Gulf Business December 2011

8/3/2019 Gulf Business December 2011

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POWERLETTERSThe regions top business

minds predict the year ahead

THE

VOLUME 16

ISSUE 08

DECEMBER 2011

Bahrain..............BD1.0

Kuwait...............KD1.0

Oman................RO1.0

Qatar..................QR

10

SaudiArabia.......SR

10

UAE..................DHS

10

ye

1996-2011


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the explorer ii

EVERY ROLEX IS MADE FOR GREATNESS. SINCE 1971, THE EXPLORER II

HAS ACCOMPANIED EXPEDITIONS AROUND THE WORLD. IT FEATURES A

24-HOUR HAND, WHICH IS INVALUABLE TO SPELEOLOGISTS AND POLAR

EXPLORERS AS IT ALLOWS THEM TO DISTINGUISH DAY FROM NIGHT. THE

LATEST EXPLORER II FEATURES A 42 MM CASE AND IS THE IDEAL INSTRUMENT

TO HELP TODAYS EXPEDITIONS PUSH THE BOUNDARIES EVEN FURTHER.


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AVAILABLE AT:

OMEGA Boutiques: BurJuman Deira City Centre

Dubai Mall Mall of the Emirates Mirdif City CentreSahara Centre Wa and at select Rivoli Stores.

Toll Free: 800-RIVOLI


7/116

w w w

o m e g a w a t c h e s c o m

PLANET OCEAN"Standing on the Moon looking back at Earth this lovely place you jus

came from you see all the colours, and you know what they represent

Having left the water planet, with all that water brings to the Earth in

terms of colour and abundant life, the absence of water and atmospher

on the desolate surface of the Moon gives rise to a stark contrast.

Buzz Aldrin, astronau


8/116


9/116GULF BUSINESS/ 7

GCC Today

14 Regional news, people, numbeRs and events

oPINIoNS

24 matein Khalid

The Arab world needs to rethink its development model.

26 dR tommy weiR

People leadership is the need of the hour.

28 taReK miKnas

Change is the way forward for the ad industry.

CoNTENTS12.2011 ers

1 9 9 6 - 2 0 1 1

14

COVER DESiGN: ROUI FRANCISCO

48LEAdING BUSINESS

mINdS FORECASt thE

REGIONS FORtUNES

FOR 2012.

POWERLETTERS

WHATS IN STORE FOR 2012?

THE


10/1168 /dECEmBER 2011

BRIEFING

30 banKing

UAEs bankers are packing up their suitcases to head home.

32 libya/gCC

Is the Gul happy with Libyas rising oil production?

34 aviation

GCC airlines went on a shopping spree at the Dubai Air Show 2011.37 FinanCe

The regional Sukuk market enjoyed a record year.

41 Commodities

Is gold losing its shine?

45 RaK

The Northern emirate draws in oreign investors.

FEaTURES

66 the aRab spRings long night

Its been a long road or revolution in the Arab region. Can the Gulcountries help their neighbours during the crucial transition?

74 pRoFile: Flydubaiydubai CEO on why the airline is expanding its horizons.

80 siR RoCCo FoRte hits abu dhabi

British hospitality tycoon launches a fve-star hotel in the capital.

84 a veRy publiC love aFFaiR

Can Emiratisation succeed in the UAEs private sector?

80

CoNTENTS

37

66

30


11/116


12/11610 /dECEmBER 2011

CoNTENTS

doWNTIME

99 tRavel

Explore history at Shanghais art deco palace, the Peace

Hotel. 102 CRuise

Reviewed: BMW 6 Series 650i.

104 aRt

Christies unveils new sales format in the Middle East.

106 booKs

Gulf Business rounds up a selection of business reading.

109 plaCes to be

Cantonese restaurant Hakkasan opens its doors at the

DIFC.

daTa CRUNCh

93 stats

Regional mergers, acquisitions and bond issuances.

REGULaRS

110 events

The Gulfs top business conferences.

112 gulF business pReFeRRed hotels

A selection of the regions top rooms.

114 in youR shoesDoug Speck, senior vice president, Volvo.

99 109

EdIToR-IN-ChIEF

Obai huai Al tayer

GRoUP EdIToR aNd MaNaGING PaRTNER

Ian Fairservice

GRoUP SENIoR EdIToR

Gina JonsonSENIoR EdIToR

Guio duken

EdIToR

Alicia Buller [email protected]

BUSINESS EdIToR

Jonaan Seik-miller [email protected]

BUSINESS WRITER

Aari Nagraj

EdIToRIaL CooRdINaToR BUSINESS

hila dSouza [email protected]

aRT dIRECToR

tarak Parek [email protected]

dESIGNER

Carlie Banalo [email protected]

JUNIoR dESIGNERRoui Francisco [email protected]

PhoToGRaPhERS

Farooq Salik; Navee Ae; Vikra Gawe; Vicor Besa

CoNTRIBUToRSRyan harrison; Ro micla; Peer Saw-Si; toasBoar; Arian mourby

SENIoR PRodUCTIoN MaNaGER S Sunil Kuar

PRodUCTIoN MaNaGER C Suakar

PRodUCTIoN CoNTRoLLER Binu Puranaran

GENERaL MaNaGER GRoUP SaLESAnony milne [email protected]

SENIoR advERTISEMENT MaNaGER

Abraa Kosy [email protected]

advERTISEMENT MaNaGER

Ajay maews [email protected]

dEPUTy advERTISEMENT MaNaGER

melroy Norona [email protected]

GENERaL MaNaGER aBU dhaBI

Joe marri [email protected]

SENIoR SaLES ExECUTIvE aBU dhaBIhaan Bawazir [email protected]

Prine by Eiraes Prining Press, dubai

hEad oFFICE: PO Box 2331, dubai, UAEtel: +971 4 282 4060, Fax: +971 4 282 4436,[email protected]

dUBaI MEdIa CITy: Office 508,5 Floor, Builing 8, dubai, UAE,tel: +971 4 390 3550, Fax: +971 4 390 4845

aBU dhaBI: PO Box 43072, UAE,tel: +971 2 677 2005, Fax: +971 2 677 0124,[email protected]

LoNdoN: Acre house, 11/15 Willia Roa,Lonon NW1 3ER, UK, [email protected]

EdIToRIaL SyNdICaTIoN dETaILStel: + 971 4 2824060, [email protected]

104


13/116


14/11614 /DECEMBER 2011

UAE TodAyTo MaRk ThE 40Th annivERsaRy of iTs founDing,wE havE DEDiCaTED ThE opEning Two pagEs of gCCToDay To ThE uaE.

98

76.51

69%

100

Te mber l brrel bll tt te uaE

re t e, mt t erl 10 er cet terld l reere.

Te 2011 etmte er te ere le exectc te uaE, ccrd te Cia wrld fctb.

Te ercete te uaE gDp lt er tt retrde ccted r, ccrd t te ctr Mter

fre Trde, se Lb al Qm.

Te re qre mle cered b ajm, te

mllet emrte te uaE, tted beteeumm al Q d srj.

The UAE turns 40,

but life is just beginning

i te cre rld tr, 40 er mere bl ee.

k d qee e reed r ler, ee r e bee

ed r ler d et te eed deelmet bee

brett, t rd t belee te uaE tll .

Te dcer l ab Db te erl 1960

eml mmet r te ee emrte tt ld eetll

rm te uaE 1971 d mc t bee ceed

debl te bc t elt. Bt te mbt d

te ctr leder, rm se Zed b slt al n

rd, e bee tl dr te t t t ere t

gDp exceeded $300 bll 2010.Te lt ceemet cttl cre d t ct

cr eer ectr. Emrte arle ll becme te rld

lret ertr de-bd rcrt b 2015; te ab Db

ietmet atrt e te rld bet ere

elt d; te ctr bt te rld tllet ter d te

lret mll; te Db itertl fcl Cetre

mjr tertl cl b; Mdr eer te

eld reeble eer d te ctr becme ee r

led rt eet rm l t f1.

Lt er, te ermet et t t becme e

te bet ctre te rld b 2021. arbl, te drem

cld becme relt lt er t tt.


15/116guLf BusinEss/ 15

UAE TodAy

2,268,000 Dhs52.2m

1985

The mber t the rld lret hd-tted crpet tht cver the

r the m pryer hll t the sheh Zyed grd Mqe ab Dhb.

The ell prce lcece plte mber

1 cted ab Dhb 2008,

hch hld the recrd r be the

rld mt expeve mber plte.

The yer hch Emrte arle, th trt-p

cptl $10 mll, mde t rt ht, k600, rm

Db t krch octber 25.

$600bnThe mt tht the uaE re et

re predcted t be rth by the ed 2012,

ccrd t the wht-bed ittte

r itertl fce.


16/11616 /DECEMBER 2011

GCC TodAy

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Gemstone bathtub

fetches Dhs6.4mn

DDF in 16% sales spike

The Le Grand Queen bathtub,made from the Caijou gemstone,managed to sell for Dhs6.4million at this years DubaiInternational Jewellery Week.The gemstone is apparentlyknown for its strong healingproperties. Organisers claimthat the luxurious bathtub is therst of its kind in the world.

Dubai Duty Free (DDF) has posteda sales total of $1.16 billion forthe rst ten months of the year,

a 16 per cent increase over thesame period in 2010. Perfumesaccounted for 14.6 per cent of allsales, generating $169 million, withgold close behind on $133 million.

On the Radar Gulf IPO market remains at

The market for initial public offerings

(IPO) in the GCC remained sluggish during

the third quarter of the year with only

two listings in the region, according to

PricewaterhouseCoopers (PwC). Both the

IPOs were in Saudi Arabia and raised a total

of $219 million, with Hail Cement raising$131 million and United Wire Factories raising

$88 million.

Steve Drake, head of PwC Capital Markets

Middle East, said that IPO activity in Q3 had

followed the same sort of flat levels as had

been seen in the second quarter. There were

just three listings in the region during Q2.

This is to be expected over the summer

months and through Ramadan, with any IPO

activity we are likely to see being in the fourth

quarter or more likely into 2012, Drake said,

adding that Saudi Arabia was the strongest IPO

market in the region.

The turmoil we are witnessing in Europeand the US is having an inevitable impact on

the regional credit markets as investor appetite

in the two economic zones for Middle East debt

has historically been strong, Drake said. It

is likely that we will see lower debt issuance

volumes or perhaps a shift towards a heavier

Asian market bias for issuers, he added.

are hr, te CEo Dyr al-Mrrq,

kfh-Br bdry, tted te

cmy ll ce, trd te ed

2011, eerl e rject tt ll clde

r redetl d cmmercl rel ette

deelmet.

al-hr l ted tt te rject ll

rde tble r r emet

Br cety ell rde bt

t te cmmercl deelmet te ld

tte c bee cetre ltcl

el rt te arb r.

You can start anairline with oneaircraft and i canmake moneY forYou in one month.

Ghaith al Ghaith, CEO flydubai speakingat a media roundtable at the Dubai Chamber ofCommerce and Industry.

SOAPBOX

Kuwaits Agility Q3down 42%Kuwait-based logistics companyAgility posted a 42 per centdecline in third quarter net protas revenues from its freightforwarding business dropped.Net prot for the three monthsending September 30 amountedto a total of $29.4 million, down

sharply from the $50.5 millionearned a year ago.

diyAr offErs

BAhrAin projECTs

gETTy

iMagEs

GCC TODAY REgionaL nEws, pEopLE, nuMBERs anD EvEnTs


17/116


18/11618 /DECEMBER 2011

GCC TodAy

gETT

y

iMagEs

MUBAdAlA BUys EMi sTAkE

ADIB prices $500m Sukuk How to rule

the world like...

Oman Oil has signed an initial pact with the Steel Authority of India (SAIL) to

jointly set up a gas-based steel plant in Oman with an estimated investment of

$3 billion. The plant will have a capacity of three million metric tonnes a year,

according to Indias steel minister Beni Prasad Verma.

The two government-owned firms are still finalising the feasibility report and

are planning to sign a final deal in the next six months.

Te abu Db ilmc B (aDiB)

rced t $500 mll 2016ilmc bd, e te b

ru te del crmed. Te

suu, lted Ld, ll yeld 3.78

er cet. Ctru, hsBC hld,

nmur, te ntl B abuDb d stdrd Crtered ere

te led mer te del.

aDiB eld everl vetr meet

a, Eure d te Mddle Et

lt mt bere u te suu.

Te leder curretly l t

sr-cmlt ud urce

mre trdtl mret dry u due

t lbl cl ccer.

Te b ld $750 mll, ve-

yer suu octber 2010.

suu uce te gCC re

e u rly 2011 t

creed t $14 bll dur te rt

eve mt te yer, ed

t $4.45 bll te crred

erd lt yer, ccrd t Zy.

cm suu Mtr.

Promote yourself

Crue Dub t mt r te rt

cree M: imble gt

prtcl t te Dub itertl flm

fetvl. Te tr eure tt e ly

te tlt uc or wrey

2005 e e jumed te cuc

re lve r kte hlme.

Do your own stunts

frm dl deruly utde te 124t

lr te rld tllet ter, te Burjkl, t jum cr trvell t 60

mle er ur, Crue t d

tut.

Diversify

i 1993, Crue rtered t rmer

et pul wer t rm Crue/wer

prduct d te cmy ce

c-rduced my mve.

love Dubai

ater t Dub r Mi4, Crue

red te cty bl. My mlyd i et ur eve t te ter r,

-rt, dr , , cub

dv, cmel rd, deert due b d

e tll ddt t ll tt tere t ejy!

e d.

brinG in the cash

Tu e t te t-r ctr t

te mmet, e re te t lce t

Tm alle frbe 2011 et d ctr

lt. Betee July 2010- 2011, te ctr

med t cet cl $22 mll.

Oman Oil joins hands with SAIL

ToM CrUisE

Mubadala Development, the

investment arm of the Abu Dhabi

government, has taken a stakein British music publisher EMI

as part of a consortium led by

Sony/ATV. The deal, worth $2.2

billion, will give the investment

consortium rights to EMIs

publishing division.

The companys recording

division will be taken over

by Vivendis Universal Music

Group for $1.9 billion. EMI was

auctioned off by Citigroup and

includes popular artists such as

the Beatles, Coldplay, Katy Perry,Rihanna and Norah Jones.

Norah Jones


19/116


20/11620 /DECEMBER 2011

GCC TodAy

Ford doubles GCC salesFord saw a 55 per cent sales growth in the

GCC this year and has just opened a $53

million spare parts centre in Jebel Ali.

Its a great year for us, said Hussein

Murad, the director of sales at Ford Middle

East. We are making money, making profits

and selling a lot of cars.

All our new products Explorer, Taurusand Edge have experienced high demand;

almost five times the supply for these

products, he said.

The firm is putting

aside worries about

another recession

hitting the region

and hitting demand.

We cant control the economy, said Paul

Anderson, Ford Middle Easts director of

marketing. So we have to focus on the things

we can control and that is simply introducing

the best products that are available so that when

consumers do buy, Ford is their choice.

adac completes upgrade

PROJECT focus

The abu Dhb arports

Compny (aDaC)

hs completed the

refurbshment nd

upgrdng of Termnl 1 t

abu Dhb interntonl

arport. The project

ncluded n ncrese n the

number of check-n nd

mmgrton counters, n

ddton to the expnson

of the retl nd food nd

beverge spce.

The project ws crred

out over ten months s

prt of the progrmme

to expnd the rports

cpcty nd meet

ntcpted trffc growth.

The rport s presently

undergong mjor mult-

bllon dollr expnson

pln whch hs seen the

constructon of second

runwy s well s thrd

termnl buldng. as the

emrtes flg crrer Ethd

arwys develops, the

rport s eventully hopng

to be ble to hndle 20

mllon pssengers yer.

as prt of the

mprovements, there hs

been 40 per cent ncrese

n the number of counters

n the pssport control re,

whle the rports hotel nd

hosptlty lounges hve

been refurbshed.

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On the Radar

TAQA sees sharprise in Q3 net proft

Emke in Saudi expansion

UAE based oileld servicesprovider Topaz Energy and Marinehas established a $380 millionnancing deal with the StandardChartered Bank and the DVB Bank.The arrangement involves therms offshore support vesseldivision, Topaz Marine, and $125million of the money will be usedto fund ships under constructionor new vessels.

TAQA, the Abu Dhabi NationalEnergy Company, has said itsthird quarter net prot morethan doubled to Dhs537 millionfrom Dhs218 million during thesame period a year ago.

The biggest push came fromoil and gas revenues, which rose68 per cent when comparedto the third quarter of 2010, toreach Dhs2.74 billion.

The UAEs Emke Group is planning

to expand in the Saudi Arabian

retail sector through its chain

of Lulu Hypermarkets. Emke is

looking to open new stores inseveral locations in the kingdom

including Dammam, Jubail,

Riyadh, Makkah and Madinah.

Emke is already present in Oman,

Qatar, Kuwait and Bahrain.

Topaz raises $380m


21/116guLf BusinEss/ 21

GCC TodAy

UAE BoosT forrolls-royCE

GCC and the world

Dhs1 billion

STATS

ThE aMounT ThaT wiLL BEinvEsTED To RELoCaTE ThE 2013 DuBaiaiRshow To a nEw vEnuE aT DuBaiwoRLD CEnTRaL.

Mieat gup bu Uk hteCtl hll htel, med Mddle Et etr t rldde rtl tel, rced t mre Ld wet Ed Te sder d te st MrtLe htel r rd $300 mll.

Mr htel gr, te 50 er cet er tererte lde lte wlt street Ctl,ll cte t me te tel l-term b rt te del.

Te del ld be cmleted bere te ed te yer.

i know the difficulties, thenegatives, the positives, i will nothang on to power. whoever hangson to power i think is crazY.

Yemens Presidentali abDullah salehtold France24 television that he would leave office within 90 days of anagreement with the GCC.

SOAPBOX

Te om ol Cmy d st kre gs Epse ed reemet t te kre rce Cm t bld te rt e te Djer lt t ct $536 mll. Te clty texected t cme trem tl te ed 2014 dt ll e tt 800 mett.

om ol ld 30 er cet re te lt,le gs Eps te rem 70 er cet d te ertr.

om o, gs eps

Rll-Ryce Mtr Cr teed 70er cet cree uaE be tyer, d te rm CEo t te DbMtr s. Te remm uk crmerl 30 er cet rt cr tere t yer.

or bet mret te us,lled by C, te uk d te uaE.Te Mddle Et ctrbte betee 12er cet t 15 er cet t lbl Rll-Ryce le, d Trte Mller-t,

CEo, Rll-Ryce Mtr Cr. Db r bet mret te rld rctmble cr, erly ll te cr te uaE re tlr-mde.

Lt yer Rll-Ryce ld 2,711 crlblly, d t yer te CEo exectt ell 3,000 cr te bc eteed cmer cdece dcreed emer mret demd.

Betee 2010 d 2011 ele eremre cmrtble t te ecmy,

bt redct tre deelmet dclt e re t mme t lblecmc e-, d Mller-t.

Rll-Ryce rt te BMwr, l t M. Te germld rm recetly tedmree cl relt, clmte tret trd qrter ttry. BMw Q3 retx rtjmed 21 er cet t $2.26 bll,bet lyt etmte.


22/11622 /DECEMBER 2011

GCC TodAy

Saudi Arabia has signed a bilateral agreement with South

Korea to cooperate in the development of nuclear energy. The

agreement was signed in Seoul, according to a statement by the

King Abdullah City for Atomic and Renewable Energy.

The pact includes scientific, technological and economic

cooperation between the two nations, and will involve the

design, construction, operation, maintenance and development

of nuclear power plants in the kingdom.

Saudi Arabia signed similar agreements with France and

Argentina earlier this year, while the kingdom is also in talks

with Russia, China, the US, the UK and the Czech Republic

regarding further tie-ups.

Saudi signs nuclear pact

30seconds on the business of

LOGISTICS

i gtc bg bune

n te UAE?

Yes, the UAEs geographical

position enables it to

facilitate major movements

between the Eastern and

Western hemispheres.

And with high quality

infrastructure in place,

logistics is also a highly

competitive business here.

hw quck can ace be

cuee aun te w

fm te UAE?

The country is a hub for all the largest courier

companies in the world Fedex, DHL, TNT

and Aramex. All these companies have frequent

connections all over the world on a daily basis.

ha te a evement f te UAE avatn

ect bte te gtc nut?

Although the infrastructure is in place, I believe

that the UAE is yet to witness a positive impact

primarily due to the global economic climate. In

the long run, it should prove extremely beneficial.

regna, wc cunte ffe te bet

gwt tenta?

Saudi Arabia offers great growth potential thanks

to increasing domestic demand. And with Qatar

hosting the World Cup in 2022, demand for

logistics services in the country will be high.

de paze ffe an eca evce t t cutme?

Parzel offers the automated delivery point system,

through which our customers can make bookings

online and use our machines to drop off or pick up

their parcels.

hw e t wk?

Customers are required to register on the Parzel

website, and they are then assigned a unique

identification number. They can use this number to

book domestic and international shipments online.

Qte ae take n stahub

Qtr Telecm (Qtel) id tt

ai Mbile hldi, te ivetmet

rm it jitly w wit sire

Teclie Telemedi,

icreed it tke

i sire iterted

cmmuicti cmy

strhub by 7.45 er cet.

Te del bri ai Mbile

hldi tke i strhub

t 56.55 er cet d Qtel

effective tke t 14.14 er cet.

Te mve i imed ttki dvte f rwt

rtuitie

t bt it

reece i

utet

ai, ccrdi

t ner

Mrfi, Qtel

gru CEo.

interviewed BY jOnAThAn ShEIKh-mILLEr

oBAid Al QAhAsh

CEo, przel

King Abdullah City for Atomicand Renewable Energy


23/116


24/11624 /DECEMbEr 2011

OpiniOn

COMMENT

The Asian tiges offe a new way fowad fo the stife

idden Aa wold.

Matein Khalidis und manager in aroyal investment ofce and a writer

in fnance and geopolitics.

Lessons for ArAb economies

tThe developmenT model of TheAsiAn

tigers has created vibrant capitalist enclaves across the Pacific Basin.

The Asian economic miracles emerged from the traumas of war, foreign

invasion, revolution, ethnic slaughter and mass poverty. In Asia, historical

traumas deliver economic growth.

The Arab world experienced multiple traumas as the colonial era

ended. Israels creation ended in a military debacle in 1948 and the

expulsion of the Palestinian refugees. Syria experienced more than a

dozen coups dtat before the Assad regime consolidated power in a

nightmarish dictatorship that is now fighting for its survival. Egypt

reeled from the 1952 Free Officer coup, the Suez crisis, Nassers Soviet

alliance, the June 1967 disaster and the loss of the Sinai to the IDF, theassassination of Sadat, an Islamist uprising in Upper Egypt in the 1990s

and now the revolution in Tahrir Square.

Iraqs modern history is terrifying, from the murder of the Hashemite

King Faisal in 1958 to Saddams wars against Iran and Kuwait, the Baathist

genocide against the Kurds and repression against the Shia, the 2003

American invasion and the terrorist/death squad bloodbath of 2004-2006.

Kuwait was invaded by Iraq in 1990. Lebanon survived the 1975-90 civil

war. Jordan was almost split apart in Black September. Algeria lost a

million people in its anti-colonial war against France and another 200,000

in its civil war of the 1990s. Yemen had multiple civil wars even after

unification. Gaddafis Libya was just surreal.

Yet trauma did not produce economic miracles in the Arab world.

Why? The answer does not lie in autocracy alone since Taiwan, Thailand,South Korea and Indonesias economic miracles occurred under military

dictatorships. Why do Silicon Valleys supply chains for cellphones, laptops

and disk drives lie in Taipei, Bangkok, Penang and Pusan, not in Cairo,

The fall of Three auTocraTs in 2011

by people power uprisings armed

wiTh TwiTTer, facebook and al

Jazeera have changed The rules of

The game.

Amman, Damascus and Algiers? Why did the Arab

world not create an Infosys, a Samsung, a Singtel or

a Taiwan Semiconductor?

Trauma led to an obsessive focus on economic

development in Asia but not in the Arab world.

Why? Firstly, the petrodollar bonanzas since

the 1970s have created rentier economies and

entrenched dictators. I see Joseph Stieglitzs oil

curse in the rubble of Tripoli and Baghdad. Socialist

policies ruined economies, as in Baathist Syria or

the FLNs Algeria. The Arab-Israeli wars nurtured

mukhabarat states that were run by secret police

elites clueless about the capitalist ethos. An Arab

intellectual elite did not emerge to persuade the

pinnacles of power with a vision for reform, though

President Mubarak sought legitimacy in pro-market

reforms after the 2004 devaluation of the pound.

Huge state bureaucracies made privatisation

dangerous for Arab governments afraid of legions of

jobless youths. The education systems in the Arab

world were unable to create a Bangalore, let alone aSingapore. The Cold War subordinated economics to

geopolitics. Intra-Arab trade was miniscule. Political

instability led to the export of more than $1 trillion

worth of private Arab capital to the West.

The exceptions to the dismal economic tragedies

of Arab history were small Gulf microstates that

created trading, logistics or finance hubs, notably

Dubai, Qatar and Abu Dhabi. Bahrain replaced

Beirut as the offshore banking hub of the Middle

East in the 1970s but has now lost its allure after

the tragic events of 2011. Kuwait is paralysed due

to a continual power-struggle between the National

Assembly and the government.Saudi Arabia leveraged its crude oil windfall to

initiate a $130 billion development programme and

$60 billion worth of arms purchases. The prices of

crude oil and LNG are the most attractive measures

of growth, not entrepreneurship or high tech

innovation. The Arab world desperately needs to

rethink its development model, as the fall of three

autocrats in 2011 by people power uprisings armed

with Twitter, Facebook and Al Jazeera have changed

the rules of the game. History has finally gone fast

forward with a vengeance in the Arab world and the

stakes are nothing less than regime survival.

IllusTrATIon:TAr

Ak

PArEkh


25/116

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26/11626 /DECEMBER 2011

OPINION

COMMENT

Following a year of global surprises, being a better leadershould be the priority in 2012

are you a people person?

its hard to believe that another year

is coming to a close. When I reflect over the year it has been exciting,

exhausting and definitely unexpected. Coming into 2011 few would have

predicted the defining events of the Arab spring, Japanese Tsunami and

the escalating debt crisis. The year has raised lots of questions for leaders.

At the end of each year, I pause and reflect on a particular dimension

from the previous 12 months. Last year, I pondered insights I gleaned from

CEOs. This year I am reflecting on the questions I was asked. Here are a

few of them:

Repeatedly throughout the year, senior leaders asked, How can weenhance our culture? Having rightfully recognised that they did not have

the culture that was going to enable their business to achieve its future

success, these leaders were ready to embark on creating the future culture.

Some organisations claimed they had no culture, but this is not true. Every

organisation has a culture even though it may not be clearly stated or

what they want. But they still have one.

The first step was to settle on the vision for the future. Then we worked

with these organisations to state what the shared values, attitudes and

practices will be. While this was a fun and exciting project for most

organisations, it will fall short of the desired outcome unless socialisation

happens, bringing the created culture to life through the employees. This

happens best through the highly specialised practice of identifying and

bringing to life the desired leader behaviour.Another question was, What do we need to do to grow greater than

the market growth rate? Numerous times I was asked this. The formula

is simple, but putting it into action is very challenging, as it requires a

Some organiSationS claimed theyhad no culture, but thiS iS not true.every organiSation haS a cultureeven though it may not be clearlyStated or what they want. but theyStill have one.

metamorphosis in leadership actions.

First, you need to understand where your

fail point is. Most businesses use their existing

operating box as the measure on how far to push

the boundaries. This orientation only allows for

incremental growth. If you think of growth as going

beyond the outline of the square then you are limiting

your opportunity based upon the past. To visualise

this, draw a square on a piece of paper representing

your current size. Now draw a dotted line around

the square that is at least two times the size of the

square. Lets assume this is your fail point. The area in

between the square and your fail point is your growth

zone. Instead of allowing your growth potential to be

defined by yesterday, allow it to go to the fail point.

Second, you need to understand the workforce

practice of creating competitiveness through surplus

value. This is a very simple concept but ignored daily

across the region. Draw an X and Y axis. The X axis

is workforce input (hours worked) and the Y axis issales output (units created, service, products, whatever

you sell). Currently there is equilibrium between the

two. So the errant thinking is in order to increase

the output, then you need to increase the input

accordingly. This thinking will keep the equilibrium

but to increase your competitiveness you need to move

to surplus value, which is the output growing at a

greater rate than the input.

A repeat question for 2011 was What does it

mean to lead a multi-national workforce? Leaders

need to be aware of and understand the following

realities: first-generation corporate societies, market

life stage starting points and adjustments, beingmulti-lingual in one language and managerial honour

and shame. These are the hallmarks for successfully

leading a multi-national workforce.

As I reflect back over the year there is one question

that I was not asked much about How do I become

a better people leader? Surprisingly, the basic of

people leadership is currently a differentiator across

the region. Leaders lead people, not processes or

strategies (you create those).

People leadership is the cornerstone of becoming

competitive through surplus value and accelerating

ahead of the market growth rate.IllustRatIon:taRak

PaREkh

Dr Tommy Weir, advisor onfast-growth and emerging

market leadership, andauthor of The CEO Shift


27/116


28/11628 /DECEMbEr 2011

OpiniOn

COMMENT

Einstein said the denition of insanity is doing the same thing

ove and ove again and expecting diffeent esults.

Tarek Miknas FP7 Group CEO

The ad indusTry musT change

weve been saying foryears that it couldnt go on like this. We knew it had to change. Weknew things werent being done right. It was our guilty little secret something that made us feel constant discomfort. And despite knowing

all of this, we just kept doing things the same old way. It was easy, it

didnt make waves, it was the way a lot of powerful people wanted it,

and lets face it we were making good money.

Am I talking about the Arab world in general? Or am I talking about

the Arab worlds advertising industry? Its not hard to tell. Im talking

about both.Theres one thing we all know by now, one thing we have to face up

to now: the old way of doing things is over. From that slap in the face in

Tunisia, through Tahrir Square, the Pearl Roundabout, and on to Algiers,

Sanaa, Jordan, Oman, Libya, Syria and elsewhere its all over. And

accordingly, for anyone who cant face up to this - its over too.

Clients, creatives, media planners, suppliers all of us are going to

have to do one thing. And thats listen. And once weve done this, were

going have to do another thing. We have to change. We have to hear

what were being told by our people, who are not, and never have been,

just consumers. They are our partners. They want it done right; they

expect accountability and honesty; they expect to be treated with respect;

they expect to be told the truth; they expect to be listened to; they expect

to be engaged and they always hope to be part of the solution.So the whole debate about digital as the way forward has to become

a thing of the past. After weve seen the life-altering videos shot on

mobile phones, the monumental influence of Facebook and Twitter, any

brand that hasnt got mobile and online at its heart from now on, is

Weve got to foster the belief

in partnership, mutual respect,

education, clear objectives and

fair reWards.

taking the same kind of risks as Mubarak.

That said, being present in the right channels

isnt the only challenge the quality of the work

shown across all media, including digital channels,

television, outdoor, in print and everywhere else,

just has to become better. We all have to do what

we should have been doing all along the good

stuff; the work thats honest; the work that people

relate to; the work thats a conversation and not an

order; the work that (oh yes) wins awards for the

right reasons.

Weve also got to do something a lot of us

havent yet considered. Weve got to treat one

another properly. Weve got to foster the belief

in partnership, mutual respect, education, clear

objectives and fair rewards.

Weve always known we had to change at

some point. What we know now is that wewont survive if we dont. On the inside, on the

outside, in our behaviour, in everything we do.

This includes our motivations lets stop looking

at short-term profit, and lets tap into the power

of creative communication and its ability to make

things better.

Todays conversations are about solutions.

Thats what our partners want and thats what our

consumers (also partners) want. The briefs we take

from clients should be how to help solve a business

issue and the result, in any form, be it a television

commercial, a microsite or a subtle product

placement, should be a good result.Nobody could have predicted the changes that

were to take place in our region and nobody did.

Its time we question our structures, our recruitment

policies, our integration models and most

importantly, build a sustainable ethos to keep the

faith inside and out.

We know it wont be easy. We accept that it may

be misunderstood and it may well give us problems

on the bottom line for a while.

But theres one thing thats crystal clear as we

look around our region today its time. And its

our time.

IllustratIon:CHarlIEb

analo


29/116


30/11630 /DECEMBER 2011

briefingREgional tREnDs, analysis anD viEws

The reTurn of remoTe bankers

cash drought

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tExt By Ryan HaRRison

123R

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31/116gUlF BUsinEss/ 31

BAnking briefing

There are banks in

The region ThaT are

suffering because

Their main revenue

sTream is equiTy

markeTs. The onlyway banks can meeT

Their financial

obligaTions is To

decrease cosTs. of

a banks profiT and

loss, 60 per cenT To

80 per cenT is made

up of salaries.

comp. sor xcuv

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m prod 2010, ccordg o nw

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tol f 2011 r 71 pr c lowr

h h fr moh of 2008,

wh f pkd $1.1 llo.

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of fcl hdhur tylor Hofr,

ddd: Horclly, k hv lwy

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quckly. th hvour h mom

ohg w.h ddd.

Prur o mk vg hom

h lf rol plyr wh ll

ivetmet bk nomur recently

disbanded its Dubai-based equity

research team of several people as a

result of low trading volumes, although it

said some leading regional companies will

continue to be covered by London-based

analysts.

Frce Crdt arcoe closed its

M&A unit in Dubai this year, aiming to

manage deals from elsewhere. It came

after news that investment banking fees

in the Middle East declined 35 per cent

to $316.6 million in the third quarter

compared with the same period a year

earlier, data from Reuters found.

Zurch-bed EFg iterto said

it is closing its ofces in Dubai and Abu

Dhabi as it conducted a global review of

its business. HsBC, Europe bet bk, said it

will stop offering brokerage services to

retail investors in the UAE and focus on

institutional clients. The bank will also

close its consumer operations in Kuwait

as part of a strategic review.

Meanwhile, four investment bankers

from Crdt arcoe MENA operation

Kanhaiya Rathi, Kawtar Benkhraba,

Pravin Chelluri and Rami Barazi have

been hired by UBs in Dubai. They will be

working for the Swiss banks corporate

advisory group, reporting to AlbertMomdjian, according to reports on

Bloomberg.

Credt sue dissolved its Middle East

equities research team.

closing time

choc u o p ck from h rgo.

bu hrd o mg h locl

vor d u wll wlcom

ck h m k wh op rm

wh hy dcd o rur.


32/11632 /DECEMBER 2011

BRIEFING LiBYA/GCC

After GAddAfi

back to black

Lbyas supsngly spy un

o ol poucon coul spak mx

lngs n GCC couns.

TExT By Ryan HaRRison

As dramatic comebacks g,

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Libya has not shown GulfArabs preference withawarding oil contracts.

aFP


33/116

BLE

AT

UDUBAIMALL..

RD.COM


34/11634 /DECEMBER 2011

Dubais upbeat air show

Cleared for landing

L mn vn f d

ld ly k f d

fm Glf ln.

TExT By pETER shaw-sMiTh

70 Airbs A350s, 40 777-300 ERs an six

Boeing freighers on orer, for a oa of

239 wie-boy aircraf worh more han

$92 biion. However, Emiraes was coy

abo he iming an financing of he

Boeing 777 orers, which wi ikey be

sprea o over he nex ecae.Sheikh Ahme cae he 777 he

backbone of he Emiraes fee, b

of he oa goba A380 fee of 60

eivere an 243 on orer, Emiraes

has 16 in service an 74 on orer,

making i easiy he arges operaor

of he sperjmbo. I is no iffic o

envisage he hrea eve perceive by

he wors eaing Wesern airines

from he formiabe power Emiraes

has gaine by is access o wo of he

gobes mos poen aircraf.

WHIlE tHE SuBduEd gobamacro-economic oook is givingmany inernaiona bsinesses case

for concern, ceary no one has o

Emiraes or he powers ha be in dbai

abo he scae of he ownrn. A

press ime, orers oaing $63 biion

were annonce a dbai Air Show 2011,

nerining he exen of he regiona

aviaion boom, an making he even

a mch bigger sccess in financia an

orer-book erms han ha of 2009.

In dbai Air Show 2011s heaine,

HH Sheikh Ahme, chairman an chief

execive of Emiraes Airine, annonce

a day One orer for 50 Boeing 777-300

ERs worh a is price $18 biion, wih

opions on 20 more, worh $8 biion, for

a oa of $26 biion. this was he biggessinge orer in he hisory of he American

manfacrer an a boos afer is ravais

wih he 787 dreaminer.

As he arges operaor of he 777 in he

wor, Emiraes has paye an imporan

roe in eveopmen of he airpane an is

inp over he years has been invaabe in

he eveopmen of he 777 programme,

sai Jim Abagh, presien an CEO of

Boeing Commercia Airpanes.

In aiion o he 50 777-300 ERs

orere, Emiraes has 73 Airbs A380s,

Emirates announced $26 billion

worth of orders at the show


35/116GULF BUsiNEss/ 35

aviation BRIEFING

GE Aviaion won $14 biion of engine

orers a he show, some $6 biion of i

evoe o he sppy an mainenance,

repair an overha [MRO] of he GE90-

115B engines o be insae on he new

Emiraes 777-300 ER jes.

the oher eye-opening ea o emerge

from he air show invove he acics of

Qaar Airways chief, Akbar A Baker, in

facing own Airbs in negoiaions over

pricing for a is A320neo orer. In he

en, he chose 50 A320neos, wih five

A380s hrown in, a is prices of $6.4

biion, an was sai o have hmiiae

Airbs wih choice angage referringo eays in he A350 programme. In

aiion, Foria-base Spiri Airines

signe a ea for 45 A320neos an 30

A320s worh $6.8 biion.

the MRO marke in he region ooks

se o boom wih severa payers hoping

o cash in on he boom in regiona civi

aviaion. Emiraes Grop signe a ong-

erm eaership raining agreemen wih

Ros-Royce, aowing Emiraes op

uAE naiona managers o ake par in

Ros-Royces eaership an bsiness

managemen eveopmen programme inhe unie Kingom.

Ab dhabis Mbaaa is areay an

esabishe payer in aviaion hrogh

severa join venres, incing whoy-

owne Ab dhabi Aviaion technoogies

in he capia, an a 70 per cen sake

in Zrich-base SR technics. the

Avance Miiary Mainenance Repair

an Overha Cenre (AMMROC) is a

join venre for efence aircraf MRO

wih Sikorsky, o which lockhee Marin

enere in Janary.

Aviaion ease an finance company

AlAFCO of Kwai increase is orer

for A320neos o 50 from he 30 originay

signe a he Paris Air Show in smmer.

Airbs sai he vae of he ea a is

price was $4.6 biion. the company

aso ook o opions on 30 more. I aso

compee he ransfer of six dreaminers

o Oman Air.

On ay five, he Air Show was

innae by 700 Emirai sens from

uAE coeges an niversiies sporing

coorf scarves an regaia samping

he amosphere of he show in a Fres

day esigne o nerine he appea ofcareers in he aviaion insry.

Wih a 25-conry office nework

areay in exisence, Aircraf broker CB

Aviaion annonce he opening of a

new office in dbai, an name Saee

A Mansori as is vice presien for he

Mie Eas an Africa. We are focsing

effors on hese regions, which, accoring

o goba saisics, wi see growh raes in

oca orism an aviaion oching 20 per

cen of goba figres, A Mansori sai.

I is sai ha he vome of invesmen

in projecs in he Mie Eas wi excee$330 biion over he coming years.

dbai Airpor Expo is o be emoishe

o make way for anoher ermina a

dbai Inernaiona an he dbai Air

Show 2013 wi ake pace a dbai

Wor Cenra in Jebe Ai. Sheikh Ahme

confirme ha Mie Eas Bsiness

Aviaion 2012 wi aso ake pace a he

new Jebe Ai compex. Wih he wo

evens now aernaing each amn,

dbai has firmy esabishe isef as one

of he wors eaing marke paces for

he aviaion insry. Wih a forh majorermina faciiy ner consrcion a

dbai Inernaiona, he reocaion of he

air show ooks se o offer he governmen

of dbai he opion o bi a fifh a

dbai Inernaiona.

looking ahead, the contrast between

Chapter 11 bankrptcy rmors among

uS carriers and the inexorabe ascent of

the Gf carriers cod not be starker.

Congestion and red tape are not making ife

for the Eropean carriers any easier either,

and governments ooking to be on the take

from passenger activity in the form of tickettaxes and environmenta charges are ony

making the strgge more diffict.

this is nohing shor of a major

re-aignmen of marke shares an of

economics of boh scae an capaciy

se, since he new mega airpors in he

Gf area sffer no fying resricions,

aowing he bes iisaion of he newes

an mos echnoogicay-avance fees

fon anywhere in he wor, wroe

dr. Wofgang thome in a repor for EtN

pbishe as monh.

Akbar Al Baker, CEO of Qatar Airways

akbar al baker was said to have humiliated

airbus with his choice language as he attacked

the plane maker for delayed production.


36/116

C E N T R A L B A N K O F T H E U A

INTERNATIONAL BANA C C O U N T N U M B E

S a f e r a n d s e c u r e b a n k t r a n s f e

IBAN, the mandatory bank account number for payrolls/salaries,remittances and e-payments, is now effective.

The International Bank Account Number (IBAN) is a 23-digit alphanumeric sequence that has

become the official standard for money transfers (including salaries, international remittances

and e-payments) in the UAE. Your IBAN will be automatically generated and communicated to you

by your local bank.* If you have not received your IBAN by now, please contact your local bank.

Visit www.centralbank.ae

*If you have multiple bank accounts, you will receive multiple IBAN notifications.

SECURITYis what IBAN means

to my business



finance BRIEFING

Sukuk on the riSet islamc fdg l as jyd a cd

ya as Glf fdg ds gw.

The Middle east sukuk mrkx 2011 n joy moo. Fun

r roug sukuk w r r-fo

yr, o g njoy bfor

fnnc cr.

t currn probm of non-imc

nb europn non v

conr ncy w mp

sukuk, or imc bon, pc on

bnc, rk-rng n -b

pproc. in, imc fnnc fn

n Wrn conom cou

rn ng or wo bou u of

convnon n. sukuk ur py

bonor w cfow gnr

by pcfc , wc r pu no

pc-purpo vc pr of

. i rucur wy o vo

imc probon on nr pymn.

W convnon bon, bun

wou py nr o bonor,

n vnuy rm bon.

t buy of sukuk y r

nk o rvnu proucng , n

or wor, r conomy, y

Yuuf d lornzo, n npnn

sr cor. if rvnu op,

r bckop.

Mor mporny, concp

bn sukuk y r no b

nrumn, bu ybr ook

n prform k bon wn y rcuy form of quy nvng.

tu, nvor buy r of bun

n ffcvy bcom ur,

govrnmn, prnr n bun

nrpr, .

Or y no mr ow you

pn , compn r on ook

o r imc bonor. db

b. an n Guf, propry vopr

Nk bn cu of o of

cpcm. i cou b rgu

Safe aS houSeS?

TExT By RyaN HaRRISoN

sr-compn b nrumn nGCC counr n or Mum rgon.

Nry $17 bon w r roug

sukuk n fr nn mon of 2011,

ccorng o su arb bnk NCB, n

mprv prur from roun $7.6

bon n 2009 n $6.1 bon n 2010.

in 2007 cmx of x-yr boom

for Guf sukuk unc

$18.7 bon.

som n imc fnnc wor y

bg pp of sukuk cncy

compny no ung b n

Over $5 billion in Gulf Sukuk willchange hands in 2012.

The concepT

behind Sukuk iS ThaT

They are noT debT

inSTrumenTS, buT

hybridS ThaT look

and perform like

bondS when They are

acTually a form of

equiTy inveSTing.


38/11638 /DECEMBER 2011

BRIEFINGGcc

Fw wou rgu ovrgn u

n counry w wor x rg

Mum popuon cou b cyc. Y

goby, My ccoun for

on r of sukuk mrk, by mo

m bou wo-r. in fr nn

mon of 2011 u $43.5 bon, or

69 pr cn of wor o. evn or

counr conrbu r. t x GCC u combn $16.1 bon or

25 pr cn of o. Nw nrn

yr ncu Ymn, irn n Jorn.

t GCC o wou v bn mor

bu xpr y w nr pry

by unr n mny pr of

MeNa rgon.

a 2012 rrv, Guf xpcng

prnkng of nw unc. Mo

urprng prp Brn, wc

xpc o $1 bon sukuk n

nrnon mrk, brv mov

conrng poc vonc connuo fr up n Kngom.

Mnw, dub imc morgg frm

tmw ugg w conr

ung mu-mon or sukuk, o

on of mr nnouncmn by

a h Bnk n spmbr.

if nx yr urn ou o b nyng

co o grow wn yr,

r r pny of gn for opmm.

t conr bwn eurozon b

wo n GCC imc bon mrk

cou g rpr.

sukuk r rky, up un pon

ur fu.

s, sukuk v prov wy

uccfu mong Guf nvor

crv n rnv o pcuv, b-

vrg Wrn bnkng mo.

Mny y imc fnnc

vc popury rwn from

m pp. Jw a, w frm Kng& spng mngng prnr for

M e offc, y: sukuk

f py n Guf bcu you on

n nvor. i opn o non-

imc nvor n sr compn

on quy.

t propc of ug conrucon

b for m nfrrucur projc

forc mny Guf o urn o sukuk.

Qr, wc fc prp mo

unng k, w ncrngy u

imc nrumn for projc fnnc.

som w b corpor sukuk, uby nvu compn, bu r

mp of govrnmn ookng o

u ovrgn sukuk.

Qr xpc o pn roun

$100 bon ovr nx fv yr o

prpr n vr nfrrucur

rqur o uppor ug nfux of

vor forc o n 2022 FiFa

Wor Cup. t conrucon cor n

su arb n Kuw r m

o pn $420 bon n $63 bon,

rpcvy, ovr nx r yr.

sukuk fvr pr byon

GCC, w rumour

govrnmn of egyp n lby w b

nx on o k pung. Bo

w u sukuk for r mv rbu.

in wk of rvouon

opp egyp ong-m r hon

Mubrk, counry fc rou

fnnc crunc n funng gp

o mor n $12 bon. i woub 80 mon Mum non fr

ovrgn sukuk, fr r c of

rrcon from Mubrk rgm

un imc fnnc nury.

Nl Mllr, global had of ilamc

fnanc at KPMG, ay: it a chanc

to njct nw captal nto a country that

nd nw captal. if egypt dd u

a sukuk t would play nto th ovrall

narratv of Mddl eat ilamc fnanc

trngthnng, vru th mght of

Malaya, h add.

Sukuk iS a Safe

play in The gulf

becauSe you donT

alienaTe inveSTorS.

iTS open To non-

iSlamic inveSTorS and

Shariah complianT

oneS equally.

sukuk pIpElINE 2012IssuER CouNtRy sIzE

aCWa Power Interntionl Sudi arbi $300 million

Etislt Sukuk Compny UaE $1 billion

Sudi Electricity Compny Sudi arbi $1 billion 1.5 billion

al Hill Bnk UaE $500 million - $1 billion

Dubi Bnk UaE $500 million (rumoured)

abu Dhbi Islmic Bnk UaE $544.5 million (rumoured)

abu Dhbi Commercil Bnk UaE $95 million (rumoured)

Skn Holistic Housing Solutions Bhrin $50 million (rumoured)

Dr al Dhbi Compny Kuwit $363.1 million (rumoured) Holding00 million struck since Ester.


39/116


40/116


41/11641 /DECEMBER 2011

BRIEFINGcommodities

Is t yw ta si sta

ati t?

TExT By yaDullah ITallah

The gold conundrum

uncertain times

owngae, a wosening Euozone

soveeign ebt cisis an the ackuste

efomance of many assets ove

investos to incease hoings in go inoe to otect thei weath.

Given gos oven isk mitigation

oeties, it is ikey that investos

wi continue to seek otection fom

economic uncetainty, which shows

no signs of abating. The ong-tem

funamentas fo go emain stong

with a ivese an gowing eman

base coue with constaine suy-

sie activity.

Ovea, go eman eache an a-

time high in vaue tems, ising $57.7

biion in the thi quate, with gobas an go exchange tae funs aso

osting obust gowth.

Goman Sachs, the goba investment

banking giant which usuay cas

coecty on commoities, has aise its

thee-month foecast by seven e cent

to $1,760 an ounce, six-month foecast

by 5.8 e cent to $1,830 an 12-month

foecast by 3.8 e cent to $1,930.

As we exect, go ices wi

continue to be iven in age measue

by the evoution of US ea inteest ates

GOld AppEArS TO have came

own afte a beathess un eaie

this yea that saw ices un u 22 e

cent an omise to coss the $2,000

an ounce baie fo the fist time. But

the ay stae the minute the ice

hit $1,900.16 in August. Since then,

the yeow meta has ithee an

emaine iectioness.

Oinion emains ivie on whee

the yeow meta is heae next: go

bugs say that with the wo (o at eastthe EU) going to he in a han basket

the egenay safe haven meta is just

taking a beathe befoe its next incine.

Go naysayes oint to the fact that

go has ost its steam, evience by the

fact the meta i not beak a ecos

afte Stana & poos owngae

US soveeign atings an the EU has

caeee ove the ege in the ast

few months. Instea, go ices have

emaine ange-boun aong the $1,700-

1,800 ban.

The imotant oint to note is that

go has gone nowhee an that offes

some cue as to whee its heae.

Fo one thing, ets ut things inesective: go has isen by 600 e

cent ove the ast ecae. The fact that

ices havent cashe an ae hoing

steay suggests that this ay has moe

bite than the go oubtes wou ike

to beieve.

Secon, thee is continue buying

of the yeow meta. lots of it. Centa

banks, often seen as key ives of go

ices, bought neay 150 tonnes in the

thi quate, the highest in fou ecaes,

accoing to the Wo Go Counci

(WGC). The banks have been net buyesof go since ast yea, iing into the

meta as a way to boost thei foeign

exchange eseves.

Unsuisingy investment eman

fo go was a key ive uing the thi

quate, sai Macus Gubb, managing

iecto, investment, at the WGC.

To be fai, the WGC is a obby gou

fo go ouces an it has a tenency

to tak u the meits of the yeow meta.

Sti, Gubb has a oint: Inceasing

eves of infation, the US ceit ating

123Rf

The price of gold has risenby 600 per cent over thelast decade.


42/116Gulf BuSINESS/ 42

commoditiesBRIEFING

an with ou US economic outlook

pointing fo continue low levels of

US eal ates in 2012, we continue to

ecommen long taing positions in

gol, the bank sai in a note to clients,

aing that the Euozone ebt cisiscoul futhe push gol upwas.

US Global Investos, a mutual fun

investment company, says negative

eal inteest ates in the US will popel

investos to seek gol fo its peceive

safe haven qualities.

Gol an the US geenback ae

negatively coelate an its pobably fai

to say that much of the commoity pice

spike is ue to the US Feeal reseve

pinting ollas with shee abanon.

So its no supise that gol pices

have been eine in as the US olla

ecently tune into a safe haven ue

to the EU cisis an, paaoxically, the

US owngae.

But Fench bank Socit Gnale

notes that the ollas safe haven tag has

limite appeal as the Feeal reseve

coul embak on a thi oun ofquantitative easing by the en of the yea

o ealy 2012.

The bank has cut its outlook fo gol,

but not by much.

Fo 2012, we now expect gol pices

to aveage $2,175 an ounce, vesus

$2,275 in the pevious foecast.

In the shot tem, analysts expect a

bust of cental bank buying an the

holiay season to boost gol pices.

Toonto domino Bank, Canaas

secon lagest financial institution, oes

not sit on the fence when it comes to thepospects of gol:

We expect pecious metals to be a

top pefome in 2012, with gol pices

heaing towas $2,100. Histoy shows

that easy monetay policy an economic/

financial stess ae suppotive fo gol

pices an this envionment is likely

to pesist thoughout the next yea, the

bank notes.

In aition, the much toute love of

the Inian an Chinese consume fo

gol shoul also ensue pices hol up.

But Inian jewelley eman was

own 26 pe cent uing the thi

quate, which sens a contaictoy

signal that consumes ae slowly being

pice out, leaving only speculatos

jumping on the gol banwagon. We can

be cetain that these investos will exit at

the fist sign of touble.While its tough ight now to fin

analysts who ae beaish on gol, investos

woul o well to move with caution.

Fist, we ae in a new ea of global

financial maket volatility, which makes

histoical technical chats eunant.

Makets have vacillate fom ecstatic

highs to epessing lows, an it is

possible that a few key ecisions in

Washington an Bussels coul issipate

the ak clous hoveing ove the global

economy, leaving gol with little cove.

Secon, if the global economycontinues to meane, investos will

be keen to take pofits fom thei gol

holings to compensate fo losses

elsewhee, keeping pices in check.

Thi, as gol has isen 600 pe

cent ove ten yeas, even a mi-size

coection may not be unwaante

an may not signal the complete

an utte ecline of the pecious metal.

But investos who move in at cuent

pices coul fin themselves staing

own a cliff. alifaabia.com

Gold buGs say thatwith the world(or at least the eu)GoinG to hell in ahand basket the

leGendary safehaven metal is justtakinG a breatherbefore its nextincline.

18 Nov 06

200

400

600

800

1000

1200

1400

1600

1800

2000

18 Nov 07 18 Nov 08 18 Nov 09 18 Nov 10 18 Nov 11

$

once

0


43/116


44/116



RAKBRIEFING

Te nrtern Emirates eisty annal

bsiness cnerences are drawing in

new investrs.

TExT By PETEr Shaw-SmITh

RAK To ThE fuTuRE

investment

happeed verght. Whe a Emrates

plt, wh was pag fr a ew vlla at

RAK Prpertes, sad 2007 he lved

the dea f t havg t bther wth the

traffc ad fmes f Dba hs dal

rte a mre, cld sese a

qe sellg pt.Last ear, after teamg p wth

teratal evet prmt grp

Hrass, Shekh Sad pt the Aal

Glbal Arab Bsess Meetg Ras

Al Khamah.

Led b charma ad e-ma team,

Dr. Frak-Jrge Rchter, Hrass has

bee rgasg evets ard the

wrld fr sx ears ad ths ear pts

cfereces Valeca, Lxembrg ad

Zrch. Swtzerlad-based Hrass has

bee actve sce 2005.

WHEn you LiVE p the radfrm Wrld Cferece Cetral,

trg t attract peple t cme t

r w mre mdest smpsa s a

challege. Resrcefl Ras Al Khamah s

deterred.

Shekh Sad b Saqr Al Qasm,

Spreme Ccl Member ad Rler

f Ras Al Khamah, s thg f

t a ca hst. Sce takg ver

maagemet f the emrates affars

2003, he has presded ver a flwerg f

ts ecm, w $4.5 bll sze.

Dwtw RAK s t fr the fat-

hearted. Wth pr rads, ad lttle

mre tha a mall ad a qat ad

dated vers f the Hlt Htel, mst

peple ecter t l f the fac

campg the Mssadam Pesla r

a chat wth e f the strgglg cemetcmpa CEos.

Bt the Hamra Resrt ctes t

blssm, wth several ew ametes ad

the pctre pstcard vstas are almst

a match fr the best that Dba has t

ffer. The ew Palace Htel s the heght

f lxr, smpts twhses stretch

as far as the ee ca see, ad a ew

aqa-park ad apartmet develpmets

- cldg a ffshre slad - are gg

p alg the seashre.

The effrt t prmte RAK has t

RAK gateway project.


46/11646 /DECEmBEr 2011

BRIEFINGRAK

RAKs business model Relies heAvily

on inwARd investment: officiAls sAy

thAt 39 peR cent of investoRs ARe fRom

indiA, 19 peR cent fRom the middle eAst

excluding the gcc, And 15 peR cent fRom

the gcc itself.

i chose RAK as the emrate has great

potental, says Dr. Rchter. And we

sally chose locatons wth a resort

character. Ras Al Khamah s an deal

locaton to hold or Global Arab Bsness

Meetng. The Rler s a great spporter.

in trth, the qalty of the debate

at the conference dd not match that

sometmes encontered when the bg-

htters converge on Dba. The otcome

of the dscssons seemed to be that the

volatlty cased by the Arab Sprng was

no bad thng for resorcefl Mddle East-

based entrepreners. Bt as a platform

for nvestment n RAK, t was perfect.i have attended a nmber of Horass

meetngs, ncldng last years event n

RAK. They represent a great networkng

and learnng platform, says Wolfgang

Lehmacher, partner and managng

drector for Greater Chna and inda,

of CVA, a global strategy consltng

botqe. They are nternatonal

and local at the same tme, allowng

partcpants to realse vews beyond

the snapshot of the regonal staton

and ntentons.

At a lnch served n two packedadjonng restarants, a Greek PhD from

Cambrdge unversty set ot her desre

to commercalse her companys cancer

research - and how possbly to nvolve

RAK edcatonal nstttons. An indan

bsnessman earnestly entreated a Dba-

based Emrat over hs latest bsness

plan. A German iT exectve who dvdes

hs tme between Pars and Hong Kong

sad RAK, wth more nformaton, mght

be worth a second look. An indan

banker and fnd manager took Shekh

Sad to one sde to mpress on hm the

need to mprove local edcaton.

Recent regonal consoldaton has

corrected nsstanable [projects] and s

refocsng bsness on fndamentals,says Mr. Lehmacher. Ths makes for

sold perspectves n the regon. Ras al

Khamah offers exactly ths perspectve.

it s a dynamc emrate, ntendng to

nvest n knowledge management and

edcaton. RAK represents fertle grond

for many bsnesses.

RAKs economy has held ts own

drng the downtrn and new projects

and warehoses sprng p reglarly. its

bsness model reles heavly on nward

nvestment: offcals say that 39 per cent

of nvestors are from inda, 19 per cent

from the Mddle East excldng the GCC,

and 15 per cent from the GCC tself.

Dr. Khater Massaad, who blt the

largest ceramcs company n the world,

RAK Ceramcs, was on hand to explan

that the RAK investment Athorty, whch

he also heads, s home to over 9,800

companes, of whch 800 are ndstral.

Total ndstral nvestment n RAKiA to

date exceeds $3.5 bllon, he sad.

Alex Thomas, general manager,

marketng, at RAK investment Athorty,

ponted to ncreasng mgraton from

GCC companes as a key to RAKs recenteconomc sccess, althogh he cold

not comment on uAE companes movng

to the emrate. Costs are an mportant

factor, he sad.

RAK has proved remarkably adept at

attractng foregn nvestment and has

sezed every opportnty to sell ts brand

nternatonally. Why dd Dr. Rchter

choose RAK over Dba to host hs

event? Probably becase he realsed that,

ltmately, more new bsnesses wold

be ncbated as a reslt.

We are not a conference organser,says Dr. Rchter. Conference organsers

sally nvte a few star speakers. And

500 people st and applad. We want to

nvolve everybody n an actve daloge;

thats the reason we nclde so many

boardroom daloge panels. Partcpants

sally stay on drng the whole

meetng, [as opposed] to conferences

where speakers come and leave.

And as the new enterprses

mshroom n RAKs ndstral zone,

yo can see why.

Sheikh Saud bin Saqr Al Qasimi, Supreme CouncilMember and Ruler of Ras Al Khaimah.


47/116


48/11648 /DECEMBER 2011

Its been a spellbIndIng year. as the arab world fought

for freedom, the wIder world battled economIc woes and

an uncertaIn future of Its own. Gulf Businessasked the

regIons top busIness mInds what the future holds In 2012.

THE POWERcompiled BY alicia buller

illustrations BY rom miclat



cover story

LETTERS


50/11650 /DECEMBER 2011

- th ogansan f h plumexng cuns (opec) was

fundd n Baghdad, iaq, n 1960

by v uns. cunly, has 12

mmb uns.

- opec uns suly abu a hd

f h wlds l.

- rnly, h gansan u s

glbal nm gwh fas f

2012 3.6 n fm 3.7 n.

fast facts

Abdalla Salem El-Badri,Secretary General, OPEC

our 2011 World Oil Outlook, which was

released in November, OPEC Member

Countries are expected to invest close to

$300 billion in 132 upstream investment

projects through 2015.

Moving forward, of course, remains

challenging. But such investments are,

as I have often said, the lifeblood of

the oil industry. Without investments

now in exploration, production and

expanded capacity future supplies

may not materialise and future needs

may not be met. And this is something

neither consumers nor oil producers

can afford.

Our Member Countries know this very

well. That is why OPEC consistently

expresses its interest in ensuring the

security of supply to all consumers

and, through its Member Countries,

maintains a commitment to investments

in new projects.

While the current global outlook

provides little security to producers and

investors, we must remember that future

oil supply depends on ongoing and timely

investments in capacity expansion. They

are central to ensuring future supply.

What motivates us is, of course, an

interest in satisfying the worlds energy

needs and striving towards stability in

the market. This is what our Member

Countries always try to keep in mind,

in line with our broader organisational

mission. It is only in this way that OPEC

can continue to be ready to act when

necessary despite what the global

outlook may show.

Giving an assessment of

the global oil outlook for

the short and medium-term

is notoriously challenging.

But offering views on the outlook for

investments in the industry, especially

given recent economic and financial

developments around the world, is even

more difficult.

Continuing unemployment and a

manufacturing slowdown in the US, as

well as a growing sovereign debt crisis

in Europe, have recently prompted OPEC

to revise down its economic growth

forecasts for 2011 and 2012 and,

consequently, oil demand. And despite

rapid growth in developing countries,

great uncertainties remain about a

sustained and broad-based recovery in

the major oil-consuming countries of

the world.

There is also the ongoing challenge

of not having a sufficiently stable crude

price environment. Our industrys growth

requires prices that are neither too high

nor too low and which are stable

enough to continue to attract investments.

We should not forget the experience of

2008 when extreme volatility resulted in

prices rising to nearly $150/b and then

falling to around $30/b by the end of the

year. This led to the postponement or

cancellation of more than 30 investment

projects across our Member Countries.

Despite the complex nature of the

economic challenges, our Member

Countries have an ongoing commitment

to capacity investments. According to

energy



2011 has been quite an

eventful year for the global

economy, but the UAE has

weathered the turbulence

well and largely remained insulated from

the impact of the Eurozone crisis. The

UAE financial services industry, being

the barometer of the overall economic

climate of the country, reflected this

stability, which is evident from the

reasonably good performance posted by

UAE banks for the first nine months of

the year.

However, during 2011 there was a

visible shift in the thinking and strategy

of most UAE banks. Having overcome

the impact of the 2008 financial crisis,

banks in the UAE have shifted their

focus internally and have been working

to strengthen their systems, processes,

structure and risk management policies.

Banks are, in general, looking

internally for improvement opportunities.

Most of them are revisiting and

re-shaping their medium to long-term

strategies, revamping their distribution

strategies and identifying areas for future

growth. In short, they are spending time

and efforts to build strong fundamentals

to face the new economic reality.

The after effects of the economic

upheaval witnessed in 2011 in the

Western economies will impact the fast

growing economies of Asia, which are

expected to slow down in 2012. This

will affect the UAE and I expect flat

performance or marginal growth for the

UAE banking sector in 2012.

- mhrq h on ol bnk

n h uae (fr db il

Bnk), wh ol of dh70.9

bllon n n pro of dh756

llon n h r nn onh of

2011. th bnk l on h db

Fnnl mrk.

- mhrq nro h r atm

n r r o h uae.

- th bnk opn 54h brnh n

u sq, db, h yr, whh

nl mhrq Gol cnr.

fast facts

h.e. Abdul Aziz Al Ghurair,chairman, Mashreq

Customers will be more demanding

and banks will be under competitive

pressure. Margins will compress,

customers will demand flexibility,

and won't accept a one size fits all

approach. Banks will be expected to

come up with innovative solutions to

meet customer demands. To be able

to compete effectively in a market,

where growth is flat and customers are

demanding, banks will need reorganise

themselves in line with the needs of their

customers. Quality customer service will

be the major differentiating factor.

Since the financial crisis of 2008,

the global regulatory environment has

changed forever and this will ensure that

banks behave more responsibly. Risk

management will take precedence over

profitability and considerations. Liquidity

and capital management will be the first

priority for banks.

Finally, let me add that changes in

the banking regulations and fiscal

discipline, introduced during the last two

years, will make the UAE banking sector

stronger and will foster long-term growth

in the country.

The after effects ofthe economic upheaval

witnessed in 2011 willaffect the UAE, with flatperformance or marginalgrowth for the UAEbanking sector in 2012.

banking and finance


52/11652 /DECEMBER 2011

H. E. Mohamed Alabbar,chairman, Emaar Properties

real estate, like just about

everything else in life,

is cyclical. The eternal

challenge for homeowners,

investors and developers is figuring

out which way the cycle is moving, and

when it is most likely to shift direction.

Because in real estate, as in life, we all

want to be ahead of the curve.

We want to buy when the cycle is

down, and sell when its up. And, as

developers, we want to build for not

just current but also future demand.

That sounds awfully simple.

Unfortunately, real estate cycles are

complex things, influenced by countless

factors, both local and global, that make

them hard to predict.

So what do we do? Generally,

we study historical trends, current

leading indicators and ongoing price

fluctuations to assess, as best we can,

the direction of the cycle.

Thats one option. Another is to

focus less attention on the vagaries of

the market and, instead, zero in on

underlying demand, asking ourselves:What do people really need, right now

and in the future, that they cant get?

So lets step back for a moment and

look at our region with a birds eye view.

What do we see? A lot of young people,

including millions who need good jobs

and just as many who require quality

homes for themselves and their families.

Our region needs sustainable jobs and

affordable homes. Its hard to miss this

plain fact.

My belief in fundamentals, in the

importance of going back to basics,

is one of the reasons why Emaar,

which has traditionally focused on

affordable luxury developments,

recently launched a new subsidiary - Al

Dawahi Development, a next-generation

developer of value housing projects

across the Arab world.

At a time when the housing shortage

in some of the fastest growing cities in

the Middle East is estimated at over five

million units, Al Dawahi Development

will address the huge demand for

value housing. Creating a new category

of homes and communities that

provide value to young families, we

will create self-sufficient communities

that fulfill the aspirations of Arab youth

and their families.

A back of the envelope calculation

will show that if we can build

40,000 homes annually, it would take

at least 100 years to meet pent up

demand. Clearly there is room

here for not just Al Dawahi, but many

more developers to enter themarket of value housing. However, it

is important for developers to

implement the right business model

that works on volume and a good

supply chain that offers the best prices

for building materials.

Three years after the worlds financial

system nearly collapsed, we need to

go back to basics. After all, as any

builder knows, every project must start

with a strong foundation.

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fast facts

real estate

Documents

Gulf Business December 2011