SPECIAL REPORT: THE LUXURY INDUSTRY REBOUNDS

Vol. 15 Issue 8 December 2010

Mohammad Omran Riad Kamal Abdul Aziz Al Ghurair Samer Majali James Hogan Sameer Al Ansari
ETISALAT ARABTEC MASHREQBANK GULF AIR ETIHAD SHUAA CAPITAL

Abdulla Al Awar Dave Lesar Joseph Anis Ammar AlKhudairy Tarek Sultan
DIFCA HALLIBURTON GENERAL ELECTRIC AMWAL ALKHALEEJ AGILITY

CEO PREDICTIONS
2011
The region’s leading business
minds share their hopes, fears
and strategies
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10
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 April 1819. François Constantin takes responsibility for the worldwide
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CONTENTS
Vol. 15 Issue 8 December 2010

CEO
GCC NOW
12
The top 100
The round-up
News, numbers and people from
around the region.
companies in the
COMMENT GCC
PREDICTIONS
22
Mishal Kanoo

2011
Greed delays the long road to recovery.

24
Matein Khalid
How to gain from currency wars.

26
Tommy Weir
A tribute to Vodafone’s Grahame Maher.

28
Chris Bruin As the economy recovers from the worst
Why credit bureaus are a must
recession since 1930s, a collection of the
ANALYSIS
32
45 region’s leading CEOs share their hopes, fears
and strategies for 2011 with Gulf Business.

Gold rush
COMMODITIES Gold prices edges
up after QE2 in the US. 42 LUXURY SPECIAL
Back on track
34 REAL ESTATE Dubai Pearl says it 88
Liquid assets can deliver despite gloomy outlook. Prestige profits
RETAIL Region’s energy drink RETAIL Analysis of the region’s
high-end shopping sector.
consumption shows growth. FEATURES
36 92
66
Travel tactics Everlasting beauty
Green report PROFILE An interview with
TOURISM The Gulf courts Asians to ENVIRONMENT Profits and Clarins Middle East.
offset decline in traditional markets. protecting the earth go hand in hand.
94
38 77 Designs on Lebanon
Takaful review Turning tides RETAIL Louis Vuitton plans to
INSURANCE Analysts debate the LOGISTICS The regional shipping extend Mid-East footprint.
credibility of Islamic insurance. industry says stormy waters are over.
96
40 83 Stepping up profits
New frontiers Aerial ambitions RETAIL Italy exports 10 per cent
MARKETS UAE’s emerging market SPACE Dubai’s first satellite has of high-end shoes to the UAE.
status could open investment gates. spurred a raft of space initiatives.

December 2010 gulfbusiness 7

F

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@motivate.ae
Business editor
Karen Remo-Listana karenr@motivate.ae

108
Chief Sub-editor
Iain Smith iains@motivate.ae
Editorial coordinator - business
Concessa D’Souza concessa@motivate.ae
Art Director
Cris Domdom cris@motivate.ae
Senior Designer
B Raveendran raveendran@motivate.ae
Contributors
Ryan Harrison; Martin Morris;
Adrian Morley; Robert Bailey.

General Manager Production

and Circulation S Sasidharan
Production Manager C Sudhakar

111
General Manager Group Sales

110
Anthony Milne anthony@motivate.ae
Senior Advertisement Manager
Abraham Koshy abraham@motivate.ae
Advertisement Manager
Ajay Mathews ajay@motivate.ae
100 Deputy Advertisement Manager
Business essentials Melroy Noronha melroy@motivate.ae

GIFTS High-end shopping ideas for General Manager – Abu Dhabi

Christmas. Joe Marritt joe@motivate.ae

LIFESTYLE 100
108 REGULARS
Travel 30 Head Office:
Explore the Orient Express train Letters PO Box 2331, Dubai, UAE
journey from Istanbul to Venice. Tel: +971 4 282 4060, Fax: +971 4 282 4436,
motivate@motivate.ae
43
110 Executive moves Dubai Media City: Office 508,
5th Floor, Building 8, Dubai, UAE,
Cars Tel: +971 4 390 3550, Fax: +971 4 390 4845

Glenn Freeman tests the new high- 107 Abu Dhabi: PO Box 43072, UAE,
performance sedan from Lexus. Hotels Tel: +971 2 677 2005, Fax: +971 2 677 0124,
motivate-adh@motivate.ae
London: Acre House, 11/15 William Road,
111 115 London NW1 3ER, UK,
Data monitor motivateuk@motivate.ae
Art Editorial syndication details,
Intrigue and scandal governed the 120 Tel: + 971 4 2824060
last Islamic art season. gb@motivate.ae
Events
112 122
Competition In your shoes
Win a two-night stay at Yas Hotel Alicia Buller goes racing with Printed by Emirates Printing Press, Dubai
Abu Dhabi. Gordon Ramsay.

8 gulfbusiness December 2010

 IN THE NEWS PRINCE MUHAMMAD BIN NAYEF
Saudi Arabia may
be the birthplace
of Osama bin Laden and
15 of the 19 hijackers in
the terrorist attacks of
September 11, 2001 but
from this kingdom also
hails Prince Muhammad
bin Nayef who has helped
foil a handful of terrorist
attempts.
Prince Muhammad, son
of minister of interior
Nayef bin Abdul Aziz, is the
Saudi interior minister in
charge of counter-terrorism
and the man behind the
– was also found at East
Midlands Airport in the
UK. The two explosive
devices were addressed to
destinations in Chicago
in the US.
Prince Muhammad
and his team impressed
the Western intelligence
agencies. He appears to
be building a network of
informers across Yemen,
and some terrorism
analysts say the tip may
well have come from one
Saudi interior minister of his spies, possibly even
Prince Muhammad
helped thwart a from inside Al Qaeda, the

thwarting of a recent bomb
plot which could have
brought down two planes.
Born in Jeddah in
August 30, 1959, he moved
to the United States to
study for his bachelor
degree, with political
science as a major.
On October 28, 2010,
he called US Homeland
Security official John
Brennan, the US
administration’s deputy
national security advisor
recent bomb plot.
for Homeland Security and
counter-terrorism, and
former CIA station chief in
Riyadh, to warn him
of the 2010 cargo plane
bomb plot.
His communication
with US and British
investigators over the
information led authorities
to seize two parcel bombs
at airports in the Midlands
and Dubai. Qatar Airways
Reuters
has confirmed that the
intercepted explosive
device was carried by two
of its planes via Doha.
The hidden bomb, a
printer cartridge packed
with the explosive PETN
attached to a concealed
F Muhammad. On August
mobile SIM card, was
posted via freight firm
FedEx, and the second
device – which was
posted via UPS in Yemen
New York Times reported.
The Saudis have stepped
up their intelligence-
gathering efforts in Yemen
since last year, when Al
Qaeda in the Arabian
Peninsula came close
to assassinating Prince
27, 2009, a suicide bomber
posing as a reformed
jihadist detonated a bomb
hidden inside his body,
but only lightly injured
the prince.

SOAPBOX
We have good relations with I have no fear whatsoever. I Why ask people to remove flat
America, in terms of military ties, strongly believe that the orderbook shoes? What can you conceal
education, health, but politically, no. today is over exaggerated. in a flat shoe?

Emir of Qatar, Per Wistoft, Akbar Al Baker,

Sheikh Hamad bin CEO of Gulf Qatar Airways‘
Khalifa Al Thani Navigation CEO criticises
gets candid in an Holding shrugs the US policy
interview with off projection on aviation
the FT, saying they that the security and
the small state is shipping sector its ”excessive”
against military is set to face a screening checks
attacks on Iran. supply glut. at the airports.

GCC AND THE WORLD

DP World has become
the first international
marine terminal operator to
join the Carbon Disclosure
Project (CDP), a disclosure
and reporting framework
used by 3,000 of the world’s
largest companies to report
27
their greenhouse gas (GHG) and 3.52 per cent when
emissions and climate normalised against TEU
change strategies. throughput against a 2008
The Dubai-based global base year. DP World has
port operator reduced the
absolute carbon emissions
per cent set a goal to reduce GHG
emissions at its terminals
DP World’s target green
of its terminals and by 27 per cent by 2013
house gas reduction.
businesses by 4.24 per cent under its five-year plan.

12 gulfbusiness December 2010


UAE shifts to recovery mode
gulfpics
The UAE has entered
recovery mode with
two prominent surveys
indicating a growth in
business activity and
recruitment prospects.
According to the HSBC
UAE Purchasing Managers’
Index (PMI), private sector
business activity hit a
15-month high in October.
The index, which measures
SPOTLIGHT
UAE supports new ruler of RAK
Sheikh Saud bin Saqr Al
Qassimi was confirmed
the ruler of Ras Al Khaimah
after his father, Sheikh
Saqr, succumbed to a long
illness. RAK has been under
the leadership of Sheikh
Saud since his older half
brother, Sheikh Khalid, was
deposed as crown prince
in 2003 by decree. Sheikh
Khalid has campaigned for
INNUMBERS
Dhs122 bn Dhs10 bn
The UAE federal budget for the 2011-
2013 period, of which Dhs 41 billion is
earmarked for 2011.
the performance of GCC
countries’ manufacturing
and services sectors, rose
to 53.8 points in October
for the UAE, its highest
level since the series began,
holding above the 50 point
mark that separates growth
from contraction. It stood
at 52.6 in September.
Results from the
bi-annual Regus Business
Aldar Properties’ funding requirements
by 2011 in order to “survive”, according to
Bank of America Merrill Lynch.
UNITED ARAB EMIRATES
The UAE private
sector business
activity hit a 15-month
high in October.
Tracker survey show that
UAE firms are planning to
hire new staff. The study,
which interviews over
10,000 businesses around
the world, says 36 per cent
of the respondents said
they intend to increase
headcount. Business
in the UAE slightly
underperformed the global
average with 34 per cent.
several years to regain
the leadership, but most
analysts believe it is
unlikely he will win power.
He managed to return
to RAK with an armed
entourage on the night
his father died, but was
quickly isolated by federal
forces. The UAE supreme
council gave its full
support to Sheikh Saud.
December 2010 gulfbusiness
Emirates profit
quadruples
Emirates Airline’s net
profit for the first half
of 2010 more than
quadrupled, fuelled by a
surge in passenger traffic
and cargo volumes. The
Arab world’s largest
carrier said H1 net profit
rose to Dhs3.4 billion
($925.9 million) up from
Dhs752 million for the
same period last year.
H1 revenue rose 35.5
per cent to Dhs26.4 billion
from Dhs19.5 billion.
The airline is the largest
customer for the Airbus
A380 super jumbo.
Adco’s expansion
on track
Abu Dhabi is on track
to add 213,000 barrels
per day (bdp) of oil
production capacity by
2012, according to Abdul
Munim Saif Al Kindy, chief
executive of the Abu Dhabi
Company for Onshore
Oil Operations (Adco),
Adnoc’s 60 per cent-owned
upstream production
venture. Abu Dhabi plans
to increase oil output from
the current 2.8 million bpd
today to 3.5 million bpd
by 2018.
Dubai’s trade
breaks record
Dubai non-oil trade
reached Dhs377 billion
in the first eight months
of this year, 18 per cent
up from Dhs320 billion
during the same period
last year. Dubai direct
exports scored the highest
growth rate throughout
the past five years,
exceeding Dhs44 billion
by the end of August 2010
with a 39 per cent increase
rate on last year, according
to Dubai Customs.
20
 SAUDI ARABIA
Saudi is world’s 11th easiest
place to do business
Getty
Saudi Arabia took
the 11th position
in the Doing Business
2011 report, one notch
higher than last year but
one notch away from its
desired top 10 spot.
The kingdom is behind
on achieving the 10 x 10
goal which aims to put
Saudi Arabia in the top
10 of the world’s most
competitive nations by
2010. Nonetheless, Saudi
Arabia trumped the whole
SPOTLIGHT
King Abdullah ranked third richest royal
With a net worth of
$21 billion, Forbes
ranked King Abdullah
bin Abdul Aziz as the
third richest royal after
Thailand’s King Bhumibol
Adulyadej ($35 billion)
and UAE’s Sheikh Khalifa
bin Zayed Al Nahyan
($23 billion).
King Abdullah, 84,
ascended to the throne in
August 2005, soon after
INNUMBERS
2 million 5.8 per cent
The number of Haj pilgrims this year,
pumping about SAR2 billion into the
Madinah economy.
14 gulfbusiness December 2010
Mena region. All other
countries in the GCC either
dropped or maintained last
year’s rankings.
The kingdom was
ranked first in terms of
the ease in registering
a property, and third in
terms of improvement in
dealing with construction
permits. It was also one
of the 10 economies
that made the largest
strides in making their
regulatory environment
construction began on a
$26 billion city named
in his honour, which the
Saudi Arabia’s inflation in October, down
from 5.9 per cent in September, while cost of
living rose .7 points, official data shows.
Saudi ranked first in
ease in registering
a property and
third in dealing with
construction permits.
more favourable to
business and used the
company law of France
as a model for revising
its own. The report by
the International Finance
Corporation commended
the kingdom for putting
procedures online,
streamlining procedures,
improving a one-stop shop
F a contract for 12 new
and expanding a range
of revolving movable
assets that can be used as
collateral.
government hopes will
become the new economic
epicenter of the Middle
East. Saudi Arabia is now
earning approximately
$1 billion a day from oil
exports, helping boost the
royal family’s fortune.
The king is an avid
horseman and breeds
Arabian horses. He
founded the Equestrian
Club in Riyadh.
Smoking in
airport banned
Smoking at Saudi
Arabia’s airport will
now land you a SAR200
fine, as per the new
regulation passed by
the General Authority
for Civil Aviation. The
fine is applicable to all
travellers and airport
employees. ”There will be
zero tolerance for those
who violate the ban on
smoking, no matter who
they are,” King Abdulaziz
International Airport
director general Mazen
Khashoggi, said.
Saudi orders
20 aircraft
Saudi Airlines signed
Boeing 777-300ER and
eight 787 Dreamliners
for its fleet. The 777-
300ER deal was valued
at $3.3 billion at average
list prices, and includes
an option for 10 more of
the aircraft, which carry
up to 365 passengers.
The value for the 787
purchase was not
disclosed.
Saudi investors
buy Crillon
A group of Saudi
investors have bought
the Crillon Hotel in
Paris, France from
US-based Starwood
Capital for around
€250 million ($353.6
million), local media
reported. The buyers
may have to spend an
additional €100 million
to renovate the luxury
hotel, with management
of the Crillon expected
to be handed to luxury
hotel chain Kempinski,
the report says, citing
sources close to the sale.
 QATAR
Getty
Qatar Airways slams
overreaction in the West
The outspoken CEO of
Qatar Airways caught
the world’s attention once
again by slamming Air
Canada for restraining
his airline’s access to
the Canadian market. He
also accused the US of
hypocrisy in their demands
for tight airline security.
Speaking at an aviation
COMPANYFOCUS
QIB leads Islamic franchise in Qatar
Credit ratings agency
Fitch has affirmed
Qatar Islamic Bank’s (QIB)
long-term issuer default
(IDR) at A with stable
outlook. The agency also
affirmed short-term IDR
at F1, individual rating at
C support rating at 1 and
support rating floor at A.
INNUMBERS
QAR80 bn 300,000
The combined assets of Islamic banks in
Qatar, a fifth of the total local banking
sector’s assets.
16 gulfbusiness December 2010
industry event in Doha,
Akbar Al Baker said
measures such as asking
passengers to remove
their shoes at security
checks and removing
laptops from bags should
be ditched.
”Sometimes we are
overreacting,” he said.
Airports, he added, were
The individual rating
reflected QIB’s position
as the leading Islamic
franchise with a nearly 50
per cent share of Islamic
assets and nine per cent
overall market share, in
addition to the bank’s high
earnings power from core
banking and healthy capital
Barrels per day is the production
from Al Shaheen field, overshooting
original estimates of 50,000 barrels.
Qatar Airways chief says
some security measures
should be ditched.
using “excessive“ screening
“which at times really may
not be necessary.“
He said airline
F Group, said it has won
companies in the West do
not have the capacity or
the capability to grow and
were putting the blame on
Middle Eastern carriers
”instead of putting their
house in order.”
ratios. QIB’s funding
profile has strengthened
with the bank’s recent
$750 million sukuk to
boost assets. The bank also
announced a recorded net
profit of QAR907 million
and operational income of
QAR1.73 billion during the
first nine months of 2010.
Cosmo quits
block 11
Japan’s Cosmo Oil has
given up on commercial
production from the
block 11 offshore oil field
in Qatar and has booked
a 3.5 billion yen ($43
million) special loss as
a result. Japan’s fourth-
biggest oil refiner, said
the firm and its partners
could not find enough
oil reserves in the block
after they had drilled two
trial wells.
Qatar to set up
SME body
Saudi-based Capitas
Group International, a
member of the Islamic
Development Bank
the exclusive contract
to establish Enterprise
Qatar, the state’s small
and medium enterprise
authority, local media
reported. Enterprise
Qatar aims to create
a comprehensive
infrastructure to
support entrepreneurial
ventures, champion
innovation and foster
the growth of business
culture in country.
Oil market stable
—minister
The oil market is not
over supplied, Qatari
deputy premier and oil
minister Abdullah bin
Hamad Al Attiyah, said.
“I think the market is
very stable, but we are
seeing high inventories
in other countries,”
he said, adding that
countries have to cope
with rising oil prices. He
said $70-$90 per barrel
was “very reasonable”
for consumers and
producers.
 KUWAIT
Getty
Zain agrees to open books for Etisalat
Kuwait’s Zain telecom
has agreed to open
its books for due diligence
to UAE operator Etisalat,
which has offered to buy
a controlling stake in the
firm worth around $12
billion. The move follows
a formal request by Al
Khorafi Group, the largest
private shareholder in Zain.
Etisalat said it had
signed a preliminary
agreement with Khorafi
PROJECTFOCUS
Clean fuels project refinery upgrade
programme to be re-tendered
Kuwait is preparing a
re-launch of tenders
for its Clean Fuels project,
hoping to get the stalled
refinery modernisation
and upgrade project off
the starting blocks by
issuing the main tender
packages by April.
According to IHS Global
INNUMBERS
KWD4 bn
The amount Kuwait hopes to earn in
non-oil revenue in 2014, the final year
of its four-year development plan.
18 gulfbusiness December 2010
Group to buy 51 per cent
of Zain shares traded on
the Kuwait Stock Exchange
at KWD1.7 ($6.1) per
share. Conditions it listed
include the completion of
satisfactory due diligence,
obtaining all applicable
regulatory approvals and
that there should be no
material adverse change in
Zain’s business, financial
or regulatory affairs. Due
diligence and the other
Insight, the project aims
to install at least 30 new
units at Kuwait’s exiting
Mina Abdullah and Mina Al
Ahmadi refineries, enabling
them to produce fuels of
the highest international
environmental standards
for export. The capacity
to produce fuels with
5.3 per cent
Kuwait’s inflation in September, the
highest point since March 2009, due to a
surge in food prices, official data shows.
Zain is in the process
of collecting the
needed shares from
other holders to make
up the deal.
work required to reach
definitive agreements could
take a number of weeks,
while the transaction is
unlikely to close before the
end of the first quarter of
F
2011, Etisalat said. Khorafi
Group is estimated to own
around 20 per cent of
Zain and is beginning the
process of collecting
the needed shares from
other holders to make up
the deal.
a sulphur content of
less than 10 parts per
would allow Kuwait
National Petroleum
Company to retake
market shares in the
most developed markets,
where environmental
regulations also tend to
be the highest.
Jazeera returns
to profitability
Jazeera Airways, a
Kuwaiti low-cost airline,
is confident of sustaining
profit into next year and
beyond after reporting
an almost six-fold rise in
third-quarter net income.
The company incurred
losses in the previous
three quarters. Net income
in the three months to
September 30 increased
to KWD4.4 million dinars
($15.7 million) from
KWD763,000 in the year-
earlier period, marking
Jazeera’s best quarter in its
five years of operations.
Oil price to rise
in 2011
Crude oil prices will
continue to rise if the US
dollar’s weakness persists
and prices for commodities
increase further, a member
of Kuwait’s Supreme
Petroleum Council, the
country’s top energy
decision-making body,
said. “This will be good
because the cost of living
has risen dramatically in
the world,” SPC Member
Imad Al Atiqi, said.
Kuwait mulls
higher spending
Kuwait plans “some
increase” in government
spending in the fiscal
year starting April 1,
finance minister
Mustafa Al Shimali,
said. He said it was not
possible to predict the
size of the additional
spending until members
of parliament meet. The
planned increase in the
2011-2012 budget will
focus on investments
as part of financing the
country’s development plan.
 BAHRAINOMAN
gulfpics
Nawras celebrated its first day of trading on the Muscat Securities
Market .
Nawras lists on Oman
Nawras has completed its IPO, which raised
OMR182 million ($472 million) and has listed on
the Muscat Securities Market under the ticker symbol,
‘nwrs’. The initial market capitalisation of Nawras
was OMR456 million, positioning Nawras as a top five
Omani company by market capitalisation. The IPO is
the largest to take place in the GCC since July 2009
and was also the first offer in Oman to be completed
using the book build method.
Al Khalili to revive IPO plans
Al Khalili United Enterprise, the flagship company
of the Al Khalili Group, will revive its plans to
float an IPO, after seeing response to the Nawras share
offer. The company is planning to offer 40 per cent of
its stake in the IPO, which was postponed last year due
to sluggish market conditions. The group will follow
the traditional fixed price method, unlike Nawras’ book
building process. Oman Arab Bank is the financial
adviser and lead manager of the proposed IPO.
Bahrain is most tax-friendly state
Bahrain has the most cost-competitive tax
environment in the world and the most liberalised
domestic financial sector out of 57 leading economies,
according to the 2010 Financial Development Report
published by the World Economic Forum (WEF).
Bahrain’s banking system was also ranked as first in
the lack of frequency of banking crises. The report puts
Bahrain 23rd in the financial development index, an
improvement of four places from 2009.
INNUMBERS
8 out of 10
Bahrain’s score in the Economic Freedom of the
Arab World: 2010 report, making it the most free
economy in the Arab world.
20 gulfbusiness December 2010
30
30 seconds to
make sense
of… the coffee
business.
Kim Thompson
Owner and manager, Raw Coffee Company
How was the coffee business affected by the
recession?
We have not been affected by the economic recession
because we are a gourmet niche business. If people are
looking to reduce their big expenditure items, maybe they
didn’t buy the home espresso machine package from us,
but they will still pop in and buy a coffee each day.
As an export commodity, the price of coffee in the
global market is volatile. How do coffee shop owners
respond to these price movements?
We have been able to hold our roasted coffee price
fixed since inception three years ago. Coffee pricing
is controlled on a daily basis by the New York Coffee
F
Exchange, and as a company we have had to absorb
the variances.
You import coffee beans from Ethiopia, Nicaragua,
Peru, Colombia, East Timor and Mexico. How do they
differ from one another?
The taste profile of the green coffee beans varies by
origin, due to the microclimate of each area – soil type,
rainfall, sunshine, temperature, age of plants, etc. All
Raw Coffee Company product is certified organic and
fairly traded at origin and all from the Arabica coffee
bean family. For example African beans tend to have a
floral citrus flavour and South American beans will have
a more chocolate-nutty flavour.
How do you spot a good coffee?
There are so many contributing factors that go into a
good coffee. Fresh beans, good equipment and good
training. Good coffee should be roasted fresh and is at its
peak at about seven to 14 days after roasting. When you
order a coffee in a café or restaurant, check to see that
the coffee hopper is not full of ground coffee and that the
portafilters (the handles that you put the ground coffee
into) of the espresso machine are sitting in place, and
therefore at the correct temperature.
How does the healthy lifestyle trend affect
your business?
Coffee is classified as one of the 20 super foods – as
with many food groups, moderation is sensible. Freshly
extracted espresso is high in antioxidants, it has anti-
carcinogenic properties, specifically for the prostate, is
used in skin products in Japanese health spas, and
has stimulant properties, with caffeine found in many
pharmaceutical products such as Panadol Extra.
COMMENT

TAKING THE LONG ROAD

TO ECONOMIC RECOVERY
The greedy habits of pre-recession days are dying hard but we can get through
this financial crisis by changing our attitudes.
MISHAL KANOO

M
oaning and groaning are just a constant in this For the economy to revive itself two things need to
part of the world. If not for one reason, it’s happen. The first is that people should understand that
for another. But do we really have something they have to pay back what they owe and live within their
genuine to groan about when it comes to means. The second is that banks must start living the
the economy? Two years on from the beginning of the reality of the situation and not hope that with time things
financial crisis that brought the house of cards down will correct themselves. That is the theory.
all over the world, we are still not close to seeing the Now here is a practical solution. Banks must lower
light at the end of the proverbial tunnel. The reason we their mortgage rate to three to four per cent and make
must ask ourselves is why? Why, after two years of a lot the time horizon 20-30 years. This will immediately
of pain and suffering and after many people discovered incentivise the people who were interested in leaving
how stupid they were in buying into Ponzi schemes their asset and going back home to think twice because
that they euphemistically called investments, after eventually the value of the asset will recover over the
people discovered that land prices cannot double for no next decade and that will still mean if they have a 30 year
good reason, and after the gullible were taken out and outlook, they will make a capital gain as well.
financially shot for thinking that it was normal for banks Why this is not happening is also due to greed. Greed
to lend them money with no strings attached? The simple by the banks as they are now making double or triple the
answer is greed, but it gets complicated. amount I had mentioned but it is paper money that has
The people who used the system no value unless someone takes it up.
were greedy. Both the consumers got People should now pay There is a secondary reason for
greedy because they lived in la la
land thinking that banks gave them
back what they owe the banks as they are in a quagmire
that they can’t extricate themselves
money for free. Land developers and live within their from. Over the years of 2003 to 2008,
got greedy because they believed means. Banks must they had taught their shareholders
that there was an endless supply of that double-digit dividend rates
dumb and greedy people who would also start getting real were the norm.
feed their addiction to their own and not just hope that They also fortified this ridiculous
greed. The press got greedy because notion by issuing bonus shares.
they saw that the land developers things will correct Now the shareholders’ greed has
were throwing away money into themselves in time. taken over rationality and that is the
advertising because they all wanted norm that is now expected by the
to tell the fools…oops...I mean prospective, intelligent shareholders of the banks.
buyers that their pie in the sky was the one the greedy Here’s a suggestion. In order for people to deposit their
consumer could make the most money from flipping it to money with the banks, and trust me on this, instead of
yet an even greedier sucker. focusing on the deposit rate, the banks should focus on
All of this naked stupidity was fueled by banks and customer service. When banks offer a higher rate than
mortgage lenders who touted themselves as the one with the norm, it usually means one thing. They are desperate
the most money to give away. Imagine, if you will, an for liquidity to survive and that is never a good sign.
addict with dealers all vying to hook the addict with their Personally, I would rather have a low rate with a solid
particular designer addiction. The only problem with that bank that is not about to collapse than a bank that offers
scenario is that the addict will eventually die. If you give me a higher percentage but is on the brink of collapsing
the addict an overdose that he cannot handle, his death due to their bad management in the past.
will come faster than the dealer would like and that is Yes we have a real reason to moan and yes the economy
not good for business. But this is something you all know can be fixed. The only question is whether all parties
happened. The question that is staring us all in the face involved have the will and strength to make the changes
but seemingly unanswered is what should we do about it? that are necessary and to see it through.
Simple again… stop being greedy. Mishal Kanoo, deputy chairman, Kanoo Group.

22 gulfbusiness December 2010

 1NO. IN EUROPE & THE MIDDLE EAST.

1
NOW,

NO. IN THE ENTIRE WORLD.

Emirates Printing Press wins the Sappi International Printers of the

year award from amongst 6,000 entries worldwide.
Amongst all the regional gold winners from Europe, North America, Asia, Middle East & Africa, Australasia, South
and Central America who competed, we're proud to be chosen as the world's best printer in the magazine web
production, and prouder still of the fact that it is an extra bold achievement for the UAE.
COMMENT
HOW TO GAIN FROM THE
CURRENCY WARS
Looming problems in Ireland lend caution to Euro-speculators, while the UK
pound and US equities could offer surprising gains.
MATEIN KHALID
T
he Fed, the G-20 conclave in Seoul, currency wars
and Ireland’s woes obsess the financial markets.
Time to gaze into my macro crystal glass, even at
the risk of swallowing crushed glass. The forex
gnomes were shocked by Uncle Ben’s money printing
spree after the Federal Reserve’s FOMC voted to pump
$600 billion to revive a moribund US economy. This meant
the dollar plunged against the Euro and commodities
soared on safe haven flows in November. However, Ireland
has joined Greece as the EU’s next policy nightmare and
Dublin might well be forced to go cap in hand to the ECB/
IMF at a time when Berlin and the Elysee Palace will not
allow taxpayer bailouts to spare private investors pain
from a potential default. This means Euro-dollar can fall
as low as 1.32 in December, particularly if risk aversion in
the sovereign debt markets continues to rise.
The ideal macro trade for next month is to sell the
Euro against sterling at 0.86 for an
eventual 0.78 target with a 0.88 stop UK growth rates
loss. Why? One, the Bank of England may rise, while the
need not and will not follow the
Fed’s QE model and boost its gilt Eurozone, plagued by
purchase programme as long as Club Med/Celtic debt
inflation is running above its two
per cent target limit. Inflation will woes and a strong
only rise, not fall, due to VAT higher Euro, could stumble
priced high street imports, crude
oil spikes and the fallout from
against the sterling and
sterling’s epic 2008 devaluation. Australian dollar.
Two, the monetary mandarins
at the Old Lady of Threadneedle Street have clearly
underestimated both economic growth and inflation in the
sceptred isle in 2010. Three, UK growth rates may well rise
while the Eurozone, plagued by Club Med/Celtic pussycat
debt woes and a strong Euro, stumble this winter. The
Euro could well fall significantly against sterling and the
high yield Australian dollar next month.
Oil prices have broken above their $65-85 trading range
due to the lower dollar, Fed quant easing, rise in Chinese
imports, speculative inflows into the London North Sea
Brent and New York West Texas futures contracts and,
above all, Saudi Arabia’s public admission that the
kingdom was comfortable with a $70-90 trading range.
This is a hugely positive backdrop for cheaply valued,
reserves rich, high dividend integrated oil supermajor
shares such as Total, whose dividend yield is now an
24 gulfbusiness December 2010
incredible six per cent. Winter heating oil demand alone
should allow crude oil to trade above $90. This macro
milieu is obviously bullish for Saudi petrochemical
shares, notably SABIC, APQ and Petro Rabigh, whose
product margins will rise even as operating rates expand.
It is no coincidence that Saudi petrochemical shares
outperformed the Tadawul by a factor of five in November.
This sector outperformance will continue in December.
US equities have been on a roll since early September
and the S&P 500 index added 200 points to regain
its April 1218 high before Cisco Systems shocked the
financial markets with a revenue miss. However, trading
at 13 times forward with inflation and bond yields at
epic lows, US equities are not expensive. Cash yields
zero, Uncle Sam’s 10 year debt yields a mere 2.6 per
cent but the free cash flow yield on American equities
is a juicy six per cent even as corporate balance sheets
are better credits than most
Western governments.
The old Wall Street adage “don’t
fight the Fed” is also bullish for stock
prices. So I doubt the stock market
will fall much below 1180 even in a
correction in December. This means
the index fund SPZ is a buy on any
dip below 1190 for a 15 per cent
total return potential in 2011.
Gold is the optimal reserve
currency in the Euro, dollar and yen
ugly stepsisters contest. At $1400,
nervous longs should be introspective as gold no longer
offers steep adjusted returns. At 30 year highs, silver is
an accident waiting to happen. All asset bubbles end in
tears. That much, at least, is certain.
The G-20 conclave in Seoul ended with predictable
platitudes. The Chinese inflation data and the Irish
bailout rumours have now coupled to trigger a global sell
off in risk assets and a rise in the dollar. The financial
markets, as usual, have priced in a worst case scenario
for Ireland and its nationalised banking system. Since US
retail sales rose for a fourth month in October, long-term
Treasury bond yields have begun to move sharply higher
as double dip recession risk is priced out of the bond
market. This is yen bearish!
Matein Khalid, fund manager in a royal investment
office and writer in finance and geopolitics.
COMMENT
VODAFONE QATAR’S CEO
WAS AN INSPIRATION
The late Grahame Maher, CEO of Vodafone Qatar will be greatly missed as
a visionary leader who championed meaning as well as profits.
DR. TOMMY WEIR
T
his is not the typical article that I would normally
write for Gulf Business. But this painful event
deserves a tribute to purpose.
On November 2, I found a surprising post on
Facebook reading “Rest in peace Grahame. May God rest
your soul. You were a true respectful gentleman and I
was honoured and privileged to have met you on several
occasions. My deep condolences to Jenny, Jess, Kate, your
friends and colleagues.” I was shocked and confused by
what I was reading until I learned…That Grahame Maher,
CEO of Vodafone Qatar, had passed away in the night.
Grahame began his career with Vodafone in 1998, where
he soon after became their CEO. During his three years
at the helm of Vodafone NZ, the mobile carrier lifted
its market share from 16 per cent to 53 per cent. Then
in September 2001 he left to become Chief Executive of
Vodafone Australia. Grahame went on to become Chief
Executive of Vodafone Sweden, and
Chairman and Chief Executive of Everyone who
Vodafone Czech Republic before
taking his Qatar role in 2008.
worked at Vodafone
Grahame was not your ordinary NZ during
CEO; he believed that the reason an Grahame’s time
organisation exists goes beyond profits.
“This is why we exist, our reason for has very fond
being, and it goes beyond just making memories of an
money. We simply won’t compromise
on it. We need to live it every day in electric working
everything we do.” As CEO he was environment.
committed to shaping a Purpose
Based Organization (PBO). He inspired this approach in every
operating company that he helmed.
For Qatar, Vodafone’s purpose is “To make a world of
difference for all people in Qatar.” It is easy to have a
mission or statement. But a purpose is much deeper as
the purpose is your reason for being. Can you imagine the
difference it would make for your business if you were a
Purpose Based Organization?
Simply put, a PBO is an organisation that holds people
firmly at its heart. When all of your employees understand
and live the ethos of a PBO, they will know why your
business exists (your purpose), how you work together
(values), where you’re going (your vision) and what you’ll
do to get there (strategies). It also helps to create an
environment where power is shared, where rules and titles
are secondary and where people feel valued, respected and
26 gulfbusiness December 2010
are able to grow. So, how did Grahame do in leading the
PBO? On the financial and business growth side, since 2008
he led Vodafone Qatar through a $1 billion initial public
offering and the rollout of service to the public last year.
The company, which achieved a customer base of 600,000 in
September out of a population of about 1.6 million, became
the first domestic competitor to QTel. And it hopes to be
profitable by the year-end. Not bad for two years of work.
But the real tribute to his leadership comes from what
others have to say:
“Everyone who worked at Vodafone NZ during Grahame’s
time has very fond memories of an electric working
environment where we believed anything was possible. But
most of all he was down to earth and humble.”
“He absolutely believed that people were a company’s
most valuable asset and treated everyone, regardless of
position, with equal value. He drove a culture that just
can’t be manufactured. It came
from his heart and that was clear to
everyone. His ready sense of fun was
absolutely infectious.”
“His mission has truly made a
world of difference for all people in
Qatar.”
“Now this guy was healthier than
I. He ran marathons, went on Tour De
France-style bike rides, and was an
amazingly positive person. So why
did this happen? In Qatar, we don’t
question why. We accept that this
was written by God. It’s in His plan and with every action
there’s some good reason. Maher has left a legacy. Every
single person in Vodafone feels for him.”
In his obituary, Mr Maher’s colleagues remember an
“inspiration leader”; his family, a man “who crammed 100
years of life into just 51.”
Grahame himself made a difference to the lives of
everyone he touched. He was a great CEO, coach, mentor,
and friend. We will all sorely miss his inspiration and
vision, his passion and energy, and his love for all the
people he worked with.
Will your tribute be to profits or purpose?
Grahame is survived by his wife Jenny Maher, and his
daughters Jessica and Kate, both in their 20s.
Dr Tommy Weir, vice president of leadership solutions at
Kenexa and author of The CEO Shift.
COMMENT
THE IMPORTANCE OF
CREDIT BUREAUS
The announcement of the UAE’s federal credit information initiative will boost
the economy and ensure good borrowers get preferential rates.
CHRIS J DE BRUIN
A
s banks and regulators continue to fine-tune
risk-management processes, the question of
credit bureaus has increasingly popped up,
especially in Asia, where they are still relatively
new. The concept has come a little later to this region for
a number of reasons.
Many banks have, in the past, been reluctant to share
credit information with other banks for competitive
reasons, although there has been a shift since the
global economic downturn began. This shift occurred
as financial institutions across the region started
looking at new ways to provide a better level of service
to the market. On the other hand, consumer advocacy
groups opposed the concept because it was perceived to
undermine rules protecting individual privacy.
In more and more countries, concerns over data
sharing has given way to two basic realities: consumers
and businesses want easier and
quicker access to competitively From a
priced loans and banks seek to
make safer, more reliable financial
macroeconomic
decisions to drive growth. One of point of view,
the best means of achieving both credit bureaus can
is through the establishment of a
positive credit bureau. bring about higher
A positive bureau is one whereby growth rates for
banks and other lenders share and
receive all information on a borrower, businesses and
allowing them to have a holistic the economy.
view on a person’s credit history. A
negative bureau on the other hand only allows for banks/
lenders to view negative information on a borrower
including where he/she has defaulted. Approximately 35
per cent of potential good customers are refused credit if
an application is only based on negative information.
From a macroeconomic point of view, credit bureaus
can bring about higher growth rates for businesses
and individuals, and therefore the economy, through an
increase in credit lines to those who wish to borrow.
There are several other benefits of positive credit bureaus
that end up benefiting the economy, organisations and
individuals. It is always important for banks not to
lend money to those who are already over leveraged and
therefore unable to pay back their debts – credit bureaus
allow lenders to assess a candidate’s total indebtedness
and calculate a borrower’s capacity to honour their debt.
28 gulfbusiness December 2010
Credit bureaus also allow for greater information
sharing which allows lenders to review how much and
at what rate they lend to borrowers. Good borrowers
should not be penalised as a result of a large number of
bad borrowers – as is the case without a bureau. With the
establishment of a positive bureau, good borrowers get
access to credit at more beneficial interest rates.
The UAE Ministry of Finance’s decision to introduce a
Federal credit bureau is a step made by the government
to improve transparency in the UAE’s financial sector.
Shortly after this announcement, emcredit was made the
official credit information agency of Dubai. Both moves
will bring about a greater sharing of information between
banks across the UAE .
For both bureaus to be a success, getting the correct
infrastructure right is essential as economic growth
becomes driven by domestic consumption, although
exports will remain important.
What the UAE and a number of
other countries in the region have
increasingly realised is an
export-led strategy can put them in
a severe boom and bust cycle,
whereas personal consumption is a
mitigating influence.
Additionally, by building an
informed financial society, consumers
will become more aware of their
financial exposure and turn to better
financial management tools to grow
and protect their wealth effectively and manage their
finances more closely.
To be successful, credit bureaus need to be either
government-led, or industry controlled and regulated by
the government. If it is to be a success, such a move must
be a collective initiative by the financial services industry
for the benefit of the sector and consumers.
Banks need to be aware of a number of dimensions to
truly assess the credit risk of customers. Proactive and
positive data sharing enables banks to get loans out to
the vast majority of reliable borrowers faster, will help
with good lending to drive growth in the economy and
help protect the end user by providing beneficial interest
rates to those who are financially responsible.
Chris J de Bruin, head of consumer banking, Standard
Chartered UAE
F LETTERS

LETTER OF THE MONTH

CEO EXCLUSIVES: ETISALAT BATELCO & OMANTEL Sell crown jewels

It’s fascinating to notice that only a handful of companies dropped
Vol. 15 Issue 7 November 2010

100
out of your list of top 100 companies. I wonder why.
But what’s obvious is that quite a lot of these companies are largely
owned by the state who have deep pockets. Banks, utility firms
and telecom companies dominate the list and these are all widely
TOP

influenced, if not controlled, by the government.

When the world realised that capitalism was the way to go,
governments opened up to the private sector to pave the way for

COMPANIES efficiency, efffectivity and competitiveness.

I remember during the previous downturn cycles, powerful state
IN THE GCC
Can the UAE go nuclear Oman’s healthy
firms divested big stakes to the private sector to kick off economic
activities. Such measures did work.
by 2017? balance sheet
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
How to lead your firm, Harnessing Saudi’s I think a true and sustainable recovery will only be achieved if the
Saudi Arabia.......SR 10
post-recession unemployed youth
private sector is given a bigger chance to compete.
UAE.................. DHS 10

GB Regional4 .indd 1 10/28/10 9:54:52 AM

So much for the talks about opening up to the private sector. What
we need is government entities divesting their crown jewels for
privatisation. But that is unlikely to happen any time soon.
Christa Dionisio, Doha, Qatar.

Ambiguity challenges economy that characterises the its growth strategy but, on the other
Tommy Weir’s commentary (Gulf UAE today. These ingredients will hand, they tend to forget that they
Business, November, p. 26) on CEO also serve to trim the exponential belong to a world without borders.
turnover rate in the UAE is rather turnover rates. But how come they were able to
worrying for two broad reasons. The Dr. Nnamdi O. Madichie continue their primitive rules?
country seems to be leading other University of Sharjah, UAE. Sovereignty has always been their
markets for all the wrong reasons escape clause. But that defence also
– with a staggering 50 Per cent Secretive equity has its own limit.
CEO turnover rate. Weir cites four I have always been against private Baiju Nimer
interesting challenges about the UAE equity. Granted that they are Bahrain.
market – young, mobile, fast-moving helpful in the transition period of
and ambiguous. privately owned companies to the
The expectation of CEOs to hit public market but their greedy goal Email: Write to the editor,
the ground running might not bode to take multiples of profit from an
Gulf Business, alicia@motivate.ae
well for this market as “what got investment bought three to five
and the letter of the month wins
the CEO here might not be enough years ago was a major reason for
to keep him here.” If the fat pay the world’s financial collapse. And an Alessi watch.
packet in the financial incentive is they are very secretive. For me,
deemed the only motivating factor transparency is the only way to go.
I am sure most OB (organisational How can they teach transparency
behaviour) and HR academics to their portfolio companies if the
and practitioners would argue management decision-making itself
that there is more to performance is opaque?
than an attractive remuneration. John Matthews
An appropriate enabling work Dubai, UAE.
environment, a cohesive team, and
an unambiguous market garnished Telecom tactic
with a set of realistic expectations I love the honesty in your story,
of CEOs should complement the Calling for Growth. Indeed, this
young, mobile and fast-moving region has been very aggressive in

30 gulfbusiness December 2010

ANALYSIS COMMODITIES

All that glitters is gold

The appeal of gold climbs as the future of the US dollar looks uncertain following quantative
easing round two, writes ROBERT BAILEY.

G
lobal economic uncertainty
has seen gold prices soar over
the last 12 months. Since the
yellow stuff’s break above
the key $1,000 an ounce level in early
September 2009, its stellar ride has
continued unabated.
Just over one year later, following the
US Fed’s decision to pump more money
into the American economy through a
process of quantitative easing, the price
of gold has since soared to a record
$1,400 an ounce.
However, QE carries longer term
risks for the country’s economy
and the dollar. It is this uncertainty
that is pushing investors to load

more gold into their portfolios,
either through acquisition of bullion,
coin, exchange traded funds or
mining shares.
The fear is that the dollar weakens
further, which means higher prices
for commodities that historically are
priced in US currency. Oil prices have
also accelerated to a year long high
with the expectation that easier money
will give a substantial upside to many
commodities, but especially precious
metals such as platinum, palladium,
silver as well as gold.
Claire Miller, head of marketing at
Dubai Gold & Commodities Exchange
(DGCX) told Gulf Business that
“uncertainty in the equity markets
and economy as a whole, as a result of
the global financial crisis, has led to
increased demand and price volatility
in gold. Institutional investors have also
been allocating higher assets to bullion
linked Exchange Traded Funds”
The World Gold Council (WGC),
which represents the international
gold industry, says that between
October 2007 and March 2009 –
the height of the global financial
meltdown – an investor with a
portfolio of $10 million experienced
an additional $500,000 loss simply by
not maintaining a position in gold.
WGC
“While gold’s role as a protection for their negative correlation with
against inflation and a currency equity and financial based markets
hedge are widely known, its ability and so offer an ideal tool for portfolio
both to diversify risk and to mitigate diversification, according to Miller.
investment losses is increasingly “DGCX gold futures are the
attracting investor attention,” says exchange’s flagship contract and have
Juan Carlos Artigas, WGC investment introduced a new pricing benchmark
research manager. for gold in the UAE – namely, the 1kg
As a result the future for gold is gold futures contract. We expect gold
looking very bright. Year to date trade to grow further in the region
volume for DGCX gold futures as and DGCX is well positioned to benefit
at November 9, 2010 was just over from this demand.”
425,000 contracts. Average daily How long the trend continues though
volume for DGCX gold futures is dependent on the global economy
currently stands at 2,750 contracts. and whether its prospects are as
Overall the exchange has traded fragile as the gold price suggests. In
1.63 million contracts in the year to several emerging markets such as
Gold futures are now the DGCX’s flagship
contract with a new pricing benchmark for
gold in the UAE – the 1kg gold futures.
date, already surpassing the total Russia, central banks have continued to
annual volume achieved in 2009. increase their gold reserves while sales
The metal is seen by many as a safe by European banks have remained
haven investment and an asset class negligible in 2010.
which can be easily liquidated to The USA holds more than 72 per
generate cash. Commodities, including cent of its reserves in gold a total of
gold, have traditionally been known 8,100 tonnes. Germany, Italy, France,

32 gulfbusiness December 2010

 the Netherlands, Austria and Greece
also have more than half of their total
reserves in gold.
Other factors also impact on price
levels such as the world’s jewellery
market, which has been active even
in the recession with India and China
accounting for 45 per cent of global
demand in 2009.
Gold usage in technology
applications, particularly in the
electronics industry for semiconductors
as well as in mobile phones, also
remains a steady source of demand.
As a result, the World Gold Council
does not consider the metal to be
overvalued and points out that “even
getty images

modest allocations to gold in a portfolio

can help investors mitigate losses
and hedge against tail risks without
US Federal Reserve chairman, Ben Bernanke. sacrificing long-term returns.”

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December 2010 gulfbusiness 33

ANALYSIS RETAIL

The region’s liquid assets

Over 15 billion litres of beverages are consumed in the Gulf each year, RYAN HARRISON looks at
the prospects for new energy drink Monster.

T
he Gulf has a thirst for energy
drinks like no other region in
the world. After a blistering
few years of growth, the
numbers on beverage consumption
are truly staggering.
In the UAE alone about 12
million litres of the energy drinks
are consumed a year. Plus, the UAE
has one of the highest per capita
consumption of drinks in the world –
about 635 litres per year, versus 197
litres annually for the global average.
Annually, approximately 15.5 billion
litres of packaged water, tea and
carbonated drinks are consumed in
the GCC, with Saudi Arabia having the
highest share with approx 65 per cent
and the rest being made up by UAE
(18 per cent), Kuwait (seven per cent),
Oman (six per cent) and Bahrain &
Qatar (two per cent each).
Out of all the beverage categories,
sugary brands are far and away the
best-sellers year after year.
With demand through the roof, the
market has become fiercely competitive, Energy is actually the number one has hired big name endorsers such
verging on the cut-throat. energy drink in the US. It’s bigger than as Michael Schumacher and MotoGP
Underpinning this demand is Red Bull and is the fastest growing World Champion Valentino Rossi.
dry weather, disposal incomes and energy drink in the world. The firm said it’s taken a different
thriving young populations across “We are currently rated 4.5 /5 vs Red approach to Red Bull and other energy
the Gulf states. Bull at 2/5 on taste flavour by BevNet. drink competitors by using these pro-
Red Bull is largely regarded as the com, with Monster Energy being a athlete ambassadors at the forefront
energy drink incumbent in the region, smooth tasting energy drink, unlike of their marketing campaigns.
Red Bull has the first mover advantage
in the Gulf and even though its recession
Beverage demand is driven by dry weather, wasn’t the best, growth, and more
high disposal incomes and thriving young importantly market share, remain solid.
The company will need to keep its wits
populations across the Gulf states. about it in the coming years.
Energy drinks started in Asian
although it suffered a stagnant financial what some describe as the ‘medicinal markets, and Red Bull helped fully
crisis. But US giant Monster recently taste’ of Red Bull.” exploit the category in the west. Since
launched in the UAE through retailer He added: “In terms of retail price, 1998, the firm has been instrumental
African & Eastern to upset the applecart. given the size of the Monster Energy in spreading the word around the
The two players face a brutal fight cans, consumers get double the energy Middle East.
for the Gulf’s sweet tooth. Both tell for approximately the same price, plus Alberto Chahoud, area communication
dramatic growth stories. our extended flavour categories gives us manager for Middle East & Africa at
Damon Tudor, general manager at a broader choice range for consumers.” Red Bull, said: “Engaging our target
African & Eastern, said: “Monster Monster is pulling no punches and audience has always been a main pillar

34 gulfbusiness December 2010

 Red Bull is regarded as the energy drink
incumbent in the region, although it
suffered a stagnant financial crisis.

in our marketing strategy. Through a Although the economic downturn is

wide array of innovative events and
activities tackling different sport
and cultural disciplines down to our
sampling activities, direct interaction
with consumers has been a consistent
trend for Red Bull.
“Following a sustainable year-on-
year growth, we witnessed a relative
stagnation in 2009, due to the economic
crisis; therefore, we have intensified
our marketing activation in 2010 to
curb the impact of the crisis and give
wings to our business,” he added.
not yet totally behind them, these drinks
firms will likely register optimistic
growth in the next two years, followed
by a steadier growth in the years to
come, according to some estimates.
Experts say that consumer taste
profiles in the Middle East are very
different from Western countries. With
over 80 nationalities living in UAE, the
region is a melting pot of taste and Red Bull and Monster have no concerns
preferences when it comes to products about widespread demand for their
such a energy drinks. But with a growing products. Going toe-to-toe over market
thirst and penchant for all things sweet, share will be a different story.

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December 2010 gulfbusiness 35

ANALYSIS TOURISM

Wooing the Asians

As Western tourism recedes, Egypt, Qatar and the UAE are pro-actively courting
South East Asian markets to plug the gap, writes MANIK MEHTA.

C
ash-rich Asians are being
courted by Middle Eastern
countries as a source of
tourism revenue to offset
declining revenue from the traditional
Western markets. This trend was in
full evidence at Asia’s leading tourism
fair, ITB Asia in Singapore where
tourism promotion agencies from a
number of Gulf and Middle Eastern
countries made a strong pitch to
woo tourists from the Association of
Southeast Asian Nations (ASEAN) and
other parts of Asia.
While Egypt’s pyramids have
historically attracted tourists from
around the world, the bulk of its
tourism revenue has always come
from Western countries. “The 21st
century is the century of Asia,” Egypt’s
senior assistant minister of tourism
Hisham Zaazou, declared. S. Iswaran, senior minister of State Singapore (right) and Hisham Zaazou, assistant
“We are using ITB Asia as a minister, Egypt (far right) at the Qatar Tourism pavilion at ITB Asia.

on the part of the QTA to attract

Tourism accounts for 11.1 per cent of
Egypt’s GDP. Some 13 per cent of the
national workforce is employed, directly
or indirectly, by tourism.
platform to promote Egypt in Asia.
Some 700,000 Asian visitors trekked
to Egypt in 2009, Zaazou told Gulf
Business. “Arab tourists only provide
about 17 per cent of Egypt’s inbound
tourists, with Saudi Arabia and Libya
being the leading nations,” he said.
Juggling with figures, Zaazou
highlighted the significance of
tourism for the national economy of
his country. “Some 20 per cent of each
foreign dollar earned by Egypt comes
from tourism. Tourism’s contribution
used to be $300 million in 1982 but
by 2009, it surged to $2.5 billion.
Tourism accounts for 11.1 per cent of
our national GDP. Some 13 per cent of
our national workforce is employed,
directly, or indirectly, by tourism,”
he said.
Qatar is equally keen to lure traffic
but has a different kind of tourism
segment in mind. “We are not
interested in mass tourism. We are
trying to attract traffic interested in
arts, history, culture, etc. We have
built the Museum of Islamic Art,
tracing a 1,400-year-old history,”
explained Ahmed Abdullah M. Al
Nuaimi, chairman of Qatar Tourism
Authority (QTA), which promotes
tourism to Qatar.
The QTA chairman also highlighted
the common religious bonds of Islam
existing between Qatar and some of
the ASEAN countries.
Prior to QTA’s participation in
Singapore, the country had held
a roadshow in Kuala Lumpur. Al
Nuaimi underlined the “keen interest”
tourists from ASEAN. He pointed
out that Qatar Airways, for example,
had increased the frequency of
connections with Kuala Lumpur to 11
flights a week.
“This will give a strong boost to
tourism from Malaysia and other
ASEAN countries to Qatar,” he said.
“The bottom line is that Qatar has
traditionally maintained a strong
business relationship with both
Malaysia and Singapore.”
The importance of the ASEAN
region as a source of tourism was
also the reason behind Messe Berlin’s
creation of ITB Asia, an Asian edition
of its ITB Berlin, the world’s largest
tourism fair.
“India, China and ASEAN are the
growth markets of the future,” said
Raimund Hosch, Messe Berlin’s
president and CEO.” This is a why you
see here a number of Middle Eastern
countries that recognise the crucial
importance of the ASEAN region as a
source of tourism.” ■

36 gulfbusiness December 2010

ANALYSIS INSURANCE
Insuring the future
Despite double-digit growth
in takaful, analysts doubt the
Islamic insurance sector has
finally established credibility,
writes KAREN REMO-LISTANA.
M
ohammad Al Marri, 45, a
perfume shop owner in
Sharjah, is not familiar
with the concept of takaful
insurance. “I’m not used to that, but
I would like to have one soon and
perhaps I can also offer that to my
staff. And if ever I avail that, I want a
policy that follows Islamic principles,”
he says.
Al Marri is part of a large majority
that the insurance sector plans to
tap. Although volume of insurance
premiums in the Gulf Corporation
Council last year grew 28 per cent,
compared to the global average of
getty images
3.4 per cent, penetration remains
extremely low at one per cent of
the GDP.
The GCC takaful operators fall short
of industry best practice in terms of
transparency and governance.
Research by consulting firm Value
Partners shows that Saudi Arabia –
the region’s largest economy – has
penetration of 0.6 per cent which is
dwarfed by its smaller neighbour the
UAE which has a penetration rate of
two per cent.
“Insurance penetration lags behind
that of the Western economies, yet
economic growth rates would be
the envy of most of the world,” Paul
Koster, chief executive, Dubai Financial
Services Authority (DFSA) told a global
industry event in Dubai.
One specific source of growth is
the Islamic-compliant insurance (or
takaful) concept of which dates back
more than 1,400 years and is based
on the principle of mutual guarantee.
Saudi Arabia, whose contributions
38 gulfbusiness December 2010
stood at $2.9 billion in 2008 and
Malaysia, with $900 million, are the
top takaful markets in the world.
“In the recent past, cultural practices
and religious beliefs have limited the
development of the life insurance
market. However, the growing
awareness and acceptance of Islamic
insurance is opening up a significant
growth opportunity,” Koster says.
According to Ernst & Young, the
global market for takaful is set to
surpass $8.8 billion this year with
contributions growing by 29 per cent
in 2008 to $5.3 billion.
Zurich Insurance, which recently
acquired 99.98 per cent in Lebanon’s
Campagnie Libanaise D’Assurances,
is bullish that the deal will boost its
takaful business. “The takaful business
is a key activity for us hence one of
the objectives of this acquisition is to
strengthen our takaful operations,”
says Axel Lehmann, member of the
group executive committee and
chief risk officer of Zurich Financial
Services Group.
But many have been unable to
access the growing market. Oman
Insurance, the UAE’s largest insurer
has been denied a licence to operate
in this sector.
“We tried to obtain a licence but
the authorities objected. It can only
be offered by a specialised insurance
company,” says Abdul Muttalib Al
Jaidi, CEO of Oman Insurance, noting
that the policy in issuing new licences
has been rigid.
“We have existing partnerships but
I don’t think the authority is granting
any new licence. We have not applied
for a licence, though,” adds Michel
Khalaf, Middle East, Africa and South
Asia president of Alico, which was
acquired by Metlife earlier this year.
The nascent sector also faces a
number of challenges. First, takaful
operators are somewhat constrained
in their investment opportunities. The
most common investment class for
global insurers is investment grade
rated bonds.
However, the bond market is not
well developed in the Middle East,
primarily due to a small local market
for such instruments. There is also
no regulatory requirement dictating
the asset allocation of insurance
companies and takaful operators.
In a study conducted by Alpen
Capital, the GCC takaful insurers
score way below their conventional
peers in terms of efficiency. The GCC
takaful operators are also falling
short of industry best practice in
terms of transparency and governance
practices. “The demand for takaful is
there because people always look for
something different,” says Al Jaidi. “If
that new something can add value to
their business then yes, the demand
will be great but were the takaful
companies able to offer that added
value? I don’t think so.” ■
ANALYSIS MARKETS
New market frontiers
The UAE’s upgraded status as an ‘emerging market’ on the FTSE could lead to significant
inward investment gains for the region, writes ROBERT BAILEY.
G
ulf financial industry officials
believe that the UAE could
attract nearly $40 billion in
foreign capital into its stock
markets. This follows a decision by the
FTSE index to upgrade the investment
ranking of the emirates’ from frontier
to secondary emerging market status.
Many frontier markets offer attractive
valuations partly because they are
relatively undiscovered, and even less
correlated with developed markets than
traditional emerging markets. However,
they are mainly limited to niche foreign
investment funds.
It is more than a fine point of
distinction for the legions of fund
managers sitting in London, Frankfurt,
New York and Tokyo. Emerging market
status implies fewer local restrictions
on foreign participation, greater
market depth, transparency as well
as efficient settlement and custody
proceedings. The status provides
a comfort zone making it easier to
disburse fund allocations measured
worldwide in billions of dollars a day.
In the last two years, professional
investors have, too, become more
bullish on emerging markets, betting
on some of them being a haven
Consolidation is another important factor. A
region with a population of less than 40 million
is too small to support nine stock markets.
from an economic slowdown in the
developed world.
The Financial Times Stock Exchange
(FTSE) list upgraded the UAE stock
markets from frontier to secondary
emerging markets in September.
Another influential index, Morgan
Stanley Capital International (MSCI),
has also announced that the UAE
and Qatar will be under review for a
potential reclassification to emerging
markets in 2011.
40 gulfbusiness December 2010
“Upgrading Arab stock markets
by international institutions from
frontier to emerging markets is of
great importance at this stage, a
course of action that is earnestly
pursued by the UAE owing to
the vast opportunities offered by
placing Arab stock markets on the
map of international investment
opportunities,” says Rashed Al
Baloushi, deputy chief executive and
director of operations of Abu Dhabi
Securities Exchange (ADX).
Nasdaq Dubai’s chief executive
Jeff Singer also believes the move is
significant since many institutional
investors have mandates to invest in
emerging markets he points out that
previously an emerging market fund
could easily overlook a country that did
not have the classification of emerging
market but it is now likely that funds
will allocate an increasing amount
of assets to the UAE which could be
measured in billions of dollars.
In an effort to open up to support
the country’s drive to attract capital,
Naveed Ahmed
ADX introduced exchange trade funds
(ETF) in March one of a few emerging
markets to do so.
Qatar’s bourse, in which the NYSE
Euronext has a 20 per cent stake,
is also considering opening up to
exchange-traded funds. According
to Al Baloushi the upgrading of
Arab stock markets by international
institutions is “of great importance” to
the investment aims of the region.
He and other professionals in the
region are aware though that the
necessary moves will require Arab
exchanges to adhere increasingly to
international norms and standards
of efficiency for trading, settlement,
clearance, custody and depositary.
Consolidation is another important
factor. A region with a population of
less than 40 million is too small to
support nine stock markets. Since the
financial crisis gripped the world in
late 2008, calls for mergers among the
region’s stock markets have increased.
This would allow exchanges to offer a
broad enough liquidity pool to attract
sizeable global investments.
The merger, in July, of Dubai
Financial Market and Nasdaq Dubai,
under one holding company, for
example, is expected to improve
liquidity, lower brokers’ fees and
attract more listings.
ANALYSIS REAL ESTATE

Dubai Pearl back on track

Despite property oversupply
in the emirate, the mega-
project is convinced it can
meet its targets, writes
KAREN REMO-LISTANA.

A
report from the Institute of
International Finance says
the UAE is returning to a
solid growth path, thanks
to robust government spending and
normalisation of global trade.
But some remain sceptical. With
the Dubai sovereign bond prospectus
revealing that half of all projects
registered by Dubai’s Real Estate
Regulatory Agency have been cancelled
and industry forecasts indicating that
supply won’t peak until 2012, there’s
valid reasons for doubt.
Yet against this oversupply
projection, Dubai Pearl has taken bold
steps to continue the project after
months of quiet market observation.
The project, known for its plans with
MGM Mirage to develop Bellagio,
MGM Grand and Skylofts, has resumed
construction activity at the 15 million
square feet development.
It was originally intended for
completion in the 2011-2012 period.
Because of the crisis, however, Dubai
Pearl construction was divided
into two phases, the first one to be
completed in 2013 and the second
in 2015.
“We believe markets will show signs
of good recovery end 2011 or early
2012 and by 2014, we expect markets
to reach very stable levels,” says
Santosh Joseph, president and CEO of
Dubai Pearl.
“I have been in the real estate
business for 20 years and I have
seen that every five years there is a
cycle. Things will go up again and
people will realise that the maximum
appreciation is in real estate.”
Joseph says one of the main reasons
real estate is still in a slump condition
is the lack of liquidity due to scarce
mortgage lending. “When the banking
industry is weak, the real estate
Dubai Pearl rendering.
industry is also weak but when it
recovers, so does real estate. I expect
that to happen at the end of
next year.’’
Currently, Dubai Pearl has zero-
debt on its balance sheet. It has sold
95 per cent of the commercial units
and 25 per cent of the residential
units. On the surface, Joseph’s job
looks less troubling than that of
other Dubai bosses.
But on closer inspection, the
company is in a dire need of
increased liquidity. Although
Dhs 5 billion worth of properties,
or half of phase one, has been
sold, customers are nevertheless
struggling to pay. So in addition to
the pressure of sourcing cash to
Markets will show signs of recovery
by late 2011 or early 2012 and we will
see stable real estate levels by 2014.
finance the completion, the company
has to restructure most of its
payment terms.
In 2008, DIFC Investments
(DIFCI), purchased 29 floors of a
yet-to-be-constructed building
at the development. This year,
DIFCI claimed that Bisher Barazi,
its former managing director,
failed to carry out due diligence
on the purchase. DIFCI has an
outstanding legal agreement with
Dubai Pearl valued at Dhs3 billion
for the purchase of commercial
space within phase 1. The deal is
now being restructured. “We have
considered that. That’s why we may
be increasing our equity and quasi-
equity base to overcome that. Our
equity base is Dhs1 billion, but over
the next two years we are looking at
bringing in at least Dhs2 billion of
equity and quasi-equity,” Joseph says.
Today, Dubai Pearl is owned by
the Al Fahim Group of Abu Dhabi
and Joseph. But other institutional
investors have also begun to look at
Dubai Pearl as a prime investment,
claims Joseph.
“One of the Dubai Pearl’s
advantages is we have the work,
play, stay and live concept
altogether in once place. It’s like a
city within a city.”
So despite the roller coaster ride
of the recession, Joseph exudes a
contagious optimism that Dubai –
like Sheikh Mohammed says – will
spring back to its feet in time. ■

42 gulfbusiness December 2010

EXECUTIVE MOVES

Dubai-based construction
firm Arabtec Holding said
its board had accepted the
nomination of Abdulla
Kalban, CEO of Dubai
Aluminium Company,
as a new board member
following the resignation
of Arif Naqvi, founder
of Abraaj Capital. The
company also elected
Ibrahim Balsaleh as chairman of the firm’s Audit
Committee, Dr Henry Azzam as chairman of the
Investment Committee and Adel Al Nowais as chairman
of the Nomination and Remuneration Committee.

Khaled Al Khattaf has

joined global investment
bank Nomura as CEO
for Saudi Arabia from the
Tadawul, the Saudi Arabia
Stock Exchange, where he
served as the chief
financial officer. Prior to
Tadawul, he worked at Saudi
Arabia Monetary Agency
for nearly 20 years. He
represented Saudi Arabia
in the G20 team and in the drafting of the Santiago
Principles (2008) on SWF activities.

Standard Chartered has

named Apoorva Shah
as managing director for
mergers and acquisitions
for the Middle East, North
Africa region. Shah joins
from Deutsche Bank where
he was most recently
regional head of M&A.
Shah has a Masters of
Arts in Economics from
Cambridge University and has 16 years of experience
in the banking and finance industry.

The Saudi British Bank (SABB) has appointed Alaa Shekib Al

Jabri as chief risk officer. Al Jabri joined SABB in November
2006 as the area general manager for Western Province. He UAE Kuwait
+971 4 338 4759 +965 247 58 141
has more than two decades of banking experience in leading
Qatar Saudi Arabia
financial institutions in Saudi Arabia and the Gulf. He has a +974 4 460 2334 +966 1 214 7444
Master of Business Administration from the INSEAD, France info@tormax.com | www.tormax.com
and a Bachelor of Business Administration from the American
University of Beirut, Lebanon.

December 2010 gulfbusiness 43


Mohammad Omran
The chairman of UAE telecommunications
company, Etisalat, says social networking will
become the norm for work decision making.
T
he telecommunications sectors
are developing at a relentless
pace. Competing for market
share, delivering innovative
solutions and keeping pace with
technology were just some challenges
that faced the telecom industry in the
past couple of years. As global markets
evolve, converge and grow, there is a
need for operators to be constantly
updated with capabilities and talents in
order to keep pace.
Etisalat excelled in its operations
and has continued to spend
where needed, whether it is on
infrastructure such as the fiber optic
network, which will be accomplished
in UAE in 2011 making Abu Dhabi
the first city in the world be fully
connected by this network, or in
maintaining the quality of services
and networks upgrades.
In a world where seamless
connectivity will be far more
important in the future, whether
between people or machines, we
hope to position Etisalat to profit
from rising demand for machine-to-
machine connectivity. The internet
will become much more about
Growing reliance on mobility is creating
higher stress for the CIOs who have the
task of integrating efficiency.
connectivity for the customer,
whether it is customers with
networks, or machines. There are now
more machines than people and this
will be a major area of future growth
in the telecom market.
Mobility solutions have created a
paradigm shift in the way
businesses are conducted in the
region. While, on the one hand,
proliferation of mobile devices are
helping to liberate the workforce by
CEOs ETISALAT
About Mohammad Omran
Omran leads Etisalat, which is now
one of the largest telecommunications
companies in the world with a market
value of approximately $25 billion.
Under Omran’s leadership, revenues
increased at a compound annual
growth rate of 24 per cent between
2005 and 2009 to reach Dhs30.8
billion. Net profits increased by 20 per
cent in the same period.
Through Omran’s strategy which is
based on deploying international best
practice, thorough market analysis
and selecting opportunities based on
stringent criteria, the number of Etisalat’s
customers increased from only four
million in 2004 to 107 million customers
in Q1 2010 across 18 markets in Asia,
Africa and the Middle East.
creating on-the-move avenues
for easy access to e-mail and
business applications; on the
other, the same proliferation and
growing reliance on mobility is
creating higher stress for the CIOs
who have an additional task of
integrating and controlling mobility
to obtain optimum workforce
efficiency. This is where organisations
need to collaborate with solution
partners, such as Etisalat, who
understand every component of the
mobility ecosystem.
In addition, the trend of social
networks will spread further
in the workplace. As the lines
between professional and personal
communications become increasingly
blurred, the industry will need
to incorporate enterprise social
networking into their overall unified
communications and strategy.
Enterprise-grade versions of Facebook,
Twitter and Wikis in the workplace
will begin to be as common as e-mail
and will change the way business is
conducted. As a result, the decision-
making process will be accelerated. ■
December 2010 gulfbusiness 45
 CEOs ARABTEC HOLDING

I
n 2008, there were $44 billion of
construction contract awards in
the emirate; in 2009 this decreased
to $9 billion; and so far in 2010
there has been just $5 billion of
projects awarded in Dubai. Our home
market, which traditionally accounted
for most of our turnover, has slowed
down in awarding contracts.
The slowdown has resulted in
fierce competition and squeezed
margins, the contracts awarded for
mega projects are not healthy and
for the smaller ones the margins are
even worse. Squeezing margins to
unhealthy levels results in them not
being delivered as they should be;
quality will suffer.
Both the construction and real
estate market in Dubai continued
to exhibit signs of sluggishness
throughout 2010. Arabtec tackles
these issues by maintaining close
and continuous interactions with
clients, particularly with regard

Riad Kamal
to payment terms and completion
schedules, whilst continuing to back
our commitment to the UAE and
our clients.
To compensate for the slowdown in
business in Dubai, the main trends
will be of continued geographical Riad Kamal, CEO of Arabtec, the region’s largest
expansion. The UAE’s construction
market is now driven by development
construction company, says local firms will have to
projects in Abu Dhabi, while, just two expand out of Dubai to survive the near-term.
years ago, it was Dubai’s real estate
projects that dominated the sector.
Abu Dhabi will remain the best
market for contractors in the UAE for infrastructure development projects. We continue to seek both local and
the near future. The UAE accounts Following a challenging period in regional opportunities with the aim
for nearly 20.3 per cent of total 2009 and this year, we are expecting a of continuing to grow and expand
construction industry in the region, more promising 2011 and beyond. In on our current capabilities. We have
followed by Saudi Arabia, Algeria recent months, firms have branched confidence the emerging markets we
and Egypt. into new markets, switching focus are growing in, especially Abu Dhabi,
There is a trend towards moving from private to public sector schemes Saudi Arabia, Egypt, Syria, Qatar,
into infrastructure projects and an and forming new alliances in a bid Bahrain and Angola, will compensate
increased demand for work in this to win work in this increasingly for the reduced opportunities in the
sub-sector caused by the regional competitive environment. UAE market, namely Dubai. ■
macro-economic factors and the
related increased governmental
spending. Most countries in the
To compensate for the slowdown in
MENA region have to cater to a business in Dubai, the main trends will
young growing population and a
faster moving society – this has
be of continued geographical expansion.
created ambitious intentions to push

Decemberr 2010 gulfbusiness 47

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 CEOs MASHREQBANK

I
t’s important to state that 2010 is
the year where the banking industry
has settled, after two years of trying
to emerge from the financial crisis.
Now, we can say that the market is
stable and there is no fluctuation.
The UAE banking industry has been
through the worst and it’s recovering
now, slow but steadily. In the region,
the crisis has been dealt with very
cautiously to limit damages and
operate at the same time.
Financial institutions now are more
vigilant and decisions to lend are led
by a concrete business plan. Lending
never stopped in such a tough
environment, however, it has slowed
down because certain measures are

Abdul Aziz Al Ghurair

taken before such a decision is made.
We have observed how banks
are focusing on risk management
now more than ever, as it is the
backbone of any business. Seizing
of opportunities with no planning
is a trend that has changed as well,
forcing companies to analyse and
identify the consequences towards
their performance.
In the past, we have noticed the
lack of planning across various
organisations and how it has impacted
their business. It’s imperative for every
organisation to acquire a solid plan
with detailed processes on how its
goals will be accomplished.
This year was also a year of steady
jobs in the banking industry, where
In the past, we have noticed the lack of
planning across various organisations and
how it has impacted their business.
previously shift of jobs used to vary
between 20 per cent, however, the scene
has changed with the financial crisis
taking place. Shifting of jobs in the
industry plays a major role in effecting
a business and customer relations.
We anticipate 2011 to be a year
of further growth and diversifying
of investments and stable revenue
streams. Small and medium business
will be an attractive segment for
banks to extend their facilities to.
The chairman of Mashreqbank says better
risk management will lead to growth and
diversification in the industry.
There will be more focus on customer
retention, while developing attractive
products that accommodate customer
requirements and market conditions.
In today’s volatile and uncertain
markets, where the crisis is
redefining the industry and its
competitive environment, banks need
to concentrate on managing their
capitalization and liquidity, realigning
their strategies and business models,
focusing on innovative solutions; and
managing increased regulations.
As a national financial institution,
we are committed to UAE’s economic
growth and we are strongly moving
towards our expansion strategy in
the UAE and the region. Mashreq
continues to develop innovative
and convenient products based on
customer requirements and offer
unmatched services to maintain
our leading position in the banking
industry. In spite of the difficult global
financial environment, we continue to
grow and invest in strategic projects.
Over the years we have succeeded in
launching innovative products and
services in order to offer convenience
to customers.
In line with our strategy to be a
regional financial institution, we
are exploring opportunities to tap
into new markets and complement
our network of branches and
representative offices around the
world. Today, we are present in Egypt,
Kuwait, Bahrain, Qatar, Hong Kong,
India, Bangladesh, USA, Pakistan,
Sudan and United Kingdom.
In the UAE, we have 54 branches
and 242 ATM’s and we look forward to
further expand in 2011. Our primary
goal is to offer a comprehensive
banking experience, whether it’s
offering products or customer service. ■

December 2010 gulfbusiness 49

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CEOs ETIHAD
James Hogan
CEO of the UAE’s national airline writes that 2011
will be a year of increasing frequencies and depth for
corporate customers, as well as boosting alliances.
2
010 was a year where, month
by month, we saw our yields
edge rather than gallop
towards pre-crisis levels.
And as the year concludes, I’d say
we’re pretty much there. There were
no seismic shifts for global aviation
in 2010. But, certainly, there was
consolidation – British Airways and
Iberia in Europe; Delta and Northwest,
as well as Continental and United
in the US, both eclipsing American
Airlines as the world’s largest carrier.
And Emirates overtook Lufthansa as
the largest international carrier.
But it was mainly a year that
fortified the existing trends. One of
those trends is the growth of the Gulf,
both as a passenger hub and as an
endpoint. Etihad, like its competitors
in the Gulf, is growing strongly. We
took delivery of four aircraft this year
and launched routes to Baghdad and
52 gulfbusiness December 2010
Erbil in Iraq; to Nagoya and Tokyo in
Japan; and to Alexandria, Colombo
and Seoul.
We also increased our frequencies
on our services to Beijing, Beirut,
Brussels, Cairo, Dublin, Frankfurt,
We will take delivery of six widebody
aircraft, almost all of which will be
allocated to our existing route network.
Geneva, Hyderabad, Manila and
Milan. So I’d say this year our
growth has been unmistakable, if not
headline grabbing.
2011 is likely to be similarly steady.
We will take delivery of six widebody
aircraft, almost all of which will
be allocated to our existing route
network to increase our frequencies,
adding depth to the network. We know
that, for our corporate customers, this
depth is essential. All businesses,
not just airlines, will need to be lean
and fast-moving to make the most of
the upturn.
We are watching the global economy
closely for relevant movements. Our
future plans for our network are
determined by the greatest areas of
opportunity. Naturally, as China and
India mature, we will focus on those
important markets. Other parts of
south east Asia will be high on our list.
Soon enough, we will look to Brazil
and its neighbours as major sources of
transfer and point-to-point traffic.
As these spokes continue to build,
Abu Dhabi will be ideally placed. The
increasing number of visitors will
help drive the emirate’s expansion
while the emirate’s expansion will help
generate more traffic as it becomes
an increasingly sophisticated place to
vacation and to do business.
Etihad will use 2011 to further
increase its scale through key strategic
alliances with likeminded airlines.
Partnering with other carriers in their
home markets to source greater banks
of traffic is the most effective way we
can design a global network.
Out of Korea we will codeshare from
Seoul and into other Asian cities on
ASIANA, while they will be doing the
same over Abu Dhabi and onwards.
We have partnered with Virgin’s
Australian airline brands to connect
our passengers across that vast
continent and into New Zealand the
Pacific Islands. And from February
next year, V Australia will be the first
Australian airline to operate into the
Middle East for twenty years.
But making too many predictions
is a pointless practice in the aviation
industry. Anything can happen. The
best strategy is to always be prepared
for the best and the worst. ■

Samer Majali
CEO of Bahrain-government owned airline
Gulf Air says there will be turbulent times ahead
for the industry, with brighter skies to come.
S
omeone once said the only
way to make a million
dollars in the airline
business was to start with a
billion; somewhat ironic considering
that the aviation industry is the
greatest catalyst of the global
economy, driving more than a trillion
dollars in economic activity.
The problem facing airlines is their
susceptibility to external factors; no
industry in the world can be more
volatile than the aviation industry.
If 2009 mauled the industry with
economic recession, 2010 punished it
with rising fuel prices. Yet commercial
aviation has demonstrated resilience
in the past and will continue to do so
in the future.
This year is a perfect example;
despite difficult operating conditions,
the industry is set to return to the
’black’ this year, expecting to post an
estimated $8.9 billion in profit and
record 11 per cent growth. Leading this
growth is the Middle East which set
for a 15.2 per cent increase this year.
This remarkable progress is driven
by the region’s oil wealth, its unique
geographical position making it a
I believe that, despite all the positive
signals, full recovery in the industry will
not come until after 2014.
transit hub between the East and
the West, improved airplane and
airport capabilities and the owner
countries ambitious growth and
investment plans.
Despite all the positive investment,
operating in the region is far from
easy. Planned aircraft purchases of
$200 billion over the next decade will
flood the market with over-capacity,
resulting in the more generously-
funded carriers subsidising fares as
CEOs GULF AIR
they compete aggressively for the
same traffic.
How does Gulf Air position itself
in this scenario? We have a clear
mandate from the airline’s ownership
– to make Gulf Air a commercially
sustainable business that adds value
to the kingdom and people of Bahrain.
Therefore, in 2010 Gulf Air launched a
new strategy to achieve this: our vision
– to create a commercially sustainable
business through identifying niche
markets, where we could exploit a
leadership position while raising the
levels of product and service delivery to
higher quality and greater consistency.
For the first time in the region, we
introduced regional jets to connect
underserved and niche markets.
We opened 11 new destinations,
10 of which are within the MENA
region. We brought in 12 new aircraft
and phased out 12 older aircraft,
reducing the average age of our fleet
to just 6.8 years.
Financially, our costs have come
down and losses have reduced while
our load factors and punctuality have
improved significantly. Our ultimate
goal is to continue to improve our
customer travel experience with
superior and more consistent products
as we continue implementing our
strategy through 2011.
Though our strategy has seen
us stay on in the right track during
2010, we are approaching 2011 with
cautious optimism. We will continue to
maintain our leadership position in the
ME region, but will also connect the
region with the key financial capitals
of the world. Coming back to my 2011
predictions for the industry in general,
I believe that despite all the positive
signals, full recovery will not come
until after 2014. But 2014 is not far off
and I am optimistic that the coming
years will be bullish. Maybe investing a
billion may be a wise idea now! ■
December 2010 gulfbusiness 53
CEOs SHUAA CAPITAL

T
he closing months of the year
look to be bringing some
relief to the financial services
industry and we will enter
2011 with cautious optimism.
Without question, 2010 had a
profound impact on our industry.
We have seen many of our smaller
competitors fall away and industry
consolidation increase. In brokerage,
we have seen a reduction of the
number of securities firms by a third
to around 70 and predict this will
continue into 2011. For larger players
such as Shuaa, this consolidation,
along with flight to quality, will
benefit our business and help increase
our market share.
The financial crisis has forced

leadership teams to reassess their
strategy and to refocus on core
strengths. This has also been the case
at Shuaa, where we spent the last
12 months rebuilding the business
and implementing a more focused
fee-based strategy, developing
our management, governance,
internal processes and systems and
positioning ourselves for the eventual
recovery. We went into 2010 with over
100 business improvement projects,
of which two thirds have already
been delivered and are now part
of ‘business as usual’. As a result,
we have become more efficient and
better-positioned to compete across
our core markets.
Firms have been strengthening their
finances, improving working capital and
reducing balance sheet liabilities.
Many companies have been
strengthening their financial position,
improving working capital, tightening
costs and reducing balance sheet
liabilities. This has been a major
focus for Shuaa and we leave 2010
with a much stronger balance sheet
and more focused business than when
we entered it.
Since September, we have seen a
pick-up in market sentiment with
trading volumes increasing and the
Sameer Al Ansari
CEO of investment firm Shuaa Capital says the
Dubai World restructure will usher in a more
positive financial year in 2011.
launch of a number of important
transactions. Dubai’s successful
sovereign bond launch reassured
markets that Dubai was over its
credit difficulties. This was followed
by several successful key Dubai
corporate bond offerings, a clear
testament to the positive sentiment
that Dubai is receiving from
regional and international investors.
Additionally, we saw a number of IPO
launches across the Gulf, including
Axiom Telecom, the first in the UAE
for over two years. Shuaa has been
working on several IPOs which are to
launch shortly and expect defensive
sectors, including consumer and food
products, as well as healthcare, to
emerge with the first IPOs in 2011.
Acquisitions have been few and
far between in recent years as
buyers and sellers have remained
resolutely far apart on price. This
looks to be changing slowly as asset
valuations fall and financing for
good transactions in certain sectors
becomes available.
Organic growth has been hampered
by reduced access to capital and we
expect sources of bank funding to
remain tight into 2011.
Although there are signs of a shift
back into equities, investors remain
primarily interested in lower risk
fixed income products.
Since I joined Shuaa Capital just
over a year ago, I have led a major
change programme. We also have a
strong view that the GCC region, and
the UAE in particular with strong
fundamentals, will be clear winners
in the medium to long-term. ■

54 gulfbusiness December 2010

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 CEOs DIFCA

O
ver the course of 2010 we
have seen an important
shift in sentiment towards
the economic climate of
the GCC. This time last year we were
facing significant challenges, with
regional economic confidence at
possibly its lowest point since the
invasion of Kuwait in 1991. However,
decades of careful planning,
investment and guidance by our
governments have ensured that
the long-term fundamentals of our
economies are strong, resilient and
capable of withstanding the worst
economic crisis the world has faced
since 1929.
Dubai International Financial
Centre was established with the
aim of being a leading international
financial centre, serving not just
Dubai and the UAE, but the entire
region. Since its inception in 2004,

DIFC has become recognised as
the gateway connecting the Middle
East, Africa and South Asia (MEASA)
region and the world. Today, DIFC,
with its modern infrastructure,
free zone status and self-governing
laws and courts, is the pre-eminent
and favoured financial centre in the
region. These facets have enabled
DIFC to continue to make a
major contribution to the UAE’s
economy throughout the global
economic crisis.
Despite the testing times, DIFC
now comprises of 760 active
registered companies, with 299
regulated and 384 non-regulated
Equity markets are picking up as liquidity
eases and firms are looking to deploy dry
powder, this will inject life into the economy.
companies and 77 retailers. We
are able to count 16 of the world’s
top 20 banks, 14 of the world’s 20
largest asset managers and four of
the world’s five largest insurers as
members of our community.
We at DIFC are committed to
supporting and encouraging the
Abdulla M. Al Awar
The CEO of Dubai International Financial Centre
Authority is hopeful for a shift in confidence
going into 2011.
growth of our clients as it is this
which determines our success. By
working closely with our clients
we are able to tailor DIFC to their
specific needs, allowing them to use
DIFC to grow their businesses and be
as competitive as possible.
Perhaps the most significant case
of working with our clients was in
the first half of 2010 when DIFC’s
senior management, in consultation
with its clients, completed a
comprehensive strategic review
and analysis of the core business
proposition. This included extensive
analysis and benchmarking of costs.
Accordingly, DIFC is currently
reducing the cost of doing business
from the centre and will enhance its
client services.
As we look to 2011, we can
expect the region to continue on
its path to recovery. I firmly
believe the worst is behind us.
Equity and debt markets are picking
up as liquidity eases and firms
are looking to deploy dry powder,
this will inject life into the wider
economy. DIFC will continue to
work closely with its clients
throughout 2011 as we strive
towards developing not just our own
businesses, but also the region’s. ■

December 2010 gulfbusiness 57

CEOs AMWAL AL KHALEEJ
Ammar AlKhudairy
Private equity firm Amwal AlKhaleej says 2011
will mean putting into practice modesty lessons
learned from the financial crisis.
A
s private equity investment
starts to come out of the
cautious environment that
has prevailed since the
financial crisis, Amwal AlKhaleej,
along with its peers, has been taking
stock of lessons learnt from the
tumultuous times brought on by
the events of 2008 and 2009. With
2010 and 2011 promising to be
good vintages for private equity
investments, every deal maker will
have the lessons learnt from the
financial crisis engrained in their
minds forever, and it is these lessons
that will shape private equity in the
MENA going forward. For Amwal
AlKhaleej, these lessons are three-
dimensional: a strict price discipline
with respect to entry valuations, a
continued emphasis on value creation,
and keeping an eye on tangible exits
based on fundamentals that are
planned from the outset.
58 gulfbusiness December 2010
Perhaps the first application of post-
crisis wisdom for MENA investment
is to adopt the right model for the
right region. Against this background,
and in the absence of the plentiful
debt that was the hallmark of pre-
Perhaps the first application of post-crisis
wisdom for MENA investment is to adopt
the right model for the right region.
crisis times, investors will turn away
from ‘copy-paste’ use of debt, in
favour of back-to-basics investing
where higher returns are a function
of value creation, not leveraging and
flipping. For Amwal AlKhaleej this
has served to underscore our policy
of unleveraged growth investing in
sectors where competitive advantages
prevail. Our investments in Saudi
Arabia are betting on demand for
education services, healthcare and
leisure, while our investments in
Egypt are similarly positioned to
bet on textiles, petrochemicals and
retail financing.
In the absence of multiple
arbitrages, investors have increasingly
turned to working more closely with
portfolio companies on value accretive
initiatives. Since its establishment in
2005, Amwal AlKhaleej has adopted
an ‘active minority’ approach which
sees us work with and guide portfolio
company management towards
achieving the company’s long-term
objectives and, in so doing, bringing
our investment closer to that all-
important exit. This year and 2011
will see us continue to work with our
partners on creating such value.
Finally, ensuing market rationality
has forced exits away from the other
‘copy-paste’ approach that prevailed
– namely IPO exits. Now that IPOs
have proven more difficult to pull off,
investors will have to pour blood,
sweat and tears into identifying and
planning for exits. Going forward, exits
will be very meticulously planned from
the outset, and much of the holding
period will be spent polishing up and
positioning the investment for what
will likely be a trade sale exit.
In conclusion, we believe that
starting 2011 and for the next few
years to come, MENA private equity
stands to see some creativity, hard
work and potentially lucrative exits.
Through a combination of strict price
discipline, a hands-on approach
to operational and strategic value
addition and continuing to partner
with management capable of taking
companies to the next level, we at
Amwal AlKhaleej are confident that
we will successfully build value into
our portfolio companies and build
towards realising the exits that
will confirm that 2011 can lead to
excellent vintage years. ■

Dave Lesar
The chairman, president and CEO of Halliburton
predicts growth for the energy sector in 2011,
particularly for unconventional resources.
H
alliburton and other
integrated energy services
companies provide the well
construction and reservoir
evaluation services our customers
need to create producing oil and
gas fields.
We go where the work is – wherever
national oil companies, international
oil companies and independents are
exploring and developing fields. We
have more than 55,000 employees
working in more than 70 countries;
managing that vast infrastructure
so we have the right technology,
equipment and expertise where our
customers need it most is one of our
greatest challenges.
Being in the right place at
the right time demands close
cooperation with our customers so
we can anticipate their needs, and
it demands flexibility and quick
responses, because even slight
changes in the relative demand make
us redeploy assets.
The most important phenomenon
shaping the energy business in
2011 and beyond is the dramatic
rise of unconventional resources,
Unconventionals depend on horizontal
drilling and completions technology –
both areas of strength for Halliburton.
especially shale gas. Unconventionals
depend on horizontal drilling and
sophisticated multi-stage fracturing
and completions technology – both
areas of strength for Halliburton.
These advanced technologies are
also finding increasing application
in conventional oil developments;
this will be positive for our future
business and for energy supply.
Across the Eastern Hemisphere,
unconventional basins are
CEOs HALLIBURTON
undercapitalised from an equipment
standpoint. As unconventional
projects take shape, we will be
investing in equipment to meet that
demand. Our global infrastructure
and technological leadership in
horizontal wells and hydraulic
fracturing will make this a major
opportunity for Halliburton in the
coming year.
Overall, growth in the Eastern
Hemisphere has been uneven since
the 2009 trough – five countries
represent 70 per cent of the rig count
increase. We expect growth to become
more evenly distributed throughout
the hemisphere as the global
economic recovery develops during
2011, and we expect global energy
demand in 2012 to exceed the peak of
the fourth quarter of 2007.
In North America, the primary
fact is relatively stable prices for oil,
but soft prices for natural gas. This
is causing operators to invest more
heavily in oil and liquids-rich plays,
causing us to position our resources
in those basins.
Weak natural gas fundamentals will
likely restrain dry gas directed drilling
and completions next year. However,
we believe strongly in the long-term
prospects for the North American gas
market, and we are working with our
customers to create new business
models that will keep the rigs working
in those basins even if short-term gas
fundamentals decline.
We anticipate 2011 will be a
year of solid if not spectacular
growth in the energy industry and
for Halliburton. Most importantly,
the fundamental trends in energy
demand, combined with our
constantly improving technical
ability to develop oil and gas
resources, point to a continued
strong demand for our services
around the world. ■
December 2010 gulfbusiness 61
CEOs AGILITY
Tarek Sultan
Chairman of Kuwait logistics giant Agility says
industry will face higher fuel costs and regulatory
changes, but growth lies in emerging markets
T
he logistics and
transportation industry
continues to be impacted
adversely by repercussions
of the global financial crisis of late
2008. GDP declined in nearly every
country; global trade was down nine
per cent in 2009 and international air
and sea freight volumes followed suit,
dropping 10 per cent in 2009. Figures
for 2010 are unlikely to be stellar.
Against this backdrop, customers
are looking to us more than ever to
contain cost while providing tailored,
value added solutions. This has driven
an increased focus on the role of
technology across the industry.
62 gulfbusiness December 2010
Being able to tell our customers
where their freight is at any time,
being able instantly to identify,
escalate and address issues – and
even track the carbon impact of
shipments – are becoming real
differentiators. Technology can help
us provide these “real time” solutions,
and at Agility, we are investing
heavily in our technology platform.
Being able to tell our customers where
their freight is and being able to address
issues are becoming real differentiators.
Most crystal balls are pointing to
something of a mixed picture in 2011,
with modest growth predicted for
developed markets but developing
economies enjoying moderate to high
growth. Here in the Middle East for
example, a rebound in oil prices will
buoy a strong recovery across the
region, while authoritative sources
such as IMF point to an average
growth rate for Asia of more than
eight per cent, with China and India
leading the pack. Growth in both
regions will mean opportunity.
Players in our industry will need
to address this mixed landscape.
They will also need to contend with
potentially higher fuel costs in 2011,
and regulatory changes related to
manufacturing and product safety
and sustainability. It is also possible
that recent terrorist scares involving
air-freight may herald new security
measures that will have a cost impact
right across the industry.
This year has been a year of
transition for Agility – but we’re
closing the year in good shape to
take advantage of the major business
opportunities we see ahead for
us in 2011. Our Global Integrated
Logistics business serves thousands
of commercial customers across
more than 120 countries and will
drive our growth in the coming year –
especially in emerging markets.
Emerging market leadership
continues to differentiate the
company, and it’s where we continue
to make big investments. Agility is
the only player in the industry top 10
with roots in developing markets. It’s
where we have grown our business
and it’s where we have an edge
over the competition. Many of our
customers see their best opportunities
here too, so Agility is uniquely
positioned to meet their needs. ■
 S P O N S O R E D F E AT U R E

ECO-DRIVE, WORLD-FIRST
ECO-FRIENDLY TECHNOLOGY
BY CITIZEN
Back in 1976, Citizen
has had the foresight to
commercialise the analogue
solar watch and commitment to
develop it further to contribute to the
sustainable life style.
In 1995, before the word “eco”
became commonplace in Japan, we
came up with the name “Eco-Drive”
for Citizen’s range of watches fitted
with solar cells that uses any source
of light absorbed through the crystal
and dial to power a rechargeable
battery. Eco-Drive constantly keeps
on running anytime and anywhere,
as long as there is light.
Since battery changes are never
required, Eco-Drive watches well
meet the universal demand for
environmentally friendly products. If
the total of 7.2 million pieces sales
of Eco-Drive watches in 2005-
2007 had been conventional quartz
watches, their primary batteries
could be piled up to 1.7 times the
height of Mt. Everest and such a
massive quantity of batteries would
have been eventually dumped into
the soil.
Ever since becoming the first
watches to be granted Eco-Mark Noboru Yamaguchi, General Manager Citizen Watches Gulf Co.
certification in Japan in 1996, as
well as the Chinese Eco-Mark in
2001, our Eco-Drive watches have
continued to lead the solar-powered Eco-Drive concept models, but also
watch market. all our models of Eco-Drive watches
At BASEL WORLD in 2009 and feature the innovative designs and
2010, we unveiled Eco-Drive powered by Eco-Drive engine inside
concept models, demonstrating the casing.
Citizen’s potential for the future and I am proud to say that Citizen
towards the eco-sustainability in would commit ourselves to
terms of expanding the possibilities endeavour to deliver comfortable and
of design and technology. Not only exciting eco-friendly time to you.
 CEOs GE

A
chieving a sustainable
energy future for the
Middle East is clearly
one of the most pressing
issues facing the region today. Next
year will continue to see countries
in the region working hard to meet
the increasing energy demand –
projected to double for power and
triple for water over the next 20
years. With no silver bullet in sight,
pursuing a sustainable energy future
requires a comprehensive approach,
with countries in the region looking
at diversifying the power generation
technology mix and increasing the
adoption of wastewater reuse.
To meet the growing energy
demand, regional governments
are also encouraging increased

private investments into new energy
infrastructure projects in the form
of Public Private Partnerships which
support national privatisation
strategies for utilities.
On the power side, reflecting global
trends, renewable and alternative
energy will play an increasingly
significant role in the regional power
mix. Some countries have already
set a target in order to encourage
the adoption of new technology. The
establishment of long-term renewable
energy targets for Abu Dhabi and
Egypt are cases in point.
However, with fossil fuels and
thermal energy continuing to be
the mainstay for regional power
generation, the public and private
sectors are working together to
implement solutions to enhance the
efficiency of power generation while
fulfilling environmental obligations.
The region is increasingly turning
to emission-reducing technologies to
promote a sustainable environment,
with countries such as Qatar
already putting in place regulatory
requirements that limit emission
levels. Technologies such as DLN
that GE is supplying to utility and
industrial customers around the
region can go a long way to fulfilling
environmental obligations.
As the region increases its power
Joseph Anis
The president of GE Energy in the Middle East
presses for a sustainable energy plan in the region
and ramps up Gulf investment plans.
generation capacity, there is also an integration of power and water at
urgent need to enhance the flexibility, a single site. Integrated Water and
efficiency and reliability of the grid Power Plants (IWPP) are gaining
and transmission and distribution strength, as they are able to achieve
of electricity. economies of scale by providing two
New technologies, such as Smart essential resources simultaneously.
Grid that GE is investing in to GE has played a key role in
deliver cleaner, smarter, and more supplying innovative technology to
efficient solutions, will gain more key regional IWPP projects in Oman,
attention as the region begins to Bahrain, UAE
integrate the delivery of energy from and Saudi’s Marafiq, the world’s
different sources. largest IWPP.
On the water side, regional GE has been a growth partner in
governments are looking into the region’s energy infrastructure
technologies that can maximise the growth for almost 80 years. We
use of water while greening announced over $11 billion in energy
the environment. Another trend that projects that support the region’s
we are seeing in the region is the growth in the last 24 months. ■
As the region increases its power
generation capacity, there is an urgent
need to enhance grid efficiency.

December 2010 gulfbusiness 65

FEATURES GREEN SPECIAL REPORT

Sustainability fuels profits

Pumping up your bottom line and saving the earth can actually go hand in
hand, writes GULF BUSINESS.

I
n the last decade, the corporate
world has accepted that
sustainability can save money,
increase efficiency and ultimately
boost profits. Indeed, although
the Gulf has been somewhat of
a late bloomer in this regard,
businesses and governments
have taken to environmental action
in a big way. This has often led to big
statements like Abu Dhabi hosting the
International Renewable Energy
Agency, the construction of Masdar
City or Saudi Arabia’s numerous large
scale eco-cities.
Yet, companies are still struggling
to find day-to-day practical examples
of implementing their broad
commitments to the environment. Switch bowling centre, pool hall.
Plus, they often battle with the exact
definition of corporate sustainability.
A key moment in all of this was the
UK government’s publication in 2006
of the groundbreaking Stern Review
on the Economics of Climate Change,
which served as a wake-up call for
many businesses to take action on
managing their climate impact.
The 700-page report written by
economist Nicholas Stern, chair of
the Grantham Research Institute on
Climate Change and the Environment
at the London School of Economics, was
internationally hailed for putting the
challenge of climate change into terms
that corporate leaders could understand.
This helped to cement the concept
that increasing your bottom line
doesn’t have to mean depleting the
earth’s resources.
To take it further, some would say
the only reason that corporations have
taken action in recent years is precisely
because being green made financial
sense to their bottom line.
Tim Drury, Unilever’s vice president
iStock

of supply chain for North Africa

66 gulfbusiness December 2010

 How Do We Power
The Future?

Is it by developing the next-generation solar thermal

technology or by funding tomorrow’s leading cleantech
companies? Is it by providing market-driven incentives to
reduce carbon emissions or developing carbon capture
networks? Is it by nurturing future energy leaders or by
developing a cleantech cluster? Actually, it is all of the above
and just the start of things to come. After all, what we are
creating in Abu Dhabi is a centre of excellence dedicated to
renewable energy and sustainable technologies.

To find out more email info@masdar.ae or visit us online at

www.masdar.ae
The Global Centre of
Future Energy

Masdar City is an emerging clean technology hub in

Abu Dhabi, UAE. Organizations and institutions from around
the world are coming here to pioneer solutions to the global
energy challenge. With access to key international markets,
funding and investment, and a skilled, specialist talent pool,
Masdar City creates an environment where innovation and
entrepreneurialism flourish.

To learn how partnering with us can transform your business

and change the world, email joinus@masdarcity.ae, or visit
us online at www.masdarcity.ae
Middle East & Central Africa, said it
may not be quite as simple as that.
“Corporate social responsibility
of the past was about mindful
compliance. Companies were more
about ‘doing good by doing less bad’
and achieved that by focusing on
producing charity and compliance-
oriented programmes.
“In recent years, many corporations
have been adopting a more strategic
approach. Understanding that social
getty images
change is a key driver of business
growth, not just an obligation or a
nice thing to do, and knowing that
companies are both capable and
powerful when it comes to generating
social impact, they are today
becoming more proactive in their
social investments.”
He added: “Companies have
accordingly developed more strategic
objectives, focusing on specific social
impact goals that are meaningful in
the communities they serve and to the
employees that work for them.”
Unilever, a company that has
historically been quick off the mark
when it comes to the environment,
recently launched what it called a
Sustainable Living Plan, which it said
aims to “decouple business growth from
environmental impact by setting out a
more sustainable business model.”
By 2020, the consumer good’s giant
plans to halve the environmental
footprint of its products, source
100 per cent of its agricultural raw
materials sustainably and help a
GREEN CODES OF CONDUCT
G overnments and local authorities
in the Gulf have introduced
increasingly stringent guidelines to
force major industries, like the property
sector, to comply with green standards.
For instance, in 2007 Dubai
launched a set of green building
ground rules which said all owners of
residential and commercial buildings
must comply with internationally
recognised environmentally-friendly
specifications.
Nicholas Stern, author of the Stern Review.
billion people take action to improve
their health and well-being.
Meanwhile, Simon Major, general
manager for Middle East business
development at ICI Paints AkzoNobel,
agrees that sustainability is now so
firmly entrenched in the boardroom
agenda that there’s a very clear
understanding that being sustainable
is not only the “right” thing to do but
also contributes to your company’s
financial success.
“A few years ago only a small
selection of senior management were
really interested in sustainability as
there was a belief that customers did
not really want sustainable products.
Although this viewpoint changed
to some degree it was only after the
Stern Report that there was a clear
realisation that being a sustainable
company would actually help
One of these was the US Green
Building Council Leed (Leadership
in Energy and Environmental
Design) certificate.
In the last few years, the Dubai
Electricity and Water Authority has
introduced green building regulations,
Abu Dhabi’s Urban Planning Council
has launched its Estidama
(sustainability) ratings system and Qatari
Diar has established a Sustainable
Assessment System.
deliver the bottom line. Sustainable
champions are now seen as being part
of the mainstream and not out on the
periphery,” said Major.
However, he warned corporate
green exponents they may face some
opposition when trying grease the
wheels of their sustainable revolution.
“Firstly, there is the internal sell
to your own company. When this
has been won the funds become
available for innovation to proceed
– research and then development of
environmentally beneficial product
offerings. Also, when there is top
management consensus, people can
be allocated to tasks connected with
sustainable improvements.
“After the internal sell comes the
external sell. Sustainable innovation
often requires customers to break
with tradition and procure or operate
in a different way. Customers are very
conservative and often, despite what they
may say, do not like change,” he added.
Technology company IBM and food
giant Walmart have in the last two
years offered some practical advice on
how companies can drive down costs
and boost profits using sustainability
as a lever.
For instance, in 2008 Walmart
announced plans to investigate
its 100,000-plus suppliers with a
Sustainability Index. Meanwhile,
earlier this year, IBM asked its 30,000
suppliers in 60 countries to establish
environmental goals and measure
energy conservation, greenhouse gas
December 2010gulfbusiness 67
FEATURES GREEN SPECIAL REPORT
ENVIROCITIES 2010 - PROMOTING SUSTAINABLE LIVING
T he Arab world, one of the fastest
growing emerging markets, is
taking sustainability one-step further
by creating new green buildings and
transforming current ecosystems into
green cities.
“With two-thirds of humanity
expected to live in cities by 2050, the
future of our lives and the generations
to come is dependent upon our care
and concern for our cities,” says
Hussain Nasser Lootah, director general
of Dubai Municipality.
Cities in the Middle East have thus
started planning how to create resource-
efficient structures from finding sites
to design, construction, operation,
maintenance, renovation, and demolition.
“It is indispensable for all who are
associated with cities of the future to
have a fine understanding of the green
city concepts, standards and tools to
achieve and maintain a safe, healthy and
emissions, and waste management/
recycling practices. If suppliers
want to stay on IBM’s radar, they
have to report their results and ask
subcontractors to do the same thing.
Wayne Balta, IBM’s vice president
of corporate environmental affairs
and product safety, said: “A key
aspect of this programme is that
we want suppliers to create a
management system that works for
their particular business operations.
Since our suppliers are diverse,
there cannot be a one-size-fits-all
solution. Some are huge publically-
traded companies while others may
be small businesses with much fewer
employees. We want them all to
build long-term sustainability in a
way that is integral to their routine
operations, not as an add-on fix.”
He added: “We’re seeing more
activity in areas where business
interests intersect with the
environment and sustainability. More
companies are realising that what is
good for the environment is good for
business, especially when it makes a
company more efficient and effective.
A case in point: if you produce a
68 gulfbusiness December 2010
sustainable city environment,” Lootah says.
In line with this, an international
conference covering green city initiatives
across the region was held in Dubai last
month. The EnviroCities 2010 – organised
by Environmental Centre for Arab Town in
cooperation with Dubai Municipality – drew
more than 500 leading figures in the field
from around the world.
It featured presentations on green
hotels, green transportation, green
lifestyles, introduction of zero carbon cities,
successful case studies, and management
of land, energy, water and wastes.
“However, even if we have 100 per
cent green building but we have poor
management, no good results will be
achieved,” Lootah tells Gulf Business. He
said simple steps, and not only skyrocket
green science, can go a long way in
saving the environment.
“There are people leaving their air
conditioning units on for 24 hours, some
product – anything from hula hoops to
heavy machinery – if you do it in a way
that is more efficient, you’ll consume
less energy, save money on energy
costs and lessen your contribution
to greenhouse gas emissions. We’re
seeing this across all industries.”
Practical environmental solutions
don’t have to be as large as IBM’s
gesture, though. Major said one
particular product development
which seemed to have caught people’s
imagination is Light & Space paint.
“This paint is more that 20 per cent
more efficient at reflecting available
light, so dark rooms require less light
to appear equally bright. This means
you have to turn your lights on less
often and when you do they can be of a
lower wattage or power consumption.”
Meanwhile, at Unilever, Drury
said one of the firm’s most effective
green endeavours was hatched out
of its Lipton factory in the UAE and
involved replacing costly wooden
pallets with environmentally friendly
polly plastic slip sheets.
Logistics companies globally agree
that wooden pallets are now too
expensive to buy, ship and dispose of.
Hussain Nasser Lootah, director
general, Dubai Municipality.
leave their TVs on round-the-clock
while some have TVs in every room,”
he adds. “You don’t have to do those.
Why don’t you bring all the family in one
room to watch? And why do you have
to have light the entire house? I have
seen houses that look like an airport
that an airplane may just land there.
Management is what we really need.”
Drury said: “We replaced the
wooden pallets, that are traditionally
used by Unilever’s Global Tea Supply
Network to ship teas worldwide, with
slip sheets. It was initiated by the
Lipton factory at Jebel Ali, Dubai in
which tea raw materials have been
received on the slip-sheets from
Assam, India to Dubai. It is a classic
example of Unilever’s belief of ‘small
actions making a big difference’.
“This eco-friendly initiative enabled
Lipton to save wood while also
minimise shipping costs by increasing
loadability per container. The slip-
sheets are much thinner than the
traditional wooden pallets which
helps cut down transportation and
fuel costs while reducing the impact
on the environment,” he added.
Regardless of the size of the
initiative, it’s clear that doing
something sustainable is doing
something savvy. In fact, going green
properly, which experts say is not
just cynically jumping on the green
bandwagon, will drive the sort of
behavior which will add to your
bottom line profitability and therefore
shareholder delight. ■
FEATURES GREEN SPECIAL REPORT
Regional renewal
The Gulf is starting to take sustainabilty seriously and has launched some of
the world’s most ambitious green projects, writes RYAN HARRISON.
S
ome will say the Gulf
has had little choice
but to pump billions
of dollars into
sustainable green
projects; after all, oil
has a shelf life.
Governments,
however, argue it’s their social duty to
protect the future of their citizens.
But in all of this there’s no disputing
that the petrodollars invested in
green initiatives in recent years have
spawned some of the most exciting
and innovative projects in the world.
70 gulfbusiness December 2010
It‘s only natural that the debate
around harnessing renewable sources
of energy has centred on solar.
Indeed, the Gulf is a global leader in
producing green ventures to recycle
the sun’s power.
Yet Donald Huisingh, from the
Institute for a Secure and Sustainable
Environment at the University of
Tennessee in the US, said still more
needs to be done on the research and
development side to fully make the
transition to solar-based systems.
“The Middle East has so much
wealth and so much sun, they need
to take advantage of it. After all, their
oil and natural gas reserves are also
limited capital that is not increasing.
“Start living on the solar income to
change from using capital to using
annual income from the sun,” he
added. A company that specialises in
making that happen is SunTech, which
is now the world’s largest producer of
solar panels.
The firm has shipped more than 12
million solar panels and works with
hundreds of partners in more than 80
countries around the world.
But James Hu, president of Asia

Masdar eco-city.
Pacific, Middle East, and Africa at
SunTech, said solar technology still
only provides for a small fraction of
the world’s total energy consumption.
“In one hour, the sun provides
enough energy to meet the world’s
annual energy consumption. Think
of it this way: almost all of the
mechanical energy that humans
GREEN RULES FOR PROPERTY DEVELOPERS
T raditionally, the Gulf has a poor
record when it comes to sustainable
development, but things have changed
quickly in the last decade, driven by
regulation and leading examples set by
government clients.
In future, sustainable design
techniques and active technologies,
such as renewable and water recycling,
are set to become more commonplace,
consume – coal, oil, gas – is really just
some form of solar energy. SunTech
wants to simplify that entire process
and make it much more efficient.
“In the Middle East, we are
particularly impressed by Masdar
City, which is one of the first large-
scale projects to really tackle
sustainability throughout the
entire ecosystem of urban living.
Although we may not be able to
rebuild the entire world from scratch,
the Masdar experiment is already
proving instructive for other urban
development projects around the
world,” Hu added.
Masdar City is arguably the most
talked about green project in the
region, although recently it has
suffered a number of setbacks, partly
because of the downturn.
In October, Masdar said it will delay
the first phase of the $22 billion low-
carbon city after undertaking a review
during the financial crisis.
Meanwhile, last month, the
International Renewable Energy
Agency, for which Abu Dhabi lobbied
to host the headquarters, appointed
Adnan Amin as interim director
general after Helene Pelosse quit.
Finally, in what is seen as one of
the teething problems with solar
technology, the project said it will
receive less energy than planned
because of dust particles in the area
blocking sunlight.
However, there are still plans to
have more than 1,500 companies
from around the world locate to the
complex to fund, research, develop
providing a boost, not just for
environmental statistics on construction
sites, but also for economic growth in
new technologies.
While developers are free to use
any methods they choose to meet the
standards laid down in new regulations,
Abu Dhabi developers are encouraged
to use the region’s first sustainable
development rating system, which will
and implement new and sustainable
technologies.
There is also the Masdar Institute
of Science and Technology. The
institute, which is modeled on the
Massachusetts Institute of Technology,
enrolled 90 students from 22 countries
in September 2009.
Masdar had originally unveiled its
ambitious plans to invest in renewable
energy projects back in 2007. Abu
Dhabi has since pumped billions into
the clean energy initiative as it aims
both to cut emissions and prepare the
world’s third-largest crude exporter
for a future less dependent on oil.
As is common knowledge, the UAE is
one of the world’s largest emitters of
greenhouse gas per capita.
Meanwhile, the need to reduce
greenhouse gas emissions generally
from buildings in the region has
underpinned a lot of the green project
activity. Buildings – residential and
commercial – are responsible for
around 40 per cent of global primary
energy use and 12 per cent of the
global water consumption, according
to the Intergovernmental Panel on
Climate Change.
Some of the major green building
projects in the Gulf include the
economic cities in Saudi Arabia. At
a cost of more than $60 billion, the
kingdom has planned and begun
constructing four economic cities,
which are located in Rabigh (King
Abdullah Economic City), Hail (Prince
AbdulAziz bin Mousaed Economic
City), Madinah (Knowledge Economic
City) and Jazan (Jazan Economic City).
see buildings earn ‘pearls’, depending
on their green credentials. Projects to
be assessed under the Pearl Rating
System fall into three categories
– buildings, communities or villas.
Each assessment is split into design,
construction and operational phases.
The rating system itself is voluntary
and falls within the government’s wider
‘Estidama’ development system.
December 2010gulfbusiness 71
FEATURES GREEN SPECIAL REPORT
And according to US energy
secretary Steven Chu, Saudi could
emerge as a major exporter of solar
energy, which might reach the current
level of the kingdom’s oil exports.
Speaking earlier this year in Riyadh,
Chu said: “The kingdom’s drive to
invest a portion of its oil revenue on
scientific and technical research will
enable it to strengthen diversification
of energy sources and promote
renewable energy programs.”
Khaled Al-Nabulsi, a professor at
King Abdulaziz University in Jeddah,
added that studies have proved Saudi
could become the largest exporter of
solar energy in the world. The country
has the capability to produce large
amounts of solar energy due to its
great expanse of open areas exposed
to direct sunlight, he said.
In Bahrain, the World Trade
Building, which opened in 2008,
was the world’s first sky scraper
to use wind turbines in its design.
The project has received a number
of awards including the Arab
Construction World for Sustainable
Design Award.
Plus, the Sabah Al Ahmed
International Finance Centre in
Kuwait is a 40-storey tower able
to generate its own energy from
a photovoltaics (PV) system and
roof mounted wind turbines. PV is
a method of generating electrical
power by converting solar radiation
into direct current electricity using
semiconductors.
Finally, in Qatar, the Energy City
utilises the latest green building
THE FIRST MIDDLE EAST-EUROPE SOLAR POWER GRID
I n an ambitious project known as
the Desertec Industrial Initiative, a
consortium of companies from Europe
and North Africa plans to build a network
of solar power plants in the Middle
East and North Africa that would be
connected by a super grid of
high-voltage, direct-current transmission
lines to Europe.
The consortium is led by Germany-
based Siemens and Munich Re, which
72 gulfbusiness December 2010
technology to house a modern
business and residential facility
occupied by a diverse mix of energy-
related companies, commercial
tenants, customers and suppliers.
Lindsey McDonald, a consultant at
the information and communication
technologies practice for the Middle-
East & North Africa at Frost &
Sullivan, said: “The Musanada project
in Abu Dhabi is a global example of
how sustainability can be achieved.
Generally, it’s gratifying to see that
in the last year there have been more
environmental initiatives in the
region than previously. This is all the
way from community environmental
clean-ups to the launch of businesses
focused on recycling not only paper,
but electronic products and the like.”
Musanada is an Abu Dhabi
government initiative established
in 2007 that develops and manages
services to improve interaction
hopes to obtain above-market prices for
the energy they would export to Europe.
Desertec plans to invest $550bn by
2050 in the project, which it says would
produce $3trn worth of energy and
supply 15 per cent of Europe’s electricity.
The plants would use concentrated
solar power, a technique whereby the
sun’s rays are focused by curved
mirrors to heat liquids that turn
generating turbines.”
The World Trade Building.
between state entities. The objective is
to make Abu Dhabi one of the five top
places in the world to live, work and
do business.
One major aspect of the project
is providing support for creating
sustainable buildings in the capital,
from design, construction to facility
management.
However, McDonald added that
progress in the region on going green
has only been successful to a point.
“The challenge and progress both
lie in legislation and regulation. At
present in the Middle East, while it is
clear that there is a push towards the
promotion of green practices, most
countries do not have comprehensive
legislation in this regard, and in those
instances in which there is regulation,
it is not always effectively enforced.
“This is the main area in which
progress can be made – when
companies are compelled by law to
take concrete action on behalf of the
environment,” said McDonald.
The development of some of the most
ambitious sustainable projects in the
Gulf comes as the definition of what is
green widens. Previously, sustainability
focused on shorter term solutions such
as recycling, perhaps contributing to
environmental efforts using monetary
methods and so on. But companies
are realising that there are far more
ways in which a business can achieve
sustainability.If the projects that have
been built so far are anything to go by,
the future of green initiatives in the
region looks promising. ■
FEATURES GREEN SPECIAL REPORT
Hotels go green
GCC hospitality firms are upping the eco stakes to capture the increasingly
lucrative green tourist, writes RYAN HARRISON.
F
rom simple recycling
to the more creative
solar water heaters,
all methods are
being deployed as
hoteliers attempt to
limit the damage their
businesses have on the
environment. And because hospitality
is a pillar of all Gulf economies, it will
be uplifting for tourist authorities to
see action taken, particularly given the
spending power of green travelers.
According to the World Tourism
Organisation, sustainable tourism
today is estimated at 11.4 per cent of
global consumer travel spend
It’s also estimated that buildings
use one third of the world’s energy
resources to run their lighting, heating
and air-conditioning systems. Within
the region, buildings’ consumption
74 gulfbusiness December 2010
of energy is estimated at 40 per cent
of total energy used, and they are
estimated to produce over 50 per cent
of all waste.
At the very least, environmentalists
say that for hotels – which are massive
consumers of both water and electricity
– there’s a lot of room for improvement.
One of the routes taken by four
star hotel Qamardeen, near Dubai’s
Burj Khalifa, was to simply raise
awareness. It recently took part in the
annual Clean up the World initiative
organised by Dubai Municipality, an
effort that also involves providing
handbooks from the Dubai Electrical
& Water Authority to new members of
staff and guests.
Park Hyatt has taken a similar
approach, also taking part in clean-up
campaigns at Dubai Creek and teaming
up with the Emirates Wildlife Society
to produce a booklet that will detail all
the birds that live on the Creek.
For these hotels, the debate has
moved on from basic activities, such as
using lower energy usage light bulbs
and the recycling of materials and
segregation of plastics and glass. It’s
now more about convincing tourists
and local authorities that green is part
of the culture of the hotel.
For instance, Park Hyatt Dubai
upgraded its light fittings and air-
conditioning units to an economy
mode that can be applied to each of the
four wings; it installed a composting
programme; and a Treat Sewage
Effluent plant used to power cooling
towers and for external irrigation.
There are plans to use that water for
its laundry at some point in the future.
Meanwhile, the Hyatt Regency said
that in the last year its Gulf hotels
saved 15 per cent in total energy. Part
of this was achieved by stemming the
chronic loss of energy through the poor
insulation of the old glass. The hotel
looked at ways of recovering this energy
by putting a film on top of the glass.
Even more effective was the
approach to lighting. Because LED
lamps use five watts of power but
give the brightness of 50 watt halogen
lamps, Hyatt Regency replaced its
lighting with LED bulbs in all corridors
and in 50 per cent of galleries.
Technology giant Philips is
particularly active in this space, and
in recent years has launched a number
of tailored products for a local hotel
industry that is starting to cater to the
green awareness of its clientele.
The firm linked up with the
InterContinental and Crowne
Plaza Dubai Festival City to save
approximately 80 per cent of their
energy costs incurred on lighting.
BEST GREEN HOTELS IN DUBAI
E arlier this year the Dubai
Department of Tourism and
Commerce Marketing announced its top
environment-friendly hotels.
The awards were based on hotels
that had boosted their green credentials
in the last year. Judges based their
decisions on factors such as waste
recycling, energy conservation and
environmental awareness campaigns.
For the 5 Star Hotel Category, Park
Hyatt took first place, Grand Hyatt
ranked second, and Al Qasr Hotel
Madinat Jumeirah secured third place.
Al Qasr hotel, Dubai.
Philips replaced the interior and
exterior façade with dynamic
architectural LED lighting. In total, it
meant covering 35,000 light points in
hotel rooms, suites and public areas.
Meanwhile, Philips has been
installing solar powered water
boilers in hotels across the Gulf.
The method has traditionally proved
more popular in Western countries
but is picking up in the region. The
rationale for hotels is that a 20 per
cent cost saving on energy bills
from these solar water heater can be
passed on to the consumer.
Philips’s argument is also that for
buildings to go green, the incentive
could be a deduction or percentage
discount on their power bills. And
until now hotels have been penalised
for consuming more, but instead they
should be pushed to save more.
In Saudi, backing the move to more
sustainable hotels, the newly-formed
In the 4 Star Hotel Category, Qamar
Eddine Hotel took first, Rotana Towers
Hotel ranked second, Marriott Court
Yard Hotel, Investment Complex
secured third place.
For the Three Star Hotel Category,
Regal Plaza Hotel took first place,
Virzales Hotel ranked second, and
Princess Hotel secured the third place.
Finally, in the Hotel Apartment
Category, Savoy Crest took first place,
Grand Hyatt ranked second and
Marriott Executive Dubai Creek secured
third place.
Grand Hyatt hotel, Dubai.
Saudi Green Buildings Forum recently
proposed several recommendations
for government and property
developers. The recommendations,
based on two days of intense
discussions by experts and officials,
were proposed at the end of the first
Saudi national conference exclusively
dedicated to sustainable buildings.
One of the key recommendations
urged Saudi municipalities to offer
incentives and rewards to use eco-
friendly alternatives in coordination
with electricity and water ministries.
Meanwhile, the Abu Dhabi Tourism
Authority (ADTA) has pledged to cut
hotels’ energy use by 10 per cent, their
water use by 20 per cent and reduce
the amount of hotel waste going to
landfills by 20 per cent as a first step
in its environmental programme.
As part of the initiative ADTA
launched a new pilot scheme which
will see four hotels in the emirate
built according to strict new green
guidelines. Plus, plans were recently
announced to build the emirate’s first
five-star green hotel in the Al Ain
Wildlife Park and Resort.
Finally, with tour operators now
offering more and more responsible
tours with activities like kayaking
through mangroves, low-impact
desert safaris and operating far more
efficient versions than the five-star
deluxe that the region is known for,
the support system for greener hotels
is definitely there.
Fundamentally, Gulf hotels are
seeing a thriving commercial element
through introducing green schemes.
It may still be some way off the West
in the development of these practices,
but there’s no denying the huge
groundswell in the region..
Regardless of the size of the initiative,
it’s clear that doing something
sustainable is doing something savvy.
In fact, going green properly, which
experts say is not just cynically jumping
on the green bandwagon, will drive the
sort of behavior which will add to your
bottom line profitability and therefore
shareholder delight. ■
December 2010gulfbusiness 75
FEATURES SHIPPING

Turning tides
After two slow years, the regional shipping industry is confident that the
worst of the stormy waters has passed, writes KAREN REMO-LISTANA.

GOP-Bahrain

L
ast year, hundreds of UAE twice a month.” Their ship arrived officer, United Arab Shipping
seafarers were afforded in the UAE waters in July 2009 to fuel Company (UASC). As it was more
the luxury of visiting up. But with no orders, the vessel cost-effective to have the vessels idle
tourist spots in the UAE had to stay there until March this than have them sail with less than
as their vessels lay idle year. At a rate of $30,000 per day, that 50 per cent utilisation, shipowners
in the port of Fujairah. translates to losses of around pulled significant capacity out of the
“There was nothing to $5.4 million. trade and shed thousands of jobs to
ship,” recounts Manuel But that case was just a drop in the remain afloat.
Atienza, a Filipino seafarer whose ship ocean. Globally, the recession cost But the sector, a macro-economic
was kept idle for eight months. “It was $15 billion to $25 billion losses in the barometer, seems to be on its way to
a blessing in disguise though. I could shipping and port industry, estimates recovery. Atienza and his crew, along
visit my friends and relatives in the Waleed Al Dawood, chief operating with many others, have sailed back to

76 gulfbusiness December 2010

the international waters for normal
operations. The Philippines, which
supplies 30 per cent of all seafarers
on international trading vessels, has
witnessed the companies’ recruitment
freeze policies begin to thaw.
“We have touched the bottom and
there’s nowhere to go but up. There
is no way we’ll go further down.
It’s impossible,” Al Dawood told the
Seatrade conference in Dubai.
UASC, which last year received
a $2 billion capital boost from its
shareholders, is now forecasting more
Nabil Bourisli, chairman, Kuwait Shaikh Daij bin Salman Al Khalifa,
than 20 per cent year-on-year growth.
Oil Tanker Company. chairman, GOP.
Al Dawood says UASC is on track to
increase capacity by 37 per cent from of 233 ships or 11 per cent of the per cent incremental growth from
1.17 million 20-foot equivalent unit current fleet. In terms of tonnage, 16.7 million dwt to 23 million dwt
(TEU) in 2009 to 1.6 million this year. the Middle East is slated to take while Iran is set to increase tonnage
And with new vessels coming online, delivery of 21 million dwt over the capacity by 34 per cent from 16.8
the capacity will further go up to next two years, or 37 per cent of million dwt to 22.5 million dwt.
two million TEU in 2011 and today’s capacity. “Over the past year, we have seen
2.7 million in 2012. The UAE tops the list with 107 demand improving,” says Woon
UASC is not the only big shipping orders on top of its 679 fleet, followed Khoon Kee, global head of structured
player with expansion plans. Kuwait by Iran with 64 on top of its 329 fleet. finance, Standard Chartered Bank.
Oil Tanker Company (KOTC) has six Tonnage-wise, the UAE will see a 40 “However, the continued introduction
new very large crude carriers (VLCCs)
on order and is planning to order 10
more medium range crude carriers The continued introduction of capacity
next year. These orders, worth $1.6 implies some short-term volatility, but in
billion, will add nearly two million
TEUs of capacity by 2011. the medium to long term, the outlook of
Even against the background of the shipping industry is positive.
banks’ reluctance to lend, Nabil
Boursili, chairman and managing
director of Kuwait Oil Tanker
Company (KOTC) says he is not
worried. “All our needs are financed
by our parent, Kuwait Petroleum
Company, so there is no need to access
the banks,” he says.
Currently, the Middle East has a
fleet of 2,040 vessels with combined
deadweight tonnage (dwt) of 57.3
million. The tanker sector takes the
biggest share (62 per cent) followed
by bulk vessels (15 per cent), dry
cargo (11 per cent) and gas (eight
per cent), according to Doll Shipping
Consultancy analysis of IHS
Fairplay data.
However, there is a concern
surrounding oversupply as
gulfpics

shipowners take delivery of new

ships. The region has an orderbook

December 2010 gulfbusiness 77

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General Organisation of Sea Ports (GOP) in Bahrain saw a 33 per cent net profit increase in 2009 over 2008.
of capacity implies some short-term
volatility, but in the medium to long
term, the outlook of the shipping
industry is positive.”
The jury is still out, but the
general outlook is that of cautious
optimism. Experts admit that the
world’s economy is still volatile. July
earnings, for example, dropped after
a better than expected first half of the
year. Figures from EA Gibson show
that VLCC earnings on the A/G Japan
route in July average-15e worst since
October 2009.
KOTC’s Bourisli is nonetheless
positive the forecast increase in
oil demand will save the industry
from another dip. “The present
fundamentals are strong enough,”
he says. “OPEC forecasts the global
GDP rate to expand 3.4 per cent over
2010 with Asian economies leading
the growth. This is good news for
the shipowners and shipbuilders.
Everyone agrees demand for OPEC
crude will increase.”
The Middle East has a fleet of 2,040
vessels. The tanker sector takes the
biggest share followed by bulk vessels,
dry cargo and gas.
Per Wistoft, CEO of Gulf Navigation
Holding, calculates that a 1.1 million-
barrels incremental capacity means
an additional need for 36 tankers. He
shrugs off the issue of oversupply,
saying financing issues have either
cancelled or delayed a significant
number of orderbook.
“I have no fear whatsoever,” he said.
“I strongly believe that the orderbook
today is much over described. There
are a lot of things happening on
cancellations and slippage, hence
the amount of ships to be delivered
over the next few years will be
substantially reduced. Any ship
today where the keel has been put
down is being renegotiated. “Now the
shipowner can only obtain 60 per
SHIPPING
cent on the market value, not on the
contract price, and the market price
versus the contract value has dropped
30 per cent,” Wistoft explains. “Instead
of coming up with $30 million per
ship, the shipowner now has to come
up with $85 million per ship. It’s a
serious issue.”
Among those who have cancelled
orders are National Shipping
Company of Saudi Arabia, recouping
$95 million from its Korean
shipbuilder, and Gulf Navigation,
which also cancelled orders for two
chemical tankers with SLS Shipping
and was repaid $70 million.
Shippers are able to cancel contracts
because many shipyards took on more
orders than they could possibly fulfil
December 2010 gulfbusiness 79
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gulfpics
in the boom years, analysts said. There
are much cheaper ways to expand
fleets, such as buying used ships.
Meanwhile, ports are also back to
growth and expansion mode.
The General Organisation of Sea
Ports (GOP) in Bahrain, which saw a
33 per cent net profit increase in 2009
over 2008, is pushing ahead with its
expansion plan. GOP chairman Shaikh
Daij bin Salman Al Khalifa says the
second phase of Khalifa Bin Salman
Port expansion is on track, increasing
capacity from 1.1 million TEUs to 2.5
million TEU.
“I do not foresee any serious
oversupply situation with regard to
port capacity, especially as the region
is fast becoming one of the most
dynamic global ports and maritime
centre,” he says.
“This process is assisted by
the fact that the global economic
equations are changing drastically
with the economies of several Asian
nations growing by over eight per
cent per annum.”
DP World, which witnessed 14
per cent growth in consolidated
SHIPPING
throughput, is also on track to meet
its $2.5 billion capital expenditure
programme. The global port operator
spent $411 million in the first half
and plans to spend $589 million in
the second half. The remaining $1.5
billion will be allocated for 2011 and
2012 investments.
Gulftainer, a Sharjah-based port
operator, has registered a 23.75 per
cent growth in traffic in the first five
months of this year and is bullish of
a double-digit growth in container
volumes for 2010 over the 2.75 million
TEUs handled in 2009.
“We are outlining $100 million capex
this year,” says Gulftainer managing
director Peter Richards.
“For us, we don’t just jump into the
boom. Our strategy is to look at niches
which we can afford and where we can
see good returns on our investments.”
The common consensus in the
region’s shipping industry is that as
economic recovery spurs another wave
of expansion, moderation will be the
key. Double-digit growth may still be
achievable but it must be driven by
well-structured business plans. ■
December 2010 gulfbusiness 81
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FEATURES SPACE
Aerial
ambitions
The launch of Dubai’s first
satellite has spurred a raft
of local space-endeavours,
writes MARTIN MORRIS.
F
ormerly the preserve
of the major
economic powers,
the space industry
in recent years has
seen an opening
up to new players
looking to match
their ambitions – more usually
in the field of scientific research.
The UAE is proving no exception.
Central to its space ambitions is
EIAST (The Emirates Institution for
Advanced Science and Technology).
Set up in 2006, the organisation’s
84 gulfbusiness December 2010
58
four-fold agenda includes promoting
advanced scientific research/
technology innovation in Dubai and
the UAE; creating an internationally
competitive base for human skills
development; positioning Dubai and
the UAE as a science and technology
development hub; and establishing
international collaborative links
and joint projects with industry and
research organisations.
EIAST focuses on four main
scientific programmes: space,
astronomy, energy and environment
and water research.
It is also spearheading the Dubai
Space Programme, including the
DubaiSat series of satellites.
DubaiSat-1, launched from the
Baikonur Cosmodrome in Kazakhstan
in July 2009, is the UAE’s first remote
sensing satellite. Images of Earth
relayed back to a ground station in
Dubai are being used by the UAE
government to help plan future land
development programmes.
Meanwhile, in October, EIAST
and the Institute for Community
Engagement (ICE) of Zayed University
(ZU) formally agreed to pursue
collaborative research in science and
technology and provide access to each
other’s facilities, data and equipment
for facilitating the research. EIAST
will share its DubaiSat-1 images and
other resources to support applied
research at Zayed University.
Further afield, an agreement
between NASA and the RAK-based
Arab Youth Venture Foundation, which
is sponsored by Mubadala – the Abu
Dhabi government’s investment arm
– recently saw the first UAE nationals
participating in a student internship
programme at NASA’s Ames Research
Center in Moffett Field, California.
Previously only open to US
citizens, the deal will see up to 12
UAE students participating each
year for three years. Shamma Al
Qassim, 19, Hazza Bani Malek, 20,
and Hamad Rajab, 21, formed the first
intake, having been selected for the
NASA education initiative to work
with top scientists on a variety of
projects, including the space shuttle
and International Space Station,
deep space missions, solar system
exploration and aeronautics research.
Al Qassim, a computer engineering
major at the American University
of Sharjah, will be applying her
studies in satellite thermal data
analysis to predict earthquakes
through the detection of stresses in
the Earth’s crust.
As NASA Ames Center Director
Pete Worden puts it: “Under this
programme, the goodwill generated
by students working side by side
with our NASA scientists and
researchers will serve as a bridge
between the USA and UAE, opening
doors for future collaboration in
scientific research.’’ As the UAE
becomes increasingly engaged in the
academic sphere, so it also aims to
be at the forefront in the commercial
sphere as Sir Richard Branson and
his Virgin Group looks to make the
businessman’s dream of putting
‘tourists’ into space a reality.
Indeed, space tourism in the Middle
East took a major step forward in
July 2009 when Abu Dhabi-based
Bill Richardson (left) and Sir Richard Branson (right), Virgin Galactic.
Aabar investments – the non-energy
investment arm of state-owned
International Petroleum Investment
Company (IPIC) – announced it had
taken a $280 million, 32 per cent
stake in Virgin Galactic – previously a
wholly-owned subsidiary of Branson’s
Virgin Group established as a space
tourism company in 2004 to develop
sub-orbital spacecraft with US partner
Scaled Composites.
As part of the deal, Aabar said it
planned to build a spaceport in Abu
Dhabi and would have rights to all
Virgin Galactic traffic in the region.
While there is yet no timeframe for
when the spaceport will be built and
become operational, Virgin confirmed
As the UAE becomes increasingly
engaged in the academic sphere, so it
also aims to be at the forefront in the
commercial sphere.
Aabar’s infusion would be sufficient
to fully fund the company through to
when it commences commercial space
tourist operations.
Aabar also announced it was setting
aside $100 million to build a small
satellite launching facility, suggesting
the team plans to use the spaceport as
a base for scientific research as well
as space tourism.
Virgin Galactic’s principal
operations, however, will be run out
of the recently opened Spaceport
Virgin Galactic
America in Upham, New Mexico – the
world’s first.
In December 2009, Virgin Galactic
unveiled the first commercial
passenger spaceship – SpaceShip Two,
set to propel tourists into space (and
zero gravity) within two to three years.
Designed by US-based company
Scaled Composites and legendary
aircraft builder Burt Rutan,
SpaceShipTwo evolved from the
smaller SpaceShipOne rocket plane
that won the $10 million Ansari X
Prize in 2004 for becoming the first
commercial manned rocket to reach an
altitude of 100 kilometers, or 62 miles.
While SpaceShip Two is still seen
in many quarters as a big gamble
on the commercial viability of space
tourism, there has been no shortage of
paying customers, with 370 would-
be astronauts – including around 20
from the Gulf–signing up. The first
100 passengers have already paid
the necessary $200,000 up-front and
booked their rides into space.
To get into space the VSS
Enterprise, attached to its mother
ship White Knight 2, will climb to
50,000 feet before detaching. Its
rocket motors will then ignite, taking
December 2010 gulfbusiness 85
SPACE

Virgin Galactic timeline

it to nearly 70 miles above Earth

at three times the speed of sound.
The engines will then shut off,
leaving passengers in a state of zero
gravity weightlessness for a period
of around five minutes, prior to it
gliding back to Spaceport America.
The overall journey itself will take
around two and a half hours.
The first piloted gliding flight of
VSS Enterprise was successfully
completed in October when it was
released from the WhiteKnightTwo
mothership at an altitude of 45,000
feet above California’s Mojave Desert.
The next step is to fit Enterprise
with rocket motors to take it into
space, followed by test flights,
which should happen in 2011. Not
surprisingly, Sir Richard has already 1996 – Original plans for the Ansari X September 27, 2004, Sir Richard
prize announced. $10million prize for the Branson and Burt Rutan announce
booked a flight on behalf of himself
first non-government human space flight. plans or the world’s first commercial
and his family.
manned space operator – Virgin
Will Whitehorn, the president of 1999 – The name Virgin Galactic is first Galactic
Virgin Galactic, has indicated the registered as Virgin begins discussions
company’s first ‘tourists’ could be with several fledgling private space September 29, 2004 – Mike Melvill
going into space within two years. ventures with a view to investment in pilots the first successful X Prize
the sector. qualifying flight reaching 330,000 feet.
Weighty matters indeed for those
looking for the ‘weightlessness’ 2001 – Ex-Microsoft founder Paul October 4, 2004 – Brian Binnie
experience. Allen’s vision leads to the creation of pilots the final X Prize flight reaching
At EIAST meanwhile, it is full SpaceShipOne by aviation designer Burt a record 368,000 feet. The X Prize is
steam ahead as the organisation Rutan. won and Virgin Galactic is born.
continues to put the UAE on the June 21, 2004 – the first manned space To date only 450 people have been
space technology and research map. flight by a private, non-Government to space.
Commenting after the first programme – Mike Melvill flying
anniversary of the launch of SpaceShipOne
DubaiSat-1, Ahmed Al Mansoori,
director general, EIAST, said:
“The achievements by EIAST
DubaiSat-1: facts
highlight the UAE’s success in
Satellite operator image receiving and processing
leveraging the advanced technology DubaiSat-1, operated by EIAST (The station, antenna and RF subsystem.
sector and underscores the Emirates Institution for Advanced DubaiSat-1 gathers information
capabilities of young Emiratis to Science and Technology), was and images from space for use
actively participate in new and launched on July 29, 2009, into a 680- by UAE government agencies in
advanced realms of technology. kilometre (420 mile) sun-synchronous infrastructure development and rural/
“The success of DubaiSat-1 low Earth orbit by ISC Kosmotras, who urban development planning, as
during the first operational year used a Dnepr-1 carrier rocket. well as the management of natural
is testament to EIAST’s ability to disasters and the provision of
translate the strategic direction and Satellite mechanics accurate maps.
DubaiSat-1 consists of two segments:
overall development plans to drive
space and ground. The space segment Future launches
the knowledge-based economy. comprises the development, design EIAST has begun work on the
“We will continue to develop and manufacture of satellite equipment specifications for its third satellite,
EIAST as an internationally and components of the measurement DubaiSat-3, even as work on
recognised institution and a national and imaging. The ground segment DubaiSat-2 continues at full pace for
icon in science and innovation,” includes the mission control station, its potential launch by end-2012.
he added. ■

86 gulfbusiness December 2010

FEATURES LUXURY

Hey

spender
The Gulf’s appetite for luxury brands survived the recession and
double digit growth is expected by 2012, writes ALICIA BULLER.

T
he latest round of global
austerity cuts couldn’t be
further from mindset of the
luxury consumer, according
to the latest figures. After
two slow years, the world’s
well-heeled sheppers are
digging deep into their
pockets once again for high-end goods.
While the sector experienced an eight per
cent slump in 2009, sales of expensive leisure
goods are now set to grow by four per cent
this year up to $191 billion, according to an
analysis of 220 global luxury goods firms by
consulting firm Bain & Company.
The general consensus is that the future of
bling – from clothes, to accessories, to cars –
is a glittering one.

88 gulfbusiness December 2010

 In this region alone, the luxury
market continues to grow and is now
worth over $10 billion annually, while
the number of millionaires now totals
around 400,000.
“Our long-term growth prognosis
is good. The UAE’s development will
also positively impact the luxury
watch industry. One of the effects of
globalisation is that trends are no
longer predominantly considered a
local issue. Even though there are
particularities which will remain
unique to a single region, the trends
are now similar from one country to
another,” says Jean-Marc Jacot, CEO
of luxury watchmaker Parmigiani.
“The recession has impacted our
industry worldwide. In the Gulf, the
area that most suffered was Dubai.
We believe that the next two years
will allow the region to bounce
back, and that the global situation
will improve. Parmigiani has an
advantage because our brand only
recently entered the UAE and our
business was not hit as strongly.”
The regional luxury market is now worth
over $10 billion annually, while the number
of millionaires totals around 400,000.
The growth rate for luxury
shopping in Asia overall is estimated
to be 15 per cent this year. In North
and South America four per cent
growth is expected and in Europe,
three per cent, according to the Bain
& Company report.
As the region slowly recovers from
the recession, it’s evident that during
the economic crisis some luxury players
fared better than others. Labels with
strong brand equity were hardly dented
and some brands even posted growth.
Meanwhile, true to form, ‘the lipstick
index’ rose – in a recession, cosmetics
purchases generally increase as a cheer-
me-up defence against the misery of
bleak economic times.
President and CEO of The Luxury
Marketing Council Middle East T.B.
McClelland says: “While there was a
dip in purchasing of fashion, other
sectors increased remarkably, such
as cosmetics, lipstick and perfumes.
Even though consumers we not able to
purchase the high priced products they
did before – or not as many as they were
able to in previous years – they still
dressed up, made up and smelled nice.
They still craved the ability to go out and
enjoy life despite the financial situation.”
Home-grown UAE luxury retail
chain Paris Gallery, purveyors of
perfumes, cosmetics and accessories,
witnessed similar trends.
“In the fourth quarter of 2008, we
started to feel the slowdown and this
continued into 2009, but perfumes and
cosmetics were the least affected,” says
the firm’s CEO Mohammed Al Fahim.
“We were about 30 per cent down in
2009 in the high-end sector, although
this has rebounded somewhat in 2010.
High-end watches are set for a record
year in 2010.
We won’t reach 2008 levels until 2012,
but with economic stability the market
should rebound.”
While the high-end was impacted
at Paris Gallery, well-established
brands with a good image and high
awareness, such as Burberry and
Cartier, actually kept growing in sales
during the recession. But one area
that was particularly hard hit was
luxury watches.
“Timepieces were impacted
negatively. The mid-market did well
[watches of around $500 on average].
Affordable watches did fine. Owing
to the recession, the watch industry
actually got smarter, more fashionable
and affordable,” Al Fahim says.
According to McClelland, demand
for luxury goods never really went
away, but the cash for purchasing did.
As the money flows back into the
system, luxury goods will be one of
the first recipients.
“Aspirational shoppers only slowed
discretionary spending while high net
worth shoppers continued supporting
their lifestyles. Big ticket items such
as yachts and private jets are already
coming back. For instance, GulfCraft
is now manufacturing and selling
bigger yachts.
“Demand is growing, consumers
are looking not only for the products
but also the experience of ownership,
and brands must take that into
account when selling to clients and
customers,” McClelland adds.
In another indicator, the MasterCard
Consumer Confidence Index dipped
by 49 per cent in 2009, but has now
returned to a healthier 69 per cent.
MasterCard has taken advantage of
this upturn in optimism by segmenting
its credit cards into the Titanium,
Platinum and The World lines.
“We continue to see growth in
spending – 64 per cent up on 2009.
The premium sector was the most
unaffected. We witnessed purchasing
December 2010gulfbusiness 89
FEATURES LUXURY
of lots of luxury items. There has
been no slowdown in that sector
from consumers. There is a renewed
optimism” says Basel Eltell, vice
president and regional manager,
Levant, MasterCard.
As tourism numbers to the Gulf
continue to increase, the level of
luxury spending is expected to rise
in tandem. Well-heeled shoppers
from emerging markets that are
experiencing exponential growth,
such as China and India, are already
upping their spend quotient in the
Gulf, according to McClelland.
“Tourism is growing, particularly
of high net worth travellers, and they
are looking for gold jewellery, precious
stones and experiential travel. One of
The Luxury Marketing Council’s newest
members, Precious Jewels LLC in the
Dubai Mall, reported extraordinary
sales of high-end jewellery over the last
six months, at the very same time as the
economic forecast was still unsettled
globally,” he says.
“The economy in the Gulf is already
showing signs of recovery – higher
crude oil prices are stimulating some
of it – and demand by tourists is
escalating. Chinese visitors to the
Gulf shop for luxury watches, for
instance, while Russians look for
jewellery and fashion.”
Al Fahim agrees that the Gulf
states are better positioned to take
advantage of the demand for luxury
goods than the West. Paris Gallery
stores in Abu Dhabi and Qatar only
felt ‘minimal effects’ as they are
still growing.”Because of the high
purchasing power of Gulf countries,
Majestic yacht from GulfCraft.
90 gulfbusiness December 2010
Mohammed Al Fahim, CEO, Paris Gallery.
the region was not as affected as the
rest of the world,” he says.
The Paris Gallery boss adds that
Saudi Arabia, however, proved to be
a testing market in the slowdown. In
a time of economic crisis, access to
markets and promotions are vital and
the Kingdom is restricted.
“Saudi Arabia is difficult as there’s
less options for communicating with
the audience and the women are not as
free to shop,” he says. “We are looking
forward to the new younger generation
coming through as they reach their 30s.”
While the region’s growing GDP will
help bolster luxury retailers’ pockets
going into 2011, companies are also
increasingly eyeing Asian markets. The
East accounts for the bulk of the growth
in luxury spending and this trend is only
expected to become more marked as the
emerging market middle classes increase
their spending power and aspirations.
Crucially, while luxury and
over-consumption defined the
pre-recession mood of Western
nations, ‘flashing the cash’ is no
longer in vogue. Job losses and tight
credit have dampened double digit
luxury growth for the foreseeable
future in developed markets.
Al Fahim says global demand for
high-end goods has been fuelled by
access to information and social
media tools, such as Twitter. “It’s
feeding demand. We’re looking at
growing into China and India –
we’re only touching the surface
with the demand there. We have
ambitions to grow in the East.
We’re home-grown but we want to
go global.”
Parmigiani is also set to make its
mark on China very soon. “Apart
from the West, our target markets are
Latin America, the Middle East and
Asia – particularly China,” says Jacot.
“In China, and Shanghai and Bejing
in particular, Parmigiani will mark
its arrival with the opening of the
first ‘Atelier Parmigiani’ – a showcase
in which we place haute horlogerie
tradition and knowledge.”
After a slow two years, the luxury
goods sector, fuelled by globalisation
and celebrity, is very much on the
world’s agenda. Now represents
a crucial time for brands to hone
their strategies to take advantage of
exponential growth opportunities.
“Each sector brings unique
characteristics to the industry, and
brands must be prepared to satisfy
their needs as the recession recedes,”
concludes McClelland. ■
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PROFILE LUXURY
Everlasting beauty
GULF BUSINESS talks to
president of Clarins
Group Middle East,
Osama Rinno, about the
rise of luxury skincare.
L
uxury skincare and
make-up brand
Clarins first put its
Parisian roots down
in the Middle East in
Dubai in 2000. Osama
Rinno was charged
with establishing a
full operations hub and eventually
converting all the GCC countries
from distributor representation to a
servicing agents representation, giving
Clarins Group Middle East (CGME)
control of the day-to-day operation of
their brands in the markets.
How much of Clarins’ business is
based in the Middle East?
Although the Middle East is less than
10 per cent of the global turnover of
the group, it is still considered an
emerging market for Clarins Group.
Sales have grown five times in 10
years since CGME started in 2000. The
market has not yet reached maturity
and that is why there is great growth
potential once the financial crisis is
completely over.
How did the recession affect the
skincare and cosmetics sector in
the region?
In early 2009, retailers and agents
stocked minimum quantities and
that has affected all brands. Things
started to improve gradually by the
end of 2009 and today we are in a
much better situation. On the
other hand, consumers were divided
92 gulfbusiness December 2010
in their actions: some reduced
spending on all categories, some
switched to more affordable brands,
and some kept purchasing only
essential items.
What do you see as being the
main upcoming trends in the Gulf
skincare and cosmetics sector?
The main changes will be the
continuous growth in skincare as more
people are aware of products and
enter into their daily beauty habits.
Therefore, all businesses related to
skincare and SPA treatments will
become stronger year by year.
For example, in Europe skincare
represents roughly 35 per cent of the
cosmetics business while make-up
does not exceed 15 per cent. In the
Middle East, the trend is the opposite.
Do you see the Gulf as a growing
market for luxury products?
Using luxury products is a lifestyle that
consumers get influenced by and adopt.
Consumers in the Gulf have adopted the
luxury lifestyle from quite sometime
and will continue adopting it as long as
their financial situation is not adversely
affected. The availability of brands and
how they are displayed, especially with
the enormous retail space they occupy,
continues to attract consumers which
triggers demand.
Is it true that ‘beauty’ is a
recession proof business?
I agree with this. Before the global
crisis, I would have had my doubts.
Today, this crisis has taught us that
brands that have done their work
properly and have invested over the
years in building a solid foundation are
not affected. Furthermore, I am sure
that you have heard of the Lipstick
index. Lipstick sales could be an
economic indicator, in that purchases
of cosmetics tend to be inversely
correlated to economic health. The
speculation was that women substitute
more expensive purchases like dresses
and shoes for cosmetics in times of
economic distress.
What is your upcoming product
strategy for Clarins ME?
Based on the sales figures that major
brands share with each other every
year, Clarins is number one in the
luxury skincare sector. However, we
are still not number one for skincare
in every door we are in. This is a
target for us. We also intend to be the
leader in foundation in the industry.
Based on our expertise in skincare,
we have great complexion lines. In
terms of make-up colours, and also
perfumes, we are now developing
more and more products especially
suitable for the Middle East. There
are several initiatives that we are
evaluating now and will hopefully
start implementing next year. ■
FEATURES LUXURY
Designs on Beirut
Luxury brand Louis Vuitton has launched its first Lebanese store and is
looking to expand its regional footprint, writes NICK COOPER.
L
iving in the lap of
luxury isn’t bad,
except that you never
know when luxury is
going to stand up,”
said Orson Welles.
Perhaps this could
have been regarded
as a prescient insight into what
should have happened to the luxury
goods market when the downturn
arrived. Except that it didn’t. Spend
on luxury goods during 2010 in
the MENA region saw only a minor
downward adjustment, in comparison
to much greater slumps witnessed in
other retail sectors. Tentative spend
projections for the Middle East upscale
retail market put growth at around
eight per cent for 2011, and while it is
not an astronomical rebound, it does
herald a return of consumer confidence
at the upper end of the socioeconomic
spectrum. Ironically then, luxury may
be thought of as a necessity in the
high-spending MENA market.
Take Louis Vuitton, for example.
The Paris-based brand – part of the
LVMH group – is confident that its
opening of a store in Beirut in July
of this year was certainly the right
move. Valerie Chapoulaud, president
of south Europe for Louis Vuitton, said
that the opening was part of a “quite
aggressive” strategy the group has in
mind for the region.
“If Lebanon goes well I’m sure we are
going to add additional space here in
Beirut very soon, in the coming two or
three years. We have some plans in other
countries, tomorrow it could be Kuwait
or it could be Qatar, or it could be Abu
Dhabi. If there is a good opportunity and
we consider that we need to bring more
service and more stores to our clientele
we will do it. So, we’re extremely reactive
and flexible,” she says.
94 gulfbusiness December 2010
All well and good, but Lebanon’s
GDP is only a fraction of those
countries that make up the GCC,
normally considered a more luxury-
friendly environment. How can this
translate to market demand in a
country that is not only getting over
the worst of its economic woes, but
has also suffered major political
upheaval in recent years too?
Damien Vernet, general manager
Middle East & India for Louis Vuitton,
says that the Beirut opening was a
long-term project and that the brand
had been looking at potential and
benchmarking Lebanon before taking
the plunge. “We have been tracking
our overseas Lebanese clients all over
the world for years and years and we
saw very encouraging numbers there.
We know that this is a market where
people are very fashion aware, very
fashion savvy and quite sophisticated
– they buy in Dubai, they buy in
Paris and they buy in London – so we
already knew the potential was there,”
he says.
Vernet points out an interesting
statistic that there are four times
more Lebanese people living outside
of Lebanon than there are in Lebanon
itself and he believes this global
diaspora provides a very big reserve
Switch
of customers forbowling
Beirut. centre,
With anpool hall.
estimated 12 million Lebanese spread
throughout the globe, cultural nuances
can play a part in the brand’s success.
The overseas Lebanese are generally
friends and family-oriented and like
to visit home often, providing a steady
stream and rich vein of clientele to the
firm’s Beirut outlet.
So, does the brand’s focus on the
MENA region, and to some extent the
emerging BRICs, signify a turn against
its more mature and established
markets like Europe and the US?
Chapoulaud disagrees this is the
case. “We have a lot of projects in key
mature markets like Italy, which is
a big market for the south Europe
region, and we have key projects
in Damien’s market in the Middle
East, so it’s always a balance. I think
we’re not going in one direction over
another, it’s on the same path and we
have to do it in parallel.”
So, the future looks both bright and
busy, then? “Oh yes,” says the Milan-
based Chapoulaud vehemently. “As
we say in Italy, there is a lot of meat
boiling at the moment!” ■
Better thinking. Together.

True diversification
begins with a
difference of opinions.
With so many industry-leading thinkers at our affiliates, there’s no shortage of opinions on
any investment issue. We make the most of them, bringing together experts from firms like
Loomis, Sayles & Company, Aurora Investment Management, AlphaSimplex Group and
Gateway Investment Advisers. Their ideas frequently drive the markets, and we value their
different perspectives and insights. Out of their exchange of viewpoints come new invest-
ment strategies for our clients.

It’s a process we call Better thinking. Together.

And you’ll experience it when we work with you. Call us at +971 4 365 8066 or
X
visit ga.natixis.com to see how
our intellectual capital can
sharpen your thinking.

This communication is provided in and from the Dubai International Financial Center (DIFC) by Natixis Global Associates Middle East. It is only available to persons
who have sufficient financial experience and understanding to participate in financial markets within the DIFC, and qualify as Professional Clients as defined by the
Dubai Financial Services Authority (DFSA). This communication should not be delivered to or relied on by any other type of person. Natixis Global Associates Middle
East is the trade name for Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is duly licensed and regulated by the DFSA.
Registered office: PO Box 118257, 5th Floor, Building 8, Gate Village, DIFC, Dubai, United Arab Emirates. Natixis Global Associates Middle East is a business development
unit of Natixis Global Associates, the global distribution organization of Natixis Global Asset Management, the holding company of a diverse line-up of specialized
investment management and distribution entities worldwide, including the investment managers referenced herein. The investment management subsidiaries of
Natixis Global Asset Management mentioned in this communication conduct any investment management activities only in and from the countries in which they are
licensed or authorized. This communication is for information only and does not constitute an offer of financial services, nor a recommendation or offer to purchase or
sell shares in any financial instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing.

ADINT169-1010
 FEATURES LUXURY

Stepping up profits
Ten per cent of Italy’s high-end shoes are exported to the UAE. How are
suppliers putting their best food forward, asks DOROTHY WALDMAN.

A
lthough China craftsmanship. Saudi Arabia imported showed significant increases in the
is the world’s over one million pairs with a median number of pairs and the total value of
largest supplier value of $25.5 last year, according to Italian shoes imported, although the
of lower-end the Istituto Nazionale di Statishca median price per pair only increased
footwear with a (ISTAT). Though this was a 20 per cent in Lebanon. This may indicate that
60 per cent decrease in volume from the previous instead of buying the highest-priced
market share, year, there was an 18.5 per cent designer or bespoke shoes, consumers
the upper end increase in the median price per pair. are lowering their sights somewhat
of the market – shoes with a leather Lebanon, Jordan and Iran all but, unwilling to forego Italian quality,
component – is dominated by the purchase from less expensive lines.
Europeans, with Italy boasting a 30 Iraq posted a lofty 180 per cent
per cent market share, according to increase in the number of pairs
Dubai Trade Statistics. imported, which translates
In 2009, to a 94 per cent increase
approximately 1.5 in the value of its Italian
million pairs of shoes, shoe imports. Although,
valued at $79 million, in monetary and volume
were imported into terms its numbers are still
the UAE from Italy. quite small, these numbers
With an average price indicate that this is an
of $50.5 per pair, this economy to watch.
represents 21 per cent Recognising what
of Italy’s exports in
terms of quantity and
15 per cent in terms
of value.
Riva del Garda Fierecongressi

Throughout the
Middle East, there
continues to be
significant demand for
Italian shoes, which
are known for their
high styling and quality

1.5 million pairs

The number of Italian shoes
exported to the UAE in 2009
29.5% 94%
Increase in Italian children’s shoes
imported into the UAE last year
Increase in Italian shoe
imports into Iraq in 2009

December 2010gulfbusiness 97
 LUXURY
Riva del Garda Fierecongressi
Roberto Pellegrini, president of the Riva del Garda Fierecongressi organising body.
appears to be a movement in some
sectors away from the higher priced
shoes in this region, as well as the
rest of the world, attempts are being
made to entice shoe buyers out of
their doldrums and to focus on the
price-point associated with the
volume market.
With biannual exhibitions in Riva,
located along the shores of Lake
Garda in northern Italy, Expo Riva
Schuh specialises in being the first
venue to present the new designs
for the following year. The show in
June introduced the spring/summer
2011 offerings from about 1,200
In the Middle East, there is significant
demand for Italian shoes, which are known
for their quality craftsmanship.
98 gulfbusiness December 2010
manufacturers, with a third from Italy
and the remaining two-thirds from 40
other countries. Approximately 5,000
buyers from 100 countries – including
the UAE, Jordan, Saudi Arabia, Kuwait
Lebanon and Syria among the 11
countries in the Middle East – came to
see the new collections.
Buyers from the Middle East
included Mohammad Ghaddar,
chairman of Golden Home in Oman,
Denise Hage of Domino Shoes, who
has shops in malls throughout Dubai,
and Abdul Salam Alryes of Trend in
Abu Dhabi, all of who made purchases
for their stores.
A number of the exhibitors reported
that lingering economic uncertainties
seemed to make some buyers cautious
about placing large orders for next
year. Perhaps another reason buyers
tended to proceed cautiously is
they know that there will be a later
opportunity to obtain those styles
that sell particularly well.
In addition to showing new styles
for 2011, Riva Schoh is also an
opportunity for buyers to restock
for the coming fall/winter 2010/11
season, with a number of companies
designated as “quick producers”
because of their ability to fulfil new
orders in 30-60 days, which, due to
the complexity of shoe construction,
is considered quite fast.
“In this sense we can say that Expo
Riva Schuh is two events in one,”
says Roberto Pellegrini, president
of the Riva del Garda Fierecongressi
organising body. “We allow
participants to act ahead of time, as
it is the first presentation that tests
collections and we also permit orders
to be completed with fewer risks,
thanks to quick production.”
The next edition of Expo Riva
Schuh, to be held in January next year,
will see the first introduction of the
autumn/winter 2011/12 collections,
while also offering a last opportunity
to place new orders for the upcoming
spring/summer 2011 season.
Another major Italian exhibition
that draw buyers from this region is
the Milan Shoe exhibition MICAM, in
late September and again in March
held. In addition, Who’s Next, an
exhibition of handbags, jewellery,
shoes, hats and other accessories will
be held at the Dubai International
Exhibition Centre from October 19-
21 and Motexha, the Middle East’s
largest garment, textiles, footwear
and fashion exhibition, will be held in
Dubai in March next year.
Whether or not these attempts by
the Italian shoe industry at wooing
back the Middle Eastern buyer to pre-
crisis levels is successful remains to
be seen. The prognosis is for a gradual
recovery that may take some years to
match previous highs. ■
BUSINESS ESSENTIALS WATCHES

AHEAD OF THE TIMES

Step into the new year in style with an up-to-the-minute
timepiece that makes a bold statement.

THE SUBMARINER
CHRONOMAT 01
Price upon request
Dhs18,350
The Oyster Perpetual
The leading model in the Breitling Submariner, which is water
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www.breitling.com simply the best diver’s watch.
www.rolex.com

ROTONDE DE CARTIER
ASTROTOURBILLON
Price upon request
Featuring an 18-carat gold case
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Astrotourbillion also has a strap
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SEAMASTER PLANET
OCEAN LIQUIDMETAL
ECO-DRIVE DOME Dhs17,500
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The multi-layered transparent dial
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radio controlled time keeping.
www.rivoligroup.com
www.citizenwatch.com

100 gulfbusiness Decemberr 2010

El Toro
Patented Perpetual Calendar.

Self-winding Movement.

18 ct rose gold case with ceramic bezel.

Water-resistant to 100 m. Also Available in Platinum. NOW OPEN: ULYSSE NARDIN BOUTIQUE, MALL OF THE EMIRATES +971 4 3950577
BINHENDI JEWELLERY, DUBAI MALL +971 4 4341421
Limited to 500 pieces. ALSO AVAILABLE IN DUBAI DUTY FREE, DUBAI INTERNATIONAL AIRPORT

W W W. U LY S S E - N A R D I N . C O M
LAPTOPS

WORK AND PLAY SMART

The latest laptops that combine rugged performance
and lightweight casing.

VAIO Z SERIES
Dhs6,495 - Dhs10,995
Count on Sony’s VAIO Z Series to get
any job done faster and more effectively,
freeing more time for personal interests
and entertainment.
www.sony-mea.com/vaio

APPLE IPAD
Dhs2,499 - Dhs4,099
Designed and developed by Apple, the
iPad tablet is marketed as a platform for
audio and visual media such as books,
periodicals, movies, music and games,
as well as web content.
www.apple.com

TOSHIBA PORTÉGÉ R700

Dhs5,130
Designed for executives on the move, the
Portégé weighs only 1.38kg, can run up
to eight hours on one battery charge and
boasts a 3D sensor for hard disk protection
against drop and shocks.
www.toshiba.com

HP PSG PAVILION DM4

Dhs4,099
Fusing fashion and efficiency HP’s
Pavilion is thin and light and is powered
by an Intel Core processor, ATI Radeon
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www.hp.com

102 gulfbusiness December 2010

Pullman Dubai Mall of the Emirates
Your new business hotel in Dubai

Be connected to the Mall of the Emirates with over 500 shops.

Discover 481 rooms and suites featuring trendy amenities.
Get closer with chic dining experiences and spa treatments.
Experience successful functions with our Co-Meeting promise.

New attitude hotels for business travelers. www.pullmanhotels.com

Your loyalty program** For further information, please contact us: +971 4 702 8000
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Engineered luxury by Porsche Design: a blend of conceived

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Also Available in Dubai Duty Free +9714 2162453

www.porsche-design.com
 ACCESSORIES

DEVIL IS IN THE DETAIL

A collection of stylish high-end accessories
for business, travel and leisure.

CARTIER CUFFS ROADSTER DE CARTIER

PRICE UPON REQUEST
PENS, CIRCULAR
GRAINED DECOR
These Santos de Cartier cufflinks
PRICE UPON REQUEST
made from sterling silver with Vincent Wulveryck

palladium finish and synthetic Featuring a Stainless steel cap,

blue spinel say style and black composite body, palladium
sophistication. finish details, sapphire blue
www.cartier.com coloured resin cabochon, an 18
carats solid gold nib and rhodium
plated this
is the ultimate in high-end
pen design
www.cartier.com
NIKON D3100
Dhs3,299
Boasting a 14.2 mega
pixel CMOS sensor, this
is Nikon’s second-highest
pixel-count DSLR after D3X
and the first in its class to
offer HD movie recording.
www.nikon.com

SAMSONITE PRO-DLX3
Dhs1,527 - Dhs2,115
Samsonite’s third generation
of soft luggage is made from
high-density nylon and includes
a removable suiter system with
hanger, wet pocket and laundry
bag and dual-tube trolley handles.
www.samsonite.com
SONY DSC-TX9
Dhs1,699
Sony Gulf claims the DSC-TX9 and DSC-WX5
are the world’s first 3D digital still cameras in the
Cyber-shot T and W series range. Both models
incorporate background defocus and superior
auto shooting modes.
www.sony-mea.com

Decemberr 2010 gulfbusiness 105

SUITS

SUIT YOURSELF
Nothing says you mean business more than
a well-made, well-cut suit.

RALPH LAUREN PURPLE LABEL FALL 2010

PRICE UPON REQUEST

This tailored suit embodies stylish luxury in a modern

silhouettes with bursts of berry, evening blue and lavender.
www.ralphlauren.com

PAUL SMITH AW10

Dhs3,584

The authentic traditional

British look is given an edge
of modernity, combining a
sophisticated dark colour
palette with luxury wools,
silks and cashmere.
www.paulsmith.co.uk

106 gulfbusiness December 2010

THE EPIC II TIMEPIECE COLLECTION

Jacob & Co. Dubai Mall • Tel: +971 4 434 1448

BinHendi Jewellery, Mall of the Emirates • Tel: +971 4 3410711
Also Available in Dubai Duty Free
 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
Al Raha Beach Hotel, created to
provide the very best of traditional
Arabian hospitality. This unique jewel
of luxury and tranquility, offering
magnificent services, awaits you for
an unforgettable visit to Abu Dhabi.
Tel 00971 2 50 80 555
Fax 00971 2 50 80 429
Khalifa Park area, Abu Dhabi
Conveniently located adjacent to Khalifa
Park, the property offers 318 luxurious
rooms and suites, 6 world class dining
venues, 6 meeting rooms and spacious
ballroom with day light access and
outdoor terrace.
Tel 00971 2 6573333
Fax 00971 2 6573000
park.hotel@rotana.com
Al-Barsha, Dubai
Offering 161 furnished units ranging
from 81 sqm to 160 sqm, 3 dining
venues, 3 multi-purpose meeting
rooms, recreation facilities & a
majestic landscaped area around the
temperature-controlled pool.
Tel 00 971 4 437 78 88
Fax 00 971 4 437 79 99
welcome.oak@layia.net
Al Barsha South-TECOM
Located in the heart of Dubai’s new
business hub and opposite Dubai Media
City and Internet City the Media Rotana
Dubai has 460 rooms, suites and deluxe
hotel apartments, 5 award winning
dining venues and 15 meeting rooms.
Tel: 00971 4 4350000
Fax: 00971 4 4350011
media.dubai@rotana.com
Sheikh Zayed Road, Dubai
This 394-room hotel boasts 10 dining
and entertainment venues a superb
spa and unrivalled meeting facilities.
Tel 00971 4 3325555
Fax 00971 4 3324555
dubai.reservations@fairmont.com

KEMPINSKI HOTEL MALL OF

JUMEIRAH EMIRATES TOWERS EMIRATES GRAND HOTEL LAYIA PLAZA HOTEL DUBAI
THE EMIRATES

Our Location

Sheikh Zayed Road, Dubai
Jumeirah Emirates Towers is a sleek
architectural masterpiece of steel
and glass. It redefines the business
hotel category, seamlessly combining
form with function, high technology
with unparalleled luxury and elegance
with efficiency.
Tel 00971 4 3300000
www.Jumeriah.com
Sheikh Zayed Road, Dubai
The truly unique and exciting five stars
hotel features 393 rooms, suites and
chalets together with Mall of the Emirates
shopping centre and Ski Dubai’s alpine
themed indoor snow resort.
Tel 00971 4 3410000
reservations.malloftheemirates@
kempinski.com
www.kempinski.com/dubai
Sheikh Zayed Road, Dubai
Located in the centre of Dubai’s business
district and just five minutes away from
DIFC, Jumeirah Beach, Burj Khalifa and
Dubai Mall, this 500-room hotel offers
you a convenient access the must see
and must go places in the emirates.
Tel 00971 4 323 0000
Fax 00971 4 323 0003
reservation@emiratesgrandhotel.com
Al Qusais, Dubai
Conveniently located nearby Dubai
International Airport Terminal 2. Offers
exceptional levels of comfort with 232
rooms & suites, three dining options,
temperature-controlled swimming pool
and state-of-the-art fitness center.
Tel 00971 4 233 44 44
Fax 00971 4 233 44 45
welcome.plaza@layia.net

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

Mall of the Emirates, Dubai
Discover a new attitude hotel directly linked
to the region’s ultimate shopping destination
amidst Dubai’s sophisticated metropolis.
Elegant 481 guestrooms complemented
with chic dining experiences awaits both
leisure and business guests.
Tel 00971 4 702 8000
Fax 00971 4 702 8001
H7337@accor.com
Sheikh Zayed Road, Dubai
Offers 301 luxuriously appointed guest
rooms and suites, nine restaurants and
bars, health club and spa, tennis and
squash courts and outdoor swimming.
Tel 00971 4 3438888
Fax 00971 4 3438886
sldb@shangri-la.com
Ras al Khaimah
The Acacia Hotel is a superbly designed
four star hotel complete with Al Nakhla
restaurant, the stylish Flamingo bar, the
vibrant Club Acacia, a pristine pool serving
as a backdrop to varied and exciting
Theme Nights, the luxurious O-Zone Spa,
and high-energy Oxygen Gym.
Tel 00971 7 2434421
Fax 00971 7 2434429
Doha
Located on the Corniche Road, opposite
the Museum of Islamic Art, the hotel
offers 154 rooms and suites, a business
centre and meeting rooms. Recreation
facilities are also available.
Tel 00974 4291111
Fax 00974 4291100
www.moevenpick-doha.com

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 near the city. With its various
dining options, 24 suites, 234 rooms,
private beach and state-of-the-art
gymnasium, it is an idyllic setting for
business and leisure.
Tel 00974 4844444
Fax 00974 4839555
Located a 10-minute drive from the
Jeddah International Airport. Offers over
414 rooms including 46 suites. 10th
and 11th floors are Executive floors
addressing all the needs of a modern-
day businessman.
Tel 00966 2 659 0000
Fax 00966 2 658 2489
The first 5 star Holiday Inn hotel in the
Kingdom, with 289 new and trendy
accommodations, huge lobby with W-Fi
access, outdoor pools, sauna, Jacuzzi
and health club. Also has state-of-the-art
meeting rooms, 24-hour business center
with professional secretarial support.
Tel 00966 1 4505054
Fax 00966 1 4505056
The hotel situated in the heart of the
business centre offers 211 rooms, 17
suites and 25 apartments. 5 meeting
rooms and 2 reception rooms to
accommodate up to 350 people.
Tel 00966 2 6602000
Fax 00966 2 6604145

GulfBusinessHotels.com Membership information: nayeem@motivate.ae, Tel: 00971 4 2052290

F LIFESTYLE TRAVEL

Destination
nostalgia
Enjoy Europe from the unique vantage point
of the Orient Express train journey from
Istanbul to Venice, writes Adrian Mourby.

L
oud music hits us as we arrived at Istanbul’s Sirkeci railway
station. A janissary band in vivid red and gold uniforms was
creating a welcoming din on the platform. Inside a huge,
high-ceilinged waiting room, unchanged since it was built in 1890,
my wife and I checked-in and deposited our luggage. We were
offered glasses of tea but we were keen to get to the platform.
There it stood. Immaculate is hardly the word. In its polished
navy blue, gold and white livery, the new Venice Simplon-Orient-
Express ( VSOE)is the most cherished train in the world. At the
door to every carriage stood bright-faced young men in blue and
gold uniforms ready to help passengers on board, although most
of their time was taken up being photographed. A lot of locals had
turned out to see this legendary train on its visit to Istanbul.
We found our compartment. Like all the carriages that run
on this annual journey, it was an original from the 1920s and
wonderfully restored. In the 1970s the VSOE company tracked
down rolling stock across Europe and rebuilt them, recreating
in exact detail all the brass and leather fittings, the marquetry,
mahogany and lacquer decorations. It’s like taking your seat in
a film set. Each compartment had a small sink discreetly hidden
behind the panelling and the fitted sofa converted into bunk beds.
We discovered this was always done while guests were at dinner.
That faint smell of woodsmoke turned out to be the original wood-
burning boilers that provided our hot water, hidden at the end of
each carriage.
There was a bucket of iced champagne waiting in our
compartment so we settled ourselves for the afternoon journey out
of Istanbul. What we hadn’t expected was the attention that this
train receives. The VSOE runs regularly from Calais to Venice and
now has routes heading up through Germany in the direction of
Russia but the annual journey from Istanbul to Venice is the star
route. People lined the tracks and waved from railway bridges
as we left Istanbul. As we passed through fields of sunflowers
and sheep, locals clustered at the tiny stations. On the Bulgarian
border the station master got out his trumpet and played as the
Orient Express trundled through.
And we were just as excited. We were in a mobile five-star
hotel, eating well and about to get a unique perspective on Turkey,
Bulgaria, Romania, Hungary, Austria and Italy. It was time to get
dressed for dinner and listen to the pianist in the bar. Yes, the train
really does have its own grand piano and resident pianist! ■

108 gulfbusiness December 2010

 Checklist
BUCHAREST
In Bucharest the Orient Express
party stays in the Athenee Palace
Hotel which featured in Olivia
Manning’s Balkan Trilogy of
novels. After a tour of the city
that takes in the Palace of the
Patriarchate, a formal dinner is
held at the former royal palace
of King Michael, now the National
Museum of Art.

SINAIA
Clockwise from top: The train passes
through Switzerland; the on-board
restaurant; the janissary band send
off; the on-board staff includes a
porter and a pianist; the sumptuous
Orient Express bar.
Heading north through Romania,
the train stops at the village of
Sinaia where a uniformed brass
band greets the party just as it
used to greet King Carol when
he visited Peles Castle, the royal
summer palace. Lunch is held in a
hunting lodge followed by a tour of
the castle.

BUDAPEST
A night in Budapest means that
Orient Express guests have the
chance to see this spectacular
city from the river. After the boat
cruise and a tour of the castle
district, dinner is held in the
Hungarian Academy of Sciences,
a splendid 19th-century palace
overlooking the Danube.

VIENNA
An afternoon stop in the
Hapsburg capital means a tour
of the city in a traditional
horse-drawn fiacre followed by
coffee and Sachertorte in one
of Vienna’s many cafés. Free
time is allowed for shopping or
visiting the Albertina museum
then it’s back to the train for a last
dinner before Venice.

The Venice Simplon-Orient-Express runs once a year on the

celebrated Istanbul to Venice route. Cabins cost from $6,633
per person. (www.orient-express.com)

December 2010 gulfbusiness 109

F LIFESTYLE CARS
Refined roar
Glenn Freeman tests the new high-performance sedan from Lexus
L
ooks can be deceiving. At first
glance, the Lexus IS-F appears
to be little more than a rather
refined sedan, but underneath its
exterior beats the heart of a fire-
breathing, high-performance vehicle.
Before hitting the start button,
one of the few visible clues to its
massive 420-hp powerplant are the
stacked quad-tailpipes of the dual-
exhaust system and the oversized,
curved bonnet.
The guttural tone of the exhaust is
immediately apparent when firing the
engine into life, but becomes meaner
still once underway. Accelerating
hard from a rolling start, once the
tacometer climbs to just under 4,000
rpm, the driver is rewarded with a
grin-inducing low rumble – something
I did a lot of during my two days
with the IS-F.
Another standout design feature is
the larger front overhang and bonnet
– which makes room for the massive
110 gulfbusiness December 2010
Five-litre V8 engine, which propels the
Lexus from 0 to 100km/h in around
4.8 seconds.
In handling the ample torque this
generates, the eight-speed sport direct
shift transmission is paired perfectly
with the engine, providing smooth,
direct upshifts under both cruising
and more spirited driving condition.
The transmission offers two
modes – D and M. The former is a
standard automatic mode, while the
latter provides a clutchless manual
operation, either via the stubby shift-
stick or the steering wheel-mounted
paddle-shifters.
Inside, the cockpit is very well
organised and uncluttered, with all-
leather seats featuring colour-coded
stitching or the choice of a two-tone
leather interior trim.
A quality soft-touch dashboard
combined with touches of chrome and
carbon-fibre look trim (unfortunately
not the real deal) also add to the
sporty appeal.
One minor gripe is the speedometer,
which is somewhat-confusingly a
small round dial next to the vision-
dominating tacometer, along with
a smallish LED readout. Keeping an
eye on this is crucial patucularly on
the speed-camera intensive roads
of the UAE. The dearth of rear seat
space is another small criticism,
but it would be fine for transporting
children or vertically-challenged
adults. Though I didn’t test it, the boot
space also looks to have room for your
golf clubs.
Priced at $81,400 for the base model,
or $84,400 for the two-tone leather
option, the IS-F isn’t exactly cheap, but
it delivers a decent bang for your buck.
A highly-specced variant of the
popular IS series, the F – named after
Japan’s Fuji Speedway where it was
developed – marks the first such
vehicle from Lexus. Hopefully it is a
sign of similar things to come. ■

Beyond the canvas
It’s been a non-stop season for Islamic art. The latest round of auctions
offered success and scandal in equal measure, writes Charles Pocock
A whirlwind season
As forecasted in the October
edition of Gulf Business, the Jawad
Salim sculpture Mother and Child
sold for in excess of $300,000 at
Bonham’s (I was the under-bidder).
The work by Moustafa – whom the
auction house labeled as Egypt’s
premier artist, an appellation
which many would disagree
with, particularly in Egypt where
few have ever heard of him –
exceeded its recognised market
value. The sale at Bonham’s was
disappointing since a large amount
of work was unsold (around 40 per
cent of the sale). This reinforces
the feeling in the market that
one should buy at Bonham’s and
sell at Christie’s. Additionally,
combining the sale with used cars
and jewellery was an error as the
room emptied out at certain stages,
affecting the overall atmosphere, a
must for a successful sale.
The Bonham’s sale was followed
by the Sotheby’s auction, which
included the glorious nude,
L’Endormie, by Mahmoud Said
that sold for $380,000, and a work
by Sepehri that went for $650,000.
Both works exceeded their
estimates and were the highest
sales of the auction, as I predicted
in my October column, proving
that exceptional works will reach
exceptional prices
Twenty-nine modern Iranian
works from the Christie’s sale were
withdrawn prior to the auction,
with action carried out by the
corporate litigators Withers, as
reported in The Financial Times.
The resignation of the department
head William Lawrie followed
shortly after.
The scandal did not affect the
performance of the sale when it
came to modern Arab art, with
Wounded Soul, Dia al-Azzawi.
The Woman, The Bird and the
Pomegranate, Ibrahim el-Salahi.
Said’s The Whirling Dervishes
reaching $2,546,000. A painting by
Zenderoudi, catalogued as a work
from 1971 and exhibited the Tapie
show, raised serious questions since
the original catalogue displays
a marginally different piece,
highlighting common concerns
related to the artist’s work.
Needless to say, this has led to
limited interest from buyers and the
work being unsold.
The finale of the auction season
was the Paris sale on November 9.
The final part of the Farsi collection
was offered through Christie’s,
with Said’s nudes generating
disappointing results for the
auction house’s Paris office.
ART
Qatar’s welcome addition
Mathaf: Arab Museum of Modern
Art in Doha has its preview on the
December 14, 2010 and will open
for the public on December 30. At
launch, the museum will feature two
exhibitions: Interventions, which
is curated by Dr Nada Shabout and
exhibits the work of Arab modern
masters Dia Al-Azzawi, Ibrahim
El Salahi, Farid Belkahia, Ahmed
Nawar and Hassan Sharif. While
the museum’s second exhibition
of contemporary Arab art, curated
by Sam Bardouil, will include
the work of Adel Abidin, Ahmed
Alsoudani, Ghada Amer, Abdelkader
Benchamma, Steve Sabella and
many others.
Noteworthy events in Munich
Haus der Kunst, The Future of
Tradition; The Tradition of Future,
held 100 years after the exhibition
Masterpieces of Muhammadan
Art, this exhibition will run until
September 16, 2010 – January 9, 2011.
Museum of Ethnology, The Aura of
Alif The Art of Writing in Islam until
February 20, 2011.
Bayerische Staatsbibliothek, The
Wonders of Creation Manuscripts
of the Bayerische Staatsbibliothek
from the Islamic World, until
December 5, 2010.
The Mandarin Oriental Hotel in
Munich is the hospitality partner for
the exhibition projects, organising
visits and guest stays for VIPs,
making one of the most important
exhibitions of Islamic Art held in
Europe for a decade, essential and
truly memorable. A must for all.
Charles Pocock runs the Meem
Gallery, Dubai. ■
December 2010 gulfbusiness 111
 I N
THE LIFESTYLE COMPETITION COMPETITION

W
A TWO-NIGHT STAY AT THE
YAS HOTEL ABU DHABI

T
he Yas Hotel, Abu Dhabi, is one of the main architectural T H E P R I Z E
features of the ambitious Yas Marina development. Sitting on
Abu Dhabi’s Grand Prix circuit, this distinctive hotel has hosted Win a two-night stay in
several global events from fashion to sports. a Yas Suite including
It offers 499 luxurious guest rooms, international cuisine in seven complimentary daily
restaurants and pioneering design and architecture. Visitors will be breakfast and a dinner for
initially struck by the engineering feat behind the incredible Gridshell, two in Kazu restaurant.
a 219-metre expanse of sweeping steel and 5,096 diamond shaped glass
panels, providing a ‘veil’ that drapes over the two hotel towers. HOW T O W I N:
The optical effect is stunning, reflecting thousands of coloured lights
To enter, log onto www.motivatepublishing.com/
against the surrounding sky, sea and desert landscape. The lobby utilises a competitions and answer the question below.
modern interpretation of the Arabian mashrabiya, where lightweight white
What is the name of Abu Dhabi’s most
latticed walls give defined private zones within an otherwise flowing space. futuristic lounge bar, located on the
The Deluxe and Executive Suites feature floor-to-ceiling glass panels which rooftop of The Yas Hotel?
change from scarlet to indigo to create definition between the entrance and
a. Moonlight b. Skylite
the bedroom, while the Marina Executive Suites offer exceptional views of c. Heavens
the Marina and Grand Prix circuit from their wraparound balconies.
The Yas Presidential Suite showcases original contemporary artwork Terms and conditions:
and exclusive furnishings, including custom-made beds. The suite, This voucher cannot be redeemed in cash.
which is the largest in the GCC, can accommodate up to 16 people Reservations are required and subject to
dining, is serviced by a private lift, a full chef’s kitchen, dining room and availability.
a private lap pool on the large terrace.

112 gulfbusiness December 2010

 For a comfortable and safe drive.

New

The sensational new SP LM703 is here. The new generation Digital

Rolling Simulation technology answers your need for a quiet and
comfortable sedan ride, without compromising on grip and safety.
That's Dunlop Tyre Technology for you.
Data monitor
Compiled by Karen Remo-Listana

116 TOP DEALS

Mergers & acquisitions
Public equity offerings
Public debt offerings
Private placements

118 GCC ECONOMIC INDICATORS

Real and nominal GDP
Fiscal balance and public debt

118 IN FOCUS
Economy: QE to push oil prices to $100
Retail: UAE tops coffee market growth

119 COMPANY WATCH

OIC: Market leader eyes 10 per cent growth
Gargash Insurance: Call for consolidation

December 2010 gulfbusiness 115

 TOP M&A TRANSACTIONS
Deal Value ($m) Bidder Target Deal Description
522 Entekhab Industrial Daewoo Electronics Corp. Entekhab Industrial Group, the Iran-based manufacturer of home appliances, has agreed to acquire a 97.5 per cent
Group Co stake in Daewoo Electronics Corp., the South Korea-based manufacturer of home appliances and multi-media products,
from KAMCO, the South Korea-based government agency collecting public funding by resolving non-performing loans
acquired by financial institutions, for a consideration of KRW577.7 billion ($522.3 million) including debt.
426 Sintonia S.A. Atlantia S.p.A. Sintonia S.A., the Italy-based infrastructure holding of the Benetton family, has agreed to acquire a 3.22 per cent
stake in Atlantia S.p.A., the listed Italy- based company engaged in the construction and management of toll
motorways and tunnels, from Aabar Investments PJSC, the United Arab Emirates infrastructure holding company,
for an offer price of EUR16 per share for total value of EUR309.6 million. The transaction will increase Sintonia’s stake
in Atlantia from 39.025 per cent to 42.245 per cent. The payment and delivery of the shares is expected to occur on
November 5, 2010.
376 Waha Capital PJSC AerCap Holdings N.V. Waha Capital PJSC has signed a definitive agreement to acquire a 20 per cent interest in AerCap Holdings N.V. AerCap
Holdings N.V., a listed company headquartered in Schipol, North Holland, a global leasing aviation company. Waha
Capital PJSC, a UAE-listed company headquartered in Abu Dhabi, is an investment holding company with interest
in companies providing aircraft industry, leasing services, financial services and maritime services. The transaction
will be financed via $105 million in cash and the remaining portion of $271.374 million will be financed with Waha
Capital PJSC’s 50 per cent interest in AerVenture and a 40 per cent interest in Waha Capital PJSC’s 16 aircraft portfolio.
95 Omega Pharma SA Laboratoire de la Mer Omega Pharma SA, the listed Belgium-based manufacturer and distributor of healthcare products, has acquired Laboratoire
de la Mer, the France-based company engaged in the transformation of seawater and recovery of marine serums for
therapeutic treatments, from CH Pharma, the Lebano- based holding company engaged in pharmaceutical and cosmetic
activities and portfolio of TCR Capital, the Franc- based private equity firm, for a cash consideration of EUR69 million.
Laboratoire de la Mer has generated revenues of EUR25.6 million and employs around 70 people in 2009.
77 Majid Al Futtaim Group MAF Greater Union LLC Majid Al Futtaim Group LLC, the UAE-based real estate developer, has agreed to acquire 49 per cent stake in MAF
LLC Greater Union LLC, the UAE-based company operating Cinestar cinema circuit, from Amalgamated Holdings Limited,
the listed Australia-based company engaged in operating entertainment, hospitality, and tourism and Leisure
businesses, for a consideration of Dhs283 million ($77.06 million). MAF Greater Union has been a joint venture
between Amalgamated and the Majid Al Futtaim Group since 1997. The acquisition aid Amalgamated Holdings to
generate a book profit of AUD60.6 million. The transaction is expected to complete on October 25, 2010.
56 Arab Company for Omar Effendi S.A.E Arab Company for Investment and Development (AICR), the listed Egypt-based investment company having interest
Investment and in infrastructure, real state and industrial sectors, has agreed to acquire 85 per cent stake in Omar Effendi S.A.E, the
Development Egypt-based company that operates department stores, from Anwal United Trading Company, the Saudi Arabia-
based retailer, for an undisclosed consideration. Omar Effendi got privatised in 2006 for about $103 million.
Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between October 20, 2010 and November 18, 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 NOVEMBER 18, 2010
TMT 9.5% Leisure Transport Pharma/Medical/
14,000 50 4.6% 7.7% Biotech 3%
Number of deals
Value ($m)

12,000 Construction
Value 40 Energy/Mining/ 5.5%
10,000 Utilities 3%
Volume
8,000 30 Real Estate
6,000 25.1%
20 Consumer
4,000 1.8%
10 Agriculture
2,000 Business 0.2%
0 0 Services 1.5% Financial Services Industrials and Defence
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 26.1% Chemicals 10.8% 1.1%

MIDDLE EAST ANNUAL M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VOLUME
FROM 2004 TO NOVEMBER 18, 2010
Transport Pharma/Medical/ Construction
30,000 200 1.7% Biotech 5.8% 3.5% Real Estate
Value Leisure
4.2% 6.7%
25,000 Volume
150 TMT Agriculture
20,000 21.7% 0.8%
Number of deals

15,000 100
Value ($m)

Defence
2.5%
10,000 Energy/
50 Mining/ Industrials and
5,000 Chemicals 16.7%
Utilities 6.7%
0 0 Consumer Business Financial Services
2004 2005 2006 2007 2008 2009 2010 7.5% Services 5.8% 16.7%
Mergermarket tracks all M&A deals of more than $5m where the target, bidder or parent is a Middle Eastern company.

116 gulfbusiness December 2010

 TOP PUBLIC EQUITY OFFERINGS
Value ($m, Target/Issuer Transaction Status Transaction comments
Historical rate)
474.7 Omani Qatari Closed Initial filing date was on August 8, 2010. Omani Qatari Telecommunications Company or Nawras had set the price range
Telecommunications for the IPO to be OMR 0.702 to OMR 0.902.The offering was open for subscription on September 15, 2010 and the offer
Company (NWRS) closed on October 21, 2010.The IPO was reserved for individual or retail investors for up to 70 per cent and the remaining
30 per cent was for institutional investors. About 70 per cent of the offering was open to Category I investors, and 30 per
cent was open to Category II investors who can participate in the book building process. Category I investors could apply for
a minimum of 500 shares in multiples of 100 up to a maximum of 500,000 shares, and Category II investors could apply for
a minimum of 500,100 shares up to a maximum of 26,037,700 shares. After the IPO, all the selling shareholders, with the
exception of Nawras Development, continued to retain a stake in Nawras, including TDC-Qtel MENA Investcom BSC, which is
controlled by Qatar Telecom and the pension funds of the Diwan of the Royal Court, the Ministry of Defence, the Royal Office,
the Internal Security Service and the Sultan’s Special Force.
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): [10/21/2010-
11/20/2010]; Source: Capital IQ.

TOP PUBLIC DEBT OFFERINGS

Value ($m, Target/Issuer Transaction Status Transaction comments
Historical rate)
1,485.26 QNB Finance Ltd. Closed The guaranteed notes, issued in USD, have a coupon rate of 3.125 per cent and will mature on
November 16, 2015. The bonds are ated A+ by S&P and Fitch, and Aa3 by Moody’s.
750.0 Abu Dhabi Islamic Bank Closed The sukuk is rated A1 by Fitch and A2 by Moody’s. The Islamic bonds issue was oversubscribed by 4.8 times
(ADIB) and will mature in November 2015. Financial Advisors are Barclays Capital, HSBC Holdings, Liquidity
Management House for Investment, Nomura Holdings and Standard Chartered.
595.92 The Saudi British Bank Closed The five-year fixed rate senior unsecured bonds were issued in USD with a coupon rate of three per cent,
(SABB) maturing on November 12, 2015. The notes are a part of Euro Medium Term Programme. The bonds are
rated A by S&P and Fitch.
494.56 BBK B.S.C. Closed The 4.5 per cent notes due 2015 were issued in USD and will mature on October 28, 2015. It is rated
A- by Fitch and A3 by Moody’s. The notes are a part of series number three, tranche number one of the
Euro Medium Term Note Programme. Interest is payable on April 28 and October 28 in each year,
commencing on October 28, 2010.
300.0 Gulf General Investment Announced The notes are unconditionally and irrevocably guaranteed by GGICO’s main subsidiaries Emirates Lube Oil Company
Company (GGICO) Limited and Gulf Prefab Houses Factory. The notes, issued in USD, will mature in 2015 and are rated B1 by Moody’s.
282.25 The Commercial Bank of Announced The corporate bonds, with three per cent coupon rate, were issued in CHF and will mature on December 7, 2015.
Qatar (CBQK) The bonds, which will be used for general corporate purposes and working Capital, was rated A1 by Moody’s.
Transaction: Fixed income; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date (Including Bids and Letters of Intent): [10/21/2010-11/20/2010];
Source: Capital IQ.

TOP PRIVATE PLACEMENTS

Value ($m, Transaction
Historical rate) Target/Issuer Buyers/Investors Transaction comments
Status
2,483.04 International Announced IPIC announced a private placement of notes for gross proceeds of $2.5 billion on November 10, 2010. The notes will
Petroleum be issued in two tranches pursuant to Rule 144A. Bank of America Merrill Lynch, Goldman Sachs, HSBC, National
Investment Bank of Abu Dhabi, RBS, and Standard Chartered Bank will act as the joint bookrunning managers to the company
Company in connection with this transaction. The transaction is expected to close on November 15, 2010.
498.0 Axis Bank Ltd., DIFC Closed Axis Bank Ltd., DIFC announced a private placement of senior unsecured notes due 2016 for gross proceeds of
$498 million on October 26, 2010. The notes will be issued as per Rule 144A and Regulation S at 99.5990 per cent
of $500 million resulting in proceeds of $497,995,000. The notes have coupon of 4.75 per cent payable
semi-annually and mature on May 2, 2016. BofA Merrill Lynch, Citigroup, Inc., Deutsche Bank AG, JPMorgan Chase
& Co., and The Royal Bank Of Scotland Plc served as joint bookrunning managers for the transaction.On November
2, 2010, Axis Bank Ltd., DIFC closed the transaction. The transaction saw participation from United States and
European banks and pension funds.
64.8 Polarcus Limited Closed Polarcus Limited announced a private placement of 73.4 million shares at NOK5.30 per share for gross
proceeds of NOK389,020,000 on November 18, 2010. The issue of shares was done through a bookbuild
process. The shares will be subsequently listed on The Oslo Borse. The placement was managed by ABG
Sundal Collier Holding, DnB NOR Markets, ASA, Pareto Securities, and SEB Enskilda.On November 18, 2010,
Polarcus Limited closed the transaction.
60.0 Gmmos Group Closed Gmmos Group announced that it has raised $60 million in funding on November 11, 2010. The company
issued a convertible loan in the transaction. The loan has tenure of four years with an initial coupon of six
per cent per annum.Gmmos Group will use the proceeds to fund further expansion of its offshore marine
business Stanford Marine and to take advantage of the expected recovery in the offshore market. On
November 11, 2010, Gmmos Group 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.

December 2010 gulfbusiness 117

 MAIN ECONOMIC INDICATORS ECONOMY
BAHRAIN
08 09E 10E 11E QE to push oil prices to
Real GDP (%yoy) 6.3 1.8 2.4 2.8 $100 per barrel
Nominal GDP ($bn) 21.9 20.6 22.0 23.4
GDP per capita ($) 28,097 19,817 27,118 28,247 The GCC countries continue to lag behind the
Fiscal balance (GG, % GDP) 7.7 -4.8 0.4 1.7 broader emerging markets (EM) but the Fed’s
Public debt (% GDP) 15.2 21.6 20.3 18.0 new round of quantitative easing may support
Gross ext. debt ($bn) 34.6 7.2 33.6 33.9 the six-nation pack’s faster path to recovery.
Gross ext. debt (% GDP) 158 181 153 145 This is according to Bank of America Merrill
Lynch (BofAML), which remains cautious on
KUWAIT the GCC recovery given the global double dip
08 09E 10E 11E concerns. In its MENA Quarterly report, the
Real GDP (%yoy) 5.5 -2.2 2.5 3.1 investment bank says the GCC not only lags
Nominal GDP ($bn) 148 98 111 120 the global business cycle historically but also
GDP per capita ($) 42,995 27,835 30,784 32,343 this time suffers from similar problems of the
Fiscal balance (GG, % GDP) 26.9 23.0 20.0 23.0 developed countries, namely troubled real estate
Public debt (% GDP) 9.9 9.8 10.8 10.8 and banking sectors.
Gross ext. debt ($bn) 60.6 53.1 46.4 45 However, the recent quantitative easing may
Gross ext. debt (% GDP) 40.9 53.9 41.8 37.5 support the GCC, although to a much lesser
extent than rest of the EM, through a weaker US
OMAN
dollar, lower interest rates, higher commodity
08 09E 10E 11E
prices, higher asset prices and access to cheap
Real GDP (%yoy) 12.8 3.8 4.6 4.5
and abundant capital.
Nominal GDP ($bn) 60 46 53 58
Because the US maintains a fiscal stimulus
GDP per capita ($) 21,649 15,996 18,650 20,219
and aims for higher inflation and inflation
Fiscal balance (GG, % GDP) 22.6 -0.8 3.6 5.6
expectations with the second round of
Public debt (% GDP) 4.2 4.9 4.1 3.6
quantitative easing, the US dollar is likely to
Gross ext. debt ($bn) 12.5 13.2 13.5 15.5
weaken against major currencies. In the GCC,
Gross ext. debt (% GDP) 20.7 28.7 25.6 26.9
Dubai is best positioned to benefit from dollar
QATAR weakness thanks to its service-based economy.
08 09E 10E 11E In addition BofAML believes that oil prices
Real GDP (%yoy) 25.4 9.0 11.3 11.2 will move higher as QE weakens the US dollar.
Nominal GDP ($bn) 111 98 124 145
GDP per capita ($) 76,43 59,99 72,64 80,74 RETAIL
Fiscal balance (GG, % GDP) 11.4 13.0 8.0 9.0
Public debt (% GDP) 6.8 8.4 11.0 10.1 UAE tops coffee market growth
Gross ext. debt ($bn) 60.7 65.9 60.3 54.3
Gross ext. debt (% GDP) 54.8 67.0 48.8 37.3 The UAE is the fastest growing coffee market in
the world with a compound annual growth rate
SAUDI ARABIA in volume sales of 12 per cent over the 2009-2014
08 09E 10E 11E period, according to Euromonitor International
Real GDP (%yoy) 4.2 0.6 3.2 4.0 study.
Nominal GDP ($bn) 477 376 427 468 Despite a thriving tea tradition in the
GDP per capita ($) 19,157 14,745 16,313 17,457 country, the coffee market managed to grow
Fiscal balance (GG, % GDP) 32.5 -6.1 1.1 1.4 thanks to the increasing number of specialist
Public debt (% GDP) 13.1 18.0 14.9 13.2 coffee shops fed through into higher on-trade
Gross ext. debt ($bn) 83.3 99.8 103.0 99.0 volume coffee sales, which grew by 17 per cent
Gross ext. debt (% GDP) 20.3 26.5 24.1 21.2 in 2009. Spending in cafes increased by 119 per
cent from 2005 to 2008 reaching $454 million.
UAE The emergence of shopping centres and
08 09E 10E 11E coffee culture prompted the rise of local coffee
Real GDP (%yoy) 5.1 -1.4 1.2 2.3 chains such as Blends & Brews. However, the
Nominal GDP ($bn) 254 224 241 255 abundance of international café chains such
GDP per capita ($) 53,388 45,615 47,600 49,039 as Starbucks, Costa, Coffee Bean & Tea Leaf
Fiscal balance (GG, % GDP) 21.7 5.4 9.6 12.1 and Seattle’s Best Coffee, Barista staved off the
Public debt (% GDP) 14.5 17.3 14.5 12.5 development of domestic ones.
Gross ext. debt ($bn) 162 155 156 158 In addition to emerging café culture, the
Gross ext. debt (% GDP) 63.6 69.3 64.9 62.0 trend of premiumisation reigned in 2009,
Source: IMF, IIF, National statistics, Haver, BofA Merrill Lynch Global Research beating earlier estimates that the economic

118 gulfbusiness December 2010

 COMPANY WATCH

And as the second and third round effects – namely higher Oman Insurance
asset values and lower interest rates – come into motion, oil
prices will likely touch $100 per barrel next year.
Market leader eyes 10 per cent growth
With the average budget oil breakevens for the oil exporters Oman Insurance Company (OIC), the
in the region around $65 to $70, oil price at $100 per barrel largest insurer in the UAE, expects to
means a higher oil windfall, increased reserve accumulation, finish the year with 10 per cent growth
stronger money supply and credit, and stronger economic in net profit, its chief executive told
activity for oil exporters. Gulf Business.
However, as the recession has weakened the link between “This year we will see 10 per cent
money supply and credit in the region due to deteriorated and thereafter we expect to see 10
asset quality and deleveraging, it is expected that the impact to 15 per cent growth year-on-year,”
will be less expansionary compared to the 2005-2008 boom. Abdul Muttalib Mustafa Al Jaidi, said,
Albeit bank lending in the region remain relatively muted noting that this growth is muted
overall, more accessible external funding will facilitate compared to the 30 to 40 per cent
rollover of maturing liabilities, especially in the UAE, and growth seen prior the crisis.
ease, but not eliminate, de-leveraging strains. “We used to grow in high double-
digits for more than eight consecutive
GCC  BUDGET BREAKEVEN OIL PRICES years,” he said. “However, increased
Breakeven oil price- competition dragged down rates so to
GCC Official 2010 budget be able to make 10 per cent growth,
QA you have to produce more than 30 per
Breakeven oil price- cent of last year’s premium.”
AE BofAML 2010 budget
Oman Insurance Company
KS
In Millions of Dhs, except per share items
OM For the Fiscal Period Ending 12 months
Dec-31-2008A
BH
Total Revenue 1,216.2
KW Growth Over Prior Year (6.8%)
The Dubai-based firm posted an
eight per cent increase in the first
half of 2010 to Dhs154 million from
Dhs142 million for the same period
last year. In a statement to Dubai
Financial Market, OIC said gross
written premium for the first half rose
five per cent to Dhs1.43 billion.
Despite a highly saturated
insurance market, Al Jaidi said
the company can still grow by
offering new products. In October,
OIC introduced property owner’s
association package insurance, with
multiple covers such as property
insurance, third party insurance,
office bearers’ liability insurance,
fidelity guarantee insurance and
machinery breakdown insurance.
12 months Last 12 months
Dec-31-2009A Jun-30-2010A
1,298.2 1,368.6
6.7% 23.9%

20 30 40 50 60 70 80 90 100 Gross Profit 394.4 394.5 440.1

Margin % 32.4% 30.4% 32.2%
Source: IMF, national official data, EcoWin, BofAML Global Research estimates
EBITDA 258.8 205.2 220.7
Margin % 21.3% 15.8% 16.1%

Net Income 250.2 189.6 201.6

Margin % 20.6% 14.6% 14.7%
slowdown would hamper its development. Last year, a number
of premium brands such as Illy, Whole Earth Organic, Lavazza Source: Capital IQ
Dek and Twinings Coffee Blendswere launched.
Although premiumisation is expected to slowdown
through 2011, there are still a handful of opportunities for Gargash Insurance
multinationals. “Coffee sales do not appear to have been
significantly affected by the economic downturn and continues
Consolidation need of the hour
to increase,” the study says. “Coffee shops are perceived as a Gargash Insurance expects a 15 per competition in pricing, which eventually
cheap alternative to dining out and as a venue for socialising, cent growth this year and plans to results in inferior products and services
especially among younger people.” expand in two more GCC countries by to the customer,” he added.
Consumers were also increasingly exposed to various ways of end of next year. In May, the Dubai-based company
preparing coffee. In May 2009, Nestle Nespresso opened its first “While the UAE insurance market had its first foray outside the UAE
store in Dubai, marketing coffee machines and coffee blends. may have grown only by five per cent though a joint venture with Omani
Unit prices reflected the lower cost of materials in 2009, in 2010, we are expecting a growth insurance broker Trade Links and hopes
with the International Coffee Organisation composite average in excess of 15 per cent for this year, to have its footprint in at least four GCC
Key stats declining to 116.4 US cents as a result of our strategic thrust and states by 2011.
Fresh coffee Instant coffee per pound down from 124.25 initiatives,” Mustafa O. Vazayil, the “There have been some green
2008 2009 2008 2009 in 2008. The decline was company’s managing director, said. sprouts but construction engineering
Saudi Arabia 239.4 258.1 38.2 40.6 not initially factored in by Vazayil said the number of insurance and motor insurance still lags behind,”
UAE 33.2 36.6 15.3 16.8
Qatar 2.4 3.2 8.2 10.6 suppliers and retailers hence firms is “far larger than what is required” Vazayild said. “Apart from those we have
Kuwait 8.5 10.2 5.8 6.8 the ministry of economy hence a consolidation is necessary. grown on all classes. We were, to start
Oman 15.9 17.2 4.9 5.2 intervened during Q1 2009 to “Insurers here need to build their with, not hit by bad debts and we have
Bahrain 4.5 5.1 1.4 1.5
Source: Euromonitor from trade sources and prevent manipulators from reserves and increase their retention been able to increase the client base by
national statistics maintaining old prices. capacities. This will avoid cut-throat over 15 per cent in the last two years.”

December 2010 gulfbusiness 119

EXHIBITIONS & CONFERENCES

Media and Marketing Show

Dubai Exhibition Centre, December 13-15
Media and Marketing Show is one of
the world’s must-attend networking and
educational resource platforms for media
and marketing professionals. More than 60
exhibitors from marketing and publishing
firms from across the region will participate
in the 2010 show. It offers business and
networking opportunities, and a platform
for all the key players who are shaping the
future of the industry.

UNITED ARAB EMIRATES

Abu Dhabi
December 07-11 Abu Dhabi International Motor Show Abu Dhabi National Exhibition Centre www.admotorshow.com
08-09 Abu Dhabi Sponsorship Forum The Yas Hotel, Abu Dhabi www.arabiansponsorship.com
12-13 World Architecture Festival Middle East The Yas Hotel, Abu Dhabi www.wafmiddleeast.com
12-15 5th Annual Security for Energy Infrastructure Summit
Le Royal Méridien, Abu Dhabi www.iqpc.com
Middle East 2010
12-15 Middle East Government Contact Centres Summit 2010 Yas Island Rotana Hotel, Abu Dhabi www.iqpc.com
12-15 Integrated Building Process Control Summit 2010 Park Rotana, Abu Dhabi www.iqpc.com
12-15 Anti-Trafficking and Border Control GCC Summit Park Rotana, Abu Dhabi www.iqpc.com
12-15 ROTATE 2010 Millennium Hotel, Abu Dhabi www.iirme.com
16-18 Seyaha – Holiday and Travel Show Abu Dhabi National Exhibition Centre www.al-hader.com
16-19 The National Fair for SME 2010 Abu Dhabi National Exhibition Centre www.al-hader.com
Dubai
December 02-03 EPEX Expo Madinat Arena, Dubai www.eton-events.com
02-04 Dubai Rugby 7s The Sevens, Dubai www.dubairugby7s.com
02-04 Mother, baby and child show Dubai Int’l Convention & Exhibition Centre www.mother,babyandchild.com
07-09 MEBA – Middle East Business Aviation 2010 Airport Expo, Dubai www.meba.aero
12-16 16th Annual Middle East Maintenance
Dusit Thani Hotel, Dubai www.iirme.com
Management 2010
13-15 25th International Autumn Trade Fair 2010 Dubai Int’l Convention & Exhibition Centre www.dubaiautumnfair.com
13-15 6th International Fashion Jewellery and
Dubai Int’l Convention & Exhibition Centre www.alfajer.net
Accessories Fair 2010
13-15 Dubai Drink Technology Expo 2010 Dubai Int’l Convention & Exhibition Centre www.drinkexpo.ae
13-15 The Small and Medium Enterprises (SME)
Dubai Int’l Convention & Exhibition Centre www.smeexpo.com
Expo and Conferece
13-15 Media & Marketing Show 2010 Dubai Int’l Convention & Exhibition Centre www.dubaimediashow.com
OMAN
December 02-05 Oman International Motor Show Oman Int’l Exhibition Centre www.omanexpo.com/motorshow
SAUDI ARABIA
December 04-05 Aramco’s Heavy Lift Safety Conference DOC Building, Saudi ARAMCO www.cpilive.net/events/aramco
04-05 The Gulf Africa Investment Forum 2010 InterContinental Hotel, Riyadh www.grcevent.net
05-08 The International Conference on Water Resources
King Saud University (KSU), Riyadh www.icwrae-psipw.org
and Arid Environments (ICWRAE)
05-09 Riyadh Motor Show 2010 Riyadh Int’l Exhibition Centre www.recexpo.com
05-09 Saudi Autoshop 2010 Riyadh Int’l Convention & Exhibition Centre www.recexpo.com
08-11 Saudi International Boat Show Al Furusya Marina & Yacht Club, Jeddah www.saudiboat.com
11-15 Balanced Scorecard Forum Saudi Arabia Radisson Blu Hotels & Resorts, Riyadh www.iirme.com
12-14 Cityscape Riyadh The Four Seasons Hotel, Riyadh www.cityscaperiyadh.com
12-15 ESTATEX 2010 Dhahran Int’l Exhibitions Centre www.diec.com.sa

120 gulfbusiness December 2010

IN YOUR SHOES
Driven by passion
Fiery UK chef Gordon Ramsay opens up to ALICIA BULLER about the two things
he loves most – cooking and driving.
F
or a man reported to have lost a large chunk of his
wealth in the last two years, Gordon Ramsay is in
a chipper mood. Contrary to his media monster
image, he’s more affable than irascible. “I’m only
going on your back page?” he jokes, extending a suntanned
hand and a very white smile.
Ramsay is in the UAE to launch Chef’s Table at his Verre
restaurant in Hilton Dubai Creek Hotel. Already a familiar
phenomenon in London, the close-up experience is being
launched in tandem with the overall
revamp of the eatery.
“It’s a unique experience where we
go off-piste and cook a little more
avant-garde, a little more dangerous.
Cooking for six guests is a lot more
fun than cooking for 60, so we can
become a little more adventurous.
Between courses the customers can
come down and cook, so it’s a master-
class and chef’s table combined. It
seemed an added bonus to come back
with the chef’s table option. It’s a
nice revenue stream, too, for obvious
reasons,” he says.
Verre launched in 2001 and was
Ramsay’s first venture outside of the
UK; the famous chef runs the Dubai
eatery on a licence and consultancy
basis. It’s a model he wishes he’d
replicated for his other international
ventures, which lost him around
$12.9 million after writing off loans
to restaurants in the US and France
and closing businesses in Prague
and Cape Town.
“We provide the top tier management at Verre but we
don’t fund the day-to-day running of the restaurant and
we don’t own it. We should have done that from day one
abroad,” he says.
“It hasn’t put me off expanding internationally or in
the Middle East, but I would change the conditions for
obvious reasons. I suppose I should have looked at that in
a broader spectrum, but you know we’re ambitious, we’re
young and you learn by your mistakes. I’ll never do that
again, next time we would do it with less risk.”
I ask him if he’s worried about the recession and
its negative affect on celebrity restaurants. ‘“Do I look
worried?” he says, as if I’d just burned his favourite dish.
And to be honest, he doesn’t. Not at all.
122 gulfbusiness December 2010
The chef says he is a fan of Dubai and can find London
dreary but he admits that the service culture can be
challenging in the UAE. “It’s hard with service, you have
to be careful to respect cultures. The hierarchy can make
everything stifled. In Europe, we have more buoyancy in
the service and it’s a bit more energised and personal,
which is not happening yet here,” he says.
Throughout the interview, Ramsay has been rather
earnest; just when I’m thinking that the chef’s infamous
hotheadedness might have been
batted down by financial woes, he
ushers over a terrified waiter at
Verre restaurant and asks: “I love
your little smile, you know that, but
I want to find out who designed
that waist-coast, because he needs
shooting. Honestly, it’s like your
grand-dad’s pajamas top with the
arms cut off.” Ah, that’s more like it.
Later in the day, Ramsay offers to
take me for drive at the Autodrome
Dubai because the only thing he
loves more than cooking is driving.
He revs up for a heart-stopping
spin in his favourite Audis (TTs and
R8s). After screeching around the
track to demonstrate the route and
pulling some handbrake turns, he
turns casually to me and says “You
got that? It’s your go now.” Needless
to say, he wasn’t too impressed
when I went the wrong way and
dragged all the cones off the track.
Ramsay says he is a driving
freak. “Racing is just like cooking. It’s edgy and dangerous.
When you start off in this business and get your butt
kicked in the kitchen and you’re in debt, you dream about
becoming an amazing chef and getting to the stage where
you don’t have to travel by the tube and own a Ferrari.”
Ramsay’s dream came true when he achieved his third
Michelin star and treated himself to his first Ferrari (he’s
reported to own six). But as he relaunches Verre restaurant
and the Chef’s Table, his mind must now be on shoring up
more cash after a painful period, despite recently raking in
$6.6 million profits to cover losses in the last year.
“It’s been tough trying to get customer confidence back in
the market. It has taken some of the arrogance out of the
industry and put chefs back in the kitchen, which needed
to happen, to be honest.”
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