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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
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CEO PREDICTIONS
2011
The region’s leading business
minds share their hopes, fears
and strategies
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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 – was also found at East
be the birthplace Midlands Airport in the
of Osama bin Laden and UK. The two explosive
15 of the 19 hijackers in devices were addressed to
the terrorist attacks of destinations in Chicago
September 11, 2001 but in the US.
from this kingdom also Prince Muhammad
hails Prince Muhammad and his team impressed
bin Nayef who has helped the Western intelligence
foil a handful of terrorist agencies. He appears to
attempts. be building a network of
Prince Muhammad, son informers across Yemen,
of minister of interior and some terrorism
Nayef bin Abdul Aziz, is the analysts say the tip may
Saudi interior minister in well have come from one
charge of counter-terrorism Saudi interior minister of his spies, possibly even
Prince Muhammad
and the man behind the helped thwart a from inside Al Qaeda, the

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

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

12 gulfbusiness December 2010


UNITED ARAB EMIRATES

UAE shifts to recovery mode 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
The UAE private
sector business per cent to Dhs26.4 billion
activity hit a 15-month from Dhs19.5 billion.
gulfpics

high in October. The airline is the largest


customer for the Airbus
The UAE has entered the performance of GCC Tracker survey show that A380 super jumbo.
recovery mode with countries’ manufacturing UAE firms are planning to
two prominent surveys and services sectors, rose hire new staff. The study,
indicating a growth in to 53.8 points in October which interviews over Adco’s expansion
business activity and for the UAE, its highest 10,000 businesses around on track
recruitment prospects. level since the series began, the world, says 36 per cent Abu Dhabi is on track
According to the HSBC holding above the 50 point of the respondents said to add 213,000 barrels
UAE Purchasing Managers’ mark that separates growth they intend to increase per day (bdp) of oil
Index (PMI), private sector from contraction. It stood headcount. Business production capacity by
business activity hit a at 52.6 in September. in the UAE slightly 2012, according to Abdul
15-month high in October. Results from the underperformed the global Munim Saif Al Kindy, chief
The index, which measures bi-annual Regus Business average with 34 per cent. executive of the Abu Dhabi
Company for Onshore
SPOTLIGHT Oil Operations (Adco),

UAE supports new ruler of RAK


Adnoc’s 60 per cent-owned
upstream production
venture. Abu Dhabi plans
Sheikh Saud bin Saqr Al several years to regain to increase oil output from
Qassimi was confirmed the leadership, but most the current 2.8 million bpd
the ruler of Ras Al Khaimah analysts believe it is today to 3.5 million bpd
after his father, Sheikh unlikely he will win power. by 2018.
Saqr, succumbed to a long He managed to return
illness. RAK has been under to RAK with an armed
the leadership of Sheikh entourage on the night Dubai’s trade
Saud since his older half his father died, but was breaks record
brother, Sheikh Khalid, was quickly isolated by federal Dubai non-oil trade
deposed as crown prince forces. The UAE supreme reached Dhs377 billion
in 2003 by decree. Sheikh council gave its full in the first eight months
Khalid has campaigned for support to Sheikh Saud. of this year, 18 per cent
up from Dhs320 billion
INNUMBERS during the same period
last year. Dubai direct

Dhs122 bn Dhs10 bn
exports scored the highest
growth rate throughout
the past five years,
exceeding Dhs44 billion
The UAE federal budget for the 2011- Aldar Properties’ funding requirements by the end of August 2010
2013 period, of which Dhs 41 billion is by 2011 in order to “survive”, according to with a 39 per cent increase
earmarked for 2011. Bank of America Merrill Lynch. rate on last year, according
to Dubai Customs.

December 2010 gulfbusiness 20


SAUDI ARABIA

Saudi is world’s 11th easiest Smoking in


airport banned
place to do business 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
Saudi ranked first in fine is applicable to all
ease in registering travellers and airport
a property and employees. ”There will be
third in dealing with zero tolerance for those
construction permits.
Getty

who violate the ban on


smoking, no matter who
Saudi Arabia took Mena region. All other more favourable to they are,” King Abdulaziz
the 11th position countries in the GCC either business and used the International Airport
in the Doing Business dropped or maintained last company law of France director general Mazen
2011 report, one notch year’s rankings. as a model for revising Khashoggi, said.
higher than last year but The kingdom was its own. The report by
one notch away from its ranked first in terms of the International Finance
desired top 10 spot. the ease in registering Corporation commended Saudi orders
The kingdom is behind a property, and third in the kingdom for putting 20 aircraft
on achieving the 10 x 10 terms of improvement in procedures online, Saudi Airlines signed
goal which aims to put
Saudi Arabia in the top
dealing with construction
permits. It was also one
streamlining procedures,
improving a one-stop shop
F a contract for 12 new
Boeing 777-300ER and
10 of the world’s most of the 10 economies and expanding a range eight 787 Dreamliners
competitive nations by that made the largest of revolving movable for its fleet. The 777-
2010. Nonetheless, Saudi strides in making their assets that can be used as 300ER deal was valued
Arabia trumped the whole regulatory environment collateral. at $3.3 billion at average
list prices, and includes
SPOTLIGHT an option for 10 more of
the aircraft, which carry
King Abdullah ranked third richest royal up to 365 passengers.
The value for the 787
With a net worth of government hopes will purchase was not
$21 billion, Forbes become the new economic disclosed.
ranked King Abdullah epicenter of the Middle
bin Abdul Aziz as the East. Saudi Arabia is now Saudi investors
third richest royal after earning approximately
Thailand’s King Bhumibol $1 billion a day from oil
buy Crillon
A group of Saudi
Adulyadej ($35 billion) exports, helping boost the investors have bought
and UAE’s Sheikh Khalifa royal family’s fortune. the Crillon Hotel in
bin Zayed Al Nahyan The king is an avid Paris, France from
($23 billion). horseman and breeds US-based Starwood
King Abdullah, 84, construction began on a Arabian horses. He Capital for around
ascended to the throne in $26 billion city named founded the Equestrian €250 million ($353.6
August 2005, soon after in his honour, which the Club in Riyadh. million), local media
reported. The buyers
INNUMBERS may have to spend an

2 million 5.8 per cent


additional €100 million
to renovate the luxury
hotel, with management
of the Crillon expected
to be handed to luxury
The number of Haj pilgrims this year, Saudi Arabia’s inflation in October, down hotel chain Kempinski,
pumping about SAR2 billion into the from 5.9 per cent in September, while cost of the report says, citing
Madinah economy. living rose .7 points, official data shows. sources close to the sale.

14 gulfbusiness December 2010


QATAR

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
Qatar Airways chief says
some security measures
oil reserves in the block
after they had drilled two
Getty

should be ditched.
trial wells.

Qatar Airways slams Qatar to set up


overreaction in the West SME body
Saudi-based Capitas
Group International, a
The outspoken CEO of industry event in Doha, using “excessive“ screening member of the Islamic
Qatar Airways caught Akbar Al Baker said “which at times really may Development Bank
the world’s attention once
again by slamming Air
measures such as asking
passengers to remove
not be necessary.“
He said airline
F Group, said it has won
the exclusive contract
Canada for restraining their shoes at security companies in the West do to establish Enterprise
his airline’s access to checks and removing not have the capacity or Qatar, the state’s small
the Canadian market. He laptops from bags should the capability to grow and and medium enterprise
also accused the US of be ditched. were putting the blame on authority, local media
hypocrisy in their demands ”Sometimes we are Middle Eastern carriers reported. Enterprise
for tight airline security. overreacting,” he said. ”instead of putting their Qatar aims to create
Speaking at an aviation Airports, he added, were house in order.” a comprehensive
infrastructure to
COMPANYFOCUS support entrepreneurial

QIB leads Islamic franchise in Qatar


ventures, champion
innovation and foster
the growth of business
Credit ratings agency The individual rating ratios. QIB’s funding culture in country.
Fitch has affirmed reflected QIB’s position profile has strengthened
Qatar Islamic Bank’s (QIB) as the leading Islamic with the bank’s recent
long-term issuer default franchise with a nearly 50 $750 million sukuk to
Oil market stable
(IDR) at A with stable per cent share of Islamic boost assets. The bank also —minister
outlook. The agency also assets and nine per cent announced a recorded net The oil market is not
affirmed short-term IDR overall market share, in profit of QAR907 million over supplied, Qatari
at F1, individual rating at addition to the bank’s high and operational income of deputy premier and oil
C support rating at 1 and earnings power from core QAR1.73 billion during the minister Abdullah bin
support rating floor at A. banking and healthy capital first nine months of 2010. Hamad Al Attiyah, said.
“I think the market is
INNUMBERS very stable, but we are

QAR80 bn 300,000
seeing high inventories
in other countries,”
he said, adding that
countries have to cope
with rising oil prices. He
The combined assets of Islamic banks in Barrels per day is the production said $70-$90 per barrel
Qatar, a fifth of the total local banking from Al Shaheen field, overshooting was “very reasonable”
sector’s assets. original estimates of 50,000 barrels. for consumers and
producers.

16 gulfbusiness December 2010


KUWAIT

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
Zain is in the process
losses in the previous
of collecting the
needed shares from three quarters. Net income
other holders to make in the three months to
Getty

up the deal. September 30 increased


to KWD4.4 million dinars
Zain agrees to open books for Etisalat ($15.7 million) from
KWD763,000 in the year-
Kuwait’s Zain telecom Group to buy 51 per cent work required to reach earlier period, marking
has agreed to open of Zain shares traded on definitive agreements could Jazeera’s best quarter in its
its books for due diligence the Kuwait Stock Exchange take a number of weeks, five years of operations.
to UAE operator Etisalat, at KWD1.7 ($6.1) per while the transaction is
which has offered to buy share. Conditions it listed unlikely to close before the Oil price to rise
a controlling stake in the include the completion of end of the first quarter of
in 2011
F
firm worth around $12 satisfactory due diligence, 2011, Etisalat said. Khorafi
Crude oil prices will
billion. The move follows obtaining all applicable Group is estimated to own
continue to rise if the US
a formal request by Al regulatory approvals and around 20 per cent of
dollar’s weakness persists
Khorafi Group, the largest that there should be no Zain and is beginning the
and prices for commodities
private shareholder in Zain. material adverse change in process of collecting
increase further, a member
Etisalat said it had Zain’s business, financial the needed shares from
of Kuwait’s Supreme
signed a preliminary or regulatory affairs. Due other holders to make up
Petroleum Council, the
agreement with Khorafi diligence and the other the deal.
country’s top energy
decision-making body,
PROJECTFOCUS
said. “This will be good

Clean fuels project refinery upgrade because the cost of living


has risen dramatically in

programme to be re-tendered
the world,” SPC Member
Imad Al Atiqi, said.

Kuwait is preparing a Insight, the project aims a sulphur content of


re-launch of tenders to install at least 30 new less than 10 parts per Kuwait mulls
for its Clean Fuels project, units at Kuwait’s exiting would allow Kuwait higher spending
hoping to get the stalled Mina Abdullah and Mina Al National Petroleum Kuwait plans “some
refinery modernisation Ahmadi refineries, enabling Company to retake increase” in government
and upgrade project off them to produce fuels of market shares in the spending in the fiscal
the starting blocks by the highest international most developed markets, year starting April 1,
issuing the main tender environmental standards where environmental finance minister
packages by April. for export. The capacity regulations also tend to Mustafa Al Shimali,
According to IHS Global to produce fuels with be the highest. said. He said it was not
possible to predict the
INNUMBERS size of the additional
spending until members

KWD4 bn 5.3 per cent


of parliament meet. The
planned increase in the
2011-2012 budget will
focus on investments
The amount Kuwait hopes to earn in Kuwait’s inflation in September, the as part of financing the
non-oil revenue in 2014, the final year highest point since March 2009, due to a country’s development plan.
of its four-year development plan. surge in food prices, official data shows.

18 gulfbusiness December 2010


BAHRAINOMAN

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


gulfpics

recession?
Nawras celebrated its first day of trading on the Muscat Securities We have not been affected by the economic recession
Market . because we are a gourmet niche business. If people are

Nawras lists on Oman 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.
Nawras has completed its IPO, which raised
OMR182 million ($472 million) and has listed on As an export commodity, the price of coffee in the
the Muscat Securities Market under the ticker symbol, global market is volatile. How do coffee shop owners
‘nwrs’. The initial market capitalisation of Nawras respond to these price movements?
was OMR456 million, positioning Nawras as a top five We have been able to hold our roasted coffee price
Omani company by market capitalisation. The IPO is fixed since inception three years ago. Coffee pricing
the largest to take place in the GCC since July 2009 is controlled on a daily basis by the New York Coffee
and was also the first offer in Oman to be completed
using the book build method. F
Exchange, and as a company we have had to absorb
the variances.

Al Khalili to revive IPO plans You import coffee beans from Ethiopia, Nicaragua,
Peru, Colombia, East Timor and Mexico. How do they
Al Khalili United Enterprise, the flagship company differ from one another?
of the Al Khalili Group, will revive its plans to The taste profile of the green coffee beans varies by
float an IPO, after seeing response to the Nawras share origin, due to the microclimate of each area – soil type,
offer. The company is planning to offer 40 per cent of rainfall, sunshine, temperature, age of plants, etc. All
its stake in the IPO, which was postponed last year due Raw Coffee Company product is certified organic and
to sluggish market conditions. The group will follow fairly traded at origin and all from the Arabica coffee
the traditional fixed price method, unlike Nawras’ book bean family. For example African beans tend to have a
building process. Oman Arab Bank is the financial floral citrus flavour and South American beans will have
adviser and lead manager of the proposed IPO. a more chocolate-nutty flavour.

Bahrain is most tax-friendly state How do you spot a good coffee?


There are so many contributing factors that go into a
Bahrain has the most cost-competitive tax good coffee. Fresh beans, good equipment and good
environment in the world and the most liberalised training. Good coffee should be roasted fresh and is at its
domestic financial sector out of 57 leading economies, peak at about seven to 14 days after roasting. When you
according to the 2010 Financial Development Report order a coffee in a café or restaurant, check to see that
published by the World Economic Forum (WEF). the coffee hopper is not full of ground coffee and that the
Bahrain’s banking system was also ranked as first in portafilters (the handles that you put the ground coffee
the lack of frequency of banking crises. The report puts into) of the espresso machine are sitting in place, and
Bahrain 23rd in the financial development index, an therefore at the correct temperature.
improvement of four places from 2009.
How does the healthy lifestyle trend affect
INNUMBERS your business?

8 out of 10
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-
Bahrain’s score in the Economic Freedom of the carcinogenic properties, specifically for the prostate, is
Arab World: 2010 report, making it the most free used in skin products in Japanese health spas, and
economy in the Arab world. has stimulant properties, with caffeine found in many
pharmaceutical products such as Panadol Extra.

20 gulfbusiness December 2010


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
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NO. IN THE ENTIRE WORLD.

Emirates Printing Press wins the Sappi International Printers of the


year award from amongst 6,000 entries worldwide.
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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 incredible six per cent. Winter heating oil demand alone
and Ireland’s woes obsess the financial markets. should allow crude oil to trade above $90. This macro
Time to gaze into my macro crystal glass, even at milieu is obviously bullish for Saudi petrochemical
the risk of swallowing crushed glass. The forex shares, notably SABIC, APQ and Petro Rabigh, whose
gnomes were shocked by Uncle Ben’s money printing product margins will rise even as operating rates expand.
spree after the Federal Reserve’s FOMC voted to pump It is no coincidence that Saudi petrochemical shares
$600 billion to revive a moribund US economy. This meant outperformed the Tadawul by a factor of five in November.
the dollar plunged against the Euro and commodities This sector outperformance will continue in December.
soared on safe haven flows in November. However, Ireland US equities have been on a roll since early September
has joined Greece as the EU’s next policy nightmare and and the S&P 500 index added 200 points to regain
Dublin might well be forced to go cap in hand to the ECB/ its April 1218 high before Cisco Systems shocked the
IMF at a time when Berlin and the Elysee Palace will not financial markets with a revenue miss. However, trading
allow taxpayer bailouts to spare private investors pain at 13 times forward with inflation and bond yields at
from a potential default. This means Euro-dollar can fall epic lows, US equities are not expensive. Cash yields
as low as 1.32 in December, particularly if risk aversion in zero, Uncle Sam’s 10 year debt yields a mere 2.6 per
the sovereign debt markets continues to rise. cent but the free cash flow yield on American equities
The ideal macro trade for next month is to sell the is a juicy six per cent even as corporate balance sheets
Euro against sterling at 0.86 for an are better credits than most
eventual 0.78 target with a 0.88 stop UK growth rates Western governments.
loss. Why? One, the Bank of England may rise, while the The old Wall Street adage “don’t
need not and will not follow the fight the Fed” is also bullish for stock
Fed’s QE model and boost its gilt Eurozone, plagued by prices. So I doubt the stock market
purchase programme as long as Club Med/Celtic debt will fall much below 1180 even in a
inflation is running above its two correction in December. This means
per cent target limit. Inflation will woes and a strong the index fund SPZ is a buy on any
only rise, not fall, due to VAT higher Euro, could stumble dip below 1190 for a 15 per cent
priced high street imports, crude total return potential in 2011.
oil spikes and the fallout from
against the sterling and Gold is the optimal reserve
sterling’s epic 2008 devaluation. Australian dollar. currency in the Euro, dollar and yen
Two, the monetary mandarins ugly stepsisters contest. At $1400,
at the Old Lady of Threadneedle Street have clearly nervous longs should be introspective as gold no longer
underestimated both economic growth and inflation in the offers steep adjusted returns. At 30 year highs, silver is
sceptred isle in 2010. Three, UK growth rates may well rise an accident waiting to happen. All asset bubbles end in
while the Eurozone, plagued by Club Med/Celtic pussycat tears. That much, at least, is certain.
debt woes and a strong Euro, stumble this winter. The The G-20 conclave in Seoul ended with predictable
Euro could well fall significantly against sterling and the platitudes. The Chinese inflation data and the Irish
high yield Australian dollar next month. bailout rumours have now coupled to trigger a global sell
Oil prices have broken above their $65-85 trading range off in risk assets and a rise in the dollar. The financial
due to the lower dollar, Fed quant easing, rise in Chinese markets, as usual, have priced in a worst case scenario
imports, speculative inflows into the London North Sea for Ireland and its nationalised banking system. Since US
Brent and New York West Texas futures contracts and, retail sales rose for a fourth month in October, long-term
above all, Saudi Arabia’s public admission that the Treasury bond yields have begun to move sharply higher
kingdom was comfortable with a $70-90 trading range. as double dip recession risk is priced out of the bond
This is a hugely positive backdrop for cheaply valued, market. This is yen bearish!
reserves rich, high dividend integrated oil supermajor Matein Khalid, fund manager in a royal investment
shares such as Total, whose dividend yield is now an office and writer in finance and geopolitics.

24 gulfbusiness December 2010


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 are able to grow. So, how did Grahame do in leading the
write for Gulf Business. But this painful event PBO? On the financial and business growth side, since 2008
deserves a tribute to purpose. he led Vodafone Qatar through a $1 billion initial public
On November 2, I found a surprising post on offering and the rollout of service to the public last year.
Facebook reading “Rest in peace Grahame. May God rest The company, which achieved a customer base of 600,000 in
your soul. You were a true respectful gentleman and I September out of a population of about 1.6 million, became
was honoured and privileged to have met you on several the first domestic competitor to QTel. And it hopes to be
occasions. My deep condolences to Jenny, Jess, Kate, your profitable by the year-end. Not bad for two years of work.
friends and colleagues.” I was shocked and confused by But the real tribute to his leadership comes from what
what I was reading until I learned…That Grahame Maher, others have to say:
CEO of Vodafone Qatar, had passed away in the night. “Everyone who worked at Vodafone NZ during Grahame’s
Grahame began his career with Vodafone in 1998, where time has very fond memories of an electric working
he soon after became their CEO. During his three years environment where we believed anything was possible. But
at the helm of Vodafone NZ, the mobile carrier lifted most of all he was down to earth and humble.”
its market share from 16 per cent to 53 per cent. Then “He absolutely believed that people were a company’s
in September 2001 he left to become Chief Executive of most valuable asset and treated everyone, regardless of
Vodafone Australia. Grahame went on to become Chief position, with equal value. He drove a culture that just
Executive of Vodafone Sweden, and can’t be manufactured. It came
Chairman and Chief Executive of Everyone who from his heart and that was clear to
Vodafone Czech Republic before
taking his Qatar role in 2008.
worked at Vodafone everyone. His ready sense of fun was
absolutely infectious.”
Grahame was not your ordinary NZ during “His mission has truly made a
CEO; he believed that the reason an Grahame’s time world of difference for all people in
organisation exists goes beyond profits. Qatar.”
“This is why we exist, our reason for has very fond “Now this guy was healthier than
being, and it goes beyond just making memories of an I. He ran marathons, went on Tour De
money. We simply won’t compromise France-style bike rides, and was an
on it. We need to live it every day in electric working amazingly positive person. So why
everything we do.” As CEO he was environment. did this happen? In Qatar, we don’t
committed to shaping a Purpose question why. We accept that this
Based Organization (PBO). He inspired this approach in every was written by God. It’s in His plan and with every action
operating company that he helmed. there’s some good reason. Maher has left a legacy. Every
For Qatar, Vodafone’s purpose is “To make a world of single person in Vodafone feels for him.”
difference for all people in Qatar.” It is easy to have a In his obituary, Mr Maher’s colleagues remember an
mission or statement. But a purpose is much deeper as “inspiration leader”; his family, a man “who crammed 100
the purpose is your reason for being. Can you imagine the years of life into just 51.”
difference it would make for your business if you were a Grahame himself made a difference to the lives of
Purpose Based Organization? everyone he touched. He was a great CEO, coach, mentor,
Simply put, a PBO is an organisation that holds people and friend. We will all sorely miss his inspiration and
firmly at its heart. When all of your employees understand vision, his passion and energy, and his love for all the
and live the ethos of a PBO, they will know why your people he worked with.
business exists (your purpose), how you work together Will your tribute be to profits or purpose?
(values), where you’re going (your vision) and what you’ll Grahame is survived by his wife Jenny Maher, and his
do to get there (strategies). It also helps to create an daughters Jessica and Kate, both in their 20s.
environment where power is shared, where rules and titles Dr Tommy Weir, vice president of leadership solutions at
are secondary and where people feel valued, respected and Kenexa and author of The CEO Shift.

26 gulfbusiness December 2010


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 Credit bureaus also allow for greater information
risk-management processes, the question of sharing which allows lenders to review how much and
credit bureaus has increasingly popped up, at what rate they lend to borrowers. Good borrowers
especially in Asia, where they are still relatively should not be penalised as a result of a large number of
new. The concept has come a little later to this region for bad borrowers – as is the case without a bureau. With the
a number of reasons. establishment of a positive bureau, good borrowers get
Many banks have, in the past, been reluctant to share access to credit at more beneficial interest rates.
credit information with other banks for competitive The UAE Ministry of Finance’s decision to introduce a
reasons, although there has been a shift since the Federal credit bureau is a step made by the government
global economic downturn began. This shift occurred to improve transparency in the UAE’s financial sector.
as financial institutions across the region started Shortly after this announcement, emcredit was made the
looking at new ways to provide a better level of service official credit information agency of Dubai. Both moves
to the market. On the other hand, consumer advocacy will bring about a greater sharing of information between
groups opposed the concept because it was perceived to banks across the UAE .
undermine rules protecting individual privacy. For both bureaus to be a success, getting the correct
In more and more countries, concerns over data infrastructure right is essential as economic growth
sharing has given way to two basic realities: consumers becomes driven by domestic consumption, although
and businesses want easier and exports will remain important.
quicker access to competitively From a What the UAE and a number of
priced loans and banks seek to
make safer, more reliable financial
macroeconomic other countries in the region have
increasingly realised is an
decisions to drive growth. One of point of view, export-led strategy can put them in
the best means of achieving both credit bureaus can a severe boom and bust cycle,
is through the establishment of a whereas personal consumption is a
positive credit bureau. bring about higher mitigating influence.
A positive bureau is one whereby growth rates for Additionally, by building an
banks and other lenders share and informed financial society, consumers
receive all information on a borrower, businesses and will become more aware of their
allowing them to have a holistic the economy. financial exposure and turn to better
view on a person’s credit history. A financial management tools to grow
negative bureau on the other hand only allows for banks/ and protect their wealth effectively and manage their
lenders to view negative information on a borrower finances more closely.
including where he/she has defaulted. Approximately 35 To be successful, credit bureaus need to be either
per cent of potential good customers are refused credit if government-led, or industry controlled and regulated by
an application is only based on negative information. the government. If it is to be a success, such a move must
From a macroeconomic point of view, credit bureaus be a collective initiative by the financial services industry
can bring about higher growth rates for businesses for the benefit of the sector and consumers.
and individuals, and therefore the economy, through an Banks need to be aware of a number of dimensions to
increase in credit lines to those who wish to borrow. truly assess the credit risk of customers. Proactive and
There are several other benefits of positive credit bureaus positive data sharing enables banks to get loans out to
that end up benefiting the economy, organisations and the vast majority of reliable borrowers faster, will help
individuals. It is always important for banks not to with good lending to drive growth in the economy and
lend money to those who are already over leveraged and help protect the end user by providing beneficial interest
therefore unable to pay back their debts – credit bureaus rates to those who are financially responsible.
allow lenders to assess a candidate’s total indebtedness Chris J de Bruin, head of consumer banking, Standard
and calculate a borrower’s capacity to honour their debt. Chartered UAE

28 gulfbusiness December 2010


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

WGC
more gold into their portfolios,
either through acquisition of bullion,
coin, exchange traded funds or “While gold’s role as a protection for their negative correlation with
mining shares. against inflation and a currency equity and financial based markets
The fear is that the dollar weakens hedge are widely known, its ability and so offer an ideal tool for portfolio
further, which means higher prices both to diversify risk and to mitigate diversification, according to Miller.
for commodities that historically are investment losses is increasingly “DGCX gold futures are the
priced in US currency. Oil prices have attracting investor attention,” says exchange’s flagship contract and have
also accelerated to a year long high Juan Carlos Artigas, WGC investment introduced a new pricing benchmark
with the expectation that easier money research manager. for gold in the UAE – namely, the 1kg
will give a substantial upside to many As a result the future for gold is gold futures contract. We expect gold
commodities, but especially precious looking very bright. Year to date trade to grow further in the region
metals such as platinum, palladium, volume for DGCX gold futures as and DGCX is well positioned to benefit
silver as well as gold. at November 9, 2010 was just over from this demand.”
Claire Miller, head of marketing at 425,000 contracts. Average daily How long the trend continues though
Dubai Gold & Commodities Exchange volume for DGCX gold futures is dependent on the global economy
(DGCX) told Gulf Business that currently stands at 2,750 contracts. and whether its prospects are as
“uncertainty in the equity markets Overall the exchange has traded fragile as the gold price suggests. In
and economy as a whole, as a result of 1.63 million contracts in the year to several emerging markets such as
the global financial crisis, has led to
increased demand and price volatility
in gold. Institutional investors have also Gold futures are now the DGCX’s flagship
been allocating higher assets to bullion contract with a new pricing benchmark for
linked Exchange Traded Funds”
The World Gold Council (WGC), gold in the UAE – the 1kg gold futures.
which represents the international
gold industry, says that between date, already surpassing the total Russia, central banks have continued to
October 2007 and March 2009 – annual volume achieved in 2009. increase their gold reserves while sales
the height of the global financial The metal is seen by many as a safe by European banks have remained
meltdown – an investor with a haven investment and an asset class negligible in 2010.
portfolio of $10 million experienced which can be easily liquidated to The USA holds more than 72 per
an additional $500,000 loss simply by generate cash. Commodities, including cent of its reserves in gold a total of
not maintaining a position in gold. 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 not yet totally behind them, these drinks
activities tackling different sport firms will likely register optimistic
and cultural disciplines down to our growth in the next two years, followed
sampling activities, direct interaction by a steadier growth in the years to
with consumers has been a consistent come, according to some estimates.
trend for Red Bull. Experts say that consumer taste
“Following a sustainable year-on- profiles in the Middle East are very
year growth, we witnessed a relative different from Western countries. With
stagnation in 2009, due to the economic over 80 nationalities living in UAE, the
crisis; therefore, we have intensified region is a melting pot of taste and Red Bull and Monster have no concerns
our marketing activation in 2010 to preferences when it comes to products about widespread demand for their
curb the impact of the crisis and give such a energy drinks. But with a growing products. Going toe-to-toe over market
wings to our business,” he added. 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 tourists from ASEAN. He pointed
Egypt’s GDP. Some 13 per cent of the out that Qatar Airways, for example,
had increased the frequency of
national workforce is employed, directly connections with Kuala Lumpur to 11
or indirectly, by tourism. flights a week.
“This will give a strong boost to
platform to promote Egypt in Asia. Qatar is equally keen to lure traffic tourism from Malaysia and other
Some 700,000 Asian visitors trekked but has a different kind of tourism ASEAN countries to Qatar,” he said.
to Egypt in 2009, Zaazou told Gulf segment in mind. “We are not “The bottom line is that Qatar has
Business. “Arab tourists only provide interested in mass tourism. We are traditionally maintained a strong
about 17 per cent of Egypt’s inbound trying to attract traffic interested in business relationship with both
tourists, with Saudi Arabia and Libya arts, history, culture, etc. We have Malaysia and Singapore.”
being the leading nations,” he said. built the Museum of Islamic Art, The importance of the ASEAN
Juggling with figures, Zaazou tracing a 1,400-year-old history,” region as a source of tourism was
highlighted the significance of explained Ahmed Abdullah M. Al also the reason behind Messe Berlin’s
tourism for the national economy of Nuaimi, chairman of Qatar Tourism creation of ITB Asia, an Asian edition
his country. “Some 20 per cent of each Authority (QTA), which promotes of its ITB Berlin, the world’s largest
foreign dollar earned by Egypt comes tourism to Qatar. tourism fair.
from tourism. Tourism’s contribution The QTA chairman also highlighted “India, China and ASEAN are the
used to be $300 million in 1982 but the common religious bonds of Islam growth markets of the future,” said
by 2009, it surged to $2.5 billion. existing between Qatar and some of Raimund Hosch, Messe Berlin’s
Tourism accounts for 11.1 per cent of the ASEAN countries. president and CEO.” This is a why you
our national GDP. Some 13 per cent of Prior to QTA’s participation in see here a number of Middle Eastern
our national workforce is employed, Singapore, the country had held countries that recognise the crucial
directly, or indirectly, by tourism,” a roadshow in Kuala Lumpur. Al importance of the ASEAN region as a
he said. Nuaimi underlined the “keen interest” source of tourism.” ■

36 gulfbusiness December 2010


ANALYSIS INSURANCE

Insuring the future


Despite double-digit growth is a key activity for us hence one of
the objectives of this acquisition is to
in takaful, analysts doubt the strengthen our takaful operations,”
Islamic insurance sector has says Axel Lehmann, member of the
finally established credibility, group executive committee and
writes KAREN REMO-LISTANA. chief risk officer of Zurich Financial
Services Group.
But many have been unable to
access the growing market. Oman

M
Insurance, the UAE’s largest insurer
ohammad Al Marri, 45, a has been denied a licence to operate
perfume shop owner in in this sector.
Sharjah, is not familiar “We tried to obtain a licence but
with the concept of takaful the authorities objected. It can only
insurance. “I’m not used to that, but be offered by a specialised insurance
I would like to have one soon and company,” says Abdul Muttalib Al
perhaps I can also offer that to my Jaidi, CEO of Oman Insurance, noting
staff. And if ever I avail that, I want a that the policy in issuing new licences
policy that follows Islamic principles,” has been rigid.
he says. “We have existing partnerships but
Al Marri is part of a large majority I don’t think the authority is granting
that the insurance sector plans to any new licence. We have not applied
tap. Although volume of insurance for a licence, though,” adds Michel
premiums in the Gulf Corporation Khalaf, Middle East, Africa and South
Council last year grew 28 per cent, Asia president of Alico, which was
compared to the global average of acquired by Metlife earlier this year.
getty images

3.4 per cent, penetration remains The nascent sector also faces a
extremely low at one per cent of number of challenges. First, takaful
the GDP. operators are somewhat constrained
in their investment opportunities. The
The GCC takaful operators fall short most common investment class for
global insurers is investment grade
of industry best practice in terms of rated bonds.
transparency and governance. However, the bond market is not
well developed in the Middle East,
Research by consulting firm Value stood at $2.9 billion in 2008 and primarily due to a small local market
Partners shows that Saudi Arabia – Malaysia, with $900 million, are the for such instruments. There is also
the region’s largest economy – has top takaful markets in the world. no regulatory requirement dictating
penetration of 0.6 per cent which is “In the recent past, cultural practices the asset allocation of insurance
dwarfed by its smaller neighbour the and religious beliefs have limited the companies and takaful operators.
UAE which has a penetration rate of development of the life insurance In a study conducted by Alpen
two per cent. market. However, the growing Capital, the GCC takaful insurers
“Insurance penetration lags behind awareness and acceptance of Islamic score way below their conventional
that of the Western economies, yet insurance is opening up a significant peers in terms of efficiency. The GCC
economic growth rates would be growth opportunity,” Koster says. takaful operators are also falling
the envy of most of the world,” Paul According to Ernst & Young, the short of industry best practice in
Koster, chief executive, Dubai Financial global market for takaful is set to terms of transparency and governance
Services Authority (DFSA) told a global surpass $8.8 billion this year with practices. “The demand for takaful is
industry event in Dubai. contributions growing by 29 per cent there because people always look for
One specific source of growth is in 2008 to $5.3 billion. something different,” says Al Jaidi. “If
the Islamic-compliant insurance (or Zurich Insurance, which recently that new something can add value to
takaful) concept of which dates back acquired 99.98 per cent in Lebanon’s their business then yes, the demand
more than 1,400 years and is based Campagnie Libanaise D’Assurances, will be great but were the takaful
on the principle of mutual guarantee. is bullish that the deal will boost its companies able to offer that added
Saudi Arabia, whose contributions takaful business. “The takaful business value? I don’t think so.” ■

38 gulfbusiness December 2010


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

Naveed Ahmed
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 “Upgrading Arab stock markets ADX introduced exchange trade funds
managers sitting in London, Frankfurt, by international institutions from (ETF) in March one of a few emerging
New York and Tokyo. Emerging market frontier to emerging markets is of markets to do so.
status implies fewer local restrictions great importance at this stage, a Qatar’s bourse, in which the NYSE
on foreign participation, greater course of action that is earnestly Euronext has a 20 per cent stake,
market depth, transparency as well pursued by the UAE owing to is also considering opening up to
as efficient settlement and custody the vast opportunities offered by exchange-traded funds. According
proceedings. The status provides placing Arab stock markets on the to Al Baloushi the upgrading of
a comfort zone making it easier to map of international investment Arab stock markets by international
disburse fund allocations measured opportunities,” says Rashed Al institutions is “of great importance” to
worldwide in billions of dollars a day. Baloushi, deputy chief executive and the investment aims of the region.
In the last two years, professional director of operations of Abu Dhabi He and other professionals in the
investors have, too, become more Securities Exchange (ADX). region are aware though that the
bullish on emerging markets, betting Nasdaq Dubai’s chief executive necessary moves will require Arab
on some of them being a haven Jeff Singer also believes the move is exchanges to adhere increasingly to
international norms and standards
of efficiency for trading, settlement,
Consolidation is another important factor. A clearance, custody and depositary.
region with a population of less than 40 million Consolidation is another important
factor. A region with a population of
is too small to support nine stock markets. less than 40 million is too small to
support nine stock markets. Since the
from an economic slowdown in the significant since many institutional financial crisis gripped the world in
developed world. investors have mandates to invest in late 2008, calls for mergers among the
The Financial Times Stock Exchange emerging markets he points out that region’s stock markets have increased.
(FTSE) list upgraded the UAE stock previously an emerging market fund This would allow exchanges to offer a
markets from frontier to secondary could easily overlook a country that did broad enough liquidity pool to attract
emerging markets in September. not have the classification of emerging sizeable global investments.
Another influential index, Morgan market but it is now likely that funds The merger, in July, of Dubai
Stanley Capital International (MSCI), will allocate an increasing amount Financial Market and Nasdaq Dubai,
has also announced that the UAE of assets to the UAE which could be under one holding company, for
and Qatar will be under review for a measured in billions of dollars. example, is expected to improve
potential reclassification to emerging In an effort to open up to support liquidity, lower brokers’ fees and
markets in 2011. the country’s drive to attract capital, attract more listings.

40 gulfbusiness December 2010


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


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.

Mohammad Omran 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
The chairman of UAE telecommunications creating higher stress for the CIOs
company, Etisalat, says social networking will who have an additional task of
integrating and controlling mobility
become the norm for work decision making. to obtain optimum workforce
efficiency. This is where organisations

T
need to collaborate with solution
he telecommunications sectors important in the future, whether partners, such as Etisalat, who
are developing at a relentless between people or machines, we understand every component of the
pace. Competing for market hope to position Etisalat to profit mobility ecosystem.
share, delivering innovative from rising demand for machine-to- In addition, the trend of social
solutions and keeping pace with machine connectivity. The internet networks will spread further
technology were just some challenges will become much more about in the workplace. As the lines
that faced the telecom industry in the
past couple of years. As global markets
evolve, converge and grow, there is a
Growing reliance on mobility is creating
need for operators to be constantly higher stress for the CIOs who have the
updated with capabilities and talents in task of integrating efficiency.
order to keep pace.
Etisalat excelled in its operations connectivity for the customer, between professional and personal
and has continued to spend whether it is customers with communications become increasingly
where needed, whether it is on networks, or machines. There are now blurred, the industry will need
infrastructure such as the fiber optic more machines than people and this to incorporate enterprise social
network, which will be accomplished will be a major area of future growth networking into their overall unified
in UAE in 2011 making Abu Dhabi in the telecom market. communications and strategy.
the first city in the world be fully Mobility solutions have created a Enterprise-grade versions of Facebook,
connected by this network, or in paradigm shift in the way Twitter and Wikis in the workplace
maintaining the quality of services businesses are conducted in the will begin to be as common as e-mail
and networks upgrades. region. While, on the one hand, and will change the way business is
In a world where seamless proliferation of mobile devices are conducted. As a result, the decision-
connectivity will be far more helping to liberate the workforce by 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
The chairman of Mashreqbank says better
is a trend that has changed as well, risk management will lead to growth and
forcing companies to analyse and
identify the consequences towards diversification in the industry.
their performance.
In the past, we have noticed the
lack of planning across various There will be more focus on customer customer requirements and offer
organisations and how it has impacted retention, while developing attractive unmatched services to maintain
their business. It’s imperative for every products that accommodate customer our leading position in the banking
organisation to acquire a solid plan requirements and market conditions. industry. In spite of the difficult global
with detailed processes on how its In today’s volatile and uncertain financial environment, we continue to
goals will be accomplished. markets, where the crisis is grow and invest in strategic projects.
This year was also a year of steady redefining the industry and its Over the years we have succeeded in
jobs in the banking industry, where competitive environment, banks need launching innovative products and
services in order to offer convenience
In the past, we have noticed the lack of to customers.
In line with our strategy to be a
planning across various organisations and regional financial institution, we
how it has impacted their business. are exploring opportunities to tap
into new markets and complement
previously shift of jobs used to vary to concentrate on managing their our network of branches and
between 20 per cent, however, the scene capitalization and liquidity, realigning representative offices around the
has changed with the financial crisis their strategies and business models, world. Today, we are present in Egypt,
taking place. Shifting of jobs in the focusing on innovative solutions; and Kuwait, Bahrain, Qatar, Hong Kong,
industry plays a major role in effecting managing increased regulations. India, Bangladesh, USA, Pakistan,
a business and customer relations. As a national financial institution, Sudan and United Kingdom.
We anticipate 2011 to be a year we are committed to UAE’s economic In the UAE, we have 54 branches
of further growth and diversifying growth and we are strongly moving and 242 ATM’s and we look forward to
of investments and stable revenue towards our expansion strategy in further expand in 2011. Our primary
streams. Small and medium business the UAE and the region. Mashreq goal is to offer a comprehensive
will be an attractive segment for continues to develop innovative banking experience, whether it’s
banks to extend their facilities to. and convenient products based on offering products or customer service. ■

December 2010 gulfbusiness 49


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CEOs ETIHAD

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

James Hogan
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
CEO of the UAE’s national airline writes that 2011 increase its scale through key strategic
will be a year of increasing frequencies and depth for alliances with likeminded airlines.
Partnering with other carriers in their
corporate customers, as well as boosting alliances. home markets to source greater banks
of traffic is the most effective way we
can design a global network.

2
Out of Korea we will codeshare from
010 was a year where, month Erbil in Iraq; to Nagoya and Tokyo in Seoul and into other Asian cities on
by month, we saw our yields Japan; and to Alexandria, Colombo ASIANA, while they will be doing the
edge rather than gallop and Seoul. same over Abu Dhabi and onwards.
towards pre-crisis levels. We also increased our frequencies We have partnered with Virgin’s
And as the year concludes, I’d say on our services to Beijing, Beirut, Australian airline brands to connect
we’re pretty much there. There were Brussels, Cairo, Dublin, Frankfurt, our passengers across that vast
no seismic shifts for global aviation
in 2010. But, certainly, there was
consolidation – British Airways and
We will take delivery of six widebody
Iberia in Europe; Delta and Northwest, aircraft, almost all of which will be
as well as Continental and United
in the US, both eclipsing American
allocated to our existing route network.
Airlines as the world’s largest carrier.
And Emirates overtook Lufthansa as Geneva, Hyderabad, Manila and continent and into New Zealand the
the largest international carrier. Milan. So I’d say this year our Pacific Islands. And from February
But it was mainly a year that growth has been unmistakable, if not next year, V Australia will be the first
fortified the existing trends. One of headline grabbing. Australian airline to operate into the
those trends is the growth of the Gulf, 2011 is likely to be similarly steady. Middle East for twenty years.
both as a passenger hub and as an We will take delivery of six widebody But making too many predictions
endpoint. Etihad, like its competitors aircraft, almost all of which will is a pointless practice in the aviation
in the Gulf, is growing strongly. We be allocated to our existing route industry. Anything can happen. The
took delivery of four aircraft this year network to increase our frequencies, best strategy is to always be prepared
and launched routes to Baghdad and adding depth to the network. We know for the best and the worst. ■

52 gulfbusiness December 2010


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.

Samer Majali
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.
CEO of Bahrain-government owned airline Financially, our costs have come
Gulf Air says there will be turbulent times ahead down and losses have reduced while
our load factors and punctuality have
for the industry, with brighter skies to come. improved significantly. Our ultimate
goal is to continue to improve our

S
customer travel experience with
omeone once said the only record 11 per cent growth. Leading this superior and more consistent products
way to make a million growth is the Middle East which set as we continue implementing our
dollars in the airline for a 15.2 per cent increase this year. strategy through 2011.
business was to start with a This remarkable progress is driven Though our strategy has seen
billion; somewhat ironic considering by the region’s oil wealth, its unique us stay on in the right track during
that the aviation industry is the geographical position making it a 2010, we are approaching 2011 with
greatest catalyst of the global
economy, driving more than a trillion
dollars in economic activity.
I believe that, despite all the positive
The problem facing airlines is their signals, full recovery in the industry will
susceptibility to external factors; no not come until after 2014.
industry in the world can be more
volatile than the aviation industry. transit hub between the East and cautious optimism. We will continue to
If 2009 mauled the industry with the West, improved airplane and maintain our leadership position in the
economic recession, 2010 punished it airport capabilities and the owner ME region, but will also connect the
with rising fuel prices. Yet commercial countries ambitious growth and region with the key financial capitals
aviation has demonstrated resilience investment plans. of the world. Coming back to my 2011
in the past and will continue to do so Despite all the positive investment, predictions for the industry in general,
in the future. operating in the region is far from I believe that despite all the positive
This year is a perfect example; easy. Planned aircraft purchases of signals, full recovery will not come
despite difficult operating conditions, $200 billion over the next decade will until after 2014. But 2014 is not far off
the industry is set to return to the flood the market with over-capacity, and I am optimistic that the coming
’black’ this year, expecting to post an resulting in the more generously- years will be bullish. Maybe investing a
estimated $8.9 billion in profit and funded carriers subsidising fares as 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

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

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

December 2010 gulfbusiness 57


CEOs AMWAL AL KHALEEJ

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

Ammar AlKhudairy
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,
Private equity firm Amwal AlKhaleej says 2011 sweat and tears into identifying and
will mean putting into practice modesty lessons planning for exits. Going forward, exits
will be very meticulously planned from
learned from the financial crisis. the outset, and much of the holding
period will be spent polishing up and

A
positioning the investment for what
s private equity investment Perhaps the first application of post- will likely be a trade sale exit.
starts to come out of the crisis wisdom for MENA investment In conclusion, we believe that
cautious environment that is to adopt the right model for the starting 2011 and for the next few
has prevailed since the right region. Against this background, years to come, MENA private equity
financial crisis, Amwal AlKhaleej, and in the absence of the plentiful stands to see some creativity, hard
along with its peers, has been taking debt that was the hallmark of pre- work and potentially lucrative exits.
stock of lessons learnt from the
tumultuous times brought on by Perhaps the first application of post-crisis
the events of 2008 and 2009. With
2010 and 2011 promising to be wisdom for MENA investment is to adopt
good vintages for private equity the right model for the right region.
investments, every deal maker will
have the lessons learnt from the crisis times, investors will turn away Through a combination of strict price
financial crisis engrained in their from ‘copy-paste’ use of debt, in discipline, a hands-on approach
minds forever, and it is these lessons favour of back-to-basics investing to operational and strategic value
that will shape private equity in the where higher returns are a function addition and continuing to partner
MENA going forward. For Amwal of value creation, not leveraging and with management capable of taking
AlKhaleej, these lessons are three- flipping. For Amwal AlKhaleej this companies to the next level, we at
dimensional: a strict price discipline has served to underscore our policy Amwal AlKhaleej are confident that
with respect to entry valuations, a of unleveraged growth investing in we will successfully build value into
continued emphasis on value creation, sectors where competitive advantages our portfolio companies and build
and keeping an eye on tangible exits prevail. Our investments in Saudi towards realising the exits that
based on fundamentals that are Arabia are betting on demand for will confirm that 2011 can lead to
planned from the outset. education services, healthcare and excellent vintage years. ■

58 gulfbusiness December 2010


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

Dave Lesar
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
The chairman, president and CEO of Halliburton heavily in oil and liquids-rich plays,
predicts growth for the energy sector in 2011, causing us to position our resources
in those basins.
particularly for unconventional resources. Weak natural gas fundamentals will
likely restrain dry gas directed drilling

H
and completions next year. However,
alliburton and other changes in the relative demand make we believe strongly in the long-term
integrated energy services us redeploy assets. prospects for the North American gas
companies provide the well The most important phenomenon market, and we are working with our
construction and reservoir shaping the energy business in customers to create new business
evaluation services our customers 2011 and beyond is the dramatic models that will keep the rigs working
need to create producing oil and rise of unconventional resources, in those basins even if short-term gas
gas fields.
We go where the work is – wherever
national oil companies, international
Unconventionals depend on horizontal
oil companies and independents are drilling and completions technology –
exploring and developing fields. We both areas of strength for Halliburton.
have more than 55,000 employees
working in more than 70 countries; especially shale gas. Unconventionals fundamentals decline.
managing that vast infrastructure depend on horizontal drilling and We anticipate 2011 will be a
so we have the right technology, sophisticated multi-stage fracturing year of solid if not spectacular
equipment and expertise where our and completions technology – both growth in the energy industry and
customers need it most is one of our areas of strength for Halliburton. for Halliburton. Most importantly,
greatest challenges. These advanced technologies are the fundamental trends in energy
Being in the right place at also finding increasing application demand, combined with our
the right time demands close in conventional oil developments; constantly improving technical
cooperation with our customers so this will be positive for our future ability to develop oil and gas
we can anticipate their needs, and business and for energy supply. resources, point to a continued
it demands flexibility and quick Across the Eastern Hemisphere, strong demand for our services
responses, because even slight unconventional basins are around the world. ■

December 2010 gulfbusiness 61


CEOs AGILITY

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.

Tarek Sultan
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
Chairman of Kuwait logistics giant Agility says us in 2011. Our Global Integrated
Logistics business serves thousands
industry will face higher fuel costs and regulatory of commercial customers across
more than 120 countries and will
changes, but growth lies in emerging markets drive our growth in the coming year –
especially in emerging markets.
Emerging market leadership

T
continues to differentiate the
he logistics and Being able to tell our customers company, and it’s where we continue
transportation industry where their freight is at any time, to make big investments. Agility is
continues to be impacted being able instantly to identify, the only player in the industry top 10
adversely by repercussions escalate and address issues – and with roots in developing markets. It’s
of the global financial crisis of late even track the carbon impact of where we have grown our business
2008. GDP declined in nearly every shipments – are becoming real and it’s where we have an edge
country; global trade was down nine differentiators. Technology can help over the competition. Many of our
per cent in 2009 and international air us provide these “real time” solutions, customers see their best opportunities
and sea freight volumes followed suit, and at Agility, we are investing here too, so Agility is uniquely
dropping 10 per cent in 2009. Figures heavily in our technology platform. positioned to meet their needs. ■
for 2010 are unlikely to be stellar.
Against this backdrop, customers
are looking to us more than ever to Being able to tell our customers where
contain cost while providing tailored, their freight is and being able to address
value added solutions. This has driven
an increased focus on the role of issues are becoming real differentiators.
technology across the industry.

62 gulfbusiness December 2010


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

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

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 Nicholas Stern, author of the Stern Review.
powerful when it comes to generating
social impact, they are today billion people take action to improve deliver the bottom line. Sustainable
becoming more proactive in their their health and well-being. champions are now seen as being part
social investments.” Meanwhile, Simon Major, general of the mainstream and not out on the
He added: “Companies have manager for Middle East business periphery,” said Major.
accordingly developed more strategic development at ICI Paints AkzoNobel, However, he warned corporate
objectives, focusing on specific social agrees that sustainability is now so green exponents they may face some
impact goals that are meaningful in firmly entrenched in the boardroom opposition when trying grease the
the communities they serve and to the agenda that there’s a very clear wheels of their sustainable revolution.
employees that work for them.” understanding that being sustainable “Firstly, there is the internal sell
Unilever, a company that has is not only the “right” thing to do but to your own company. When this
historically been quick off the mark also contributes to your company’s has been won the funds become
when it comes to the environment, financial success. available for innovation to proceed
recently launched what it called a “A few years ago only a small – research and then development of
Sustainable Living Plan, which it said selection of senior management were environmentally beneficial product
aims to “decouple business growth from really interested in sustainability as offerings. Also, when there is top
environmental impact by setting out a there was a belief that customers did management consensus, people can
more sustainable business model.” not really want sustainable products. be allocated to tasks connected with
By 2020, the consumer good’s giant Although this viewpoint changed sustainable improvements.
plans to halve the environmental to some degree it was only after the “After the internal sell comes the
footprint of its products, source Stern Report that there was a clear external sell. Sustainable innovation
100 per cent of its agricultural raw realisation that being a sustainable often requires customers to break
materials sustainably and help a company would actually help with tradition and procure or operate
in a different way. Customers are very
conservative and often, despite what they
GREEN CODES OF CONDUCT may say, do not like change,” he added.
Technology company IBM and food

G overnments and local authorities


in the Gulf have introduced
increasingly stringent guidelines to
One of these was the US Green
Building Council Leed (Leadership
in Energy and Environmental
giant Walmart have in the last two
years offered some practical advice on
how companies can drive down costs
force major industries, like the property Design) certificate. and boost profits using sustainability
sector, to comply with green standards. In the last few years, the Dubai as a lever.
For instance, in 2007 Dubai Electricity and Water Authority has For instance, in 2008 Walmart
launched a set of green building introduced green building regulations, announced plans to investigate
ground rules which said all owners of Abu Dhabi’s Urban Planning Council its 100,000-plus suppliers with a
residential and commercial buildings has launched its Estidama Sustainability Index. Meanwhile,
must comply with internationally (sustainability) ratings system and Qatari earlier this year, IBM asked its 30,000
recognised environmentally-friendly Diar has established a Sustainable suppliers in 60 countries to establish
specifications. Assessment System. 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
sustainable city environment,” Lootah says.
In line with this, an international
conference covering green city initiatives
by creating new green buildings and across the region was held in Dubai last
transforming current ecosystems into month. The EnviroCities 2010 – organised
green cities. by Environmental Centre for Arab Town in
“With two-thirds of humanity cooperation with Dubai Municipality – drew
expected to live in cities by 2050, the more than 500 leading figures in the field
future of our lives and the generations from around the world.
to come is dependent upon our care It featured presentations on green
and concern for our cities,” says hotels, green transportation, green
Hussain Nasser Lootah, director general lifestyles, introduction of zero carbon cities, Hussain Nasser Lootah, director
of Dubai Municipality. successful case studies, and management general, Dubai Municipality.
Cities in the Middle East have thus of land, energy, water and wastes.
started planning how to create resource- “However, even if we have 100 per leave their TVs on round-the-clock
efficient structures from finding sites cent green building but we have poor while some have TVs in every room,”
to design, construction, operation, management, no good results will be he adds. “You don’t have to do those.
maintenance, renovation, and demolition. achieved,” Lootah tells Gulf Business. He Why don’t you bring all the family in one
“It is indispensable for all who are said simple steps, and not only skyrocket room to watch? And why do you have
associated with cities of the future to green science, can go a long way in to have light the entire house? I have
have a fine understanding of the green saving the environment. seen houses that look like an airport
city concepts, standards and tools to “There are people leaving their air that an airplane may just land there.
achieve and maintain a safe, healthy and conditioning units on for 24 hours, some Management is what we really need.”

emissions, and waste management/ product – anything from hula hoops to Drury said: “We replaced the
recycling practices. If suppliers heavy machinery – if you do it in a way wooden pallets, that are traditionally
want to stay on IBM’s radar, they that is more efficient, you’ll consume used by Unilever’s Global Tea Supply
have to report their results and ask less energy, save money on energy Network to ship teas worldwide, with
subcontractors to do the same thing. costs and lessen your contribution slip sheets. It was initiated by the
Wayne Balta, IBM’s vice president to greenhouse gas emissions. We’re Lipton factory at Jebel Ali, Dubai in
of corporate environmental affairs seeing this across all industries.” which tea raw materials have been
and product safety, said: “A key Practical environmental solutions received on the slip-sheets from
aspect of this programme is that don’t have to be as large as IBM’s Assam, India to Dubai. It is a classic
we want suppliers to create a gesture, though. Major said one example of Unilever’s belief of ‘small
management system that works for particular product development actions making a big difference’.
their particular business operations. which seemed to have caught people’s “This eco-friendly initiative enabled
Since our suppliers are diverse, imagination is Light & Space paint. Lipton to save wood while also
there cannot be a one-size-fits-all “This paint is more that 20 per cent minimise shipping costs by increasing
solution. Some are huge publically- more efficient at reflecting available loadability per container. The slip-
traded companies while others may light, so dark rooms require less light sheets are much thinner than the
be small businesses with much fewer to appear equally bright. This means traditional wooden pallets which
employees. We want them all to you have to turn your lights on less helps cut down transportation and
build long-term sustainability in a often and when you do they can be of a fuel costs while reducing the impact
way that is integral to their routine lower wattage or power consumption.” on the environment,” he added.
operations, not as an add-on fix.” Meanwhile, at Unilever, Drury Regardless of the size of the
He added: “We’re seeing more said one of the firm’s most effective initiative, it’s clear that doing
activity in areas where business green endeavours was hatched out something sustainable is doing
interests intersect with the of its Lipton factory in the UAE and something savvy. In fact, going green
environment and sustainability. More involved replacing costly wooden properly, which experts say is not
companies are realising that what is pallets with environmentally friendly just cynically jumping on the green
good for the environment is good for polly plastic slip sheets. bandwagon, will drive the sort of
business, especially when it makes a Logistics companies globally agree behavior which will add to your
company more efficient and effective. that wooden pallets are now too bottom line profitability and therefore
A case in point: if you produce a expensive to buy, ship and dispose of. shareholder delight. ■

68 gulfbusiness December 2010


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 It‘s only natural that the debate to take advantage of it. After all, their
has had little choice around harnessing renewable sources oil and natural gas reserves are also
but to pump billions of energy has centred on solar. limited capital that is not increasing.
of dollars into Indeed, the Gulf is a global leader in “Start living on the solar income to
sustainable green producing green ventures to recycle change from using capital to using
projects; after all, oil the sun’s power. annual income from the sun,” he
has a shelf life. Yet Donald Huisingh, from the added. A company that specialises in
Governments, Institute for a Secure and Sustainable making that happen is SunTech, which
however, argue it’s their social duty to Environment at the University of is now the world’s largest producer of
protect the future of their citizens. Tennessee in the US, said still more solar panels.
But in all of this there’s no disputing needs to be done on the research and The firm has shipped more than 12
that the petrodollars invested in development side to fully make the million solar panels and works with
green initiatives in recent years have transition to solar-based systems. hundreds of partners in more than 80
spawned some of the most exciting “The Middle East has so much countries around the world.
and innovative projects in the world. wealth and so much sun, they need But James Hu, president of Asia

70 gulfbusiness December 2010


consume – coal, oil, gas – is really just and implement new and sustainable
some form of solar energy. SunTech technologies.
wants to simplify that entire process There is also the Masdar Institute
and make it much more efficient. of Science and Technology. The
“In the Middle East, we are institute, which is modeled on the
particularly impressed by Masdar Massachusetts Institute of Technology,
City, which is one of the first large- enrolled 90 students from 22 countries
scale projects to really tackle in September 2009.
sustainability throughout the Masdar had originally unveiled its
entire ecosystem of urban living. ambitious plans to invest in renewable
Although we may not be able to energy projects back in 2007. Abu
rebuild the entire world from scratch, Dhabi has since pumped billions into
the Masdar experiment is already the clean energy initiative as it aims
proving instructive for other urban both to cut emissions and prepare the
development projects around the world’s third-largest crude exporter
world,” Hu added. for a future less dependent on oil.
Masdar City is arguably the most As is common knowledge, the UAE is
talked about green project in the one of the world’s largest emitters of
region, although recently it has greenhouse gas per capita.
suffered a number of setbacks, partly Meanwhile, the need to reduce
because of the downturn. greenhouse gas emissions generally
In October, Masdar said it will delay from buildings in the region has
the first phase of the $22 billion low- underpinned a lot of the green project
carbon city after undertaking a review activity. Buildings – residential and
during the financial crisis. commercial – are responsible for
Meanwhile, last month, the around 40 per cent of global primary
International Renewable Energy energy use and 12 per cent of the
Agency, for which Abu Dhabi lobbied global water consumption, according
to host the headquarters, appointed to the Intergovernmental Panel on
Masdar eco-city. Adnan Amin as interim director Climate Change.
general after Helene Pelosse quit. Some of the major green building
Finally, in what is seen as one of projects in the Gulf include the
Pacific, Middle East, and Africa at the teething problems with solar economic cities in Saudi Arabia. At
SunTech, said solar technology still technology, the project said it will a cost of more than $60 billion, the
only provides for a small fraction of receive less energy than planned kingdom has planned and begun
the world’s total energy consumption. because of dust particles in the area constructing four economic cities,
“In one hour, the sun provides blocking sunlight. which are located in Rabigh (King
enough energy to meet the world’s However, there are still plans to Abdullah Economic City), Hail (Prince
annual energy consumption. Think have more than 1,500 companies AbdulAziz bin Mousaed Economic
of it this way: almost all of the from around the world locate to the City), Madinah (Knowledge Economic
mechanical energy that humans complex to fund, research, develop City) and Jazan (Jazan Economic City).

GREEN RULES FOR PROPERTY DEVELOPERS

T raditionally, the Gulf has a poor


record when it comes to sustainable
development, but things have changed
providing a boost, not just for
environmental statistics on construction
sites, but also for economic growth in
see buildings earn ‘pearls’, depending
on their green credentials. Projects to
be assessed under the Pearl Rating
quickly in the last decade, driven by new technologies. System fall into three categories
regulation and leading examples set by While developers are free to use – buildings, communities or villas.
government clients. any methods they choose to meet the Each assessment is split into design,
In future, sustainable design standards laid down in new regulations, construction and operational phases.
techniques and active technologies, Abu Dhabi developers are encouraged The rating system itself is voluntary
such as renewable and water recycling, to use the region’s first sustainable and falls within the government’s wider
are set to become more commonplace, development rating system, which will ‘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
The World Trade Building.
could become the largest exporter of
solar energy in the world. The country
has the capability to produce large technology to house a modern between state entities. The objective is
amounts of solar energy due to its business and residential facility to make Abu Dhabi one of the five top
great expanse of open areas exposed occupied by a diverse mix of energy- places in the world to live, work and
to direct sunlight, he said. related companies, commercial do business.
In Bahrain, the World Trade tenants, customers and suppliers. One major aspect of the project
Building, which opened in 2008, Lindsey McDonald, a consultant at is providing support for creating
was the world’s first sky scraper the information and communication sustainable buildings in the capital,
to use wind turbines in its design. technologies practice for the Middle- from design, construction to facility
The project has received a number East & North Africa at Frost & management.
of awards including the Arab Sullivan, said: “The Musanada project However, McDonald added that
Construction World for Sustainable in Abu Dhabi is a global example of progress in the region on going green
Design Award. how sustainability can be achieved. has only been successful to a point.
Plus, the Sabah Al Ahmed Generally, it’s gratifying to see that “The challenge and progress both
International Finance Centre in in the last year there have been more lie in legislation and regulation. At
Kuwait is a 40-storey tower able environmental initiatives in the present in the Middle East, while it is
to generate its own energy from region than previously. This is all the clear that there is a push towards the
a photovoltaics (PV) system and way from community environmental promotion of green practices, most
roof mounted wind turbines. PV is clean-ups to the launch of businesses countries do not have comprehensive
a method of generating electrical focused on recycling not only paper, legislation in this regard, and in those
power by converting solar radiation but electronic products and the like.” instances in which there is regulation,
into direct current electricity using Musanada is an Abu Dhabi it is not always effectively enforced.
semiconductors. government initiative established “This is the main area in which
Finally, in Qatar, the Energy City in 2007 that develops and manages progress can be made – when
utilises the latest green building services to improve interaction companies are compelled by law to
take concrete action on behalf of the
environment,” said McDonald.
THE FIRST MIDDLE EAST-EUROPE SOLAR POWER GRID The development of some of the most
ambitious sustainable projects in the

I n an ambitious project known as


the Desertec Industrial Initiative, a
consortium of companies from Europe
hopes to obtain above-market prices for
the energy they would export to Europe.
Desertec plans to invest $550bn by
Gulf comes as the definition of what is
green widens. Previously, sustainability
focused on shorter term solutions such
and North Africa plans to build a network 2050 in the project, which it says would as recycling, perhaps contributing to
of solar power plants in the Middle produce $3trn worth of energy and environmental efforts using monetary
East and North Africa that would be supply 15 per cent of Europe’s electricity. methods and so on. But companies
connected by a super grid of The plants would use concentrated are realising that there are far more
high-voltage, direct-current transmission solar power, a technique whereby the ways in which a business can achieve
lines to Europe. sun’s rays are focused by curved sustainability.If the projects that have
The consortium is led by Germany- mirrors to heat liquids that turn been built so far are anything to go by,
based Siemens and Munich Re, which generating turbines.” the future of green initiatives in the
region looks promising. ■

72 gulfbusiness December 2010


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 of energy is estimated at 40 per cent to produce a booklet that will detail all
to the more creative of total energy used, and they are the birds that live on the Creek.
solar water heaters, estimated to produce over 50 per cent For these hotels, the debate has
all methods are of all waste. moved on from basic activities, such as
being deployed as At the very least, environmentalists using lower energy usage light bulbs
hoteliers attempt to say that for hotels – which are massive and the recycling of materials and
limit the damage their consumers of both water and electricity segregation of plastics and glass. It’s
businesses have on the – there’s a lot of room for improvement. now more about convincing tourists
environment. And because hospitality One of the routes taken by four and local authorities that green is part
is a pillar of all Gulf economies, it will star hotel Qamardeen, near Dubai’s of the culture of the hotel.
be uplifting for tourist authorities to Burj Khalifa, was to simply raise For instance, Park Hyatt Dubai
see action taken, particularly given the awareness. It recently took part in the upgraded its light fittings and air-
spending power of green travelers. annual Clean up the World initiative conditioning units to an economy
According to the World Tourism organised by Dubai Municipality, an mode that can be applied to each of the
Organisation, sustainable tourism effort that also involves providing four wings; it installed a composting
today is estimated at 11.4 per cent of handbooks from the Dubai Electrical programme; and a Treat Sewage
global consumer travel spend & Water Authority to new members of Effluent plant used to power cooling
It’s also estimated that buildings staff and guests. towers and for external irrigation.
use one third of the world’s energy Park Hyatt has taken a similar There are plans to use that water for
resources to run their lighting, heating approach, also taking part in clean-up its laundry at some point in the future.
and air-conditioning systems. Within campaigns at Dubai Creek and teaming Meanwhile, the Hyatt Regency said
the region, buildings’ consumption up with the Emirates Wildlife Society that in the last year its Gulf hotels

74 gulfbusiness December 2010


saved 15 per cent in total energy. Part Philips replaced the interior and Saudi Green Buildings Forum recently
of this was achieved by stemming the exterior façade with dynamic proposed several recommendations
chronic loss of energy through the poor architectural LED lighting. In total, it for government and property
insulation of the old glass. The hotel meant covering 35,000 light points in developers. The recommendations,
looked at ways of recovering this energy hotel rooms, suites and public areas. based on two days of intense
by putting a film on top of the glass. Meanwhile, Philips has been discussions by experts and officials,
Even more effective was the installing solar powered water were proposed at the end of the first
approach to lighting. Because LED boilers in hotels across the Gulf. Saudi national conference exclusively
lamps use five watts of power but The method has traditionally proved dedicated to sustainable buildings.
give the brightness of 50 watt halogen more popular in Western countries One of the key recommendations
lamps, Hyatt Regency replaced its but is picking up in the region. The urged Saudi municipalities to offer
lighting with LED bulbs in all corridors rationale for hotels is that a 20 per incentives and rewards to use eco-
and in 50 per cent of galleries. cent cost saving on energy bills friendly alternatives in coordination
Technology giant Philips is from these solar water heater can be with electricity and water ministries.
particularly active in this space, and passed on to the consumer. Meanwhile, the Abu Dhabi Tourism
in recent years has launched a number Philips’s argument is also that for Authority (ADTA) has pledged to cut
of tailored products for a local hotel buildings to go green, the incentive hotels’ energy use by 10 per cent, their
industry that is starting to cater to the could be a deduction or percentage water use by 20 per cent and reduce
green awareness of its clientele. discount on their power bills. And the amount of hotel waste going to
The firm linked up with the until now hotels have been penalised landfills by 20 per cent as a first step
InterContinental and Crowne for consuming more, but instead they in its environmental programme.
Plaza Dubai Festival City to save should be pushed to save more. As part of the initiative ADTA
approximately 80 per cent of their In Saudi, backing the move to more launched a new pilot scheme which
energy costs incurred on lighting. sustainable hotels, the newly-formed will see four hotels in the emirate
built according to strict new green
guidelines. Plus, plans were recently
BEST GREEN HOTELS IN DUBAI announced to build the emirate’s first
five-star green hotel in the Al Ain

E arlier this year the Dubai


Department of Tourism and
Commerce Marketing announced its top
In the 4 Star Hotel Category, Qamar
Eddine Hotel took first, Rotana Towers
Hotel ranked second, Marriott Court
Wildlife Park and Resort.
Finally, with tour operators now
offering more and more responsible
environment-friendly hotels. Yard Hotel, Investment Complex tours with activities like kayaking
The awards were based on hotels secured third place. through mangroves, low-impact
that had boosted their green credentials For the Three Star Hotel Category, desert safaris and operating far more
in the last year. Judges based their Regal Plaza Hotel took first place, efficient versions than the five-star
decisions on factors such as waste Virzales Hotel ranked second, and deluxe that the region is known for,
recycling, energy conservation and Princess Hotel secured the third place. the support system for greener hotels
environmental awareness campaigns. Finally, in the Hotel Apartment is definitely there.
For the 5 Star Hotel Category, Park Category, Savoy Crest took first place, Fundamentally, Gulf hotels are
Hyatt took first place, Grand Hyatt Grand Hyatt ranked second and seeing a thriving commercial element
ranked second, and Al Qasr Hotel Marriott Executive Dubai Creek secured through introducing green schemes.
Madinat Jumeirah secured third place. third place. 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. ■

Al Qasr hotel, Dubai. Grand Hyatt hotel, Dubai.

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 The Middle East has a fleet of 2,040
term, the outlook of the shipping vessels. The tanker sector takes the
industry is positive.”
The jury is still out, but the biggest share followed by bulk vessels,
general outlook is that of cautious dry cargo and gas.
optimism. Experts admit that the
world’s economy is still volatile. July Per Wistoft, CEO of Gulf Navigation cent on the market value, not on the
earnings, for example, dropped after Holding, calculates that a 1.1 million- contract price, and the market price
a better than expected first half of the barrels incremental capacity means versus the contract value has dropped
year. Figures from EA Gibson show an additional need for 36 tankers. He 30 per cent,” Wistoft explains. “Instead
that VLCC earnings on the A/G Japan shrugs off the issue of oversupply, of coming up with $30 million per
route in July average-15e worst since saying financing issues have either ship, the shipowner now has to come
October 2009. cancelled or delayed a significant up with $85 million per ship. It’s a
KOTC’s Bourisli is nonetheless number of orderbook. serious issue.”
positive the forecast increase in “I have no fear whatsoever,” he said. Among those who have cancelled
oil demand will save the industry “I strongly believe that the orderbook orders are National Shipping
from another dip. “The present today is much over described. There Company of Saudi Arabia, recouping
fundamentals are strong enough,” are a lot of things happening on $95 million from its Korean
he says. “OPEC forecasts the global cancellations and slippage, hence shipbuilder, and Gulf Navigation,
GDP rate to expand 3.4 per cent over the amount of ships to be delivered which also cancelled orders for two
2010 with Asian economies leading over the next few years will be chemical tankers with SLS Shipping
the growth. This is good news for substantially reduced. Any ship and was repaid $70 million.
the shipowners and shipbuilders. today where the keel has been put Shippers are able to cancel contracts
Everyone agrees demand for OPEC down is being renegotiated. “Now the because many shipyards took on more
crude will increase.” shipowner can only obtain 60 per orders than they could possibly fulfil

December 2010 gulfbusiness 79


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gulfpics SHIPPING

in the boom years, analysts said. There throughput, is also on track to meet
are much cheaper ways to expand its $2.5 billion capital expenditure
fleets, such as buying used ships. programme. The global port operator
Meanwhile, ports are also back to spent $411 million in the first half
growth and expansion mode. and plans to spend $589 million in
The General Organisation of Sea the second half. The remaining $1.5
Ports (GOP) in Bahrain, which saw a billion will be allocated for 2011 and
33 per cent net profit increase in 2009 2012 investments.
over 2008, is pushing ahead with its Gulftainer, a Sharjah-based port
expansion plan. GOP chairman Shaikh operator, has registered a 23.75 per
Daij bin Salman Al Khalifa says the cent growth in traffic in the first five
second phase of Khalifa Bin Salman months of this year and is bullish of
Port expansion is on track, increasing a double-digit growth in container
capacity from 1.1 million TEUs to 2.5 volumes for 2010 over the 2.75 million
million TEU. TEUs handled in 2009.
“I do not foresee any serious “We are outlining $100 million capex
oversupply situation with regard to this year,” says Gulftainer managing
port capacity, especially as the region director Peter Richards.
is fast becoming one of the most “For us, we don’t just jump into the
dynamic global ports and maritime boom. Our strategy is to look at niches
centre,” he says. which we can afford and where we can
“This process is assisted by see good returns on our investments.”
the fact that the global economic The common consensus in the
equations are changing drastically region’s shipping industry is that as
with the economies of several Asian economic recovery spurs another wave
nations growing by over eight per of expansion, moderation will be the
cent per annum.” key. Double-digit growth may still be
DP World, which witnessed 14 achievable but it must be driven by
per cent growth in consolidated 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. 58

F
ormerly the preserve four-fold agenda includes promoting It is also spearheading the Dubai
of the major advanced scientific research/ Space Programme, including the
economic powers, technology innovation in Dubai and DubaiSat series of satellites.
the space industry the UAE; creating an internationally DubaiSat-1, launched from the
in recent years has competitive base for human skills Baikonur Cosmodrome in Kazakhstan
seen an opening development; positioning Dubai and in July 2009, is the UAE’s first remote
up to new players the UAE as a science and technology sensing satellite. Images of Earth
looking to match development hub; and establishing relayed back to a ground station in
their ambitions – more usually international collaborative links Dubai are being used by the UAE
in the field of scientific research. and joint projects with industry and government to help plan future land
The UAE is proving no exception. research organisations. development programmes.
Central to its space ambitions is EIAST focuses on four main Meanwhile, in October, EIAST
EIAST (The Emirates Institution for scientific programmes: space, and the Institute for Community
Advanced Science and Technology). astronomy, energy and environment Engagement (ICE) of Zayed University
Set up in 2006, the organisation’s and water research. (ZU) formally agreed to pursue

84 gulfbusiness December 2010


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

Virgin Galactic
– recently saw the first UAE nationals
participating in a student internship
programme at NASA’s Ames Research
Center in Moffett Field, California. Bill Richardson (left) and Sir Richard Branson (right), Virgin Galactic.
Previously only open to US
citizens, the deal will see up to 12 Aabar investments – the non-energy America in Upham, New Mexico – the
UAE students participating each investment arm of state-owned world’s first.
year for three years. Shamma Al International Petroleum Investment In December 2009, Virgin Galactic
Qassim, 19, Hazza Bani Malek, 20, Company (IPIC) – announced it had unveiled the first commercial
and Hamad Rajab, 21, formed the first taken a $280 million, 32 per cent passenger spaceship – SpaceShip Two,
intake, having been selected for the stake in Virgin Galactic – previously a set to propel tourists into space (and
NASA education initiative to work wholly-owned subsidiary of Branson’s zero gravity) within two to three years.
with top scientists on a variety of Virgin Group established as a space Designed by US-based company
projects, including the space shuttle tourism company in 2004 to develop Scaled Composites and legendary
and International Space Station, sub-orbital spacecraft with US partner aircraft builder Burt Rutan,
deep space missions, solar system Scaled Composites. SpaceShipTwo evolved from the
exploration and aeronautics research. As part of the deal, Aabar said it smaller SpaceShipOne rocket plane
Al Qassim, a computer engineering planned to build a spaceport in Abu that won the $10 million Ansari X
major at the American University Dhabi and would have rights to all Prize in 2004 for becoming the first
of Sharjah, will be applying her Virgin Galactic traffic in the region. commercial manned rocket to reach an
studies in satellite thermal data While there is yet no timeframe for altitude of 100 kilometers, or 62 miles.
analysis to predict earthquakes when the spaceport will be built and While SpaceShip Two is still seen
through the detection of stresses in become operational, Virgin confirmed in many quarters as a big gamble
the Earth’s crust.
As NASA Ames Center Director As the UAE becomes increasingly
Pete Worden puts it: “Under this
programme, the goodwill generated engaged in the academic sphere, so it
by students working side by side also aims to be at the forefront in the
with our NASA scientists and
researchers will serve as a bridge
commercial sphere.
between the USA and UAE, opening Aabar’s infusion would be sufficient on the commercial viability of space
doors for future collaboration in to fully fund the company through to tourism, there has been no shortage of
scientific research.’’ As the UAE when it commences commercial space paying customers, with 370 would-
becomes increasingly engaged in the tourist operations. be astronauts – including around 20
academic sphere, so it also aims to Aabar also announced it was setting from the Gulf–signing up. The first
be at the forefront in the commercial aside $100 million to build a small 100 passengers have already paid
sphere as Sir Richard Branson and satellite launching facility, suggesting the necessary $200,000 up-front and
his Virgin Group looks to make the the team plans to use the spaceport as booked their rides into space.
businessman’s dream of putting a base for scientific research as well To get into space the VSS
‘tourists’ into space a reality. as space tourism. Enterprise, attached to its mother
Indeed, space tourism in the Middle Virgin Galactic’s principal ship White Knight 2, will climb to
East took a major step forward in operations, however, will be run out 50,000 feet before detaching. Its
July 2009 when Abu Dhabi-based of the recently opened Spaceport 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 me-up defence against the misery of We won’t reach 2008 levels until 2012,
market continues to grow and is now bleak economic times. but with economic stability the market
worth over $10 billion annually, while President and CEO of The Luxury should rebound.”
the number of millionaires now totals Marketing Council Middle East T.B. While the high-end was impacted
around 400,000. McClelland says: “While there was a at Paris Gallery, well-established
“Our long-term growth prognosis dip in purchasing of fashion, other brands with a good image and high
is good. The UAE’s development will sectors increased remarkably, such awareness, such as Burberry and
also positively impact the luxury as cosmetics, lipstick and perfumes. Cartier, actually kept growing in sales
watch industry. One of the effects of Even though consumers we not able to during the recession. But one area
globalisation is that trends are no purchase the high priced products they that was particularly hard hit was
longer predominantly considered a did before – or not as many as they were luxury watches.
local issue. Even though there are able to in previous years – they still “Timepieces were impacted
particularities which will remain dressed up, made up and smelled nice. negatively. The mid-market did well
unique to a single region, the trends They still craved the ability to go out and [watches of around $500 on average].
are now similar from one country to enjoy life despite the financial situation.” Affordable watches did fine. Owing
another,” says Jean-Marc Jacot, CEO Home-grown UAE luxury retail to the recession, the watch industry
of luxury watchmaker Parmigiani. chain Paris Gallery, purveyors of actually got smarter, more fashionable
“The recession has impacted our perfumes, cosmetics and accessories, and affordable,” Al Fahim says.
industry worldwide. In the Gulf, the witnessed similar trends. According to McClelland, demand
area that most suffered was Dubai. “In the fourth quarter of 2008, we for luxury goods never really went
We believe that the next two years started to feel the slowdown and this away, but the cash for purchasing did.
will allow the region to bounce continued into 2009, but perfumes and As the money flows back into the
back, and that the global situation cosmetics were the least affected,” says system, luxury goods will be one of
will improve. Parmigiani has an the firm’s CEO Mohammed Al Fahim. the first recipients.
advantage because our brand only “We were about 30 per cent down in “Aspirational shoppers only slowed
recently entered the UAE and our 2009 in the high-end sector, although discretionary spending while high net
business was not hit as strongly.” this has rebounded somewhat in 2010. worth shoppers continued supporting
their lifestyles. Big ticket items such
as yachts and private jets are already
The regional luxury market is now worth coming back. For instance, GulfCraft
over $10 billion annually, while the number is now manufacturing and selling
bigger yachts.
of millionaires totals around 400,000. “Demand is growing, consumers
are looking not only for the products
The growth rate for luxury but also the experience of ownership,
shopping in Asia overall is estimated and brands must take that into
to be 15 per cent this year. In North account when selling to clients and
and South America four per cent customers,” McClelland adds.
growth is expected and in Europe, In another indicator, the MasterCard
three per cent, according to the Bain Consumer Confidence Index dipped
& Company report. by 49 per cent in 2009, but has now
As the region slowly recovers from returned to a healthier 69 per cent.
the recession, it’s evident that during MasterCard has taken advantage of
the economic crisis some luxury players this upturn in optimism by segmenting
fared better than others. Labels with its credit cards into the Titanium,
strong brand equity were hardly dented Platinum and The World lines.
and some brands even posted growth. “We continue to see growth in
Meanwhile, true to form, ‘the lipstick spending – 64 per cent up on 2009.
index’ rose – in a recession, cosmetics High-end watches are set for a record The premium sector was the most
purchases generally increase as a cheer- year in 2010. unaffected. We witnessed purchasing

December 2010gulfbusiness 89
FEATURES LUXURY

of lots of luxury items. There has Crucially, while luxury and


been no slowdown in that sector over-consumption defined the
from consumers. There is a renewed pre-recession mood of Western
optimism” says Basel Eltell, vice nations, ‘flashing the cash’ is no
president and regional manager, longer in vogue. Job losses and tight
Levant, MasterCard. credit have dampened double digit
As tourism numbers to the Gulf luxury growth for the foreseeable
continue to increase, the level of future in developed markets.
luxury spending is expected to rise Al Fahim says global demand for
in tandem. Well-heeled shoppers high-end goods has been fuelled by
from emerging markets that are access to information and social
experiencing exponential growth, media tools, such as Twitter. “It’s
such as China and India, are already feeding demand. We’re looking at
upping their spend quotient in the growing into China and India –
Gulf, according to McClelland. we’re only touching the surface
“Tourism is growing, particularly with the demand there. We have
of high net worth travellers, and they ambitions to grow in the East.
are looking for gold jewellery, precious Mohammed Al Fahim, CEO, Paris Gallery. We’re home-grown but we want to
stones and experiential travel. One of go global.”
The Luxury Marketing Council’s newest the region was not as affected as the Parmigiani is also set to make its
members, Precious Jewels LLC in the rest of the world,” he says. mark on China very soon. “Apart
Dubai Mall, reported extraordinary The Paris Gallery boss adds that from the West, our target markets are
sales of high-end jewellery over the last Saudi Arabia, however, proved to be Latin America, the Middle East and
six months, at the very same time as the a testing market in the slowdown. In Asia – particularly China,” says Jacot.
economic forecast was still unsettled a time of economic crisis, access to “In China, and Shanghai and Bejing
globally,” he says. markets and promotions are vital and in particular, Parmigiani will mark
“The economy in the Gulf is already the Kingdom is restricted. its arrival with the opening of the
showing signs of recovery – higher “Saudi Arabia is difficult as there’s first ‘Atelier Parmigiani’ – a showcase
crude oil prices are stimulating some less options for communicating with in which we place haute horlogerie
of it – and demand by tourists is the audience and the women are not as tradition and knowledge.”
escalating. Chinese visitors to the free to shop,” he says. “We are looking After a slow two years, the luxury
Gulf shop for luxury watches, for forward to the new younger generation goods sector, fuelled by globalisation
instance, while Russians look for coming through as they reach their 30s.” and celebrity, is very much on the
jewellery and fashion.” While the region’s growing GDP will world’s agenda. Now represents
Al Fahim agrees that the Gulf help bolster luxury retailers’ pockets a crucial time for brands to hone
states are better positioned to take going into 2011, companies are also their strategies to take advantage of
advantage of the demand for luxury increasingly eyeing Asian markets. The exponential growth opportunities.
goods than the West. Paris Gallery East accounts for the bulk of the growth “Each sector brings unique
stores in Abu Dhabi and Qatar only in luxury spending and this trend is only characteristics to the industry, and
felt ‘minimal effects’ as they are expected to become more marked as the brands must be prepared to satisfy
still growing.”Because of the high emerging market middle classes increase their needs as the recession recedes,”
purchasing power of Gulf countries, their spending power and aspirations. concludes McClelland. ■

Majestic yacht from GulfCraft.

90 gulfbusiness December 2010


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PROFILE LUXURY

Everlasting beauty
GULF BUSINESS talks to consumers get influenced by and adopt.
Consumers in the Gulf have adopted the
president of Clarins luxury lifestyle from quite sometime
Group Middle East, and will continue adopting it as long as
their financial situation is not adversely
Osama Rinno, about the affected. The availability of brands and
how they are displayed, especially with
rise of luxury skincare. the enormous retail space they occupy,

L
continues to attract consumers which
triggers demand.
uxury skincare and
make-up brand Is it true that ‘beauty’ is a
Clarins first put its recession proof business?
Parisian roots down I agree with this. Before the global
in the Middle East in crisis, I would have had my doubts.
Dubai in 2000. Osama Today, this crisis has taught us that
Rinno was charged brands that have done their work
with establishing a properly and have invested over the
full operations hub and eventually years in building a solid foundation are
converting all the GCC countries not affected. Furthermore, I am sure
from distributor representation to a that you have heard of the Lipstick
servicing agents representation, giving index. Lipstick sales could be an
Clarins Group Middle East (CGME) economic indicator, in that purchases
control of the day-to-day operation of of cosmetics tend to be inversely
their brands in the markets. in their actions: some reduced correlated to economic health. The
spending on all categories, some speculation was that women substitute
How much of Clarins’ business is switched to more affordable brands, more expensive purchases like dresses
based in the Middle East? and some kept purchasing only and shoes for cosmetics in times of
Although the Middle East is less than essential items. economic distress.
10 per cent of the global turnover of
the group, it is still considered an What do you see as being the What is your upcoming product
emerging market for Clarins Group. main upcoming trends in the Gulf strategy for Clarins ME?
Sales have grown five times in 10 skincare and cosmetics sector? Based on the sales figures that major
years since CGME started in 2000. The The main changes will be the brands share with each other every
market has not yet reached maturity continuous growth in skincare as more year, Clarins is number one in the
and that is why there is great growth people are aware of products and luxury skincare sector. However, we
potential once the financial crisis is enter into their daily beauty habits. are still not number one for skincare
completely over. Therefore, all businesses related to in every door we are in. This is a
skincare and SPA treatments will target for us. We also intend to be the
How did the recession affect the become stronger year by year. leader in foundation in the industry.
skincare and cosmetics sector in For example, in Europe skincare Based on our expertise in skincare,
the region? represents roughly 35 per cent of the we have great complexion lines. In
In early 2009, retailers and agents cosmetics business while make-up terms of make-up colours, and also
stocked minimum quantities and does not exceed 15 per cent. In the perfumes, we are now developing
that has affected all brands. Things Middle East, the trend is the opposite. more and more products especially
started to improve gradually by the suitable for the Middle East. There
end of 2009 and today we are in a Do you see the Gulf as a growing are several initiatives that we are
much better situation. On the market for luxury products? evaluating now and will hopefully
other hand, consumers were divided Using luxury products is a lifestyle that start implementing next year. ■

92 gulfbusiness December 2010


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 benchmarking Lebanon before taking
luxury isn’t bad, the plunge. “We have been tracking
except that you never our overseas Lebanese clients all over
know when luxury is the world for years and years and we
going to stand up,” saw very encouraging numbers there.
said Orson Welles. We know that this is a market where
Perhaps this could people are very fashion aware, very
have been regarded fashion savvy and quite sophisticated
as a prescient insight into what – they buy in Dubai, they buy in
should have happened to the luxury Paris and they buy in London – so we
goods market when the downturn already knew the potential was there,”
arrived. Except that it didn’t. Spend he says.
on luxury goods during 2010 in Vernet points out an interesting
the MENA region saw only a minor statistic that there are four times
downward adjustment, in comparison more Lebanese people living outside
to much greater slumps witnessed in of Lebanon than there are in Lebanon
other retail sectors. Tentative spend itself and he believes this global
projections for the Middle East upscale diaspora provides a very big reserve
retail market put growth at around Switch
of customers forbowling
Beirut. centre,
With anpool hall.
eight per cent for 2011, and while it is estimated 12 million Lebanese spread
not an astronomical rebound, it does throughout the globe, cultural nuances
herald a return of consumer confidence can play a part in the brand’s success.
at the upper end of the socioeconomic The overseas Lebanese are generally
spectrum. Ironically then, luxury may friends and family-oriented and like
be thought of as a necessity in the to visit home often, providing a steady
high-spending MENA market. stream and rich vein of clientele to the
Take Louis Vuitton, for example. firm’s Beirut outlet.
The Paris-based brand – part of the So, does the brand’s focus on the
LVMH group – is confident that its MENA region, and to some extent the
opening of a store in Beirut in July emerging BRICs, signify a turn against
of this year was certainly the right its more mature and established
move. Valerie Chapoulaud, president markets like Europe and the US?
of south Europe for Louis Vuitton, said All well and good, but Lebanon’s Chapoulaud disagrees this is the
that the opening was part of a “quite GDP is only a fraction of those case. “We have a lot of projects in key
aggressive” strategy the group has in countries that make up the GCC, mature markets like Italy, which is
mind for the region. normally considered a more luxury- a big market for the south Europe
“If Lebanon goes well I’m sure we are friendly environment. How can this region, and we have key projects
going to add additional space here in translate to market demand in a in Damien’s market in the Middle
Beirut very soon, in the coming two or country that is not only getting over East, so it’s always a balance. I think
three years. We have some plans in other the worst of its economic woes, but we’re not going in one direction over
countries, tomorrow it could be Kuwait has also suffered major political another, it’s on the same path and we
or it could be Qatar, or it could be Abu upheaval in recent years too? have to do it in parallel.”
Dhabi. If there is a good opportunity and Damien Vernet, general manager So, the future looks both bright and
we consider that we need to bring more Middle East & India for Louis Vuitton, busy, then? “Oh yes,” says the Milan-
service and more stores to our clientele says that the Beirut opening was a based Chapoulaud vehemently. “As
we will do it. So, we’re extremely reactive long-term project and that the brand we say in Italy, there is a lot of meat
and flexible,” she says. had been looking at potential and boiling at the moment!” ■

94 gulfbusiness December 2010


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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
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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
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investment management and distribution entities worldwide, including the investment managers referenced herein. The investment management subsidiaries of
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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

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
Riva del Garda Fierecongressi

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
Roberto Pellegrini, president of the Riva del Garda Fierecongressi organising body. autumn/winter 2011/12 collections,
while also offering a last opportunity
appears to be a movement in some manufacturers, with a third from Italy to place new orders for the upcoming
sectors away from the higher priced and the remaining two-thirds from 40 spring/summer 2011 season.
shoes in this region, as well as the other countries. Approximately 5,000 Another major Italian exhibition
rest of the world, attempts are being buyers from 100 countries – including that draw buyers from this region is
made to entice shoe buyers out of the UAE, Jordan, Saudi Arabia, Kuwait the Milan Shoe exhibition MICAM, in
their doldrums and to focus on the Lebanon and Syria among the 11 late September and again in March
price-point associated with the countries in the Middle East – came to held. In addition, Who’s Next, an
volume market. see the new collections. exhibition of handbags, jewellery,
With biannual exhibitions in Riva, Buyers from the Middle East shoes, hats and other accessories will
located along the shores of Lake included Mohammad Ghaddar, be held at the Dubai International
Garda in northern Italy, Expo Riva chairman of Golden Home in Oman, Exhibition Centre from October 19-
Schuh specialises in being the first Denise Hage of Domino Shoes, who 21 and Motexha, the Middle East’s
venue to present the new designs has shops in malls throughout Dubai, largest garment, textiles, footwear
for the following year. The show in and Abdul Salam Alryes of Trend in and fashion exhibition, will be held in
June introduced the spring/summer Abu Dhabi, all of who made purchases Dubai in March next year.
2011 offerings from about 1,200 for their stores. Whether or not these attempts by
the Italian shoe industry at wooing
back the Middle Eastern buyer to pre-
In the Middle East, there is significant crisis levels is successful remains to
demand for Italian shoes, which are known be seen. The prognosis is for a gradual
recovery that may take some years to
for their quality craftsmanship. match previous highs. ■

98 gulfbusiness December 2010


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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

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Al Raha Beach Hotel, created to Conveniently located adjacent to Khalifa Offering 161 furnished units ranging Located in the heart of Dubai’s new This 394-room hotel boasts 10 dining
provide the very best of traditional Park, the property offers 318 luxurious from 81 sqm to 160 sqm, 3 dining business hub and opposite Dubai Media and entertainment venues a superb
Arabian hospitality. This unique jewel rooms and suites, 6 world class dining venues, 3 multi-purpose meeting City and Internet City the Media Rotana spa and unrivalled meeting facilities.
of luxury and tranquility, offering venues, 6 meeting rooms and spacious rooms, recreation facilities & a Dubai has 460 rooms, suites and deluxe Tel 00971 4 3325555
magnificent services, awaits you for ballroom with day light access and majestic landscaped area around the hotel apartments, 5 award winning Fax 00971 4 3324555
an unforgettable visit to Abu Dhabi. outdoor terrace. temperature-controlled pool. dining venues and 15 meeting rooms. dubai.reservations@fairmont.com
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Discover a new attitude hotel directly linked Offers 301 luxuriously appointed guest The Acacia Hotel is a superbly designed Located on the Corniche Road, opposite
to the region’s ultimate shopping destination rooms and suites, nine restaurants and four star hotel complete with Al Nakhla the Museum of Islamic Art, the hotel
amidst Dubai’s sophisticated metropolis. bars, health club and spa, tennis and restaurant, the stylish Flamingo bar, the offers 154 rooms and suites, a business
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Doha Jeddah Riyadh Jeddah


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located near the city. With its various Jeddah International Airport. Offers over Kingdom, with 289 new and trendy business centre offers 211 rooms, 17
dining options, 24 suites, 234 rooms, 414 rooms including 46 suites. 10th accommodations, huge lobby with W-Fi suites and 25 apartments. 5 meeting
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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
Heading north through Romania,
the train stops at the village of
Sinaia where a uniformed brass
band greets the party just as it
Clockwise from top: The train passes used to greet King Carol when
through Switzerland; the on-board he visited Peles Castle, the royal
restaurant; the janissary band send summer palace. Lunch is held in a
off; the on-board staff includes a
porter and a pianist; the sumptuous hunting lodge followed by a tour of
Orient Express bar. 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 Five-litre V8 engine, which propels the sporty appeal.
glance, the Lexus IS-F appears Lexus from 0 to 100km/h in around One minor gripe is the speedometer,
to be little more than a rather 4.8 seconds. which is somewhat-confusingly a
refined sedan, but underneath its In handling the ample torque this small round dial next to the vision-
exterior beats the heart of a fire- generates, the eight-speed sport direct dominating tacometer, along with
breathing, high-performance vehicle. shift transmission is paired perfectly a smallish LED readout. Keeping an
Before hitting the start button, with the engine, providing smooth, eye on this is crucial patucularly on
one of the few visible clues to its direct upshifts under both cruising the speed-camera intensive roads
massive 420-hp powerplant are the and more spirited driving condition. of the UAE. The dearth of rear seat
stacked quad-tailpipes of the dual- The transmission offers two space is another small criticism,
exhaust system and the oversized, modes – D and M. The former is a but it would be fine for transporting
curved bonnet. standard automatic mode, while the children or vertically-challenged
The guttural tone of the exhaust is latter provides a clutchless manual adults. Though I didn’t test it, the boot
immediately apparent when firing the operation, either via the stubby shift- space also looks to have room for your
engine into life, but becomes meaner stick or the steering wheel-mounted golf clubs.
still once underway. Accelerating paddle-shifters. Priced at $81,400 for the base model,
hard from a rolling start, once the Inside, the cockpit is very well or $84,400 for the two-tone leather
tacometer climbs to just under 4,000 organised and uncluttered, with all- option, the IS-F isn’t exactly cheap, but
rpm, the driver is rewarded with a leather seats featuring colour-coded it delivers a decent bang for your buck.
grin-inducing low rumble – something stitching or the choice of a two-tone A highly-specced variant of the
I did a lot of during my two days leather interior trim. popular IS series, the F – named after
with the IS-F. A quality soft-touch dashboard Japan’s Fuji Speedway where it was
Another standout design feature is combined with touches of chrome and developed – marks the first such
the larger front overhang and bonnet carbon-fibre look trim (unfortunately vehicle from Lexus. Hopefully it is a
– which makes room for the massive not the real deal) also add to the sign of similar things to come. ■

110 gulfbusiness December 2010


ART

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 Qatar’s welcome addition


As forecasted in the October Mathaf: Arab Museum of Modern
edition of Gulf Business, the Jawad Art in Doha has its preview on the
Salim sculpture Mother and Child December 14, 2010 and will open
sold for in excess of $300,000 at for the public on December 30. At
Bonham’s (I was the under-bidder). launch, the museum will feature two
The work by Moustafa – whom the exhibitions: Interventions, which
auction house labeled as Egypt’s is curated by Dr Nada Shabout and
premier artist, an appellation exhibits the work of Arab modern
which many would disagree masters Dia Al-Azzawi, Ibrahim
with, particularly in Egypt where El Salahi, Farid Belkahia, Ahmed
few have ever heard of him – Nawar and Hassan Sharif. While
exceeded its recognised market Wounded Soul, Dia al-Azzawi. the museum’s second exhibition
value. The sale at Bonham’s was of contemporary Arab art, curated
disappointing since a large amount by Sam Bardouil, will include
of work was unsold (around 40 per the work of Adel Abidin, Ahmed
cent of the sale). This reinforces Alsoudani, Ghada Amer, Abdelkader
the feeling in the market that Benchamma, Steve Sabella and
one should buy at Bonham’s and many others.
sell at Christie’s. Additionally,
combining the sale with used cars Noteworthy events in Munich
and jewellery was an error as the Haus der Kunst, The Future of
room emptied out at certain stages, Tradition; The Tradition of Future,
affecting the overall atmosphere, a held 100 years after the exhibition
must for a successful sale. Masterpieces of Muhammadan
The Bonham’s sale was followed Art, this exhibition will run until
by the Sotheby’s auction, which September 16, 2010 – January 9, 2011.
included the glorious nude, The Woman, The Bird and the
L’Endormie, by Mahmoud Said Pomegranate, Ibrahim el-Salahi. Museum of Ethnology, The Aura of
that sold for $380,000, and a work Alif The Art of Writing in Islam until
by Sepehri that went for $650,000. Said’s The Whirling Dervishes February 20, 2011.
Both works exceeded their reaching $2,546,000. A painting by
estimates and were the highest Zenderoudi, catalogued as a work Bayerische Staatsbibliothek, The
sales of the auction, as I predicted from 1971 and exhibited the Tapie Wonders of Creation Manuscripts
in my October column, proving show, raised serious questions since of the Bayerische Staatsbibliothek
that exceptional works will reach the original catalogue displays from the Islamic World, until
exceptional prices a marginally different piece, December 5, 2010.
Twenty-nine modern Iranian highlighting common concerns
works from the Christie’s sale were related to the artist’s work. The Mandarin Oriental Hotel in
withdrawn prior to the auction, Needless to say, this has led to Munich is the hospitality partner for
with action carried out by the limited interest from buyers and the the exhibition projects, organising
corporate litigators Withers, as work being unsold. visits and guest stays for VIPs,
reported in The Financial Times. The finale of the auction season making one of the most important
The resignation of the department was the Paris sale on November 9. exhibitions of Islamic Art held in
head William Lawrie followed The final part of the Farsi collection Europe for a decade, essential and
shortly after. was offered through Christie’s, truly memorable. A must for all.
The scandal did not affect the with Said’s nudes generating
performance of the sale when it disappointing results for the Charles Pocock runs the Meem
came to modern Arab art, with auction house’s Paris office. 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.

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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 The Dubai-based firm posted an
in the region around $65 to $70, oil price at $100 per barrel largest insurer in the UAE, expects to eight per cent increase in the first
means a higher oil windfall, increased reserve accumulation, finish the year with 10 per cent growth half of 2010 to Dhs154 million from
stronger money supply and credit, and stronger economic in net profit, its chief executive told Dhs142 million for the same period
activity for oil exporters. Gulf Business. last year. In a statement to Dubai
However, as the recession has weakened the link between “This year we will see 10 per cent Financial Market, OIC said gross
money supply and credit in the region due to deteriorated and thereafter we expect to see 10 written premium for the first half rose
asset quality and deleveraging, it is expected that the impact to 15 per cent growth year-on-year,” five per cent to Dhs1.43 billion.
will be less expansionary compared to the 2005-2008 boom. Abdul Muttalib Mustafa Al Jaidi, said, Despite a highly saturated
Albeit bank lending in the region remain relatively muted noting that this growth is muted insurance market, Al Jaidi said
overall, more accessible external funding will facilitate compared to the 30 to 40 per cent the company can still grow by
rollover of maturing liabilities, especially in the UAE, and growth seen prior the crisis. offering new products. In October,
ease, but not eliminate, de-leveraging strains. “We used to grow in high double- OIC introduced property owner’s
digits for more than eight consecutive association package insurance, with
GCC  BUDGET BREAKEVEN OIL PRICES years,” he said. “However, increased multiple covers such as property
Breakeven oil price- competition dragged down rates so to insurance, third party insurance,
GCC Official 2010 budget be able to make 10 per cent growth, office bearers’ liability insurance,
QA you have to produce more than 30 per fidelity guarantee insurance and
Breakeven oil price- cent of last year’s premium.” machinery breakdown insurance.
AE BofAML 2010 budget
Oman Insurance Company
KS
In Millions of Dhs, except per share items
OM For the Fiscal Period Ending 12 months 12 months Last 12 months
Dec-31-2008A Dec-31-2009A Jun-30-2010A
BH
Total Revenue 1,216.2 1,298.2 1,368.6
KW Growth Over Prior Year (6.8%) 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 The chef says he is a fan of Dubai and can find London
wealth in the last two years, Gordon Ramsay is in dreary but he admits that the service culture can be
a chipper mood. Contrary to his media monster challenging in the UAE. “It’s hard with service, you have
image, he’s more affable than irascible. “I’m only to be careful to respect cultures. The hierarchy can make
going on your back page?” he jokes, extending a suntanned everything stifled. In Europe, we have more buoyancy in
hand and a very white smile. the service and it’s a bit more energised and personal,
Ramsay is in the UAE to launch Chef’s Table at his Verre which is not happening yet here,” he says.
restaurant in Hilton Dubai Creek Hotel. Already a familiar Throughout the interview, Ramsay has been rather
phenomenon in London, the close-up experience is being earnest; just when I’m thinking that the chef’s infamous
launched in tandem with the overall hotheadedness might have been
revamp of the eatery. batted down by financial woes, he
“It’s a unique experience where we ushers over a terrified waiter at
go off-piste and cook a little more Verre restaurant and asks: “I love
avant-garde, a little more dangerous. your little smile, you know that, but
Cooking for six guests is a lot more I want to find out who designed
fun than cooking for 60, so we can that waist-coast, because he needs
become a little more adventurous. shooting. Honestly, it’s like your
Between courses the customers can grand-dad’s pajamas top with the
come down and cook, so it’s a master- arms cut off.” Ah, that’s more like it.
class and chef’s table combined. It Later in the day, Ramsay offers to
seemed an added bonus to come back take me for drive at the Autodrome
with the chef’s table option. It’s a Dubai because the only thing he
nice revenue stream, too, for obvious loves more than cooking is driving.
reasons,” he says. He revs up for a heart-stopping
Verre launched in 2001 and was spin in his favourite Audis (TTs and
Ramsay’s first venture outside of the R8s). After screeching around the
UK; the famous chef runs the Dubai track to demonstrate the route and
eatery on a licence and consultancy pulling some handbrake turns, he
basis. It’s a model he wishes he’d turns casually to me and says “You
replicated for his other international got that? It’s your go now.” Needless
ventures, which lost him around to say, he wasn’t too impressed
$12.9 million after writing off loans when I went the wrong way and
to restaurants in the US and France dragged all the cones off the track.
and closing businesses in Prague Ramsay says he is a driving
and Cape Town. freak. “Racing is just like cooking. It’s edgy and dangerous.
“We provide the top tier management at Verre but we When you start off in this business and get your butt
don’t fund the day-to-day running of the restaurant and kicked in the kitchen and you’re in debt, you dream about
we don’t own it. We should have done that from day one becoming an amazing chef and getting to the stage where
abroad,” he says. you don’t have to travel by the tube and own a Ferrari.”
“It hasn’t put me off expanding internationally or in Ramsay’s dream came true when he achieved his third
the Middle East, but I would change the conditions for Michelin star and treated himself to his first Ferrari (he’s
obvious reasons. I suppose I should have looked at that in reported to own six). But as he relaunches Verre restaurant
a broader spectrum, but you know we’re ambitious, we’re and the Chef’s Table, his mind must now be on shoring up
young and you learn by your mistakes. I’ll never do that more cash after a painful period, despite recently raking in
again, next time we would do it with less risk.” $6.6 million profits to cover losses in the last year.
I ask him if he’s worried about the recession and “It’s been tough trying to get customer confidence back in
its negative affect on celebrity restaurants. ‘“Do I look the market. It has taken some of the arrogance out of the
worried?” he says, as if I’d just burned his favourite dish. industry and put chefs back in the kitchen, which needed
And to be honest, he doesn’t. Not at all. to happen, to be honest.”

122 gulfbusiness December 2010


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