif, the company’s ‘taskforce’, which is given a remit of
regional general manager. coming up with recommendations on
Microsoft’s key focus is the how to improve employee work/life
development of its employees through balance. This bottom-up strategy is
the distribution of transparent cultivated with the aim of fostering trust
information, a clear career development
plan and work/life balance.
“We do not underestimate employee MICROSOFT
Sector: Technology
roles. We all have a passion for Founded: 1975
technology and, no matter where we UAE employees: 290
are positioned, everyone has a role. M/F ratio: 244/46
Paid leave: 23 days
We all feel part of a group. We show Annual job applications: 6394
this in the way we communicate Annual training hours: 53
and we make the company strategy
transparent. Development of people is
central and we foster that spirit.” and team spirit within the company.
The Microsoft career experience Latif also cites recogition
begins with a unique ‘on-boarding programmes as a motivator. “We have
road map’, where a new founded a Circle of Excellence for
employee is shadowed by global recognition of our employees
a member of the company and we also conduct local awards,
who has been there for a where our people nominate our people.
number of years. The firm This creates a sense of solidarity and
also conducts a lengthy teamwork,” he says.
hiring process, getting to Finally, the Gulf office offers a
know potential employees in- community citizenship programme,
depth and always includes a so that employees feel that they are
potential peer member in the not only commercially-orientated,
interview panel. but that they are also making a
“It’s such a large company difference to the wider world.
that we go beyond the usual “It’s important that employees feel
orientation,” says Latif that they are part of something bigger.
Communication itself Our commitment to CSR shows people
is the most salient aspect they are working for a company that
of Microsoft’s people is aware. That’s crucial,” concludes
policy. The firm conducts Latif, the first winner of the UAE’s
an extensive annual first-ever Great Places to Work list.
“Our assets wear shoes”

FedEx
H
amdi Osman knows the FedEx Osman says the most important
people policy better than factors for motivating his staff are
most, not just because he’s the empowerment, communication and
regional senior vice president but feedback. FedEx operates an open
because he’s lived it. Over 30 years door policy that the company “lives
ago, Osman embarked on a make-or- and dies by.”
break trip to the US, where he spent Another tenet of the delivery
six months washing FedEx lorries. firm’s ‘people-service-profit’ strategy
Two years later, he was a manager. is a healthy work/life balance.
And thanks to FedEx’s ‘people- “We don’t want our people to work
service-profit’ mantra, he hasn’t to death, we want to make sure
looked back since. they have no stress. So there’s no
“It is the differentiator that made surprises at any moment. When
FedEx a world-class company. you’re working as a happy team you
We hire the best and look after succeed, everyone knows a sinking
them, which makes employees ship doesn’t win.”
conscientious and motivated. The firm’s focus on diversity is also
Dedicated employees give the highest a key market differentiator and a
quality, most professional service. primary reason FedEx made it so high
Our business is about passion, on the Great Places to Work list.
we have no tangible products. Our In short, a comprehensive diversity
service relies totally on our people.
Our assets wear shoes,” he says.
“We have to make sure of the FEDEX
Sector: Logistics
consistency of the purple promise; we Founded: 1971
are renowned for our purple people. UAE employees: 440
We make our customer experience an M/F ratio: 292/61
Paid leave: 24 days
outstanding one. Leadership starts from Annual job applications: 5000
the bottom.” Annual training hours: 99
FedEx consistently outperforms
in global independent employee
satisfaction surveys because of its policy ensures you’re not only
palpable commitment to its ‘purple connecting with the community and the
people’. The firm is now the most social fabric of the country in which
successful express delivery company you’re based, your company is also able
in the world with billion dollar to mine a rich well of differing talents
global revenues. and insights. “In FedEx, there’s no
differentiation made based on
where you come from, as long
as you can communicate,”
Osman says.
“When I became a manager,
NUMBER OF EMPLOYEES my English was quite broken,
but I passed with the panel
Microsoft 290

FedEx 440
because six out of seven
Pepsi Co 200
people said I had passion
Marriott 520 and they saw my potential.
TOTAL: 9205 Merck Serono 247 They taught me and let me
The One 363 make some mistakes. We
[Link] 213
recruit around 70 per cent of
Shuaa Capital 205
our managers from within.
Zayed University 727
It shows you believe in your
Dulsco 6000
staff.”
 Top 10places
to work
“Act like a family”
Pepsi Co

H
uw Gilbert, communications most interesting about the F&B
manager for the PepsiCo Middle organisation is its work/life balance
East, Africa and Asia (MEAA), policy. Employees must always
says: “It all starts with empowerment. include one out-of-work activity
Empowered employees are motivated in their annual KPI objectives and
and energised.” they are benchmarked on them, just
Established in Dubai in 1976, as they would be a work objective.
PepsiCo MEAA runs the Frito-Lay, Gilbert says his own work/life
Quaker, Pepsi-Cola, Tropicana and balance KPI is ‘making sure he
Gatorade brands. The company’s personally drives his daughter to
ambitious mission statement school every day’.
‘to deliver sustained growth Gilbert adds that PepsiCo ‘feels
through empowered people like a family’, which he says can be a
acting with responsibility and powerful motivational factor.
building trust’ is what helped to
push PepsiCo up this
year’s list. PEPSICO
Sector: F&B
The firm has introduced Founded: 1976
‘Saad’s Blog’, which is written UAE employees: 184
by the CEO and informs the M/F ratio: 99/85
Paid leave: 22 days
staff of anything from business
Annual job applications: 237
results to CSR programmes (of Annual training hours: 10
which PepsiCo has many). But what’s

“We put employees before guests”

Marriott

I
nternational hotel group Marriott chain runs daily team briefings and
is still run by US family owner runs quarterly town hall meetings.
Bill Marriott, who believes that if “Every employee can ask questions,
the firm respects and cares for its anything they like. Managers share
employees, in turn, they’ll respect the business results and direction
and care for their guests. and seek their feedback,” he says. “We
The company even goes as far as have a programme of guaranteeing
saying that it puts employees before fair treatment where any employee
guests. “It’s just sound business can, and does, write to ask the
sense,” says Robert Dodds,VP of HR regional office, or even Bill Marriott,
for Middle East and Africa. “A better to review a perceived hardship.”
performing employee creates a better
satisfied guest who will come back.”
Aside from living the culture from
Bill Marriott ‘down to every waiter
and waitress’, Dodds is a strong ANNUAL JOB APPLICATIONS
believer in communication. The hotel
15000
12000
9000
MARRIOTT
Sector: Hospitality 6000
UAE employees: 520 3000
M/F ratio: 797/168 0
Paid leave: 25 days
Microsoft

Marriott

FedEx

Dulsco

Merck Serona

PepsiCo
SHUAA Capital

Annual job applications: 6000

Annual training hours: 40
 Top10places
work
to

“Engagement gets you out of bed”

Merck Serono
G
lobal pharmaceuticals firm sustainability of our
Merck Serono set up its Dubai organisation,” says
office in 2006, but has been Karim Smaira, the firm’s
doing business in the region for Intercontinental vice president.
over 50 years. The company places a Merck Serono Middle East
heavy focus on ‘growing’ its people was the winner of the 2009
through learning. Merck Best Pharma Award
“Our environment, where for Work Environment for
learning and experiencing on the development of the
the job are encouraged, leads to ‘Empower’ initiative – an
innovation in developing new innovative home-grown
health solutions for our customers. training programme, with
Brand recognition and loyalty topics ranging from ‘selling
is developed and ensures the skills’ to ‘emotional
intelligence’ and ‘dealing
with difficult people’.
MERCK SERONO “We focus on employee
Sector: Pharmaceuticals
Founded: 2006
engagement rather than
UAE employees: 247 motivation. Achieving
M/F ratio: 173/74 objectives is a given.
Paid leave: 30 days
Surpassing these objectives
Annual job applications: 851
Annual training hours: 100 is what employees should
get out of bed for.”

“In every person, there is a dream”

The One
H
ome furniture pioneer The across the Gulf, runs some of the region’s
One, is the highest ranking most comprehensive socially responsible
local company in the list. Self- investment programmes, from hiring
appointed chief emotional officer (CEO) challenged young adults to global community
Thomas Lundgren says it’s all about initiatives. “You have to give people a chance,
feelings. “It’s the combined energy of I don’t want a system based on KPIs, they are
the staff that charges the stores each already paid to meet those. I want empathy, I
day,” he says. “In every person there is want someone with a big heart.”
a dream – if you take care of the team, Lundgren, who has half of his employees
they take care of you.” as Facebook friends, likens employees to
Lundgren, who founded 14 stores dogs and children because of their high
sociabilty and longing for recognition.
“People are the only species more
sociable than dogs. We want to be proud
of where we work, so we can show it off
COMPANY ORIGIN to our peers. It’s simple, if you’re proud
of where you work, you do a good job.”
Locally founded International

THE ONE
Sector: Retail
Founded: 1996
UAE employees: 363
M/F ratio: 279/84
Paid leave: 30 days
Annual job applications: Not given
Annual training hours: Not given
 Top 10places
to work
“People must feel what they do matters”
Shuaa Capital

A
fter a difficult couple of years now delivers a quarterly video CEO
and management changes, update because it’s important that
local investment firm Shuaa “everybody knows what’s going on”.
Capital’s new people strategy has “It’s all part of one circle; if you
paid off. create engagement, it creates results,
The firm’s CEO, Sameer Al Ansari, which creates growth, which creates
was appointed 18 months ago and retention and then engagement,”
has put a firm focus on employee Ansari says.
engagement and training. “If you engage people then they
“I introduced the ‘One Shuaa’ feel empowered and motivated.
initiative across the organisation. People have to feel that what they do
We have five divisions but only matters. Recognition is not always
one Shuaa; the idea is that we about cash rewards.”
win together or lose together,”
he says. “We now have a strong
team culture; if we’d entered
SHUAA CAPITAL
for this award a year ago, we Sector: Finance
wouldn’t have won it.” Founded: 1979
Shuaa Capital places focus on UAE employees: 205
M/F ratio: 143/72
transparent employee communication Paid leave: 22 days
as an engagement tool. Regular town Annual job applications: 12, 456
hall meetings are held, monthly Annual training hours: 14
newsletters are sent and Ansari

“Be part of something bigger than you”

[Link]

M
iddle East recruitment website our own team. If they are well trained,
[Link] is the only dotcom to compensated and motivated, they
make the list. What impressed themselves will admire and respect the
the researchers about this company organisation they are part of and are
was the organisational belief that more likely to ensure that the world
employees perform best when they are around them does the same.”
‘part of something bigger than them’. [Link] also cites the sense of
“The measure of our success is forming meaningful relationships
the degree to which people’s lives and a perceived sense of destiny
are positively touched through their and progress as critical employee
interaction with us. This applies to all motivation factors.
our stakeholders,” says Rabea Ataya,
CEO of [Link].
“We feel that people will only
‘respect and admire’ us if we help
them lead better lives. This starts with HOURS OF TRAINING
100
80
60
[Link]
Sector: Technology 40
Founded: 2000 20
UAE employees: 213
M/F ratio: 116/107 0
Merck Serona

FedEx

Microsoft

Marriott

Zayed University

Dulsco

PepsiCo
SHUAA Capital

Paid leave: 22 days

Annual job applications: Not given
Annual training hours: Not given
 Top10places
work
to

“We have a higher purpose”

Zayed University
C
urrently serving around 3,000 around our mission. This creates a sense
students, the Emirati college of community and governs everything we
is the only government- do. It is a huge goal,” says Daniel Johnson,
organisation to make the list. What provost, Zayed University.
sets the university’s working culture “It’s not just about policies and
apart is the school’s namesake procedures, it’s something that’s
Sheikh Zayed bin Sultan Al Nahyan, innately understood – and that flows
the country’s first president. The from the vision of the Sheikh
late leader’s passion for learning Nahyan. We feel like we have a
permeates the organisation’s mission higher purpose which improves
statement to become the leading employee motivation.”
university in the region. “Everything He says the university
we do at Zayed University revolves places emphasis on respect
and diversity as workplace
values, which is reflected
in the organisation’s
ZAYED UNIVERSITY
Sector: Education retention rates, international
Founded: 1998 employees and female staff
UAE employees: 727 count.
M/F ratio: 356/371
Paid leave: 40 days for senior staff
(The university’s vice
Annual job applications: Not given president Dr. Sulaiman Al
Annual training hours: 40 Jassim is pictured, right.)

“People trump economics”

Dulsco
W
ith 6,000 employees, local courtesy, effective two-way communication
firm Dulsco is the largest between management and employees,
company on our list and is emphasis on individual initiative and team
also the longest-established in the work,” insists the firm’s chairman Abdul Aziz
UAE. The company’s core business is Mohammad Khan.
HR solutions and waste management He says that companies that have failed in
solutions, which goes some way the UAE made the mistake of focusing on the
to explain Dulsco’s adeptness at economic activity of producing goods and
managing its own people. services at the exclusion of people.
“Our people strategy has been “They forget that an organisation’s true
guided by honesty and transparency, nature is humans who need to live and
continue for many generations, even with a
commercial objective.”
Dulsco believes that autonomy and a good
working environment are just as important
THE GENDER SPLIT for employee motivation as money.
6000
5000
Male
4000
Female
3000 DULSCO
2000 Sector: HR & Industry
Founded: 1935
1000
UAE employees: 6000
0
M/F ratio: 5414/163
Microsoft
FedEx
Marriott
PepsiCo
Merck Serono
THE One
[Link]

Zayed University
Dulsco
SHUAA Capital

Paid leave: 30 days

Annual job applications: 1200
Annual training hours: 20
FEATURES ENTREPRENEURSHIP

Hundreds of entrepreneurs pitch their

business plans to possible investors
and business partners at the Intel
Capital CEO summit.

Show me the money

KAREN REMO-LISTANA looks into the precarious world of start-up funding and
the role they play in shaping the future global business landscape.

S
itting quietly in a to address advertising on social media. a venture capital firm which placed
spacious hotel lobby, Every month boo-box displays 600 a seed capital of $300,000. Last year,
in Huntington Beach, million ads with product offers and Intel Capital also invested in it.
California, Marco advertising campaigns in over 13,000 “My parents did not like it at
Gomes – wearing websites for 31 million people in Brazil. first,” Gomes tells Gulf Business in
thick black specs, Like Bill Gates of Microsoft and a veranda overlooking Huntington’s
jeans and sneakers Mark Zuckerberg of Facebook, Gomes surfing district. “I had to go to Sao
– seems to be out of dropped out of university to pursue Paulo to be noticed by venture
place in a 500-plus gathering of high- this project when he was 22, and capitalists. I used to pay bills using
level techno geeks. But the Brazilian is through the pro-bono help of friends my credit cards. I can still hardly
not your ordinary boy next door. and family was able to finish the believe where I am now.”
At 24, he has founded boo-box, the prototype. His project eventually got But not everyone is as lucky as
first technology-based player in Brazil the attention from Monashees Capital, Gomes. Omar Onsi had to incur “awful

54 gulfbusiness January 2011

 successful business models and track Arvind Sodhani, president of Intel
records,” says co-founder Jimmy Capital and Intel executive president.
Grewal. “For start-ups, you are usually Citing robust performance by
funded by family, friends, angel Google, Apple, Microsoft, IBM and
investors and venture capitalists.” Oracle, he said technology has been the
So the fact that these companies driving force of the world’s economy.
have received financial injection from “Innovation thrives all over the world
Intel Capital – the venture capital arm and we want to foster that. Innovative
of the world’s largest chipmaker – is a minds do not stop inventing just because
dream come true. there is a recession,” Sodhani added.
To date, Intel Capital has invested Currently, Intel Capital has eight
$247 million in 98 companies, 35 per portfolio companies – four from the

Marco Gomes, founder of boo-box. Amjad Tadros, founder of ShooFee TV.

losses” in previous businesses and sell cent of which are outside the US. This UAE (Conservus International, Pulse
commercial and personal assets before is just under the 102 deals worth $327 Technologies, NeuString, and Vertex
finally setting up Splendor Telecom in million it made last year. However, Animation Studio) and two each from
Lebanon, which finally broke-even last exits made last year jumped from 15 Jordan (Jeeran and ShooFeeTV) and
year. “Entrepreneurs are born,” he says. to 29, where 12 are IPOs and 17 are Lebanon (Nymgo and Berytech Tech
“You need to have lots of persistence acquisitions. From 1991 to 2010, the Pole). But there are thousands of other
and you should not be afraid to fail.” company has invested $9.7 billion in small businesses looking for partners
Rabih Nassar, founder of Lebanon’s 1100 companies in 48 countries, of like Intel. In the UAE alone, as many
Element Company, has faced three which 450 have been exited. as 230,000 enterprises in the UAE fall
bankruptcies. “It takes years to grow The company has the capability under the SME category and together
a company and now that there’s to swoosh cash in an instant, but is they constitute a revenue pool of over
downturn, it’s more difficult to win nonetheless selective. The $50 million $1.2 billion, which is growing annually
clients and obtain funding,” he says. Middle East and Turkey fund, for by 25 per cent.
UAE’s Pulse Technologies, which example, was set up four years ago but Over 90 per cent of the businesses
builds automation systems for only began to invest in 2009. The fund in the GCC are SMEs and according
property and hotel developers, has is still not yet fully invested and no to Regus who surveyed 5,000
been hit by the construction and real exits are imminent. entrepreneurs in 78 countries, the
estate slowdown in Dubai and learned “What we are looking for in the SME sector will be the main source
that obtaining funds from the banks is Middle East region are companies of employment growth. Two fifth
simply impossible. that will help adopt applications and of entrepreneurs (40 per cent net)
“It is not the role of banks to lend serve the needs of consumers and surveyed said they intend to increase
to start-ups as they are looking for enterprises specific to that region,”says headcount in the next six months.

January 2011gulfbusiness 55
 FEATURES ENTREPRENEURSHIP

However, a recent report by the Abdulrahman Al Suwaidi, an Emirati

Union of Arab Banks and the World who proposed the Autopix concept
Bank showed that Middle East-based where credit card-size brochures
SMEs currently receive a mere eight will be placed in a network of taxis
per cent of regional bank lending, and to promote UAE services to tourists
GCC-based SMEs receive just two per and residents won the Manchester
cent of all bank lending. Innovation Award for Emiratis 2010.
To ease up lending for this sector, Aspiring fashion entrepreneur
the UAE is set to finalise its SME law and American University of Sharjah
in the second half of this year. The graduate Yahya Stapic will finally
credit bureau is also expected to relax open his retail concept in April after
banks’ stringent lending policy. But winning Al Tamimi Investments’
more needs to be done, especially in The Big Start student entrepreneur
equity financing, Ahmad M. Al Sari, competition last year.
executive partner at Riyadh-based The ideas of this region’s students
Malaz Capital, says. have also reached San Francisco,
“While loan-based financing is the world’s centre of innovation
essential to the survival of SMEs, it and technology development, which
does not actively promote innovation has also become a major cluster of
and entrepreneurship nor accelerate Flip Video founder Jonathan Kaplan social entrepreneurship. Three out
economic diversification and job speaking to Dubai Women’s College of the 28 participating teams in the
students.
creation,” Al Sari explains. 2009 Intel + UC Berkeley technology
Because the party providing the a business in what could have been Entrepreneurship Challenge, came
capital is a partner, his posture is done in three days in Singapore,” from this region – Saudi Arabia, Egypt
naturally different. He needs to ensure a food business entrepreneur says. and Lebanon.
the viability of the enterprise before “The regulation is also out-dated. My The enthusiasm is certainly
committing his money. friend’s business is nowhere in the list building. But in the real world, it
“Once convinced, he will offer any of the categories so it took ages for must be understood that a handful
relevant knowledge, connection, the registration to be finished.” This of entrepreneurs are not yet making
resources and, of course, the capital. is despite the fact that 11 out of 18 profits despite years of operations.
He will ensure the establishment economies in MENA implemented 22 “Our main aim is to grow a company
of a viable governance process business regulation reforms, according and not to be profitable immediately,”
without impeding the ability of the to the IFC’s Doing Business 2011 report. says Amjad Tadros, founder of ShooFee
entrepreneur to manage the business In addition to interactive TV. “We can aim to break even right
effectively,” Al Sari adds. workshops and networking – away, why not? But that defeats the
Although there is a dearth of which include investment pitches purpose of growing first the company
equity financing for SMEs, there are – the event featured the launch of to make it financially sustainable.”
signs that the region is beginning to Riyada Enterprise Development, a It goes without saying that betting
ponder the idea. In November, more $500 million investment platform on start-ups has never been easy. Under
than 1,000 entrepreneurs, business exclusively dedicated to supporting normal circumstances, a third of SMEs
leaders, finance providers and SMEs across the region. do not make it in the business world.
creative professionals from across the The last few months also saw But there are many notable ones who
Middle East, North Africa and South academias jumping into the have succeeded. Intel Capital has make
Asia region gathered in Dubai for a entrepreneur bandwagon. Jonathan successful investments in WebMD in
“Celebration of Entrepreneurship”. Kaplan, senior vice president and the US, Canada’s Research in Motion
During the two-day event, general manager of Cisco Consumer and Sweden’s MySQL. All it takes is a
entrepreneurs shared their hopes and Products and the person behind the little bit of risk taking. And who knows?
frustrations in opening or operating a Flip Video camcorders, treated Dubai The existing Apple and BlackBerry hype
small business in the region. Women’s College students with may soon be replaced by Middle East’s
“It took me three months to register anecdotes of his entrepreneurial journey. very own olive or dates technology. ■

January 2011gulfbusiness 57
PROFILE TELECOMS

58 gulfbusiness January 2011

 PROFILE TELECOMS

Smooth operator
Telecoms veteran Osman Sultan, CEO of du, talks to KAREN REMO-LISTANA
about taking on Etisalat and growing profits.

T
he news that its three years of operations, a target he’s per cent year-on-year while Ebitda for
rival’s revenues pleased to say was achieved. the period rose 76 per cent.
have been smarting “I’ll tell you our brief history,” he “It’s not a secret that the growth
since du started its says. “Du was registered on January will be slowing down because of the
operations did not 1, 2006, got its license on December levels of penetration. As you know,
come as a surprise 12, 2006 and started mobile service on the UAE is now the most penetrated
to Osman Sultan. February 11, 2007. After exactly three country in the world in terms of
It is, after all, an years, in February 2010, we were close use of mobile services. But top line
unavoidable consequence of the to 34 to 35 per cent and by August we growth will continue in double-digits,
country’s decision to accept another had 37 per cent of the market share.” that’s for sure,” he says.
player in the telecommunications This growth was achieved while the Sultan’s well-calculated strategy is
market after 20 years of monopoly. world stumbled into a deep recession a reason why Etisalat saw a reduction
The bleeding is not expected to stop beginning in the second half of 2008. in revenues and also why it warned
as Sultan, the man behind the UAE’s Telecommunication experts agree that investors that stiff competition could
second telco, is hellbent on continuing to it is during turbulent times that the cause the group to lose customers,
acquire new mobile phone subscribers telecom sector becomes more robust fail to attract new customers or
until du achieves parity with other because crises make communication a incur increased costs to maintain its
players over the next two years. staple commodity. customer base.
By the end of August 2010, du However, Sultan does not like to In a bond prospectus, Etisalat said
had more than four million active find glory in just growing subscribers its mobile average revenue per user
subscribers and an estimated 37 per within a saturated market. Instead, (ARPU) has been in steady decline
cent market share of active mobile he wants to focus on growing du’s over the past three years, from Dhs176
subscribers, a number which it aimed Ebitda and net profit against a for the year ended December 31,
to boost to 40 per cent by end of 2011. shrinking space. 2007, to Dhs118 for the nine months
“I actually won’t be doing my job “In the first half of 2010, we grew our ended September 30, 2010. This is
if we don’t have parity with other top line by 30 per cent. I would guess still eight per cent higher than du’s
players,” Sultan tells Gulf Business. that 2010 compared to 2009 will be Dhs109 ARPU, however, du’s own has
“We have the talent and we now have less than this, but we will still see very threaded up five per cent from Dhs104
the full infrastructure, but we are good double-digit growth,” he says. a year ago.
realistic people so this will happen in Despite a mobile penetration of The squeeze in ARPU has been
the coming two to three years.” more than 200 per cent in the UAE, brought on by the competition, which
Sultan possesses a refreshing no du continues to register double-digit according to the Telecommunication
non-sense outlook. In an interview with growth. The upbeat trend in the first Regulatory Authority (TRA) has
Gulf Business in 2006, he vowed to half continued in the third quarter, successfully pushed down UAE fixed
reach 35 per cent market share after with du posting revenue growth of 31 telephony international calling prices by
up to 70 per cent; mobile subscription
charges by 65 per cent; and national
calling price by 50 per cent.
Osman Sultan Chief Executive Officer, du TRA data also showed that mobile
Sultan joined du in January 2006 after spending eight years at the Egyptian Company for Mobile Services roaming prices have dropped by up
(MobiNil), a company he helped set up and develop in 1998, to become the first Mobile Telephony to 70 per cent for certain destinations
Operator in Egypt. He joined the France Telecom Group in 1983 and for the next 11 years worked in with substantial reductions in
management positions. In 1995, he was appointed president of a US-based subsidiary Questel Orbit Inc.
broadband packages.

January 2011 gulfbusiness 59

PROFILE TELECOMS

In addition, more than 2,000 special

packages have been registered with
the TRA over the past three years as
operators attempt to win customers
by bringing down prices and offering
more attractive deals. According to
Arab Advisors Group, however, the UAE
still has the fourth most expensive
ADSL rates in 19 Arab countries.
Customers are also not convinced
that real competition is in evidence,
judging by the shareholders of the two
telcos. Both Etisalat and du are largely
government-owned with the former
owned 60 per cent by the government
while du is owned 39.5 by the UAE
Federal Government, 19.75 per cent by
Mubadala Development Company, 19.5
per cent by Emirates Communications
& Technology Company LLC and the
remaining stake by public shareholders.
In the fixed line service, both
operators have their own exclusive
territory. In other words, customers
don’t have a choice of service provider.
Sultan says du’s market share in
the fixed telephony is “not significant”
because of the current set-up. The
company has foothold in Tecom,

CURRENT CAPITALIZATION (MILLIONS OF USD) Media City and Internet City but lacks processes by the end of December 2009.
presence in other parts of the emirate. Under the process called local loop
Currency USD
“For fixed line, we just offer unbundling, the regulatory authority
Share Price as of Dec-07-2010 $0.8
service in one area exclusively,” he forces the incumbent to separate
Shares Out. 4,571.4
explains. “So we can’t talk today of bundles of subscriber lines from
Market Capitalization 3,671.7
a duopoly. What we have are two the incumbent network, and leases
- Cash & Short Term Investments 679.3 the subscriber lines to new entrants
monopolies, but, of course there
+ Total Debt 1,020.4 are heavy discussions in order to or service providers at low cost, so
+ Pref. Equity - share infrastructure and open the that the latter avoids building a new
+ Total Minority Interest - competition truly in the UAE. That is network from scratch at high cost.
= Total Enterprise Value (TEV) 4,012.8 the case in broadband, too.” But as of today, no final agreement
Book Value of Common Equity 1,137.3 Last year, the TRA said unbundling has been reached and Sultan blames
+ Pref. Equity - the local loop or sharing of the technical challenges for the delay.
+ Total Minority Interest - infrastructure was already under “On fixed service, it will be a slower
+ Total Debt 1,020.4 discussion between the two operators, ramp up,” he says. “I was a little bit
= Total Capital 2,157.7 with an aim to finalise all technical optimistic saying that in 2010 we will

du’s active mobile subscribers year-on-year:

Q3 2008 2.1 million

Q3 2009 3.1 million

Q3 2010 4.1 million

60 gulfbusiness January 2011

see some kind of progressive commercial availability. In >Wc7ViijiV<ViZ=diZa
DeZgViZYWnBŽkZce^X`=diZahGZhdgih
2011, we will see some positive news hopefully.”
Although fixed line services are suffering on account of I]^hÒkZ"hiVgajmjgn]diZa^h^YZVa[dgk^h^i^c\Wdi]9jWV^VcY6Wj9]VW^#
increased shift of customer base to the more convenient 8ZcigVaanadXViZYWZilZZcWdi]^ciZgcVi^dcVaV^gedgih!>Wc7ViijiV<ViZ=diZa
mobile voice services, Sultan believes the segment, together d[[Zghi]ZWZhid[Wdi]ldgaYh#I]Z]diZa]Vh(.+gddbhVcYhj^iZh!hdbZd[
with mobile services, will push its top line higher. Today, l]^X]VgZ("lVn^ciZgXdccZXi^c\VcY^YZVa[dg[Vb^a^Zh#L^i]VX]d^XZd[-
gZhiVjgVcihVcYWVghVcYV[jaahZaZXi^dcd[[VX^a^i^ZhVindjgY^hedhVa!ndj]VkZ
mobile operations comprise three-quarters of du’s revenues.
VaandjcZZY[dgVcZc_dnVWaZhiVn#H]dee^c\^hVkV^aVWaZVii]ZVY_VXZci>Wc
Meanwhile, geographical expansion is off the drawing 7ViijiVBVaaVcYi]ZWZVX]Zhd[i]ZEVab?jbZ^gV]VgZ_jhib^cjiZhVlVn#Id
board. “I don’t think going outside the UAE will get us any ÒcYdjibdgZdgidbV`ZVgZhZgkVi^dc!eaZVhZXdciVXii]Z]diZaY^gZXiandc/
value,” he says. “We don’t have the financial capabilities, .,&))))%%%%!]diZa#YjWV^#^WcWViijiV5bdZkZce^X`#XdbdgXdciVXindjg
the playground is very crowded, we have Etisalat, STC, igVkZaV\Zci#8Vaaidaa[gZZ[gdb/i]ZJ6:-%%).()!7V]gV^c-%%%&..&!@H6
-%%&')'.'.!@jlV^i'''*(''-VcYFViVg-%%'%%&#
Qtel, Zain, Orascom.” Whatever capital the company has,
was used to strengthen its infrastructure. In October, the
company entered into a $255 million financing agreement
lll#bdZkZce^X`"]diZah#Xdb
with The Export-Import Bank to repay short-term debt and
roll out third generation telco technologies.

6ldgaYd[ldcYZg
While in September, it entered into a $207 million
financing agreement with KfW IPEX-Bank GmbH,
facilitated by Nokia Siemens Networks. In June, it
completed a follow-on equity offering in the amount of
Dhs1 billion. VcYajmjgn#
Sultan says at the moment, the company has already
raised significant funding and is not looking at additional
funds in the near-term. “There are no plans today. We will
look at different options and why we need to raise these
financials in due course,” he says.
In terms of capital expenditure, du may not be able to
reach the Dhs2.2 billion levels it had earlier earmarked
for 2010. “If you gain some efficiency in some spending,
you spend less,” he says. “We will do what’s right for du to
sustain its growth and it doesn’t matter if we spend 10 per
cent more or 10 per
6,000 cent less than the
Not Liability Total Liability initial guidance.”
5,000
Common Equity Market Capitalization Acknowledging
4,000
its limited
3,000 financial muscle,
2,000 the company
1,000 continues to
explore various
0
Market Cap TEV Total Capital revenue streams.
Last year, it
launched Anayou, a product of the du Media Lab, which
has now been spun off as a separate company. It features
entertainment, gaming and sports content in Arabic,
English and French.
“We cannot compete outside our borders but I believe
that there is this digital space,” Sultan says.
“We launched the portal called Anayou, from ana
which means me in Arabic, which has the ambition over
time to become a major portal destination for the whole
Arab world.”
He admits commercial value “will take time… but this is
where the future is heading so we should be in this space.”
Hearing it from the instinct of a telco veteran, he must
be right. ■

MP0137-IBG Room Promotional ad 245x88mm_GulfBusiness_V1.indd 1 12/20/10 [Link] PM

January 2011 gulfbusiness 61
PROFILE DHL

62 gulfbusiness January 2011

 PROFILE DHL

Pass the parcel

Hermann Ude, CEO of DHL Global Forwarding and Freight, tells
ALICIA BULLER about his ambitious plan to reduce logistics costs for
emerging markets by 30 per cent.

A
s the world increased from a third to over 50 per many documents to be completed in
continues on its cent, making international trade the order for a shipment to be exported,
inexorable path most important driver of economic compared to the firm’s Asia Pacific
towards true growth and rising living standards. headquarters in Singapore and many
globalisation, However, inefficient logistics in many OECD countries. BRIC countries also
trade-linked economies are still a road block to carry out ten times more physical
firms will feel trade growth,” he says. inspections than best-in-class
the immediate “As a result, paperwork can be the countries and are prone to insufficient
benefits. But some countries are set to single most time-consuming element port capacity and poor roads which
gain more than others, according to in the life of a shipment, with days push transport costs up.
DHL’s CEO of Global Forwarding and lost and costs increasing as products With emerging economies growing
Freight Hermann Ude. For emerging spend more time in the warehouse two or three times faster than
markets to reap maximum economic than on the move.” developed countries, by gently
growth, the logistics veteran says Speaking as DHL’s new research cajoling the BRICS and other
leaders must decrease administrative report Enabling Trade and Higher developing markets to streamline
blockages and upgrade infrastructure Standard of Living is unveiled, Ude their logistics, DHL is also bolstering
– starting now. is steeled by the certainty of the its own company strategy for 2015
“Over the past 30 years, world fresh facts. The statistics show that which focuses on ‘unlocking organic
trade as a percentage of GDP has BRIC countries require twice as growth’. After all, better logistics
means better trade, better GDPs and
better profits for all.
Ude says that emerging economies
Hermann Ude is CEO of DHL Global Freight can reduce logistics costs by 30 per
cent and transit times by 65 per cent
Forwarding and Freight Member of the Board by 2020 if best practices are applied.
of Management of Deutsche Post AG. Six per cent of the savings will come
from improved infrastructure, while
Ude joined the firm in 1998 as director of corporate organisation. When he’s not masterminding
worldwide deliveries, he can be found in his garden listening to classical music. improved transit times means 20 – 40
per cent more trade could be generated.

January 2011 gulfbusiness 63

PROFILE DHL

The CEO is particularly excited by

projections for growth in the Asia DHL headquarters.
region. DHL research points to three
trade triangles centred on Asia which
is expected to contribute nearly 20 per
cent of global trade by 2015, reaching
a full 40 per cent share by 2028. The
logistics giant has outlined the Intra-
Asia (IA) triangle and the Middle East-
Africa-Asia (MEAA) triangles as being
compelling engines of global growth.
The MEAA triangle is set to
comprise 14 per cent of global trade
by 2028 and will emanate from
China’s trade with South Africa,
Saudi Arabia and the UAE. This will
be driven by China’s imports of raw
materials and exports of textiles,
machinery and metal products. India’s
contribution to growth within this
triangle is also sizeable with similar
raw material imports.
“The big growth is Asia, this is
where the middle class is growing
and it is based on exports. If you look
at the focus that China puts on Africa,
where they want to get control of
access to natural resources, it makes
sense. On the one side, China wants
to build the infrastructure of Africa
in a big way; telecoms, for example.
There are also a lot of export flows
into Africa and a lot of that also goes
to the Middle East. Dubai has a major
role as a hub,” Ude tells Gulf Business.
“On the other hand, the Middle East
is a growing place for consumption.
The construction and energy sector is
driving some of the region’s growth.

International Trade as % of World GDP

It’s sometimes easier to move something
from China to South Africa than it is to 55

move something across the Middle East. 50

45
However, it is largely Asia, which has presence in 220 countries worldwide
little resources, that is making the and around 300,000 employees, 40
lanes to Africa and Latin America DHL raked in around $61 billion
grow so fast.” in revenue in 2009 and hopes to 35
DHL, part of German company continue with this year’s double
30
Deutsche Post DHL, is well digit growth in all its divisions. Ude
positioned to home in on the predicts that a sizeable chunk of 0
astonishing growth in trade levels ensuing profits will be generated in 1985 1990 1995 2000 2005 2010E
in the coming decades. With a the Middle East. Source: World Bank

64 gulfbusiness January 2011

 “The region is very important to us; of cargo moves from Asia to Africa DHL UAE in 2009
we have a presence in most countries and then if you move to Dubai you can
t Over 2.5 million
but in some countries we still operate consolidate it to Europe. A lot of cargo
shipments handled
with agents, we have an agenda moves from Asia to Europe, Europe
to make sure we have a complete into Africa,” he says. t More than 75, 200
tonnes handled
presence wherever we work. When Iraq Ude adds that for a country to
comes back we will get in there and streamline and optimise its trade t 1,800 employees
the same for other markets,” he says. operations, there must be a synergy t More than 165 vehicles
“It is a focus market; we will engage between the government and logistics t 33 locations
more in the oil and energy sector; we organisations. To this end, Dubai
t 105 daily commercial flights
will also engage significantly more in holds up logistics as one of its key
the intraregional trade linking Turkey value propositions and this has t More than 170, 000 metres of
and the Middle East with Europe. We directly led to its success as the warehouse space.
will also have a high density trucking main hub of the region. “They have
network in the region, this is one of an aligned country agenda, at the Ude evens goes so far as to blame
the things we are working on.” forefront of their proposition is ‘how India lagging behind China
According to the CEO, Dubai will be do we make it easier for companies to in part on logistics and says most
pivotal to the Middle East’s success work with our country?” trade with India globally is
as a trading hub and is the region’s Unfortunately, the CEO says managed via Dubai and Singapore
model example of efficient logistics, that elsewhere in the Middle East because of the country’s crushing
minimal lead times and red tape. network there can be problems with administrative procedures.
“India is one of the most difficult
places to trade, it is a big problem.
The Middle East-Africa-Asia triangle will The infrastructure is mixed and is
comprise 14 per cent of global trade by not good, there are some serious
issues. If you want to move cargo
2028 and will be driven by China. at every border crossing you have
a customs procedure. The little
“Along with the fact that Dubai is queues and costly, time-draining degree of alignment between the
in the middle of the ‘Y’ between Asia, administrative procedures. bureaucracies is holding India
Europe and Africa, which gives it the “By the Saudi Arabia causeway, back against China. This is already
opportunity to be a very large trade let’s say you want to get newspaper stunting its economy, India would
hub for key regions, the emirate has in big rolls, from one side of KSA to grow much faster otherwise.”
had a regime for many years now to the other, the time it takes and the And this is why DHL is pushing
be extremely administrative light, effort it takes is consuming. Some of its emerging markets efficiency
to have a mindset to facilitate trade the countries need to work on agenda; without the right
and that has created this enormous the lightness of their administration. infrastructure, administrative
connectivity with cargo and vessels It’s sometimes easier to move efficiency and security procedures,
and aircraft coming to Dubai. A lot something from China to South countries with vast reserves of
Africa than it can be to move educated and entrepreneurial people
On average, BRIC countries require twice as something from one side of the creating exceptional products are
many documents to be completed in order for Middle East to the other,” he says. in danger of literally slowing their
a shipment to be imported or exported
“For competitive logistics and global trajectory – and that of
15
infrastructure, the key thing is logistics companies.
Export Documents connectivity. How do you create A country can have all the brains,
12
Import Documents connectivity? You have to be cheap, minerals and oil in the world, but if
competitive and admin-light. You have your partners can’t reach you, they’ll
9
to be reliable and stable. And once you reach out to your nearest competitor.
have connectivity, the second most In a period when the world’s
6
important thing is again connectivity – emerging countries are vying for the
if I cannot move my cargo worldwide, I lion’s share of global growth and
3
am not interested. If you employ paper international trade accounts for over
pushers who work with many other half of the world’s total GDP, efficient
0
Brazil Russia India China Singapore government administrations, it is a connections are no longer simply
Source: World Bank major inhibitor.” important, they are now do-or-die. ■

January 2011 gulfbusiness 65

FEATURES WATER

When will water run out?

The world is perilously close to drying up in the next decade and Gulf water
policy needs urgent prioritisation, writes RYAN HARRISON.

I
t may not feel like it, but the of the region and in the Arab world of more than 6,000 cubic metres per
worst water crisis in the Middle in general, already one of the driest capita. Supply per capita has plunged
East is here. And it’s here to stay, regions on the planet, countries will to only a quarter of its 1960 level.
according to most environmental tip into severe water scarcity as early William Rees, the University of
experts. So much so that when as 2015, according to a recent report British Columbia economist who
things get bad in the coming by the Arab Forum for Environment developed the notion of the eco-
decades, it will be enough to and Development (AFED). footprint, offers a grim vision of
make the recent downturn look By then, people living in the region climate change where the world is
like a mere economic blip. will have to survive on less than 500 dangerously warmer and drier.
Freshwater supplies are cubic metres of water a year each, or “Imagine a four celsius degree warmer
approaching a critical point in much below a tenth of the world average world, which some say is increasingly

66 gulfbusiness January 2011

 FEATURES WATER

“Should this unfold, the only upside FRESHWATER MELTDOWN

is that the region would be ideal for
solar collector arrays if civilization
survives the displacement and
migration of hundreds of millions of
G lobally, discussion of climate
change has focused on rising
temperatures, which in and of
people and the resultant geopolitical themselves aren’t a threat and have
chaos,” he says. some positives (such as lowering
Although Rees admits that such winter heat demand). As UCLA
a doomsday scenario is based on geographer Laurence Smith shows
a climate system that is complex, in his important new book The World
increasingly hard to predict and in 2050, nearly all our globe’s surface
riddled with extreme weather events, freshwater is in glaciers and snowpack.
such as the record heatwave in Warming is causing “more of the
western Russia and the historic floods world’s water to leave the mountains to
in Pakistan this summer. run to the sea,” warns Smith, and “no
However, he added, at the very least: amount of engineering” can reverse
“The probability of increasing, or even this loss in the short-term.
permanent, drought in at least parts of
the Middle East is on the table as part into operation next year. It comes as
of the generalized human forcing of Riyadh-based investment bank NCB
global climate change.” Capital said the kingdom needs $33.3
In the coming decades, rapid billion in investments in desalination
population growth will further and water recycling plants.
stress water resources in the region. The country gets about 100
According to UN projections, the Arab millimetres (four inches) of rain a
world, which has a current population year, and most of that evaporates
of 360 million, will multiply to nearly due to temperatures that can reach
600 million by 2050. 50 degrees Celsius (122 degrees
This has led governments in the Fahrenheit) in the summer.
Gulf to pump billions of dollars Like other Gulf states, the Saudi
into improving and expanding government is also studying raising
water networks. For instance, Saudi tariffs on consumption to better
Arabia has increasingly reached conserve water. The government
out to the private sector to manage revised electricity rates in July.
water projects to conserve resources The AFED report said: “Without
likely by the end of the century. It’s a and ensure consistent supplies as fundamental changes in policies
place where the entire Middle East – as population growth spurs demand. and practices, the situation [in the
well as India, China, much of Africa and National Water Co, Saudi’s state Arab world] will get worse, with
South America – are projected to become owned utility, recently announced it drastic social, political and economic
uninhabitable deserts. will put projects costing $800 million ramifications.”

ACUTE GULF SHORTAGES WITHIN 15 YEARS

T he Arab world has five per cent of

the world’s population, but only one
per cent of its renewable fresh water.
and seawater intrusion in coastal areas.
According to delegates at last month’s
World Economic Forum summit in Dubai,
and Water, told members of the
Federal National Council: “Water is …
considered the primary challenge in
Agriculture consumes 85 per cent the Middle East will face acute water the UAE.” Agriculture was one area in
of Arab water use, compared with a supply pressures in the next 15 years, which water use needed “a fundamental
world average of 70 per cent. Irrigation with consumption in the region projected rethinking”, he said.
efficiency is only 30 per cent, against to increase by 50 per cent. Rapid urbanisation, industrialisation,
a world average of 45 per cent. Meanwhile, the region’s population is energy production and agricultural
Groundwater is over-exploited, projected to grow by 4.5 per cent this year. activity in the region have led to water
leading to significant declines in In November, Rashid Ahmed bin overuse and intense competition among
water tables, pollution of aquifers Fahad, the UAE’s Minister of Environment countries for available water resources.

January 2011gulfbusiness 67
FEATURES WATER

Global Distribution of Water Scarcity (2000)

Source: GWI (Courtesy of BWA Additives)

demand in countries where there is

Agriculture consumes 85 per cent of no access to potable water; and there
Arab water use, compared with a global is also demand in countries that have
growing populations and limited
average of around 70 per cent. potable water resources,” said Turgeon.
BWA creates and dispenses
Agriculture consumes 85 per cent Therefore, the desalination industry chemicals that help with the
of Arab water use, compared with a is expected to grow 15 – 20 per cent desalination process – including
world average of 70 per cent. Irrigation per year for the projectable future, said descaling, cleaning and corrosion
efficiency is only 30 per cent, against a Paul Turgeon, president at BWA Water inhibiting technology.
world average of 45 per cent. Additives, a water treatment specialist. He added: “We work closely with
Groundwater is over-exploited, He said there is an increasing manufacturers in the desalination
leading to significant declines in demand for potable water (or drinking process. The demand for reverse osmosis
water tables, pollution of aquifers and water) globally, and in the Middle East is growing. The demand for thermal is
seawater intrusion in coastal areas, this demand is high and growing fast. growing, even though the costs are high,
AFED said. More than 43 per cent of “There are two methods of it is desirable in the Middle East region
wastewater is discharged raw, while desalination. First, there is thermal, because of access to fossil fuels.”
only 20 per cent is reused. which is fossil-fuel intensive and Concerns about the general state of
Meanwhile, the Arab world has five is favoured by the Middle Eastern water in the region were heightened
per cent of the world’s population countries. Then there is the reverse- last month, when experts cited by
but only one per cent of its renewable osmosis technique which is popular in CNN said Yemen could be the first
fresh water, so several Gulf states Australia, China and the US. nation to completely run out of water
rely heavily on desalinated sea water, “Growth in industries, agriculture in a few years, a prospect that does
accounting for more than half the and population is fuelling the global not bode well for its young population
world’s desalination capacity. demand for potable water. There is of 24 million that is expected to
double in 20 years.
In Sana’a, which could be the
GOVERNMENTS NEED TO TALK world’s first capital city to go dry, the
population is growing at a rate of seven

A damning report from the Arab Forum

for Environment and Development
recently heaped pressure on Gulf states
shortcomings: water institutions are
fragmented, water legal systems are
deficient, public water budgets are
per cent per year as people flee from the
parched outer reaches of the country.
So while the threat of scarcity may
to act to handle the water crisis. It said constrained, water policies are divorced not be as rapid or intense as the
the challenge could be solved by effective from sound science, water investments are recent financial upheaval, the looming
government and better management. poorly targeted, funding and regulations for crisis is slowly but surely sneaking
But, as the final conclusion of the report pollution control are insufficient, controls up on the Middle East. Governments
summed up: “The root of the Arab water over proper aquifer use are lacking, and should remain on high alert in their
crisis is a set of political and management water prices are artificially low.” efforts to limit any damage from the
coming decades’ water torture. ■

68 gulfbusiness January 2011

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F LIFESTYLE TRAVEL

Veiled in
Venice
The 18th century spirit of the Venice Carnival
comes to life when you don your own mask
and costume, writes Adrian Mourby.

M
y wife came rushing in. “Come on! Come on! There are
people in costume.”
We had spent a rather damp Saturday morning shopping
in Venice and returned to have lunch on our hotel’s terrace with its
view over the Grand Canal. So far Venice had seemed very much its
usual splendid self, apart from a stage that had been set up Piazza
San Marco. Now, however, people were appearing on the streets in
carnival costume and Kate was keen to join in.
My own outfit was pretty straight forward, an 18th-century
gentleman’s frock coat and knee breeches, worn with a tricorn hat
and a large white “bauta” mask. Kate’s was more complex. As her
dress required panniers that effectively tripled the width of her hips,
she had to learn to step sideways into the lift.
We’d been to the world-famous Carnevale before, but only as
spectators. It was finding that our local fancy dress shop in Oxford did a
very good line in period costume that gave us the idea to take part. This
way we didn’t have to pay Venetian hire-prices to be part of the fun.
As soon as we emerged like Mr & Mrs Casanova out for a stroll,
we attracted a lot of attention. As we crossed the San Moise bridge
people stared and photographed us. One woman came alongside to
take our picture, but we kept on moving so she gave up. We felt we’d
let her down. I noticed other costumed revellers paused whenever a
photographer drew near so we did the same. Noblesse oblige. Passing
Caffé Florian, one tourist thanked us for posing and Kate replied
“You’re welcome”. The poor man looked quite disappointed. I think he
imagined we were real Venetians. Thereafter we just inclined our heads
silently, yet graciously, whenever people got out their cameras.
At the Hotel Danieli we’d bought tickets for hot chocolate and
music in the hotel’s glorious Byzantine lobby. We found a sofa wide
enough for Kate and talked to other guests, who included a nurse
from New York who had come dressed as a courtesan, some Japanese
Don Giovannis and a middle-aged Londoner who was dressed as the
Doge of Venice.
Later we walked to the Luna Baglioni which, like many hotels
during Carnevale, was hosting a dinner and a performance. We
were treated to an Italian parody of il Trovatore, while in the lobby
acrobats on stilts ushered guests up to the Marco Polo Ballroom,
which is famous for its stunning floor to ceiling frescoes by students
of Giambattista Tiepolo. Looking around this salon lit entirely
by candlelight, it was so easy to believe we were back in the 18th
century – until everyone got out their cameras! ■

70 gulfbusiness January 2011

 Checklist
TAKING FLIGHT
The Sunday morning Flight
of the Angel from the top
of the Campanile signals
the start of Carnevale. Last
year, Bianca Brandolini
d’Adda was lowered slowly
down into Piazza San
Marco while the Hallelujah
chorus played. The piazza
was full of tourists and
masked revellers watched
a parade of medieval
dignitaries.

GRAND BALL
The Serenissima Grand Ball at
Palazzo Pesaro Papavafa is
one of the many glamorous
evening events that mix live
music with good food and
wine from the Veneto. All
palazzos stand on canals,
so guests arrive by water
taxi or gondola. Tickets
can be purchased through
Liaisons Abroad (www.
[Link]).

THE DANIELI
Venice’s oldest hotel always hosts an event to welcome
costumed revellers on the first Saturday of Carnevale. Tickets
cost 40 euros pp. In the past the hotel has been home to the
composers Richard Wagner and Claude Debussy and the
writers George Sand and Charles Dickens.

MEET THE REVELLERS

Adrian Mourby and Kate
Tadman-Mourby in their 18th
century finest photographed
on St Mark’s Basin. Antonia
Sautter, creator of the
annual Doge’s Ball, hires out
costumes from her studio
at Frezzeria, San Marco 1286
([Link]). Most
people chose to dress in 18th
century attire, but there are costumes
to suit every taste.

The Carnival of Venice runs from February 26 to March 8.

For information on local hotels and event schedules, visit
[Link]

January 2011 gulfbusiness 71

F LIFESTYLE CARS

Beautiful beast of Bologna

Synonymous with Italian passion and design, Maserati is one of the
world’s legendary auto brands, Glenn Freeman discovers that the 2010
Quattroporte Sport GT S lives up to its proud history.

B
earing the iconic trident logo – a switched on. In fact, upon discovering This also meant I waited two
nod to municipal pride, as the the small, console-mounted button that days before trying out the stereo,
official symbol of Maserati’s activates this, I rarely switched it off. which is, incidentally, a fantastic
birthplace Bologna – the Maserati This was for the simple fact that its nine-speaker Bose-equipped unit.
marque has long been an object of sonorous rumble sounds so superb. For the most part I left this switched
desire for automotive enthusiasts of This magical button amplifies the off though, preferring the engine’s
every ilk, including this author. Quattroporte Sport GT S’s glorious sound soundtrack while gunning the throttle
Maserati’s Quattroporte (literally, by opening the pneumatic valves within and accelerating up through the
‘four door’) was first introduced in the exhaust. In normal mode, these gears of the excellent MC Auto Shift
1963, meaning the now Fiat-owned remain closed, but at the flick of a switch, transmission. The steering-column
company has had almost half a century the exhaust is turned into a modern, mounted paddles and the on-the-
to perfect it, and the constant process high-tech version of the old straight- floor manual options also add greater
of refinement shows. through system. You need to hear it to driver input.
From the interior decked out understand how good it is, especially the The 2010 Quattroporte Sport GT
with suede leather, with swathes of automatic throttle-blip on downshifting. S’s ride is as inspiring as its engine,
composite glass-fibre adding plenty of with a sporty passive damping system
sporty accents, to the racing-inspired delivering taut, firm suspension. This
seats imprinted with that famous logo, latest Quattroporte suspension has
the 2010 Quattroporte Sport GT S oozes also been lowered and firmed-up
quality and style. further, with spring stiffness 30 per
However, the real star of the show is cent and 10 per cent stiffer at the front
the engine, a 4.7ltr V8 producing more and rear, respectively.
than 430hp. More specifically, it is the Priced at $163,100, engineering of
pairing of this powerplant with the twin- this calibre doesn’t come cheap, but,
system exhaust that sets this vehicle if you have the spare cash, it is money
apart, particularly when sport mode is well spent. ■

72 gulfbusiness January 2011

 ART

Mathaf: Arab Museum

of Modern Art
Visionary Qataris have created the region’s first fully-fledged museum
for savouring the great modernists of Arab art, writes Charles Pocock.

I
t is not often that I am swept
away by another person’s dream. Untitled,
However, this is the case with Ibrahim
Mathaf: Arab Museum of Modern Art. el-Salahi.
The museum was the dream of HE
Sheikh Hassan bin Mohammed bin
Ali Al Thani, vice chairperson of the
Qatar Museums Board of Trustees
and the Founder of Mathaf.
For two decades, he collected the
finest in modern Arab art, developing
an incredible artist residence
programme over 10 years ago with
Dia Al Azzawi, Ismail Fattah Al Turk,
and many others. The foundations
for Mathaf were set in place by HE
Sheikh Hassan in the right way and
for the right reasons.
What is truly staggering is that what
does not seem possible to achieve
politically has been achieved culturally:
a unity in the Arab World. Here the best
in modern Arabic culture from Morocco
to Oman, from Syria to Sudan, has been
brought together in the same space.
Mathaf is a true celebration of modern
Arab art, presenting great works sculptures and works on paper from In Told/Untold/Retold, displayed in
with supporting bilingual exhibition Mathaf’s extensive collection. the same building, 23 commissioned
catalogues, providing not just an Two sites have been inaugurated works are displayed. The aim of the
academic reference but an inspiring for Mathaf. Mathaf itself, held curators is to present a unique story
collection for all to see. in the Education City, where the where the boundaries of the past,
Bringing the collection of HE Sheikh museum is held and opened on the present and future are blurred. It
Hassan to Mathaf was supported by December 30, 2010. The second is the presents the works of Ghada Amer,
HE Sheikha Al Mayassa bint Hamad temporary exhibition space next to Steve Sabella, Jeffar Khaldi, Youssef
bin Khalifa Al Thani, chairperson of the Museum of Islamic Art, where the Nabil and many others. This grouping
The Qatar Museums Authority (QMA). exhibitions Interventions, curated by has not been presented before in such a
It’s now possible to view great Dr Nada Shabout, and Told/Untold/ way, and the outcome is superb.
modernists of Arab art together. And Retold, curated by Sam Bardaouil The Four Seasons in Doha is
the public is no longer dependent and Till Fellrath are located. What perfectly placed between the two
on auction prices to justify great works, is clear from the exhibitions on locations and it’s also a great place
as a number of the artists presented at display is that the work presented from which to explore the rest of the
Mathaf have either not been at auction, is representative of the Arab world, city. The hotel meets the whims of
or failed to deliver high prices. especially in Interventions. Here, a not only the art connoisseur but also
The museum opened with the wonderfully broad spectrum of major that of the business traveller, with an
inaugural show curated by Dr. Nada modern Arab artists are presented: impressive collection of work by Ali
Shabout, Wassan Al-Khudhairi Hassan Sharif of the UAE, Ibrahim Hassan throughout the residence.
and Deena Chalabi, titled Sajjil: A Salahi of Sudan, Ahmed Nawar of Charles Pocock, managing partner,
Century of Modern Art and Egypt, Farid Belkahia of Morocco and Meem Gallery and Fellow of The Royal
includes more than 260 paintings, Dia Al Azzawi from Iraq. Asiatic Society. ■

January 2011 gulfbusiness 73

Data monitor
Compiled by Karen Remo-Listana

76 TOP DEALS
Mergers & acquisitions
Public equity offerings
Public debt offerings
Private placements
GCC current account & fiscal balance

78 GCC ECONOMIC INDICATORS

Commodity price forecasts
Market overview
GDP & CPI inflation

78 IN FOCUS
Petrochem: Industry urged to double sales
Aviation: Abu Dhabi eyes global competition

79 POLICY WATCH
Financial issues facing the GCC

January 2011 gulfbusiness 75

 TOP M&A TRANSACTIONS
Deal Value ($m) Bidder Target Deal Description
1200 Qatar Telecom Orascom Telecom Tunisie SA A consortium led by Qatar Telecom (QTel) Q.S.C., the listed Qatar-based company engaged in providing
(QTel) Q.S.C. telecommunications services, has agreed to acquire a 50 per cent stake in Orascom Telecom Tunisie SA (Tunisiana),
the Tunisia-based telecom group, from Orascom Telecom Holding S.A.E, the listed Egypt-based telecom carrier, and
a subsidiary of Weather Investments SpA, the Italy-based holding company of worldwide telecom assets, for a cash
consideration of $1.2 billion. Qatar Telecom is expected to fund the acquisition through a combination of cash, debt and
using its revolving-credit facility. The consortium consists of Qatar Telecom’s 52.5 per cent-owned subsidiary National
Mobile Telecommunications Company KSC (Wataniya) and Princesse Groupe Holding. Wataniya already owns 50 per cent
stake in Tunisiana.
532 Qatar Holding LLC Hochtief AG Qatar Holding LLC has agreed to acquire a 9.1 per cent stake in Hochtief AG, the listed Germany-based construction
and facility management services company. Qatar Holding LLC is an investment arm of Qatar Investment Authority,
the Qatari sovereign wealth fund. Terms: 6,999,999 shares of Hochtief AG to be issued at an offer price of EUR57.114
per share. The implied equity value of the transaction is about EUR399.798 million. The offer provides a discount
of five per cent based on Hochtief AG closing share price on December 3, 2010 of EUR60.12 one day prior to the
announcement. The offer provides a discount of 7.6 per cent based on Hochtief AG closing share price on November
5, 2010 of EUR 61.82 one month prior to the announcement.
132 Oman Oil Company Zhejiang Zhongyou Hua Oman Oil company S.A.O.C, has agreed to acquire 45 per cent stake in Zhejiang Zhongyou Hua Dian Energy Co. Ltd,
S.A.O.C Dian Energy Co. Ltd the China-based company engaged in liquefied petroleum gas import business and sale of petrochemical products,
from China Gas Holdings Limited, the Listed Hong Kong-based company engaged in the investment, construction
and management of city gas pipeline infrastructure, for a cash consideration of $131.5 million. Post acquisition,
China Gas Holdings will hold 55 per cent stake in Zhejiang Zhongyou.
112 Expo Swiss Holdings Petroleum Coke Industries Expo Swiss Holdings Gmbh, the Switzerland-based investment firm having interest in petrochemical companies, has agreed
Gmbh Company K.S.C. to acquire a 40.82 per cent stake of Petroleum Coke Industries Company K.S.C., from Al Mal Investment Company KSC, the
listed Kuwait-based company engaged in wide range of investment and financial services, for a consideration of KWD31.348
million ($112.3 million). Al Mal will sell 61,228,510 shares of Petroleum Coke at KWD0.512 per share to Expo Swiss. Al Mal
will book a profit of KWD20.54 million ($73.58 million). In 2009, Al Mal purchased an 11.5 per cent stake in Petroleum Coke
from Rain Commodities Ltd, the listed India-based company engaged in the manufacture and sale of cement, for $15 million.
9 Saudi Paper Al Juzoor Factory Saudi Paper Manufacturing Company , the listed Saudi Arabia-based company engaged in manufacturing, recycling
Manufacturing Company and distribution of tissues and paper products, has agreed to acquire a 85 per cent stake in Al Juzoor tissue paper
factory, the Kuwait-based tissue paper manufacturer, for a consideration of SAR35 million ($9.3 million).The
consideration will be financed from Saudi Paper Manufacturing’s own resources. The acquisition is part of the
Saudi Paper Manufacturing’s expansion strategy. Al Juzoor Factory has been operating in Kuwait for 10 years. The
acquisition will enable Saudi Paper Manufacturing to enhance its production capacity.
Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between November 19, 2010 and December 15, 2010. Based on announced deals, including lapsed and
withdrawn bids. Where deal value is not disclosed, the deal has been entered based on turnover of target exceeding $10 million. Activities excluded from the table include property transactions and restructurings
where the ultimate shareholders’ interests are not changed. Source: Mergermarket

MIDDLE EAST QUARTERLY M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VALUE
FROM 2005 TO DECEMBER 15, 2010
Transport Pharma/Medical/ Construction Real Estate
14,000 50 7.4% Biotech 3.2% 5.5% 25.1%
Number of deals
Value ($m)

12,000 Leisure
Value 40 4.3%
10,000 Agriculture
Volume 0.2%
8,000 30
TMT 9.1% Defence
6,000 20 1.1%
4,000 Energy/
10 Mining/
2,000 Utilities 3.1%
0 0 Consumer Business Financial Services Industrials and
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2005 2006 2007 2008 2009 2010 2.7% Services 1.6% 24.8% Chemicals 12%

MIDDLE EAST ANNUAL M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VOLUME
FROM 2004 TO DECEMBER 15, 2010
Pharma/Medical/ Construction Real Estate Agriculture Defence
30,000 200 Biotech 6.7% 3% 7.4% 0.7% 2.2%
Value
25,000 Volume Transport
150 2.2% Industrials and
20,000 Chemicals 17%
Leisure
Number of deals

15,000 100 3.7%

Value ($m)

10,000 TMT
50 20%
5,000 Financial Services
14.8%
0 0 Energy/Mining/ Consumer Business
2004 2005 2006 2007 2008 2009 2010 Utilities 8.1% 8.1% Services 5.9%
Mergermarket tracks all M&A deals of more than $5 million where the target, bidder or parent is a Middle Eastern company.

76 gulfbusiness January 2011

 TOP PUBLIC EQUITY OFFERINGS
Value ($m, Historical Target/Issuer Transaction Status Transaction comments
rate)
372.24 Aluminium Bahrain Closed The offering period commenced on October 24, 2010 and closed on November 4, 2010. Each
(LSE:ALBH) Global Depositary Receipt represented five ordinary shares. On offer were 35,500,000 shares
at BHD3.31. The shares offered as a part of this offering have been listed on the Bahrain Stock
Exchange and on the London Stock Exchange in the form of Global Depositary Receipts. J.P.
Morgan Securities Ltd acted as the underwriter for the issue of global depositary receipts
and Gulf International Bank B.S.C managed the domestic share issue. The underwriters were
expected to receive a total of $6.5 million as total fees and [Link] retail tranche of the
offering was underwritten by the domestic underwriters.
332.35 Axiom Telecom LLC Withdrawn Offered 289 million shares, with price range between 80 cents to $1.15, which will value the
offerings up to $332 million. About 32.2 per cent ($105 million) will go to the company while
67.8 per cent ($222 million) will go to shareholders. SilkRoute Group was acting as the financial
advisor, while Citibank, Deutsce Bank and Shuaa Capital were the co-lead underwriters. On Nov
6, Axiom cancelled IPO and Nasdaq Dubai listing.
4.8 Polarcus Limited Closed Follow on [Link] Limited offered 5.7 million new shares with preferred allocation
(OB:PLCS) to eligible shareholders as of October 13, 2010. The subscription period was from November
25, 2010 to December 9, 2010. Payment and delivery of shares will take place on or about
December 15, 2010. As of December 9, 2010, the offering was oversubscribed.
Transaction: IPO or Follow-on Equity Offering; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, or UAE; All transactions announced date (Including Bids and Letters of Intent): [11/21/2010-
12/15/2010]; Source: Capital IQ.

TOP PUBLIC DEBT OFFERINGS

Value ($m, Historical rate) Target/Issuer Transaction Status Transaction comments
280.47 The Commercial Bank of Qatar Closed The corporate bonds, with three per cent coupon rate, were issued in CHF and will mature
Q.S.C. (DSM:CBQK) on December 7, 2015. The bonds, which will be used for general corporate purposes and
working Capital, was rated A1 by Moody's and A- by S&P.
Transaction: Fixed income; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date (Including Bids and Letters of Intent): [11/21/2010-12/15/2010];
Source: Capital IQ.

TOP PRIVATE PLACEMENTS

Value ($m, Target/Issuer Buyers/Investors Transaction Status Transaction comments
Historical rate)
31.86 Sahaab Leasing Jazeera Airways Company Closed Kuwait-based Sahaab Leasing Company announced that it has received KWD9 million
Company K.S.C. (KWSE:JAZEERA) in funding from Jazeera Airways Company K.S.C. on December 12, 2010. It will use the
proceeds to take advantage of new market opportunities. On December 12, 2010, Sahaab
Leasing Company closed the transaction.
Transaction Types: Private placement; Geographic Locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date: [10/21/2010-11/20/2010]; Source: Capital IQ.

GCC CURRENT ACCOUNT & FISCAL BALANCE FORECASTS

Baharain Qatar
2010 2011 2012 2013 2010 2011 2012 2013
Policy rate (%)* 0.5 0.5 0.5 0.5 Policy rate (%)* 1.0 1.0 1.0 1.0
Current account balance (% GDP) 5 10 12 13 Current account balance (% GDP) 16.0 22.0 20.0 20.0
Fiscal balance (% GDP) -0.3 -0.4 -0.2 -0.0 Fiscal balance (% GDP) 10 8 7 7

Kuwait Saudi Arabia

2010 2011 2012 2013 2010 2011 2012 2013
Policy rate (%)* 2.5 2.5 2.5 3.0 Policy rate (%)* 0.25 0.25 0.25 0.25
Current account balance (% GDP) 26 27 28 27 Current account balance (% GDP) 6.5 7.0 7.0 8.0
Fiscal balance (% GDP) 20 22 21 20 Fiscal balance (% GDP) 2.0 6.5 7.5 7.5

Oman UAE
2010 2011 2012 2013 2010 2011 2012 2013
Policy rate (%)* 2.0 2.0 2.0 2.0 Policy rate (%)* 1.0 1.0 1.0 1.0
Current account balance (% GDP) 6.5 7.0 7.5 8.0 Current account balance (% GDP) 5.5 6.0 7.0 7.0
Fiscal balance (% GDP) 0.5 0.6 1.0 0.8 Fiscal balance (% GDP) -2.5 4.0 4.5 4.5
Source: Standard Chartered Research; *end-period

January 2011 gulfbusiness 77

 COMMODITY PRICE FORECAST PETROCHEMICALS
4Q10F 2010F 1Q11F 2Q11F 3Q11F 4Q11F 2011F
WRI Crude Oil ($/bbl) 80.00 78.29 81.00 82.00 86.00 91.00 85.00 Industry urged to more than
Brent Crude Oil ($/bbl) 80.00 78.44 81.00 82.00 86.00 91.00 85.00 double sales to $200 billion
USGC no.2 HO crack
10.09 9.51 10.55 7.30 8.50 12.75 9.80 Although global economy shrunk by 4.6 per
spread ($/bbl)
cent, the Gulf’s petrochemical sector expansion
USGC RBOB Gasoline
7.64 9.54 7.00 13.00 10.20 7.00 9.30 continued with production surging 3.7 per cent
crack spread ($/bbl)
last year.
USGC 1% Residual
-8.30 -6.94 -6.90 -9.90 10.00 -8.00 8.70 According to Sheikha Lubna Bint Khalid
crack spread ($/bbl)
Al Qasimi, UAE’s Minister of Foreign Trade,
NWE 0.2% Gasoil crack
10.41 9.82 11.40 7.60 8.80 13.40 10.30 production went up across the Middle East
spread ($/bbl)
last year with Saudi Arabia posting an increase
NWE Prem Gasoline
1.45 5.02 5.70 9.70 7.70 6.90 7.50 of 6.3 per cent, UAE (Abu Dhabi) 4.4 per cent,
crack spread ($/bbl)
Kuwait 4.2 per cent and Qatar 7.4 per cent.
NWE 1% Residual
-4.90 -5.11 -6.00 -5.65 -5.60 -4.8 -5.50 “Even in the tough economic environment,
crack spread ($/bbl)
where capital infusion has increasingly been
US Natural Gas ($/MMBtu) 4.80 4.59 4.90 4.60 5.00 5.50 5.00 challenging, the ability of GCC producers to
Thermal coal, fund their expansion projects has not been an
105 91 105 110 110 110 107
Pacific spot ($/t) issue,” she told the GPCA Forum in Dubai.
The Gulf is estimated to have produced
Aluminium ($/t) 2,475 2,228 2,600 2,700 2,600 2,500 2,600
more than four million ethylene capacity
Copper ($/t) 8,600 7,557 10,000 12,000 11,000 12,000 11,250 and by 2015, the region will see nine new
Nickel ($/t) 24,750 22,177 26,000 28,000 25,000 24,000 25,750 crackers and downstream plants come on
Zinc ($/t) 2,550 2,242 2,700 2,800 2,600 2,800 2,725 stream – five in Saudi, two in Iran and one
Lead ($/t) 2,550 2,209 2,800 2,700 2,900 2,700 2,775
each in UAE and Qatar.
Sheikha Lubna said the global ethylene share
Gold ($/oz) 1,400 1,233 1,400 1,450 1,350 1,500 1,425
of the Gulf petrochemical producers is expected
Silver ($/oz) 25.50 19.91 27.5 30.00 28.00 32.50 29.50 to reach 16 per cent by end of 2010 and reach
Platinum ($/oz) 1,780 1,631 1,800 2,100 2,000 2,100 2,000 20 per cent by 2014. The region is also set
Palladium ($/oz) 670 524 700 850 750 800 775 to supply 40 per cent of incremental Asian
Iron ore, spot demand for polyolefin.
110 136 120 150 130 120 130
fines CIF ($/t)
Source: BofA Merrill Lynch Global Commodity Research AVIATION

GCC ECONOMIC FORECASTS Abu Dhabi eyes competition with

GDP growth, % CPI Inflation %
global manufacturers
Saudi Arabia 4.3 0.6 3.2 4.0 9.9 5.1 5.7 5.5 Abu Dhabi, through its investment arm,
United Arab Emirates 5.1 -1.4 1.2 2.3 12.3 1.6 1.0 2.8 Mubadala, is taking aircraft manufacturing
to a higher level and is aiming at competing
Kuwait 6.4 -2.2 2.5 3.1 10.5 4.0 3.0 4.0
neck-to-neck with leading global aviation hubs
Qatar 15.8 9.0 11.3 11.2 15.0 -4.9 -2.9 2.5 Seattle and Toulouse.
Oman 12.3 3.8 4.6 4.5 12.6 3.5 4.0 4.1 Strata, a Mubadala subsidiary based in
Bahrain 6.1 3.1 2.4 2.8 3.5 2.8 3.5 3.0 Al Ain, Abu Dhabi’s second largest city,
Source: BofA Merrill Lynch
had already delivered its first assembled
products to FACC in Austria and over the
next 18 months will be the sole source of
MIDDLE EAST MARKET OVERVIEW
wing parts and empennages (tail) for aircraft
Returns manufacturers such as Boeing and Airbus.
Value MTD* YTD* “We are trying to be a global player,”
TADAWUL (Saudi Arabia) 6,332.43 -0.34% 3.33% Homaid Al Shemmari, executive director,
business development, aerospace unit at
KSE (Kuwait) 6,902.00 -2.29% -1.50%
Mubadala and chairman of Strata, said.
BSE (Bahrain) 1,438.87 -1.61% -1.35% “Aerospace is a boutique but global industry.
MSM 30 (Oman) 6.603.48 0.77% 3.55% When people think of aviation, they will think
DFM (Dubai, UAE) 1,670.29 -5.34% -7.98% of Seattle, Toulouse and Al Ain.”
Mubadala has earmarked $500 million
ADX (Abu Dhabi, UAE) 2,728.75 -3.10% -0.54%
investment in this 60,000 sqm development.
Source: Rasmala, Bloomberg, * All returns are latest available end of day of November 30, 2010
Phase one, which consists of 21,600 sqm of

78 gulfbusiness January 2011

 POLICY WATCH

But more needs to be done. Khalid Al Falih, president and Bahrain

CEO of Saudi Aramco said despite being home to more than The kingdom is increasingly basing its budget on a higher oil price, leaving it
one-third of the world’s oil and nearly a quarter of natural gas vulnerable to oil-price shocks. The government forecasts deficits of BHD373
reserves, the Gulf has a market share of only $40 billion, or million in 2011 and BHD440 million in 2012. It commonly issues bonds to cover
one per cent of the total petrochemicals market. its deficits, and the deficits should be manageable.
Over the next 10 years, Al Falih urged the industry to
increase the region’s revenues by 150 per cent per cent from
$80 billion to $200 billion, increase the workforce by ten- Kuwait
fold and raise development spend from half per cent of a The central bank cut its benchmark policy rate from three per cent to 2.5 per
company’s revenues to five per cent. cent in February 2010. The central bank is not expected to hike again until
“Without a doubt, we enjoy significant energy advantages,” 2013. Kuwait’s success in achieving sustainable growth will be determined by
he said. “But is the Gulf pulling its weight when it comes to its ability to revamp laws to better suit its needs. A long-awaited privatisation
the wider petrochemical and chemical industry? The answer is law was passed in May 2010, and the government announced plans in
unfortunately no. The region has a lot of catching up to do.” November to privatise the postal service within two years. However, there are
signs that reform will be gradual.
REGIONAL PROFITABILITY & NET PROFIT MARGIN
2,500 25
Net Profit (US$mn) – LHSQoQ Oman
Net Profit Margin – RHS The government is budgeting a fiscal deficit of $2.1 billion for 2010 and
2,000 20
expects a similar shortfall in 2011. While Oman is following through on its 2010
expenditure plans, having spent close to 63 per cent of the budget in the first
1,500 15 eight months of the year, the budget was based on conservative oil prices. A
fiscal surplus is therefore likely for 2010. Oman’s 2011 budget includes a 10.7
1,000 10 per cent spending increase over the 2010 budgeted amount, with infrastructure
and development projects being key focus areas. The 2011 budget is based on
500 5 an oil price of about $55 per barrel.

0 0 Qatar
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
The budget for FY12 (begins April 1, 2011) is yet to be released, but the finance
Source: Company Reports & Global Research minister said it would at least match the $32.4 billion FY11 budget, which saw
a 25 per cent increase in spending. The finance minister said 40 per cent of
budget spending until FY17 would be allocated to infrastructure investment.
Given the weaker pace of infrastructure spending and higher energy prices, a
floor space, is set to reach its full capacity of one million fiscal surplus of $2.6 billion for FY11 is expected. Qatar will need to increase
man-hours by 2012 while phase two will begin in early 2012, infrastructure spending in 2011 and beyond in order to support growth and
providing an additional 21,600 sqft of facilities, doubling the reduce its excessive dependence on hydrocarbons.
current space.
Ross Bradley, CEO of Strata, said the plant will hit
profitability within five years and targets $1 billion sales
Saudi Arabia
The kingdom’s 2011 fiscal spending is slated to be almost five per cent higher
by 2020. “This will make us the top three supplier by 2020.
than the previous year’s fiscal budget ($125.3 billion), with infrastructure-related
We will also aim to be on the top upper quartile in terms of
expenditures ($70 billion) increasing about 15 per cent from 2010. Given the
profitability,” Bradley said.
US dollar peg of the Saudi riyal, domestic monetary policy is likely to continue
Total staffing is expected to reach 300 by end of this year,
to mirror US policy. However, there is a possibility that Saudi Arabia might move
including 52 UAE nationals at its training school. By 2015,
to tighten rates before the US does in 2013 after H2 2011, once inflationary
over 1000 people are estimated to be employed.
dynamics have built enough momentum to warrant such a move.
In addition to Strata, Mubadala has six other aerospace
assets where it plans to invest a couple of billion dollars over
the next few years. El Shemmari said capital markets will UAE
fund 30-60 per cent of these projects. The UAE has approved a three-year federal budget for 2011-13. The budget
Mubadala’s other aerospace assets include Abu Dhabi foresees federal spending of Dhs122 billion over the period, with an allocation of
Aircraft Technologies, which services over 100 customers Dhs41billion for 2011, six per cent lower than the 2010 budget. The UAE federal
including Etihad; SR Technics, an independent maintenance, budget accounts for only a part of total government spending; the individual
repair and overhaul (MRO) company based in Zurich; Piaggio emirates have their own budgets that are much larger. While Abu Dhabi’s 2010
Aero SpA, a firm specialising in the production of a 9+2 seater budget reduced expenditure by $12 billion to $56 billion, spending is likely to
executive aircraft where it has 31.5 per cent stake; Sanad, reach the $65-70 billion range in 2011 as the sovereign pushes ahead with
which leases aircraft components and spare engines; Ammroc, infrastructure development. Dubai, whose budget reached $9.6 billion in 2010,
a military MRO support to armed forces in the UAE and the is expected to cut its budget by at least 15 per cent as the emirate scales back
Samena region; and Horizon International Flight Academy. infrastructure spending allocations. (Source: Standard Chartered Research)

January 2011 gulfbusiness 79

EXHIBITIONS & CONFERENCES

UNITED ARAB EMIRATES

Abu Dhabi
January 17-19 Environment 2011 Abu Dhabi National Exhibition Centre [Link]
17-19 World Future Energy Summit 2011 Abu Dhabi National Exhibition Centre [Link]
25-27 Recruitment Show - Tawdheef 2011 Abu Dhabi National Exhibition Centre [Link]
23-26 Middle East Road Safety Summit 2011 Radisson Blu Hotel, Abu Dhabi [Link]
Dubai
January 08-11 Arabplast 2011 Dubai Int’l Convention and Exhibition Centre [Link]
17-19 Intersec Trade fair and conference 2011 Dubai Int’l Convention and Exhibition Centre [Link]
23-26 HR Technology MENA 2011 Movenpick Hotel Jumeirah Beach Dubai [Link]
24-27 6th Annual Healthcare Insurance Forum Dubai Int’l Convention and Exhibition Centre [Link]
30-31 Branding Financial Services Hyatt Regency Dubai [Link]
31-03 Feb HBMeU Annual Congress Atlantis, The Palm Dubai [Link]
Sharjah
January 17-20 Steelfab 2011 Expo Centre Sharjah [Link]
BAHRAIN
January 12-14 Health & Wellness Bahrain Expo 2011 Bahrain Int’l Exhibition & Convention Centre [Link]
KUWAIT
January 27-07 Feb Arabic & International Products Exhibition Kuwait International Exhibition Centre [Link]
OMAN
January 30-02 Feb Oman Construction Summit Grand Hyatt, Muscat [Link]
SAUDI ARABIA
January 15-18 Interior Design and Construction Saudi Arabia Riyadh Marriott Hotel [Link]
23-24 Bulk Liquid Storage Operations & Safety Doha Millennium Hotel, Qatar [Link]
25-26 Treasury and Cash Management Millennium Hotel, Doha, Qatar [Link]

HBMeU Annual Congress

U nder the patronage of H.H. Sheikh
Hamdan Bin Mohammed Bin Rashid
Al Maktoum, Crown Prince of Dubai and
Organised under
the theme “Being at
the Leading Edge –
University President, Hamdan Bin Mohammed How to Give Quest
e-University (HBMeU), a leader in the field for Excellence a New
of e-Learning and quality management Meaning”, the An-
in the Arab World, has announced that it nual Congress 2011
will hold the Annual Congress 2011 from will feature an inter-
January 31 to February 3, 2011. The Annual national gathering of
Congress 2011 will provide an international thinkers, researchers,
platform for three important conferences: experts, gurus and
the 5th Quality Conference in the Middle practitioners who will
East – TQM and Excellence: A Framework present novel ideas,
for Managing Governance and Corporate demonstrate how
Social Responsibility; the 4th Conference original research is
on e-Learning Excellence in the Middle supported by evi-
East – In Search of New Paradigms for Re- dence-based arguments, share new con- and from other parts of the world to submit
engineering Education; and the 3rd e-Health cepts and illustrate best practice applications various research works concerning quality, e-
Conference in the Middle East – Excellence in various sectors of the economy. HBMeU Learning and e-Health.
in Healthcare: From Global Perspectives to has revealed that it has invited scholars, re-
Local Opportunities. searchers and intellectuals in the Middle East

80 gulfbusiness January 2011

 Hotel Collection
Gulf Business Hotel Collection members offer guests complimentary copies of
the GCC’s premier business magazine Gulf Business.
United Arab Emirates
AL RAHA BEACH HOTEL PARK ROTANA ABU DHABI LAYIA OAK HOTEL & SUITES MEDIA ROTANA DUBAI THE FAIRMONT DUBAI

Abu Dhabi Khalifa Park area, Abu Dhabi Al-Barsha, Dubai Al Barsha South-TECOM Sheikh Zayed Road, Dubai
Al Raha Beach Hotel, created to Conveniently located adjacent to Khalifa Offering 161 furnished units ranging Located in the heart of Dubai’s new This 394-room hotel boasts 10 dining
provide the very best of traditional Park, the property offers 318 luxurious from 81 sqm to 160 sqm, 3 dining business hub and opposite Dubai Media and entertainment venues a superb
Arabian hospitality. This unique jewel rooms and suites, 6 world class dining venues, 3 multi-purpose meeting City and Internet City the Media Rotana spa and unrivalled meeting facilities.
of luxury and tranquility, offering venues, 6 meeting rooms and spacious rooms, recreation facilities & a Dubai has 460 rooms, suites and deluxe Tel 00971 4 3325555
magnificent services, awaits you for ballroom with day light access and majestic landscaped area around the hotel apartments, 5 award winning Fax 00971 4 3324555
an unforgettable visit to Abu Dhabi. outdoor terrace. temperature-controlled pool. dining venues and 15 meeting rooms. [Link]@[Link]
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Fax 00971 2 50 80 429 Fax 00971 2 6573000 Fax 00 971 4 437 79 99 Fax: 00971 4 4350011
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KEMPINSKI HOTEL MALL OF

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THE EMIRATES

Our Location

Sheikh Zayed Road, Dubai Sheikh Zayed Road, Dubai Sheikh Zayed Road, Dubai Al Qusais, Dubai
Jumeirah Emirates Towers is a sleek The truly unique and exciting five stars Located in the centre of Dubai’s business Conveniently located nearby Dubai
architectural masterpiece of steel hotel features 393 rooms, suites and district and just five minutes away from International Airport Terminal 2. Offers
and glass. It redefines the business chalets together with Mall of the Emirates DIFC, Jumeirah Beach, Burj Khalifa and exceptional levels of comfort with 232
hotel category, seamlessly combining shopping centre and Ski Dubai’s alpine Dubai Mall, this 500-room hotel offers rooms & suites, three dining options,
form with function, high technology themed indoor snow resort. you a convenient access the must see temperature-controlled swimming pool
with unparalleled luxury and elegance Tel 00971 4 3410000 and must go places in the emirates. and state-of-the-art fitness center.
with efficiency. [Link]@ Tel 00971 4 323 0000 Tel 00971 4 233 44 44
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[Link] [Link]/dubai reservation@[Link] [Link]@[Link]

Qatar
PULLMAN DUBAI MALL OF SHANGRI-LA ACACIA HOTEL MÖVENPICK HOTEL DOHA
THE EMIRATES

Mall of the Emirates, Dubai Sheikh Zayed Road, Dubai Ras al Khaimah Doha
Discover a new attitude hotel directly linked Offers 301 luxuriously appointed guest The Acacia Hotel is a superbly designed Located on the Corniche Road, opposite
to the region’s ultimate shopping destination rooms and suites, nine restaurants and four star hotel complete with Al Nakhla the Museum of Islamic Art, the hotel
amidst Dubai’s sophisticated metropolis. bars, health club and spa, tennis and restaurant, the stylish Flamingo bar, the offers 154 rooms and suites, a business
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Qatar Saudi Arabia

INTERCONTINENTAL DOHA JEDDAH HILTON HOLIDAY INN RIYADH, IZDIHAR SOFITEL AL HAMRA JEDDAH

Doha Jeddah Riyadh Jeddah

Situated in the West Bay area, yet Located a 10-minute drive from the The first 5 star Holiday Inn hotel in the The hotel situated in the heart of the
located near the city. With its various Jeddah International Airport. Offers over Kingdom, with 289 new and trendy business centre offers 211 rooms, 17
dining options, 24 suites, 234 rooms, 414 rooms including 46 suites. 10th accommodations, huge lobby with W-Fi suites and 25 apartments. 5 meeting
private beach and state-of-the-art and 11th floors are Executive floors access, outdoor pools, sauna, Jacuzzi rooms and 2 reception rooms to
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[Link] Membership information: nayeem@[Link], Tel: 00971 4 2052290

IN YOUR SHOES

Reach for the skies

KAREN REMO-LISTANA boards a seaplane with digital man of the moment Sohrab
Jahanbani from GoNabit, the group discount web site.

I
t’s a sunny morning, the clouds are clear and the Today, it has more than 75,000 subscribers in the UAE,
temperature is 24 degrees – it’s probably the best time Beirut, Oman and Kuwait. The concept is simple – the
to experience my first seaplane tour of Dubai. I’m website features deals at up to 90 per cent discount off
with Sohrab Jahanbani, the chief operating officer and things to see, eat and do locally, you purchase the deal but
co-founder of bargain voucher website GoNabit. He’s also you only get charged – and get the deal – if enough people
set to experience the aerial view of Dubai for the first time. buy and the “deal is on”, then you get your Nabit voucher
Except the flight is delayed by 40 minutes. the next business day after the deal closes.
That delay gives me an opportunity to learn more “Demand for e-commerce in this region is already
about the man behind the website that offers online here, there is just no supply of services. There were lots
discounts for leisure activities, of questions when we started
as long as enough people sign this concept, but you just
up to the deal within a limited have to stick to your guns,”
time-frame. Jahanbani says.
Jahanbani, who arrived in We finally boarded the
Dubai last year, first tested Cessna Caravan nine-seater
his business skills at the age aircraft by 11.30am, and five
of 18. “It was a food business minutes later experienced the
in the UK,” he recalls. “It was thrill of taking off on water.
tough, but I learned a lot from “This is like a dream come
it. From 14 years old, I was true. And this is what we do,
studying and working at the we make other’s dreams come
weekends in a restaurant, so true,” Jahanbani says, while he
food was my expertise at that cheerfully and enthusiastically
time. Whatever I made from it takes pictures. And why not,
helped me set-up a software the view is breathtaking.
company, which I later on sold After nearly a decade of
to my first client.” reporting and criticising Dubai’s
After working with a small economic hypes and blunders,
team to launch Bulldog I could not help but admire its
Communications, the UK’s first developments from the iconic
alternative LLU broadband Burj Al Arab, Burj Khalifa, Palm
provider, in 2002, he founded Jumeirah and the palace-like
NYT Ltd, where he launched the Atlantis to the beautifully-
UK’s first weekly mobile-only crafted landscapes of Emirates
magazine and the first third- Hills, Jebel Ali Port, Dubai
party 3G site on the 3 network. Marina, Deira and Bur Dubai.
After acquiring Touchsoft in There were, of course, the
2004, he oversaw the in-house sights of empty plots in the
development and successful World Islands (except for a
launch of a mobile-enablement technology platform, sole island that’s replete with all the greeneries and pool
which was sold at the end of 2006. He then oversaw the amenities, said to be owned by Sheikh Mohammed), Palm
commercial function at Kulacom where he looked after the Deira and a chunk of properties still under construction –
development and launch of the world’s first end-to-end a sign that full recovery is yet to be seen.
wireless Wi-Max network in Jordan. Time flies so fast that I haven’t even noticed we’re
The financial crisis brought him to Dubai in February back at the port by 12.15pm. The price for that package
last year. In March, he was introduced to Dan Stuart, was Dhs1,200 and GoNabit sold 81 of those vouchers at
previously the chief possibility officer at [Link] and 50 per cent off for Dhs600. It was not my dream, but I
now the founder and CEO of GoNabit, and in May the must admit, it was an unspoken wish that suddenly
website was launched. came true.

82 gulfbusiness January 2011

I’ll create opportunities,
that’s my business plan

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