Gulf Business - June 2011

VOLUME 16
ISSUE 02
JUNE 2011
VOLUME 16 ISSUE 02 JUNE 2011
years
1996-2011
The American airlines
get Chapter 11 protection.
But if I go bankrupt after
the IPO, the state
wont support
me. So whats
the Wests
problem?
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10
+
Saudi Arabia: The
state of the nation
pg. 42
pg. 48
How Japans pain
affects the Gulf
The UAEs great
train journey
pg. 54
Akbar Al Baker, CEO of Qatar Airways
on the Gulf subsidies debate
pg. 36
!$GB June 2011.indd 1 5/30/11 12:10:10 PM
GULF BUSINESS / 5
GCC Today
8 regional news, people, numbers and events
oPINIoNS
19 matein KHalid
Bahrains fundamental credentials will pull it through the crisis.
21 dr tommy weir
Treat employees with dignity and theyll reward you.
23 melissa master CavanaugH
Powerful women believe in themselves and take risks.
BRIEFING
24 aviation
The UAE benefts from Middle East unrest.
26 banKing
Swiss bank boss Raymond Baer on shifting investment East.
28 business
Around 25 per cent of the Gulfs CVs are falsifed.
30 retail
The GCC leads the regions recession-busting shopping spree.
33 trade
Dubai picked up on foreign direct investment in 2010.
34 real estate
How the crisis shifted Oman and Cyprus property cycles.
CoNTENTS
06.2011
years
1 9 9 6 - 2 0 1 1
34
24
33
COVER DESIGN: TARAK PAREKH
Fly me to
the boom
COVER STORY
QATAR AIRwAyS CEO AKBAR AL BAKER ON RECORd
PLANE ORdERS, MIddLE EAST UNREST ANd THAT
PUBLIC TRANSATLANTIC SPAT.
36
05-06 Contents.indd 5 5/25/11 6:14:24 PM
6 / JUNE 2011
EdIToR-IN-ChIEF
Obaid Humaid Al Tayer
GRouP EdIToR aNd MaNaGING PaRTNER
Ian Fairservice
GRouP SENIoR EdIToR
Gina Johnson
SENIoR EdIToR
Guido duken
EdIToR
Alicia Buller alicia@motivate.ae
ChIEF SuB-EdIToR
Iain Smith iains@motivate.ae
EdIToRIal CooRdINaToR BuSINESS
Hilda dSouza hilda@motivate.ae
aRT dIRECToR
Tarak Parekh tarak@motivate.ae
SENIoR dESIGNER
B Raveendran raveendran@motivate.ae
dESIGNER
Charlie Banalo charlie@motivate.ae
JuNIoR dESIGNER
Roui Francisco rom@motivate.ae
PhoToGRaPhERS
Farooq Salik; Naveed Ahmed; Vikram Gawde
CoNTRIBuToRS
Sabah Haider; dania Saadi; Ryan Harrison;
Angela Shah; Mark Atkinson
GENERal MaNaGER PRoduCTIoN
aNd CIRCulaTIoN S Sasidharan
SENIoR PRoduCTIoN MaNaGER S Sunil Kumar
PRoduCTIoN MaNaGER C Sudhakar
GENERal MaNaGER GRouP SalES
Anthony Milne anthony@motivate.ae
SENIoR advERTISEMENT MaNaGER
Abraham Koshy abraham@motivate.ae
advERTISEMENT MaNaGER
Ajay Mathews ajay@motivate.ae
dEPuTy advERTISEMENT MaNaGER
Melroy Noronha melroy@motivate.ae
GENERal MaNaGER aBu dhaBI
Joe Marritt joe@motivate.ae
Printed by Emirates Printing Press, dubai
hEad oFFICE: PO Box 2331, dubai, UAE
Tel: +971 4 282 4060, Fax: +971 4 282 4436,
motivate@motivate.ae
duBaI MEdIa CITy: Office 508,
5th Floor, Building 8, dubai, UAE,
Tel: +971 4 390 3550, Fax: +971 4 390 4845
aBu dhaBI: PO Box 43072, UAE,
Tel: +971 2 677 2005, Fax: +971 2 677 0124,
motivate-adh@motivate.ae
loNdoN: Acre House, 11/15 william Road,
London Nw1 3ER, UK, motivateuk@motivate.ae
EdIToRIal SyNdICaTIoN dETaIlS
Tel: + 971 4 2824060, gb@motivate.ae
FEaTuRES
42 Country report: saudi arabia
In-depth report on the Kingdoms economy, oil
and demographics.
48 tHe uaes train journey
Etihad Rails progress and an interview with
CEO Richard Bowker.
54 japan and tHe gulf
How the tsunami affected the regions manufacturing
and services.
60 CHemiCal reaCtion
The Gulf must shift gears to claim its share of the
petrochemicals industry.
64 profile: pHilip barnes
Hes boisterous. Hes upfront. Meet the regional VP
of Fairmont Hotels.
daTa MoNIToR
68 stats
Regional mergers, acquisitions and bond issuances.
doWNTIME
72 travel
Salzburg offers more than Mozart and The Sound of Music.
75 Cars
The Aston Martin Virage gets you from A to B in style.
77 teCH
Google vs. Apple and the latest app wars.
REGulaRS
79 events
The Gulfs top business conferences.
81 gulf business preferred Hotels
A selection of the regions top rooms.
82 in your sHoes
Pandoras Thomas Nyborg.
60
CoNTENTS
05-06 Contents.indd 6 5/25/11 6:14:39 PM
8 / JUNE 2011
GCC TODAY
REGIONAL NEWS, PEOPLE, NUMBERS AND EVENTS
KUWAIT
QATAR
BAHRAIN
KD8.5 billion
20%
300
QR500 million
Kuwaits budget surplus in the fscal year 2010/11,
although the country transferred 10 per cent of revenues
to a sovereign-run fund for future generations.
The earnings increase for Qatars luxury hotels in
the frst quarter of 2011, compared to the same
period last year, the Qatar Tourism Authority said.
The number of employees that state-run Bahrain
Petroleum Co fred for being absent from work during
pro-democracy protests, the energy minister was
reported as saying.
Qatar-based Gulf helicopters planned investment in new
aircraft over the next four years as it sees demand from
the oil and gas sector remaining high.
Safety in numbers: GCC
eyes new Arab states
GCC leaders are in talks over Jordan and Moroccos request to join
the six-member political and economic bloc, a move that would
change the face of business and stability in the region.
Jordan stands to gain from fnancial aid and potentially
discounted oil, helping it manage a record fscal defcit of $2 billion,
swelling foreign debt, rising ination and rampant unemployment.
GCC members will get greater access to Jordans highly respected
and professional human resources, as well as security and military
expertise at a time of regional instability.
The impact of greater ties with Morocco, however, is still unclear,
with analysts emphasising that traditionally the country has
been closer to Europe as the main source of exports and tourism.
Still, one short-term beneft for Morocco would be Gulf aid that
comes without the same kind of strings attached to European and
international funds.
The GCC has already pledged a total of $20 billion to Bahrain
and Oman its two poorest members to help allay the economic
troubles that have fuelled unrest.
By joining the GCC, Jordans current account balance is likely
to improve as more Jordanians working in the Gulf send money
home and investments increase.
So far leaders of the GCC said at a gathering in Riyadh that they
welcome the requests from Jordan and Morocco. Kind Abdullah
of Jordan immediately telephoned Saudi King Abdullah Ben Abdul
Aziz to thank him for the support, a Royal Court statement said.
More detailed talks will now centre on the two countries
meeting the GCCs membership requirements.
Jordans King Abdullah (R) meets with
Saudi Foreign Minister Prince Saud al-Faisal
at the Royal Palace in Amman. R
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8-17 GCC Today.indd 8 5/25/11 5:45:37 PM
GULF BUSINESS / 9
GCC TODAY
SAUDI ARABIA
OMAN
UNITeD ARAB eMIRATeS
$35 million
44,000
DHS53.9 million
180%
The price for News Corp to increase
its stake in Saudi Prince Alwaleed
bin Talals Rotana Media Group to
14.53 per cent from
9.09 per cent.
The number of jobs civil service offcials
claim have been created after Sultan
Qaboos bin Said ordered the government
to create positions to quell protests.
Islamic mortgage lender Amlaks loss for Q1 of 2011 on
higher provisions and a sharp drop in revenues. In Q1 last
year it lost Dhs3.1m.
The increase in energy frm Dana Gas proft for the frst
three months of 2011 to Dhs92 million, compared to the
same period last year.
A
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8-17 GCC Today.indd 9 5/25/11 5:45:49 PM
10 / JUNE 2011
GCC TODAY
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Dubai hits 500
property cancellations
Clarifcation
Omans biggest telco
suffers proft drop
Qatar to launch
Islamic bonds
Up to 500 of Dubais real estate
developments face cancellation,
according to the emirates property
watchdog, an increase of 200 from
last year. Rera said the projects and
their backers are being assessed
for fnancial viability and a list of
the terminated developments will
be released imminently.
In last months Gulf Business, Qatar
National Bank (QNB) ranked in the
Top 50 rankings, not the National
Bank of Qatar, as the article states.
Qatar Islamic Bank plans to sell
Islamic bonds this year to help
reduce debt payments, according
to acting CEO Ahmad Meshari.
The sukuk will have a maturity
of more than fve years, but it is
unknown how much the bond sale
could raise or in what currency
they will be denominated.
On the Radar
Stake sale in the offng as DP World foats on LSE
DP Worlds listing on the London Stock
Exchange will provide much-needed liquidity
and could see Dubai World relinquish some of
its ownership of the ports operator, according
to a report.
State-owned conglomerate Dubai World
owns 80 per cent of the firm, which is
considered one of its more profitable assets.
According to investment bank J.P. Morgan,
DP Worlds floating on the London Stock
Exchange may prompt a stake sale by
conglomerate Dubai World.
This (London listing) remains a key
milestone in clearing the path to an improved
liquidity through a broader investor
participation and/or potential selling by
majority shareholder Dubai World, the
report said.
The Middle East accounts for 15 per cent of Boeings
$263 billion backlog of orders, the US aircraft maker
has said.
The manufacturer forecasts that airlines in
the region will require an estimated 2,340
aeroplanes worth $390 billion by 2029 a 150
per cent increase.
In terms of long-haul capacity, the Middle East
has around 140,000 seats waiting to be delivered,
far ahead of Asia (60,000) and Europe (50,000).
The firm also predicted that Middle Eastern
travel will grow by an average of 7.1 per cent per
year over the next 20 years, outpacing the regions
projected economic growth rate of four per cent.
My priority
and coMMitMent
is to facilitate
a new sense
of confidence
in the solid
foundations of
the firM.
Sheikh MaktouM haSher
MaktouM al MaktouM,
Shuaa Capitals new chairman
SOAPBOX
DP World remains one of
Dubais most proftable frms.
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Oman Telecommunications
Co, or Omantel, has seen its
frst-quarter net proft fall 19 per
cent to OR26 million ($67 million)
due to challenging market
conditions and higher expenses.
The latest decline was largely in
line with analyst predictions as
the company recorded a 10 per
cent year-on-year increase in
frst-quarter expenses.
Middle east dominates
Boeing orders
8-17 GCC Today.indd 10 5/25/11 5:45:57 PM
12 / JUNE 2011
Qatar set for region-beating
GDP growth
Unrest unleashes
Saudis spending
power
How to rule
the world like...
Dubai government-owned Emirates Airline said
net profit grew 52 per cent to $1.5 billion in the
year to the end of March as passenger demand
and capacity on its 111 routes grew. Emirates
Group increased revenues to $15.6 billion, up
26 per cent on last year. The results came amid
In last months Gulf Business, Qatar National Bank (QNB) ranked in the
Top 50 rankings, not the National Bank of Qatar, as the article states.
Saudi Arabias public
spending spree this year
could hit a record SR821
billion, 41 per cent higher
than previously thought,
according to Riyadh-based
Jadwa Investment.
The Saudi Arabian
government announced at
the end of last year that
its budget for 2011 was
projected to reach SR580
billion, with revenue at
SR540 billion.
But Jadwa expects the
recent higher crude prices,
boosted by regional unrest,
to increase revenue by
nearly 70 per cent to
SR916 billion.
Sell experienceS
Its widely held that Jobs does not sell
computers, he sells experiences. You only
have to sit through one of his presentations
to realise this some are more like
theatrical productions than product
launches.
ruthleSS iS right
Jobs was described recently by Forbes
magazine as a corporate dictator, which
referred more to an inability to suffer fools
lightly rather than his penchant for killing
those that dare disagree with him.
prepare or die
His Apple team takes months to perfect
a presentation that could last only half an
hour. As a result, Jobs performances are so
gripping that neuroscientists say he creates
an emotionally charged event.
love your coMpany
The Wall Street Journal said recently that
when he exits Apple, its not actually
possible to replace a leader like Jobs, who
loves his company as if it were a person or
cherished thing. The 20th century produced
only one of him.
let your Staff lead
Managing the worlds greatest tech minds
has been fundamental to Jobs success.
He once said: When you hire really good
people you have to give them a piece of the
business and let them run with it.
Emirates Airlines chairman,
Sheikh Ahmed bin Saeed Al-Maktoum
STeve JOBS
Record profts at Emirates
Qatar can expect blistering economic growth
in 2011 and next year as it races ahead of its
GCC rivals, according to Bank of America
Merrill Lynch.
Qatars GDP will grow 13 per cent this year,
the banks report said, followed someway
behind by Saudi Arabia (4.9 per cent) Oman
(3.7 per cent), Kuwait (3.1 per cent), UAE
(2.8 per cent) and Bahrain (-2.2 per cent).
Clarifcation
global passenger growth of 8.2
per cent and a rise in regional
travel of 17.8 per cent.
Despite higher oil prices this
year, the airline increased its
seat factor to a record 80 per
cent. Passengers carried rose
14.5 per cent to 31.4 million
in the 2010-2011 financial year,
which ends March 31. Cargo
revenues grew 27.6 per cent to
$2.4 billion.
After launching six new
routes last year, the airline
plans to open four more
Geneva, Copenhagen, Rio de
Janeiro and Buenos Aires in
this financial year. Emirates,
which has a fleet of 148
aeroplanes and 193 more on
order, received eight new
aircraft in 2010-11, including
seven Airbus A380s.
R
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8-17 GCC Today.indd 12 5/25/11 5:46:02 PM
14 / JUNE 2011
GCC TODAY
Saud Rajhi says steel plant in the works
Saudi-based Rajhi Steel plans to set up a
SR15 billion ($4 billion) heavy steel complex
in King Abdullah Economic City and will get
dry gas from Aramco, according to the state
news agency.
The firm will later offer 50 per cent of the
new project to the public through an initial
public offering.
The Saudi Ministry of Petroleum and
Mineral Resources agreed to allocate 70 million
cubic feet a day of dry gas to Rajhi Steel to
build a heavy steel complex in King Abdullah
Economic City, the statement said.
Emaar Economic City, an affiliate to UAE-
based Emaar Properties, is spearheading the
development of King Abdullah Economic City,
one of the kingdoms most ambitious projects
aimed at diversifying its oil-based economy.
The project, aimed at building a new high-
tech city on the Red Sea coast with businesses,
industrial, leisure and residential estates as well
as a giant port, has been dogged by delays and
lower-than-expected interest from local and
foreign investors.
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On the Radar
Kuwait is to launch the tender for its
metro project in early 2012 and will
start implementing the project in the
first quarter of 2013, according to a
Metro executive.
Kuwait Metro Rapid Transport Co.
is seeking to form a consortium in
order to execute large parts of the
project, which is estimated to cost
$7 billion.
So far Spains Ineco and a South
Korean company have been selected,
said Saeed Dashti, Kuwait Metros
chairman, adding that the two firms
will act as consultants for the project.
Dashti also said that a project to build truck parking areas and a bus station in Kuwait
City will be tendered in September or October this year, costing $108.9 million.
The total value of metro and rail projects completed and underway currently in the region
stands at about $10 billion, as GCC governments upgrade their facilities to meet demand
for improved public transport.
Kuwait on tracK for $7bn Metro project
project focus
Taqa caught off-guard
by UK tax rise
Dubai hotel guests
overlook Gulf unease
Political violence has so far cost
Bahrain $2 billion, according to
the chairman of the countrys
Chamber of Commerce and
Industry, Dr Essam Fakho. Not
being an oil rich country, Bahrain
has seen its major sectors such
as banking, retail and heavy
industries damaged due to
unrest. Lucrative events like the
2011 Gulf Air Formula One Grand
Prix also been postponed.
A higher tax rate on hydrocarbon
business in the UK has hit the
earnings of Abu Dhabi National
Energy Company (Taqa), as its
frst-quarter 2011 proft plunged 47
per cent year-on-year. Taqa had to
pay 11 per cent more income tax
than it had accounted for from its
exploration operations in the UKs
North Sea.
Dubais tourism sector has
showed resilience in the face of
the current regional unrest, with
the emirates hotels recording a
13.6 per cent growth during the
frst quarter of 2011. According to
the Department of Tourism and
Commerce Marketing, occupancy
reached 2.38 million up from
2.09 million recorded in the frst
quarter of 2010.
Dr Essam Fakho, chairman of
Bahrains Chamber of Commerce
and Industry
$2billion bill for
Bahrains ongoing
protests
8-17 GCC Today.indd 14 5/25/11 5:46:07 PM
16 / JUNE 2011
GCC TODAY
UK-headquartered oil services firm Petrofac will be more
active in bidding for projects in Saudi Arabia, where it
sees many opportunities arising in the second half of the
year, a senior executive at the company said.
Petrofac, which is listed on the London Stock Exchange,
said the second half of 2011 will be very busy with
bidding activity.
The EPC (Engineering, Procurement, Construction)
market did not recover yet [from the 2008 financial
crisis]. We expect that next year probably a reasonable
size of business will be available or awarded in Saudi,
said Imad Shanan, senior vice president and general
operations for the Saudi operations of Petrofac
Engineering and Construction Ventures.
Shanan said his company was not concerned by
competition from South Korean companies who have
won several EPC deals in the Saudi market over the
past couple of years.
State oil giant Saudi Aramco has awarded 39 contracts
to South Korean companies worth $11.5 billion in the last
five years.
UKS PeTROfAC GeTS
PROACTIve ON SAUDI
OIl CONTRACTS
GCC and the world
30 million
STATS
ThE VOLTS OF ELECTRICITY ThAT PASSED
ThROUGh A PASSENGER A380 FLIGhT TO LONDON
hEAThROW ThANKS TO A LIGhTENING STRIKE.
Saidi callS for a
rebuild bank to tackle
MenaS clean-up
Middle East and North
African nations need a
Bank for Reconstruction
and Development to
help rebuild parts of
the region affected
by change recently,
according to the DIFC
Authoritys chief
economist and head
of external relations.
Similar to the bank created
to help Eastern Europe
after the fall of the Berlin
Wall, the MENA region
must create a centralised
financial institution to cope
with the political upheaval
and support the Arab
Spring, said Nasser Saidi.
The Kuwait Investment Authority wont sell its stake in the
Agricultural Bank of China that it has held since the banks
initial public offering after the lock-up period expires, the
funds managing director Bader Mohammad Al-Saad said.
The fund agreed in June last year to opt for a share of $800
million in the IPO in Hong Kong.
No plan for China bank stake
sale, says Kuwait fund
UAe hits pre-crisis non-oil
trade levels
The UAEs non-oil foreign
trade growth has returned
to rates similar to those
experienced before the 2008
financial crisis, according
to the Federal Customs
Authority (FCA).
Non-oil trade grew 22 per
cent in January compared
to the same month in 2010,
jumping Dhs12.6 billion to
Dhs70.2 billion ($19.1 billion).
This is clear evidence
that the UAE economy is on
track to recovery and that
the production and trade
movement is restoring its
pre-crisis normal rates, the
FCA said in a statement.
India, China, the US, the
UK, Germany and Japan
were the top exporters to the
UAE, while India, Singapore,
Thailand, Saudi Arabia, Kuwait
and hong Kong were the top
importers from the UAE.
Saudi Arabia maintained
its top position among the
GCC regions trading partners
with a total value of Dhs1.75
billion, with Kuwait second,
followed by Qatar.
Gold was the number one
import, with a value of Dhs7.4
billion, followed by diamonds
and cars.
none of our staff have been
shifted out of bahrain.
v. Shankar, Standard Chartereds CEO for Europe, Middle East,
Africa and Americas
SOAPBOX
Bader Mohammad
Al-Saad, The Kuwait
Investment Authoritys
managing director
8-17 GCC Today.indd 16 5/25/11 5:46:08 PM
GULF BUSINESS / 17
GCC TODAY
Dubai telco firm du said it will make good on Dhs3 billion of
debt due in June.
Part [of the debt] will be paid in cash and part will be
refinanced, said chief executive Osman Sultan.
he added that dus expanding subscriber base will likely
help fuel a 20 per cent rise in revenues this year, while about
Dhs1.7 billion has been earmarked for capital expenditure.
du to meet its dhs3 billion debt
obligations in june
30
COMPANY focus
seconds to make sense of...
SWIMMING POOLS
Tell us about Belhasa...
Belhasa Projects is now one
of the leading swimming pool
builders in the world. We have
offices in Dubai, Abu Dhabi
and Doha, Qatar. Over 10 years
ago we started to diversify from
pools and now have four main
divisions: swimming pools;
mechanical electrical plumbing;
coatings; and watertech
including sewage treatment and dissemination plants. A
sewage tank is just like a swimming pool but looks a lot
less sexy.

Who are your clients?
We created a lot of Wild Wadi (Dubai) and Dreamland
aqua-park in Ras Al Khaimah, as well as some features of
the Aquarium at Dubai Mall. For anything water-related
and iconic in the UAE, theres a large chance that Belhasa
Projects has been involved in some aspect of it. We also
did the tracks at the Commonwealth Games in New Delhi.

What challenges does the UAes swimming pool
business face?
In the good old days when property was being
developed, everyone wanted their own pool. But since
the market slowed down, pools arent seen as an
essential item. Were continuing to win large orders,
but to maintain market share we need to increase our
productivity. Were extending our geographic footprint
hence the office in Qatar. Were doing more work in
Oman and will soon start in Kuwait.

Why did Belhasa diversify from pools 10 years ago?
People were asking us if we knew someone who could
build a tennis court or a jogging track and so we
thought lets offer that. We were satisfying a demand
that was there.

Whats the most off-the-wall request or order youve had?
There have been many, but what comes to mind is the
upward flowing waterfall for a major hotel in Dubai.
There arent many of those in the world.

How has the swimming pool market changed since you
first started?
The market has changed due to the downturn but
the opportunities are still there. We need to go to the
markets rather then the demand coming to us.
Deyaar, Dubais second-largest property developer by market
value, returned to profit in the first-quarter, as it handed over
new units and reduced provisions.
Deyaar made a first-quarter profit of Dhs26 million ($7.08
million) compared with a loss of Dhs100 million during the
same period in 2010, the company said in a statement.
Deyaars gross revenues reached Dhs85 million and its
shareholder equity is Dhs4.4 billion. Its total assets are worth
Dhs8 billion, it said.
The return to profit was down to a combination of profits
being recognised on units handed over to customers and
reduced provisions.
The developer delivered five projects in the UAE in the first
quarter and said it would deliver another two this year.
Deyaar made a huge 2010 loss of Dhs2.3 billion in 2010 on
writedown of assets and impairments.
Dubais Deyaar swings
back into proft
GReG GARNeR
CEO of Belhasa Projects
8-17 GCC Today.indd 17 5/25/11 5:46:10 PM
GULF BUSINESS / 19
OPINION
COMMENT
Its rare to get a second chance in capital markets, but Bahrains
credentials will ensure the island survives political unrest
Matein Khalid is fund manager in a
royal investment offce and a writer
in fnance and geopolitics.
The Tragedy and desTiny
of Bahraini finance
b
ahrain emerged as a financial
centre in the Gulf in the mid 1970s just as OPECs petrocurrency
bonanza hit the Euromarkets, Saudi Arabias construction boom created
a market for offshore banking and Saudi riyal syndicated lending in
Manama and Beirut lost its role as the Levants gold trading and foreign
exchange hub in the bloody opening round of the Lebanese civil war.
International finance proved to be a windfall for Bahrain. With $217
billion in assets, 27 per cent of GDP, offshore banking was a major
generator of high value jobs for educated citizens in the 400 financial
institutions based on the island.
Bahrain emerged as a global Islamic banking, asset management and
insurance hub, second only to Kuala Lumpur and London in the global
league tables. Unfortunately, the last three months have been traumatic
for Bahraini finance as international banking hubs cannot coexist
with protracted political risks, street riots and military intervention.
Bahrains status as the oldest, preeminent financial centre of the Gulf is
at risk if social and political wounds do not heal fast.
Standard and Poors and Fitch have both downgraded Bahrains
sovereign credit risk rating. The credit ratings of the Central Bank
and Mumtalakat were also cut. International banks closed branches
when the protests reached the Financial District and Bahraini dinar
forwards swooned in the foreign exchange market. Political risk is a
sword of Damocles in financial markets that recoil from uncertainty.
This is a worst-case scenario for dollar-funded offshore banks and local
investment/Islamic banks, where debt restructuring and even default
While there is no evidence of bank
depositor panics, global banks have
slashed interbank credit lines to
some local banks and Western banks
have relocated expats to dubai until
the unrest settles doWn.
risks will only escalate. While there is no evidence
of bank depositor panics, global banks have slashed
interbank credit lines to some local banks and
Western banks have relocated expats to Dubai until
the unrest settles down.
Bahrains $20 billion economy is the first post-
oil economy in the Gulf. Tourism was a natural
victim of the tragic events since March. The Spring
of Culture festival and the Formula One Grand Prix
motor race, the crown jewels of the social season
were both postponed. Several finance and banking
conferences and industry exhibitions have been
cancelled. Saudi tourist traffic across the King Fahd
Causeway has plunged, which affects local hotels,
shopping malls, restaurants and cinemas.
The foreign office travel advisory for British citizens
not to travel to Bahrain was a cruel blow for an
island financial centre that depended on the City of
Londons banking, shipping, insurance and brokerage
constellation as its umbilical cord in the Gulf. Despite
stratospheric prices for crude oil and aluminum, the
finance/tourism hit could trigger a Bahraini recession,
though the $10 billion GCC reconstruction fund may
prevent economic contraction, a banking shock and
a credit crunch. However, with a 60 per cent fall in
property prices since 2008, Bahraini bank NPL ratios
will continue to rise since one third of their loan books
are concentrated in property and construction loans.
Bahrains economic success was due to its
traditional culture of social tolerance and the
cosmopolitan values of its merchant elite. Hopefully,
the Bahraini government and the protestors will
achieve rapprochement, move beyond the tragic past
and salvage the islands future as the Gulfs financial
and services hub. Bahrain has a stellar track record
as a host regulator and central bank supervisor that
must not be sacrificed lest the current foreign bank
exodus from the island reach the point of no return.
In the post-Lehman world of Arab black swans and
credit ugly ducklings, hot money moves across the
digital netherworld of the global capital market at
the speed of light. There are few second acts in
international finance but I believe Bahrain can and
will make a financial renaissance.
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19 Opinion Matein.indd 19 5/25/11 5:47:26 PM
GULF BUSINESS / 21
OPINION
COMMENT
Leaders that ignore dignity in the workplace could be landed with
offce protests and uprisings.
A cAll for dignity
o
ver lunch, Sheikh MohaMMed
Abdullah bin Mubarak Al Sabah of Kuwait shared his view of the
problematic spring in the Arab world. He was quick to point out that
the issue was not driven by political interference, autocratic rule, or
even unemployment, as most commentators conclude. His strong
hypothesis is that the uprisings were caused largely by dignity, or,
rather, a lack of dignity. The underlying cause for Mohammed Bouazizi
of Tunisia setting himself on fire, to Tahrir Square, Bahrain, and even
Syria, was a cry to be recognised and, in other words, a demand to
be treated with dignity.
Echoing this insight, a Syrian caller to Al Jazeera news station said:
We dont want 1,500 Lira, we want 1,500 units of dignity. Dignity
is the innate right to be treated respectfully.
Discussing Sheikh Mohammeds premise led me to think about what
dignity means in the workplace. If dignity is such a fiery issue among
the jobless, is it also a hot issue for the gainfully employed? Well, it is.
Employees want to be recognised and treated with respect.
While governments and the private sector are working to create jobs,
the issue of dignity needs to be a top priority action item as these young
people may release years of pent-up frustration into the workplace.
So, what can employers do to build dignity?
Leaders need to build respectful relationships with their employees
all of them and among the different groups. As hard as this is in a
hierarchical environment, the need exists to break down the idea of us
When dignity is referred to, it
is often used to suggest that
someone is not receiving a proper
degree of respect. the syrian caller
to al Jazeera neWs station said:
We dont Want 1,500 lira, We Want
1,500 units of dignity.
and them or suits and troops. Treating people with
respect on a daily basis is one of the most helpful
actions a leader can take to offset tension
in the workplace. Respect is an action. Leaders must
show respect, they need to act respectfully, and they
should speak with respect.
How can leaders make respect a forefront topic?
By taking an interest in others this is more than
making statements like, everyone is important from
the tea boy to our senior leaders. Taking an interest
means taking the time to listen to what others have
to say and recognising that their insights count.
Additionally, you build respect by allowing your
employees to choose their own actions.
Dignity is a state in which all employees have
equal opportunity to succeed, but this is only
actualised through hard work and performance.
The trio of cronyism, wasta (who you know) and
passport hierarchy is the unfortunate elephant in the
room standing in the way of equal opportunities.
These practices must be set aside to clear the way
for equal opportunities and, therefore, dignity.
Finally, you build dignity by understanding
that the face of dignity has a regional look. The
perception of dignity is influenced by culture and
family, peer and social relationships and, in this
region, it is about honour and shame. The secret
isnt to act rightly or wrongly; honour stems from
gaining respect for being the kind of person who
does things according to group values.
Leaders need to be cautious and not assume
that this issue is far from home because they are
not located in one of the countries named above.
While it is true that some parts of the GCC are not
experiencing direct impact from the uprisings, with
the migration of the workforce across geographical
borders, soon those embedded feelings may show
up and explode.
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Dr Tommy Weir, emerging
markets leadership expert and
author of The CEO Shift
21 Column Weir.indd 21 5/25/11 5:37:28 PM
GULF BUSINESS / 23
OPINION
t he social and political developments in the
Middle East this year have focused the worlds attention on the region.
But another form of change slower, less visible, and more pervasive
has been under way among women in the GCC. Womens increasing
participation at all levels of social and economic development is widely
recognised. As ministers, CEOs, and regulators, women play a crucial role
in driving these countries economic and social development, they are also
opening the door for young women following them to do the same.
We interviewed a representative sample of eight women in senior
positions in the public and private sectors in Qatar, Saudi Arabia, and
the UAE exploring their career paths, their motivations, and their
recommendations for creating the institutions that will allow more
women to succeed.
Constant improvement: Women leaders are constantly redefining
their societys expectations of them and pushing themselves to achieve
more, personally and professionally, than many people expected. This
manifests from a desire to challenge the common wisdom that sometimes
constrains them in their organisation or their region.
studied disComfort: Gulf economies are growing at a breakneck
pace, with relatively small populations and an even smaller cadre of
qualified people who can maintain this evolution. As a result, the
regions leaders are often called upon to step into roles for which they
have not prepared and for which they do not necessarily feel qualified.
To be successful, they must willing to go outside their comfort zone.
Quiet ConfidenCe: For women leaders, faith in their own ideas
and abilities is essential in the face of frequent skepticism. In many
Many successful woMen insist upon the
validity of their ideas and insights. a
certainty in their own expertise is critical,
as is thorough preparation when they are
called upon to substantiate the value of
their work.
GCC organisations, the presence of a woman in a
senior position is still rare enough that many women
need to insist upon the validity of their ideas and
insights. A certainty in their own expertise is critical,
as is thorough preparation when they are called upon
to substantiate the value of their work.
entrepreneurship: The chance to start a small
business can open doors for ambitious, educated
young women who want to work but feel that the
long hours required for a traditional corporate career
path are at odds with their family responsibilities.
But entrepreneurs need support in particular,
access to capital, training in leadership and financial
management, and opportunities for networking.
Work-life balanCe: This issue, pervasive
worldwide, is especially challenging in the GCC,
particularly because so few provisions are currently
in place for flexible employment. Such policies,
including regulations that allow for part-time and
flex-time work, are crucial.
eduCation: The challenge now is to make sure that
women are pursuing educational paths that will lead
to employment. Graduates whose degrees dont meet
the needs of the labour market need ongoing education
and training, and universities and the private sector
must work together to make sure that students currently
completing their education are better prepared.
mentorship: The fact that there are currently
women in positions of power throughout the GCC is
an enormous source of inspiration to young women.
But it is not enough for young women to admire their
role models from afar; formal mentoring programmes
are a must.
family support: Although this is a very personal
issue, governments can make a difference by sending
a message particularly in schools and through
the media that emphasises the essential value of
womens contributions to society and the economy.
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COMMENT
Local female CEos and leaders believe in themselves and take risks;
now theyre inspiring a generation of young women to do the same
in a league of their own
Melissa Master Cavanaugh, senior
editor Middle East, Booz & Company.
23 Column Melissa.indd 23 5/25/11 5:48:13 PM
24 / JUNE 2011
turbulent times
its been a mixed bag for middle east
airlines as they battle with regional
uprisings on the ground, but uAe
profts have soared as passengers
fock to safer climes.
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TExT by sAbAH HAiDER
Abu Dhabi International Airport
O
n the back of a slew of first-
quarter results released last month,
its clear that economists excitedly spent
the past couple of months number-
crunching about what the economic
impact of the revolutions of the arab
Spring has been, on both their home soil
and on the economies they affect. the
Uae has confidently stated that its been
able to gain from the unrest, due to an
increase in traffic and business.
Data released at the arabian travel
Market, held in Dubai in april, stated
that Middle east unrest, particularly in
Libya, egypt and tunisia, had boosted
tourism in the Uae. ali abu Monassar,
chairman of Vision Destination
Management, told reporters: So many
of the destinations around us are closed
because of the current situation. Its bad
for them, but its good for Dubai.
the Uae boasts three of the biggest
regional airlines flagship carriers etihad
and emirates, and low-cost giant flydubai
which all play a key role in the
movement of people and goods around
the Middle east and South asia.
the political unrest in parts of the
Middle east and north africa region
has undoubtedly affected emirates,
particularly from an operational
perspective with flights to tripoli in Libya
suspended indefinitely, says ahmed
khoory, emirates senior vice president
commercial operations, Gulf, Middle east
and Iran, when asked how unrest in the
Middle east since January has affected
passenger numbers at the regions
biggest airline. by swiftly adjusting
our flight schedules, redeploying
aircraft to balance the network and
optimise revenue we have been able
to keep our other Middle east
operations going.
the situation in abu Dhabi
with etihad airways is not very
different. James hogan, the airlines
ceO, says unrest has ultimately
contributed to passenger revenue
growth. etihad announced record
first-quarter revenues, despite the
challenges presented by unrest in
the Middle east and the Japanese
earthquake, he says. While seat
factors fell slightly, passenger revenues
grew by 15 per cent on the back of a
10.6 per cent rise in passenger numbers
to 1,854,392.
briefing
REGioNAl TRENDs, ANAlysis AND viEws
24-33 Briefing Middle East.indd 24 5/25/11 5:39:01 PM
GUlf bUsiNEss / 25
AVIATION briefing
The flIpsIde
however, according to figures released
in March by the International air
transport association (Iata), the
decline in Middle east traffic led the
dip in overall global industry numbers
passenger traffic levels in egypt and
tunisia were 10-25 per cent below
average for the month of March, while
the no-fly zone and military action in
Libya has halted all air traffic to and
from the north african country.
Overall, Middle east airlines
experienced a decline in their year-on-
year demand as growth slowed from 5.8
per cent in February to 3.8 per cent in
March. Illustrating a drop in the number
of travellers, compared to February, the
demand in March climbed only 0.1 per
cent while capacity expanded by 0.8
per cent.
Giovanni bisignani, Iatas director
general and ceO, told reporters that the
tsunami in Japan and the political unrest
in the Middle east and north africa
(Mena) both contributed to a loss of
demand in the global airline industry in
March by two per centage points.
We continue to closely monitor the
situation in other parts of the region
and are prepared to act quickly if
the situation changes, khoory says.
emirates is the Middle easts largest
airline and the worlds largest carrier
measured by international capacity.

The UAe, A hUb
the Uaes three biggest airlines also
happen to be the Middle easts biggest.
that means abu Dhabi and Dubai are
both key travel hubs, with the former
being the home of etihad and emirates
and flydubai operating from the latter.
Dubai is also the Middle easts biggest
travel hub for both regional and
international flights.
asked how Middle east unrest has
affected international passenger traffic
through the hub for passengers travelling
to/within the region, khoory says its
been positive for Dubai. Overall visitor
numbers to the Uae have increased over
the previous year and statistics from
tourism boards and Dubai airport have
confirmed such a trend. During the 2010-
11 financial year emirates saw a 14.5 per
cent growth in overall passenger numbers
to 31.4 million people.
according to Dubai airports,
passenger traffic at Dubai airport
the worlds fourth busiest hub for
international passenger traffic climbed
by 5.8 per cent year-on-year in March,
to 4.2 million passengers. however,
passenger numbers to the Middle east
and africa fell due to regional unrest
dropping by 23,240 passengers for the
Middle east, while african routes saw
a decline of 24,402 passengers as traffic
was affected by political unrest in these
regions. according to Iata, bahrain,
Yemen and Syria represent six per cent
of Middle east air traffic, and on the
back of unrest passenger traffic fell
significantly to these countries.
Unrest in various countries in the
Middle east has certainly affected the
volumes of people travelling into those
markets. that said, our ability to respond
to these situations is a reflection of
the growing maturity and underlying
strength of the business, says hogan.
Flydubai has made every effort to
operate its flights as normally as possible
during the period of turbulence in the
region, says Ghaith al Ghaith, ceO
of flydubai. the airlines first-quarter
results were not available. We continued
to monitor the situation in the region
closely and made any adjustments to
our schedule necessary to ensure the
safety of our passengers and crew. Our
schedule is always subject to change,
depending on the demand from our
passengers and the availability of new
routes and new aircraft.
contrary to etihad and emirates,
Sharjah-based low-cost carrier air arabia
reported a 12 per cent year-over-year
drop in its first quarter net profit, to
$12 million, although first quarter 2011
revenue grew six per cent to Dhs513
million, and passenger numbers increased
11 per cent, to 1.2 million, while load
factor grew to 85 per cent from 80
per cent a year earlier. the airline has
subsidiary operations in egypt and
Morocco, where unrest has also occurred.
the chairman of air arabia, Sheikh
abdullah bin Mohammad al thani, said
he was satisfied with the result, as air
arabia had been adversely affected by
the impact of political uncertainty. he also
said the price of oil is an issue. though
the region has clearly shown positive
signs indicating the emergence from the
more serious effects of the global financial
downturn, the rise in fuel costs continues
to challenge regional carriers.
Flydubai has made
every eFFort to
operate its Flights
as normally as
possible during the
period oF turbulence
in the region.
Ghaith Al Ghaith, the CEO of fydubai.
26 / JUNE 2011
swiss bAnks cAst their eyes eAst
investment
in the wake of the tax evasion
clampdown in the west, swiss
banks are aggressively pursuing the
emerging markets, says raymond
baer, chairman of billion dollar
investment bank Julius baer.
TExT by DANiA sAADi
about a third of the $1.5 trillion of
assets held offshore by the wealthy
in the Middle east and africa are in
Switzerland, according to Swiss research
firm MyPrivatebanking, and at least 15
per cent of the offshore assets or about
$225 billion have been obtained through
illegal means and transferred out of the
home countries.
Despite these challenges, baer is
keen to boost its business in the Gulf
in particular, buoyed by the spike in oil
prices that promises to fill the coffers
of sovereign wealth funds (SWFs) and
high net worth individuals (hnWIs).
the number of hWnIs in the Middle
east grew 7.1 per cent to 400,000 in
2009, returning to the 2007 levels,
T
he WOrLD OF Wikileaks disclosures,
austerity measures in debt-laden
europe and instability in the energy-
rich Middle east now renders it more
difficult for Swiss banks to practice the
discretionary skills they are famed for.
bank secrecy the way we dealt with
it in the past is gone, raymond baer,
the chairman of Julius baer, which had
173 billion Swiss francs in assets under
management at the end of april, tells
Gulf Business. today, one has to be tax-
compliant. the beauty for this part of
the world (the Middle east) is that tax is
not an issue anyway.
the issue in the Middle east is the
legality of clients, which is changing
every day as more members of despotic
regimes get toppled or challenged
by the freedom wave sweeping
the region. the fast-paced political
change has caused problems for Swiss
banks, which have to deal with Swiss
authorities freezing the assets of
leaders from tunisia, egypt, Libya
and Syria.

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Raymond Baer, Chairman
of Julius Baer bank.
GUlf bUsiNEss / 27
bANKING briefing
and their total wealth increased by 5.1
per cent to $1.5 trillion, according to
capgemini and Merrill Lynchs World
Wealth report 2010.
baer joins the fold of other Swiss banks
targeting Middle eastern clients, including
Falcon Private bank, the unit of abu
Dhabis aabar Investments which opened
an office this year in the Uae capital.
baer, which has an office in DIFc,
expects to grow assets from clients in
the region by more than six per cent
annually over the next three to four
years, and plans to add up to five new
relationship managers a year for the
region over the next two to three years.
Some of the clients in the region have
shifted assets from egypt to the Uae, or
from bahrain to the Uae, and the same
trend has happened into asia, Singapore,
for instance, but also into europe, London
and Switzerland, says baer. Sovereign
wealth funds will start buying stakes in
internationally-listed companies, they will
do more now than before.
Gulf SWFs, which are amongst the
richest in the world, took a break during
the recession when their stakes in listed
firms took a hit, but in the last two years
they returned to the international market
snapping up significant holdings in blue
chip companies.
traditionally, hnWIs in the
region, like most emerging market
investors, have tended to be more
trading-oriented and opportunistic
with a concentration of wealth in
properties and equities. but investors
in the region need to diversify their
investments, particularly in these
politically uncertain times, the Swiss
banker says.
the main strategy is investing in
anything related to real assets because
central banks around the world are printing
money, so people want to protect their
cash deposits by investing in real assets via
commodities and equities, said baer.
the Zurich-based bank believes hnWIs
in the Middle east should give more
attention to foreign currency transactions,
given that all Gulf states, except kuwait,
peg their currencies to the US dollar. the
greenback is also the largest component
in kuwaits basket of currencies.
Foreign currency investment was much
greater in the Middle east in 2009 than
the global hnWIs average of 13 per
cent, accounting for 20 per cent of their
alternative investment allocations, as the
regions wealthy sought to hedge against
local currency fluctuations, according to
the World Wealth report 2010.
cash-rich Julius baer is also on the
prowl for acquisitions, and recently
announced the purchase of a 30 per
cent stake in brazilian wealth manager
GPS. baer is not interested in buying any
assets in the Middle east per se, but would
target acquisitions that offer a foothold in
a number of emerging markets, similar
or larger than its purchase of InGs Swiss
private banking assets in 2009.
Julius baer, like its Swiss rivals UbS
and credit Suisse, is venturing into
emerging markets not only to take
advantage of their growing wealth, but also
to make up for the potential loss of assets
and clients as Swiss authorities negotiate
tax deals with the Uk and Germany, which
are clamping down on tax evaders. to cap
the tax cases in europe, the US has ramped
up pressure on Switzerland to reveal tax
evaders using Swiss banks, a move that
led UbS to hand over some data on US
clients and pay a fine to the US in 2009.
I think the history with europe could
actually be cleaned up, if that happens
(tax deals are finalised with Germany and
Uk). said baer. america is a different
issue and our politicians are talking to
americans to see what can be done to
solve the history.
this year, a former Julius baer banker
was arrested after handing over the names
of hundreds of clients with offshore bank
accounts to the whistle-blowing website
Wikileaks. Germany and Italy are Julius
baers biggest european clients and any
tax agreement with european states is
expected to hit bank profitability.
the most likely impact is that some
money that is currently in Switzerland
will be paid for the fines etc, so you lose
a certain asset base, said baer. but
what you win is a clear parameter going
forward and, if you have clear parameters
for business, you hope the valuation of
this business gets higher in terms of the
stock price.
Julius baer, like
its swiss rivals ubs
and credit suisse,
is venturing into
emerging markets
not only to take
advantage oF
growing wealth,
but also to make up
For the potential
loss oF assets and
clients as swiss
authorities negotiate
tax deals with the uk
and germany, which
are clamping down
on tax evaders.
28 / JUNE 2011
briefing bUsINess
stretchinG the truth
Gulf headhunters have warned that
widespread cV fraud from fnance
professionals is jeopardising the industry.
Hr
TExT by RyAN HARRisoN
Up to 25 per cent of
CVs are fraudulent
R
ecrUIterS Fear aS many as
one in four candidates in regional
financial services tell serious lies on
applications, usually concerning their
education and references.
Some bankers even hide criminal
records and a history of fraud.
the alert level for serious untruths
rose in the aftermath of the Gulfs
economic downturn, as laid off bankers
fabricated applications and covered gaps
in their cVs to secure a job. but the
menace has become a persistent threat
and permanent source of annoyance to
headhunters hired by banks to search
for talent.
the troubles across the Middle east in
recent months, that has led some banks
to freeze hiring, may have compounded
the issue further as job-seekers
frantically chase fewer openings.
emma McGregor, head of the
professional services division at huxley
associates, says candidates often use
online resources to fake certificates
relating to It or accountancy. they
can make up credentials like bachelor
of arts or chartered accountants, but
when you check they actually havent
completed any courses.
the worry for recruitment agencies
like huxley is that if candidates
are taking the time to embellish
qualifications they could also be hiding
something more sinister. and whereas
in more mature Western markets banks
have a web of databases to check new
recruits backgrounds, for Gulf financial
services there is no central depository.
One headhunter revealed: this
means that up to 25 per cent of
people in the financial services
industry are engaging in cV fraud
at any given time, in particular in
relation to references.
a popular lie is to put close friends
and colleagues at previous companies
as references.
anecdotal evidence suggests that
the group most likely to misrepresent
themselves are front office personnel,
a probable reflection of the massive
pressure to produce sales and investment
performance, as well as relationships
with clients.
Gareth clayton, director at recruiters
the charterhouse Partnership, says:
Wealth management is an area where
banks might be vigilant, specifically over
what a candidate says about his books,
assets under management, deal flow and
where his clients are based. For instance,
private bankers with a good portfolio in
Saudi arabia are hard to come by.
clayton says the Gulf job market in
general still has a Wild West stigma,
where candidates punch well above their
weight and use bravado to paper over
inadequacies in their cV.
but candidate dishonesty is a serious
business in the Gulf, with those that
lie heavily on their cV facing not only
termination but being successfully sued
by their employer, as well as potentially
facing jail or deportation.
the threat hasnt put some off though
and in recent years banks have hit back
by hiring independent companies to
screen employee applications. requests
for credit checks and certificates of good
conduct are at an all-time high.
Still, its often hard to pin down
exactly who might be least forthcoming
with the truth about their past. Magdy
el Zein, managing director of boyden
Middle east, a search firm specialising in
top level executives says: at the senior
level you wouldnt expect it to be a
common practice or habit to put things
in a cV that are not true. that being
said, its not that it never happens.
With many employers in the Gulf
currently reining in hiring plans in the
wake of the regional turmoil, competition
for jobs has never been so fierce. the
real threat at the moment is as rising
numbers of candidates hunt each new
job opportunity, more and more are
prepared to resort to desperate measures
to catch an interviewers eye.
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briefing GCC
Gcc leAds the retAil boom
retail
Growing populations in the uAe and
saudi Arabia are fuelling a region-wide,
recession-busting shopping spree.
TExT by sAbAH HAiDER
G
ranD MaLLS, VIbrant shopping
festivals, bargain shopping
fairs, international supermarkets and
traditional souks. these consumer
playgrounds are synonymous with the
capitals of the Gcc, culturally and
economically, and have produced a retail
sector thats growing faster than any
other market in the Mena region.
It is expected that the Middle east
retail industry will reach $682 billion
by 2013, growing at a compound annual
rate of around 13 per cent during 2009-
2013, according to a report by research
firm rncos. the total current value of
the retail sector in the Middle east is
around $425 billion.
according to the report, the Gcc
is witnessing many positive trends in
consumer demand, a continuing
growth in tourism, regional
coordination and market access.
the factors strengthening the regions
retail industry include changing market
dynamics, rapid economic development,
higher crude oil prices, and strong
consumer confidence.
there are initiatives that have
helped the industry. helping,
supporting and developing the real
estate infrastructure are all initiatives
by the government their proactive
investments which have helped
develop the sector, says Mohammed
al Fahim, chief executive of luxury
department store chain, the Paris
Gallery, which has over 80 stores in
the region.
the report by rncos identified kSa
and the Uae as the regional retail
markets with most potential and
dynamism they have sustained their
dominance in the retail landscape for
over a decade and will continue to do so
in coming years.
We will see retail becoming more
organised in coming years and also
expect it to grow by 1518 per cent.
We can definitely see a standardisation
of market as well, says Manu Jeswani,
the ceO of Shoe Mart (Landmark Group),
which has 110 stores across the Gcc.
al Fahim says the great infrastructure
put in place in many Gcc countries is
a major force driving the retail boom
because investment in service areas,
airports, entertainment, hotels, restaurants,
communications and transport helped
tourism to grow in the region.
In the past, even if tourists wanted to
come they couldnt because of a lack of
facilities, he explains. extreme weather
and a vibrant consumer culture based on
populations with high disposable incomes
drive retail and push more brands to
invest in the region.
While economies such as kuwaits
slumped during the economic downturn,
others, such as Qatar, thrived due to high
demand for its gas.
Philip toledo Limited (PtL) is the
Uae distributor of retail Pro point of
sale software to over 400 retailers in the
region. David catania, chief executive
of PtL, says he has noticed four specific
trends in the Gcc retail sector over the
past six months: business intelligence
which comes from a desire to be more
scientific in terms of the way retailers
analyse their information; vertical growth
the retail sector is being organised;
Gcc expansion even companies
that arent big are looking to have an
operation in kSa, kuwait or Qatar as part
of their strategy; government support for
SMes a healthy vision and regulatory
framework by Gcc governments,
particularly the Uae, is leading them to
stimulate SMe growth.
theres a growth mindset across
the industry, he says. Its good for
other Gcc countries to emulate what
the Uae is doing.
The Middle East retail
industry is growing at around
13 per cent annually.
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dUbAI briefing
dubAis renAissAnce
trade
Post the property debt pile up, the emirate is once again luring foreign
investors with its service-based infrastructure.
TExT by DANiA sAADi
D
UbaI MaDe ItS mark by providing
the services that international
companies needed to set up shop and
reach Middle eastern customers. after
the financial crisis and the end of the
real estate boom, Dubai is focusing on
this core strength again.
We know three or four years ago
the (foreign investment) interest was
circulating around real estate, but
currently there is a re-focus on the
fundamentals of Dubai, which is trade
and logistics, but also financial services
and green or clean tech, said Fahad
al Gergawi, chief executive officer of
Dubais Foreign Investment Office.
Dubais reversal of fortune is part
of a bigger story. Overall foreign direct
investment (FDI) in the United arab
emirates rose 13 per cent to $15 billion
in 2010 from a year earlier, according
to estimates from the Ministry of
Foreign trade.
Dubai, which expects FDI inflows
to rise by up to 30 per cent in 2011, is
not the only party that believes the city
state is going back to the pillars of its
economic boom, sweeping away investor
jitters over its property-induced debt pile-
up in 2009.
Dubai is attractive even more now
because the balloon has been deflated
and we now believe were back to the
essence, so its a good time to come
because the financial crisis has taken
out the speculative part of the business,
said Linar Yakupov, the chairman of
the committee for small and medium
enterprise in russias oil-rich republic
of tatarstan.
While in the past russians
investors were mainly focusing on
Dubais property market, more and
more companies are looking at Dubai
as a launch pad to deliver their goods
and services to the rest of the region,
including russian technological know-
how, Yakupov added. russia, which
used to have strong economic and
political ties with countries in the
Middle east prior to the fall of the
berlin Wall, is also looking to
re-energise these business links that
have drawn closer to the West.
Dubais problems may be water under
the bridge for now, but the whole region
is just starting to deal with a snowball of
political unrest that threatens to dampen
the regions strong economic recovery
and demand for goods and services.
amid the political turmoil, the
Uae, Qatar and Saudi arabia to
some extent are fast emerging as safe
havens for investors looking to make
a foothold in this energy-rich region.
Dubai stands to benefit significantly from
the turmoil due to its services base and
infrastructure which is firmly plugged in
to the global economy.
the Uae is going to profit by virtue
of whats happening in the Middle east,
said Gita Wirjawan, the chairman of
Indonesias investment coordinating
board. by sheer availability of the hard
infrastructure and wherewithal to manage
everything that has already been built, it
will serve as a very attractive destination.
Overall, Dubai is attracting more
interest from emerging markets such as
china, India and brazil simply because
the fast growing brIcs have more money
to dole out and are eager to find more
markets for their goods.
brazilian companies are looking
at setting up distribution centres in
Dubai for their goods, including
transportation equipment and parts, as
well as agricultural and meat products,
which are in high demand in the arid
Gulf region, where lack of water and
agricultural land is boosting food imports.
We know the crisis is temporary and
when you enter the international market
its for the long-term, said alessandro
teixeira, deputy minister of brazils
ministry of development, industry and
foreign trade. the question mark is
not the stability of the region and the
returns, the question is about who
invests. the countries that used to invest
in this area are the US and europe and
they are going through a difficult time
in terms of economic performance.
Dubai FDI rose 13 per
cent last year.
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34 / JUNE 2011
BRIEFING Cyprus/oman
F
ive years ago it seemed so easy.
Pick a preferred location. Develop
irresistible marketing collateral. sun, sea
and impossibly picturesque backdrops
would do the rest. Build it and they
would come.
The global real estate crisis has forced
luxury developers to make difficult
decisions about how to sustain their
projects into the future, given falling
house prices and the negative equity
confronting existing tenants. Consultancy
firm Jones Lang Lasalle says Dubai
property prices will bottom out within
about a year, but whether this is the case
in other areas is far from clear.
Two real estate developments are
between 2008 and 2009-10. still worse,
the months up to July 2010 were slightly
ahead of the comparable month in 2009,
but august, september and october 2010
were below the year earlier month. While
this does not necessarily reflect the
situation at the high end of the market,
the developers of aphrodite Hills, Lanitis
Development, have had their work cut
out to progress on new phases. The core
selling months of april to July are likely
to provide respite in 2011, or perhaps
2012, as the global economy picks up.
around 700 villas, junior villas and
apartments at aphrodite Hills have
been sold at the resort in the past eight
years. Today, almost 80 per cent of the
117 villas and apartments in the latest
Theseus village phase have been sold.
a new phase, known as alexander
Heights will bring another 69 units to
market. Mortgages are available for up
to 40 years with a down payment of 25
per cent. some 35 investors from Dubai
have already purchased properties at the
site, with elysian group acting as sole
agent for Lanitis Development in the Uae
since early 2010. Cyprus has 2.5 million
tourists a year, and the management
seems confident that the locations
charms will rub off on new arrivals.
The Wave Muscat was set up as an
integrated tourism complex [iCT] in
2006 and a completed development with
some 4,000 freehold properties is now
envisaged as the final goal. an iCT is
the governments official designation
for areas where the sale of freehold
property to non-omani nationals is
allowed. The development took $90
million in revenues last year. Because
construction only goes ahead after sale,
the projects owners, the government
of oman and Majid al Futtaim, have if
anything increased the number of units
planned on project completion. With
such a strategy insulating the Wave from
recession, the prospects look bright.
The Wave has seen what its Ceo,
Michael Lenarduzzi, calls a broadening
of product reach without a change of
overall positioning. This is designed to
increase its appeal across the board while
at the same time maintaining the projects
high standards. The vision has filled out,
and now, in addition to apartments and
instructive in the manner in which
their sponsors have reacted to the
real estate crisis of the past two-and-
a-half years. The Wave Muscat was
originally conceived as a high-end luxury
community catering to expatriates and
omanis. Conversely, aphrodite Hills,
near Paphos, in Cyprus, has become a
fixture on the international conference
circuit, and adjacent villas and
apartments have managed to attract a
very high-end clientele.
The severity of the property slow-
down has hit Cyprus hard. Department
of Lands and surveys data to october
2010 show that the general market has
fallen between one-third and two-thirds
A tAle of two countries
Gulf Business investigates how the global crisis affected oman and cyprus, two very
different landscapes with similarly challenging property cycles.
REAL ESTATE
Villa rendering, The
Wave, Oman
34-35 Briefing-Cyprus-oman.indd 34 5/25/11 5:50:15 PM
GULF BUSINESS / 35
ToTal PRoPERTy SalES, CyPRuS 2008-10
RoLL-oUt oF thE WavE MUScat
RESIdENtIaL dEvELopMENt UNItS By MoNth
CyPRuS
oMaN
2008 2009 2010
Jan 1,615 458 570
Feb 1,581 558 704
Mar 1,326 580 792
apr 1,336 603 675
May 1,366 639 803
Jun 1,386 753 864
Jul 1,542 902 797
aug 936 642 554
Sep 1,157 757 687
oct 1,016 723 714
Nov 782 792 -
Dec 624 763 -
10-month 13,261 6,615 7,160
year 14,667 8,170 8,592*
10-month - -50.1% 8.2%
year - -44.3% 5.2%
Phase Date Villas Townhouses apartments Total
units
1 03/06 133 88 - 221
2 12/06 91 60 - 151
1a 03/07 - 42 - 42
3 05/07 75 - - 75
4 11/07 95 - 132 227
auction 12/07 17 - - 17
5 03/08 124 - 64 188
7 03/10 Na Na Na 160
8 11/10 70 36 - 106
Total 1,187
*

F
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data from cyprus department of Lands and Surveys shows that
the market in unit sales has declined dramatically in the almost
three years to october 2010.
cyprus property market has been having a tough time of late. 2009 was the poorest year for house sales since 2002. Figures released
by the department of Lands and Surveys, for the period to october 2010, show that, compared to the bumper frst half of 2008,
the market is down substantially in the period since. Furthermore, in august 2010, monthly sales for 2010 fell below the comparable
month sales for 2009. Realtors will be hoping that 2011 brings about a reversal of this trend. Lanitis development data show that while
apartment prices at aphrodite hills only appreciated 3.0 per cent in the four-year period to 2010, for a compound annual growth rate
[caGR] of only 0.8 per cent, villa prices over the same period were up 62 per cent [a caGR of 12.7 per cent].
the Wave in Muscat was launched in March 2006. It had a good
period of success until March 2008, when further phase roll-outs
were suspended, in effect for two years. By November 2010, a
total of almost 1,200 units had come to market, out of a total now
envisaged to reach 4,000 by time of project completion. prices
almost doubled in the period to March 2008 for launch buyers,
but are now around 30 per cent from those peaks.
a three bed townhouse launched for Ro 140,000 is now
asking Ro200,000, says philip paul, head of offce for cluttons
oman, a rise since launch of 43 per cent or a caGR of 9.3 per
cent. the Wave has redsigned subsequent releases with smaller
unit sizes to target the resident/working owner-occupier and
investor looking for rental returns.
a cluttons oman research note for January 2011 said: prices
in the re-sales market have declined sharply from the highs
of early 2008 but have now stabilised to a degree. We do not,
however, feel that the bottom of the market has been reached
and foresee a continued but gradual softening of secondary
market values over the coming months. the last quarter has
Cyprus property market unit Sales 2008-2010
2008
2009
2010
Jan
1,600
1,400
1,200
1,000
800
600
400
200
Feb Mar apr May Jun Jul aug Sep oct Nov dec
seen increased activity in the secondary sales market but it is
still relatively quiet. the level of enquires is, however, slowly
increasing and we expect the market to start to accelerate during
the frst quarter of the New year.
villas clinging to the coast road, several
new neighbourhoods, including a 400-
berth marina, a golf course designed by
greg Norman, for which the first nine
holes will be complete this spring, and
four new hotels, including the Kempinski
and Fairmont brands, will increase the
resorts appeal. We are not selling real
estate; we are creating a destination,
he says.
some 1,000 property units have
already been sold at the Wave, with
600 handed over by the end of 2010.
Foundations have been laid at another
980, with over 900 reaching rooftop
level. omans challenge is how to
become more sophisticated as a tourism
market, says Lenarduzzi, of the need
to take on neighbours abu Dhabi and
Dubai. The issue is how they will
compete with us.
34-35 Briefing-Cyprus-oman.indd 35 5/25/11 5:50:16 PM
36 / JUNE 2011
NOTHING
STOP US NOW
Akbar Al Baker, CEO of Qatar Airways, speaks exclusively to Alicia Buller
about Western detractors, rising oil prices, and why theres enough future
global demand to fll his record order book.
PHOTOS BY VIKRAM GAWDE
I
ts no surprise that Akbar Al Baker
likes to unwind by sitting in the
office. When he relaunched Qatar
Airways in 1997, the airline operated
just four planes. Today the CEO runs a
fleet of 97 aircraft, with orders for over
170 more including five Airbus A380s,
the largest planes on earth.
Al Baker cuts a slight frame as he
walks through the Arabian Travel Market
crowds, trailed by a gaggle of hangers-on
and flunkies. After all, this is the man
who runs the second largest airline in
the Gulf, and forms a part of the super-
connector trio, along with Emirates
Sheikh Ahmed bin Rashid Al-Maktoum
and Etihads James Hogan the Middle
Easts transit carriers with supersized
planes and profits to match much to
the chagrin of the West.
Just dont tell Al Baker. After months
of publicly slinging mud at Air Canada
and Lufthansa, the mere mention of the
Wests accusation of Gulf fuel subsidies
sends him off into a fever-pitched
diatribe. They are inefficient airlines, so
they shouldnt blame other people. They
think that we are getting government
subsidies, but we are not, the Qatari
tells Gulf Business.
They got subsidies in 2001, they
got them because of the ash cloud,
they got so much assistance from their
governments at times when we didnt.
But they dont like to talk about this
they only like to talk about the level
playing field.
After decades of protectionism, code
sharing and coddling air routes, the
West is right to be shell-shocked by the
rapid rise of the Gulfs airlines. But Qatar
Airways, like its formidable Gulf peers,
is no flash in the pan, and is driven
by a shrewd strategy from an
even shrewder mind. Al
Baker says he will stop
36-41 Cover Story.indd 36 5/25/11 6:22:29 PM
GULF BUSINESS / 37
cover story
at nothing to be the best airline in the
world across commercial, private jets
and cargo. In just a year from now,
the CEO will be receiving an aeroplane
every 15 days.
And the diatribe continues: Lufthansa
became private only 19 years ago;
before that, for 70 years, they were a
state instrument. It was getting all its
cash requirements, and it was always
losing, the airline nearly went bankrupt
in 1991. British Airways was the same,
The new Doha International Airport will open by 2012
with a capacity of 24 million passengers annually.
until it was privatised and wrote off
$14 billion. The American airlines
get Chapter 11 protection. But if I go
bankrupt (after the IPO), the state wont
support me, so whats the problem?
(Western airlines) have a very high
cost base and their governments are
making it difficult for them because they
close airports at 10pm and open them
at 5am. They should blame themselves.
Once their governments do for them
what they do for us because we are
economic instruments of our country,
then we will have a level playing field.
While Qatar Airways owned 50 per
cent by the Qatar Investment Authority,
the countrys sovereign wealth fund,
and 50 per cent privately claims not
to be given direct financial support,
Qatari ruler Sheikh Hamad bin Khalifa Al
Thani, like his UAE counterparts, views
the national airline as the lifeblood for
his vision of economic diversity and
sustainability. Build it and they will
come, said Sheikh Mohammed, UAE
vice president, Prime Minister and ruler
of Dubai, when creating Emirates airline.
Qatar Airways and the UAE national
carrier, Etihad, were not far behind in
grasping the reality of his sentiment.
38 / JUNE 2011
GULF BUSINESS / 39
cover story
Like the other major Gulf airlines,
Qatar Airways is following a strategy
of tapping into markets that have been
neglected by Western markets and are
consequently relying on inefficient hubs
in their regions. We see growth for the
entire Qatar Airways global network
not from any one particular concentrated
area because Qatar Airways strategy is
not to focus on one area. If there is any
international turmoil, we want to spread
the impact, so it doesnt affect us.
Despite experiencing a revenue drop
of six per cent due to the regional
uprisings earlier this year, the CEO
claims Qatar Airways is expecting a
higher profit this year to the end of
March 2011. We are also expecting profits
the year after, he says.
The airline has previously said it made
a $205 million profit in the financial year
2009 2010 and is expecting $250 million
for the following year. In December, the
firm said it planned to launch an initial
public offering (IPO) in early 2012 after
three consecutive years of profit.
I didnt say the IPO was confirmed
for 2012, clarifies Al Baker what I
said was profits will be good by then,
so it could be 2012, 2013, or 2011, for
that matter.
Overall Middle East passenger growth
slowed around two per cent between
February and March due to the unrest,
according to International Association of
Air Travel (IATA). On a future view, Air
Transport Intelligence (ATI) predicted
that Qatar Airways will carry almost 70
million passengers annually by 2020.
But its not the long-term figures Al
Baker is worried about.
The biggest threat to my profits is
200
ABU DHABI
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Qatar Executives Bombardier Challenger 605 and
Global 5000.
SOURCE: AIR TRANSPORT INTELLIGENCE;
AIRLINES FORECAST
INFOGRAPHICS: TARAK PAREKH
[Western
airlines] have
a very high
cost base
and their
governments
are making
it diffcult for
them because
they close
airports at
10pm and
open them
at 5am. They
should blame
themselves.
40 / JUNE 2011
the oil price. My biggest worry is the
regional conflict, if it gets worse then my
business will be severely hurt, and the
global aviation industry will be hurt,
he says. You cant pass on all costs to
the customers as they will be paying
15 per cent every month additionally.
Unfortunately, we have to (absorb the
cost), we can only recover a small
fraction from our passengers.
For a man who likes to think big,
another major concern has been delayed
plane orders. Al Baker has been one
of the most vocal critics of 787 delays
saying last year that Boeing would
be in for a serious surprise if they
continued the delays. With over 170
craft on order including 80 Airbus
A350s, 60 Boeing 787s, 12 Boeing 777s
and five Airbus A380s the first 787
delivery is already a year late for Qatar
Airways and, considering that Boeing is
currently around two years late with all
its customers orders, this would indicate
a 2013 timeframe. Today, however, Al
Baker has regained confidence in the
blighted aircraft-maker.
We are expecting more than 120
planes in the next two and a half years.
We now have firm dates of delivery for
the 787s, though the deliveries were
delayed due to technical issues in the
past and production delays, this has now
been overcome, says Al Baker. Boeing
is also imminently going to start a second
production facility on the East Coast so
we think that there will be a ramp up of
production and Qatar Airways will receive
aeroplanes earlier than stated to us in the
revised delivery schedule.
With Al Bakers aggressive plans
across commercial, private and cargo,
hes going to need a lot of planes,
And hes going to need them quick.
Just last month, the CEO confirmed
to journalists that he expects to sign a
deal for a 33 per cent stake in European
all-cargo airline Cargolux in a few
weeks. The stake in the ninth largest
freight company globally will lend Qatar
Airways considerable extra grip in the
global cargo market. While Al Bakers
warehouse at Doha International Airport
has capacity to handle around 400,000
GULF BUSINESS / 41
cover story
tons of cargo annually, Cargolux handled
4,652 million tonnes in 2009.
It is the right time because the whole
business has rebounded and Qatar
Airways wants to play a very important
role in air cargo. Cargolux is very well
established and a strong airline, says the
CEO. The synergies are appropriate, we
want to be a global player.
Another crucial peg in Al Bakers
plan is the private jet market. The firm
plans to double its all-Bombardier fleet
to six aircraft by the end of August this
year. The incoming deliveries include a
Bombardier XRS in May, followed by a
Challenger 605 and a Global 5000.
These planes will be housed in a
handsome new 6,300 square metres
hangar facility. Which brings us to
another gripe from Western critics: the
plethora of shiny, new infrastructure
thats cropping up and supporting the
Gulfs shiny, new planes.
The $14.5 billion New Doha
International Airport based in Qatars
capital, Doha is Al Bakers self-
professed favourite subject and another
of the airlines related projects directly
under his control. The facility, delayed
by two years, is now set to open by 2012
with a capacity of 24 million passengers
a year, rising to twice that in 2015.
What will happen to the airlines old
facility? Why, you want to buy it? he
asks, with a smile testament to a sense
of humour lurking beyond his steely
ambition. It will be demolished, he
says, to make way for commercial and
office space.
The new airport is due to be
complete at the end of 2012 and will be
operational after that. We will make sure
that we have tested all the systems six to
eight months before we open the gates
for full operation. For example, cargo will
be partly functional this year in July so,
part by part, we will take over sections
of the airport. The air traffic systems will
also be completed before the end of the
year. Cargo facilities will be complete
by the end of the year, he adds, clearly
proud of what such a mammoth-sized
project means for the future capabilities
of his country.
I didnt achieve anything I just did
my job, which was to have a successful
airline. I love all the jobs that are given
to me by my government because I serve
my country. I have always been in a
position of responsibility, he says. You
dont call this power; you call this the
freedom to do your job the way you like,
without outside interference, as long as
you deliver.
The new airport and Qatar Airways
represents just part of a grander master
plan for Qatars development by 2030.
In addition to growing its air transport
capacity, the country is spending
hundreds of billions of dollars on power,
infrastructure, real estate and education.
Last year, the small but boisterous Emir
state boasted 19.4 per cent GDP growth
number one in the world.
And there is, of course, the football
World Cup to provide for in just over
a decade, The PR value of the World
Cup in 2022 is immense and every
country that has achieved this so far has
leveraged this PR opportunity to show
many things that the country would want
to portray. This is an opportunity that
Qatar will take seriously and in a very
successful way, the CEO says.
And with that, hes off. Have I got any
more interviews today? he asks his PR
team. Media-friendly Al Baker is clever
enough to know that image along with
putting your struggling rivals straight from
time to time means everything.
2005 2009 2015 2020
no. oF yeArs
0
40
20
60
80
(In mIllIons)
emIrAtes
0
20
40
60
80
QAtAr AIrWAys
0
20
40
60
80
etIHAD AIrWAys
Passengers carried by airline Passengers carried by airline
80 Airbus A350s (including options)
60 Boeing 787s (including options)
12 Boeing 777s (including freighters
and options)
14 Airbus A320s (Family aircraft)
5 Airbus A380-800s
1 Bombardier Global 5000
QAtAr AIrWAys
Fleet on orDer
SOURCE: AIR TRANSPORT INTELLIGENCE; AIRLINES FORECAST
INFOGRAPHICS: TARAK PAREKH
Boeing
is also
imminently
going to start
a second
production
facility, so
we think that
there will be
a ramp up of
production,
Qatar Airways
will receive
aeroplanes
earlier than
stated to us
in the revised
delivery
schedule.
42 / JUNE 2011
KINGDOM, COME
Abundant oil resources remain Saudi Arabias largest blessing and burden.
Sabah Haider reports on the challenges of rampant unemployment and
generating diversifed income in the regions largest economy.
Jeddah cityscape,
Saudi Arabia
S
audi King Abdullah bin Abdul Azizs announcement of billions of dollars of
domestic investment in March came amid intense regional unrest and fears
that the turmoil would trickle into the kingdom.
An estimated 60 per cent of the population of roughly 26 million is
under the age of 25, and the country suffers from an unemployment rate of around
10 per cent.
These factors, combined with a chronic housing shortage,
a lack of skilled Saudi workers in the private sector, and an
underdeveloped infrastructure in certain areas, all fell into the
spotlight as matters for concern.
The government responded fast and with unprecedented
levels of investment to address the frustrations of its
citizens, but also because it needed to turbo-drive its economic
aspirations of becoming a top-10 global economy.
Back in 2005, Saudi Arabia was ranked 67th by the World
Bank in its annual rankings of 183 economies for Ease of
Doing Business. That year, the government ambitiously
announced its 10x10 programme based on the goal of becoming
a top-10 economy by 2010. And it got close only six years
later, in 2011, KSA is ranked 11th.
The country looks set to further climb
the rankings, if only slightly, next year
on back of the mega spending which
is pushing the kingdom into a bright
economic renaissance affecting all major
industries and sectors particularly
banking and finance, oil and energy,
technology, and infrastructure.
A publIC prIvAtE AffAIr
The dramatic turn for the better for
Saudi Arabia has been steered by the
governments efforts to relax regulations
around doing business in the country
in order to stimulate the private sector
making it easier for businesses in the
kingdom to operate in both the public
and private spheres.
One way this has been achieved
is through the facilitation of PPPs,
42-47 Saudi Arabia.indd 42 5/25/11 5:55:21 PM
GULF BUSINESS / 43
SAuDI ArAbIA COUNTRY RepORT
or public-private partnerships. In the
past the banking sector has functioned
in a sphere where lending has been
a challenge, and government efforts
to address this have resulted in a
stimulation of private investment.
The banking sector may still need to
go through a natural maturation process,
but Shady Shaher, Middle East economist
at Standard Chartered Bank, says the
Saudi government is making credible
moves. In 2008, the world was going
through a financial crisis and when that
happens you need the government to step
in with counter-cyclical policies, and all
of that trickled through and helped the
private sector grow, says Shaher. Long
term, I see the government continuing
to encourage private sector companies
to come in and more public-private
partnerships (PPPs). The Saudi Arabian
General Investment Authority (SAGIA)
launched a major programme a few years
back to stimulate private investment.
Clearly marketing the countrys
credentials as a great place to do
business is important on its website,
SAGIA notifies visitors looking to apply
for an online business licence, KSA is
the easiest place to do business in the
whole of the Middle East.
OIl AND ENErGy
Saudi Arabia is the regions largest
economy, fuelled by oil which has been
both a blessing and a thorn in its side
because the countrys vast wealth and
dependence on oil income has caused
a degree of underdevelopment in other
industries. Now with only a few more
projected decades of oil remaining, the
country, not unlike Abu Dhabi, is rapidly
developing other sectors.
Problems caused in the past, such as a
dramatically unequal distribution of wealth
and a vast, frustrated and unemployed
youth population, are being addressed
in tandem with developing the public
and private spheres, and this investment
is possible because the government
especially in recent years has been able
to develop enormous surplus wealth due to
the high price of oil.
Oil prices have been favourable to
KSA, Its able to sustain this type of
spending because of high oil prices,
explains Dr John Sfakianakis, chief
economist at Saudi Fransi Bank.
The macroeconomic profile of the
country is solid, and given that oil prices
44 / JUNE 2011
are at the level of $100 and above allows
the country to appear very healthy on the
inside and outside, as well as spend a lot
of money. Saudi Arabia has little domestic
debt and no external government debt.
Thats important. On top of that, the
economy will attain fiscal surpluses this
year and next year as long as oil prices
remain high.
While current oil prices are certainly
good for Saudi Arabias booming
economy, Glenn Lovell, senior associate
at Al-Tamimi law firm in Riyadh, says
the government recognises that its oil
wont last forever and alternative energy
sources are being explored. There are
some challenges in the oil sector, and
that is the consumption rate internally,
he says. For example, to supply the
countrys electricity generators, theres
a huge internal consumption of oil;
the government is addressing this and
is looking at alternative power
generation methods.
Addressing the need to safeguard
energy supplies and provide for a fast-
growing population, and noting that solar
and nuclear power are the best alternative
energy options, the government seems to
have responded proactively.
In April 2010, the Saudi leadership
announced a Royal Decree to establish
the King Abdullah City of Atomic and
Renewable Energy in Riyadh, to
manage future energy resources. The
step was hailed by the president of
King Fahd University of Petroleum and
Minerals, Khaled Al Sultan, as a massive
step toward securing additional sources
of energy and preserving oil for many
a decade.
Overall, the government has committed
to spending approximately $100 billion on
solar, nuclear and other alternative energy
sources in the coming years.
fINANCE AND ECONOMy
Clearly KSA is enjoying a period of
prosperity and stability, especially
when compared to surrounding GCC
countries, says Lovell. Its in a unique
situation because it had time to build its
financial reserves.
One thing Lovell points to is the
King Abdullah Financial District (KAFD),
being built 10km from the centre of
Riyadh, the countrys financial capital.
The KAFD will accommodate the Central
Bank, the capital market authority and
a number of other supporting bodies,
while all financial institutions in KSA
will moved there.
Banks are further set to benefit from
new laws on the horizon. This is the
year for banks in KSA, says Lovell. We
are waiting for the government to issue a
number of laws finance, mortgage, etc.
Once theyre passed, there will be more
framework within those regulations.
One key challenge in the past was
growth of credit and availability of
liquidity, but since last year that has
improved, explains Shaher. The
situation would have been different if the
government had not spent and focused
on key areas of the economy; the private
sector would have contracted significantly.
A key challenge for the banking and
finance sector in KSA now is increasing
balance sheet size without compromising
The government responded fast and with
unprecedented levels of investment to address
the frustrations of its citizens, but also because it
needed to turbo-drive its economic aspiration
to become a top-ten global economy.
Left: KAUST
Below: Saudi
King Abdullah
bin Abdul
Aziz
A
R
A
B
I
A
N

E
Y
E
GULF BUSINESS / 45
on risk management, says Julian
Johansen, a partner at Allen & Overy
in association with Abdulaziz Al Gasim
Law Firm, Riyadh. Meanwhile, for the
government, Johansen says the major
challenge is to maintain the right
balance between government and
private sector funding.
He explains: A preponderance of
government funding tends to diminish the
private sector role, which may have an
adverse effect on bank profitability. Too
much emphasis on the private sector, with
banks remaining cautious following the
global financial crisis, carries the risk that
essential projects may be under-funded.
INfrAStruCturE
Unprecedented levels of infrastructure
development have begun in the kingdom.
With the population set to increase
dramatically, and on the back of 500,000
new homes to be built in the next few
years as announced by Royal Decree
in March tremendous amounts of
infrastructure need to be put in place.
Beyond water desalination,
telecommunications, and energy, it
also includes technology and transport.
Saudi Arabia has put aside billions to
invest in its infrastructure, from power,
roads and rail to hospitals and schools.
A huge national and regional GCC rail
network is underway, which, when
completed, will play a significant role in
the cost and energy-efficient movement
of goods and people.
Lovell explains that the supply of
water and electricity are issues in KSA,
firstly as there is major pressure on the
current systems to supply electricity, and,
with water, the price that consumers
pay for a glass is one tenth of its cost of
production When you have that, its
very hard to privatise those industries.
The construction sector is one of
the big industries set to benefit from
government spending on infrastructure,
both residential and commercial,
including the development of planned
economic cities. A total of SAR624
billion over the next five years has been
earmarked for government expenditure
housing the planned six economic cities.
Facilitated by SAGIA, each city, will be
developed by the private sector
around one globally competitive
cluster or industry, which will serve
as an anchor and a growth engine
for the city, around which other
businesses will locate and consequently
create infrastructure, real estate
and industry opportunities.
Infrastructure and technology firms
are set to benefit from investment in
infrastructure and across industrial
sectors in KSA, says Walid Abukhaled,
president and chief executive of GE Saudi
Arabia. The economy has always been
good in Saudi Arabia. GE has been there
for 80 years and weve done this through
a strategic partnership with the Saudi
government that is, creating value for
the Saudi government and, in return,
we get value.
In the past 20 years, GE has
invested SAP 1 billion in localisation
and manufacturing projects. This
investment cuts across energy,
healthcare, aviation, power and water
industries, explains Abukhaled.
Overall, Lovell notes a challenge for
the government is the need to get top
quality products for the right price, while
Buildings under
construction in
the King Abdullah
Financial District,
on the outskirts
of Riyadh.
controlling the pace of development:
It must be an enormous task for
ministries. Another challenge, he says,
is classification of foreign entities
Some of these companies are classified
as A in their own countries, but they
may have to change here. This is an
issue because certain government tenders
require certain classification for contracts
and contractors.
uNEMplOyMENt AND INflAtION
The Saudi American Bank (SAMBA)
expects the kingdoms population to rise
to 29.7 million by 2013. Organisations
in both the public and private sphere
have implemented Saudiisation
policies, as industry-specific quotas
for the employment of Saudi Arabian
nationals have been introduced in
order to promote the employment of
locals, as well as skill enhancement in
the local professional labour market,
and, ultimately, decrease the countrys
dependence on imported talent.
Around 140,000 Saudis are currently
studying abroad under Saudi government
sponsorship, explains Abukhaled, a
Saudi national. Theyll all come home
with the best education in the world and
well be looking to recruit that talent.
We have a vigorous plan for
46 / JUNE 2011
264.6 billion
bARRElS
SAUDI ARABIA BoAStS
thE woRLDS LARGESt
oIL RESERvES
PoPULAtIoN GRowth RAtE: 1.536 per cent
GDP per capita
MEDIAN AGE
oIL RESERvES LItERACY RAtE:
UNEMPLoYMENt
RAtE:
$24,200
78.8 PER CEnT
10.8
PER CEnT
25.3
YEARS
RESUME
(2010 est.)
(2010 est.)
M
A
P
S

A
R
E

F
o
R

I
L
L
U
S
t
R
A
t
I
o
N

P
U
R
P
o
S
E

o
N
L
Y
Saudiisation were concentrating on
bringing in Saudi talent, he adds.
Most nationals tend to prefer jobs in
the public sector where they benefit from
better salaries and packages than what
is typically available in the public sector.
The wage gap between sectors is an area
of concern as private firms often struggle
to compete.
However, Shaher explains an
estimated five million jobs need to be
created by 2025 as the number of Saudi
nationals grows from 20 to 30 million in
the next decade.
Currently, unemployment is
approximately 10 per cent. I think the
way the Saudis are dealing with it is
right in terms of addressing the structural
issues that cause unemployment, such
as education, and if you look at the big
area of spending in past few years, it is
education, he says.
The population is are very young in
Saudi. If you look back 10 years ago,
there were 10 universities in the country.
Now there are 25. says Ali Riza Kucuk,
Intel regional retail manager for Middle
East Turkey and Africa. This young
population has become tech-savvy.
They are very interested and willing
to know about and use technology, so
thats why in this renaissance the Kings
packages are helping; lowering the
broadband price is helping,
Policymakers in the region have been
active in dealing with the demographic
challenge and thats why theyve been
investing and diversifying to create
job opportunities, adds Shaher. Im
optimistic on the back of all the spending.
In the past two years theyve spent almost
$200 billion on infrastructure investment.
The next decade will be crucial in
building the kingdoms impact as a truly
diversified economy. Key to this will be
the country continuing to hold its arms
open to investment; and turning its vast
youth population into an asset.
GULF BUSINESS / 47
ToTAl lAnDMASS
2,149,690 SQ.KM
(SliGHTlY MoRE THAn onE-FiFTH THE SiZE oF THE US)
totAL PoPULAtIoN
MEDINA
RIYADh (Capital) AD DAMMAM
(2009)
MECCA
JEDDAh
PoPULAtIoN IN CItIES
INCLUDES
NoN-NAtIoNALS
26,131,703
1.104M
4.725M 902,000
1.484M
3.234M
5,576,076
SAUDi ARAbiA
S
o
U
R
C
E
:

C
I
A

I
N
F
o
G
R
A
P
h
I
C
S
:

t
A
R
A
K

P
A
R
E
K
h
MeDINAH
RIYADH eASTeRN ReGION
MAKKAH
The UAes
TrAin
joUrney
TEXT BY ANGELA SHAH
ILLUSTRATION BY TARAK PAREKH
48-53 Etihad Railways.indd 48 5/25/11 5:57:34 PM
GULF BUSINESS / 49
SPECIAL REPORT
IN jUSt ovEr two yEarS, aBU dhaBI IS SEt to roLL
oUt thE FIrSt StaGES oF ItS EtIhad raIL pLaN.
cEo rIchard BowkEr SpILLS thE BEaNS to GULF
BUSINESS oN thE BILLIoN doLLar projEct.
T
he glamour and neon lights
of the Yas Hotel made an
unlikely tableau for the launch
of an idea grounded in the past but
with ambitions for the future.
The world-famous venue was chosen
by Abu Dhabi to formally introduce
Etihad Rail, formerly known as Union
Railways, its ambitious $10-billion,
1,200 km rail network for which it will
break ground later this year. The first
trains carrying granulated sulphur from
new plants in Shah and Habshan, the
locations of major oil and gas field
developments, along the 260 kms to
Ruwais should roll on the tracks in
2013. Ruwais is the site of the UAEs
major oil refineries, a natural gas
liquids fractionation plant and a sulphur
handling terminal, among other plants.
Rail is a great way to transport
high-volume goods: commodities,
containers, aggregates, cement and
sulphur. Railway can do it better
than anything, says Richard Bowker,
Etihad Rails chief executive officer,
in an interview with Gulf Business.
In most of the places in the world,
you always have to deal with things
sorted out 100 years ago, he adds.
But here there is an opportunity
to learn from the best of the best
and apply that in a way for the best
possible results in the UAE.
Etihad Rail is a key part of planned
investments by Abu Dhabi to shore
up its economy to flourish beyond
the day when its oil dries up. Its 2030
economic development plan calls
for the emirate to boost a number of
industries, including alternative energy
and tourism, while also spending billions
50 / jUNE 2011
SPECIAL REPORT
become viable in countries like the UAE.
Increasing freight traffic to and through
the country has made rail necessary to
both reduce costs and increase efficiency
of moving the goods.
Bowker says one total rail shipment
can carry the equivalent freight of 300
trucks. And with coffers flush from
escalating oil prices, a rail network
becomes a go-to investment choice for
Gulf governments.
Etihad Rails management says the
network will also be better for the
environment compared to truck fleets,
even though they have decided to use
diesel, rather than electric, engines.
The second stage of the network, for
which preliminary engineering is being
conducted, would lay tracks inside the
emirate of Abu Dhabi from Ruwais to
Gweifat, which is located on the border
with Saudi Arabia, about 240 kms west
of Abu Dhabi city. This stage would
also include lines from Tarif to the new
Khalifa Port and the Kizad industrial
zone in Abu Dhabi, ending at Jebel Ali
port in Dubai. The third stage would
involve tracks from Jebel Ali northward
through the emirate of Sharjah, where
they will split, heading to both Khor
Fakkan in Ras Al Khaimah and to
Fujairah, where a major oil and gas port
is being increasingly used to reach the
Indian Ocean by bypassing the Straits
of Hormuz.
The trains
would have double-decker carriages
and travel at speeds of 120 km/h. A
planned passenger rail line going as fast
as 200km/h for commuters between
Abu Dhabi and Dubai has been put on
hold for now. Still, Bowker says the rest
of the 1,200km network what he calls
the core lines of the rail system would
also be able to accommodate passenger
traffic, and would do so.
There is strong potential demand for
passenger service, Bowker says. But
One total rail shipment can carry the equivalent freight of
that in 300 trucks. and with coffers fush from escalating oil
prices, a rail network becomes a go-to investment choice for
Gulf governments. Richard Bowker, Etihad Rails chief executive offcer
to beef up infrastructure such as rail.
The development of an integrated
railway network signifies the inception of
a new chapter of transport in the UAE,
says Nasser Al Sowaidi, chairman of the
board of directors of Etihad Rail. The
rail network will form an imperative
part of the countrys infrastructure
and promote integration between
various methods of transportation, both
current and planned for the future.
In total, the planned rail network,
which is scheduled to be completed in
2018, would stretch from oil and gas
fields in the countrys western region and
through Dubais busy ports and up to
the northern emirates and the Omani
border. The railway expects to
ship 50 million tonnes of a
variety of goods in the first
few years.
While railways have
long been a part
of many nations
transportation
systems, such a
network has only
just recently
GHWEIFAT
TO SAUDI ARABIA
TO OMAN
RUWAIS
ABU DHABI
ICAD
ABU DHABI
MUSAFFAH
ABU DHABI
KHALIFA PORT
DUBAI
JEBEL ALI
SHARJAH
RAS AL
KHAIMAH
PORT SAQR
KHOR FAKKAN
FUJAIRAH
AL AIN
LIWA
SHAH
ETIHAD RAIL
PROJECTED
ROUTES
r
E
U
t
E
r
S
52 / jUNE 2011
SPECIAL REPORT
we have a colossal amount of work to
do to get the first stage running. Its all
about priorities.
Putting the priority on freight makes
sense, agrees Nabeel Kazerooni, senior
executive officer at Injazat Capital
in Dubai. In this part of the world,
passenger volumes are not that big, given
the size of the populations, he says.
Etihad Rail is capitalised at Dhs1
billion ($270 million) and is 70 per cent
owned by the government of Abu Dhabi,
while the UAE federal government owns
a 30 per cent share.
MONEy ON THE TRACKS
rail projects across the Gulf arent
technically the frst time trains have
snaked across the region. the mode
of transport actually hails back to the
crumbling ottoman Empire in the early
part of the 20th century.
the hejaz railway traversed between
damascus and Medina, largely ridden
by haj pilgrims. But the railway was
destroyed during the First world war
when it was raided by Bedouin tribes led
by Lawrence of arabia.
today, a series of simultaneous rail
projects could one day link omani
ports on the Indian ocean through the
Gulf, into the Levant and turkey, and
on the doorstep of Europes capitals
recreating, and even going beyond, the
ottoman Empires network.
rail is the buzzword in the region,
says Nabeel kazerooni, senior executive
offcer at Injazat capital in dubai.
Flush with cash from oil revenues, Gulf
governments are investing the proceeds in
large infrastructure projects, including rail.
the individual projects themselves are at
various stages of development with Saudi
arabia, the UaE and Qatar having the
most advanced plans. the research frm
Business Monitor International estimates
the total value of rail projects in the region
over the next 10 years at $109 billion. the
only other railway market with a similar
potential is that of the United States.
the UaEs railway is being constructed
in tandem with similar rail projects in
other Gulf countries. Saudi arabia will
soon open a north-south line covering
2,500 kms, while oman, Qatar and
Bahrain are starting rail projects of
their own.
the vision is that you will be able to
run a train from Muscat through abu
dhabi to Saudi right up to the jordanian
border, then through to turkey and
Europe proper, said richard Bowker,
chief executive offcer of Etihad rail in
the UaE. then youre into very exciting
visions of transportation of goods.
Each Gulf country has agreed to
comply with the same standards
for track gauge, the European train
control System 2. this will help avoid
ineffciencies created because of
differences in signaling systems that
exist between the Uk and continental
Europe, for example.
those sorts of agreements aside,
it will be a few years yet before train
caravans will be chugging along the
Gulfs desert landscape. there have
been some teething problems, says
Marina petroleska, head of infrastructure
analysis, industry research, at Business
Monitor International in London. But
there is a lot of political backing; the
rhetoric is quite positive.
In the meantime, the private equity
industry has found limited success in
leveraging the billions being spent on
railroad projects. kazerooni says his
frm had hoped to raise about $300
million last year for a transportation and
logistics fund, but found slack interest
due to the moribund global economy.
recent political turmoil in the
Middle East has thwarted those efforts
further. Still, kazerooni said the sound
fundamentals of such a fund should
attract investors once stability in the
regions security is achieved and he hopes
to market the fund again later this year.
Its a fantastic asset class for
investors to consider, he says. you own
the asset as investors and lease it back
to the operator. you maintain the value
of the investment and also perhaps get a
little bit of capital gain as well.
SAUDI ARABIA: THE WAy TO MECCA
AND BEyOND
the oid-rich kingdom is building the
regions largest rail network to support
ThE GCCS BURGEONING RAILwAY NETwORk IS ONE Of ThE BIGGEST BENEfICIARIES Of ThE RISING OIL pRICE
It seems to be on track, says Marina
Petroleka, head of infrastructure analysis,
industry research, for Business Monitor
International in London. The contracts
are going out; the construction is to start
this year.
There was, however, one misstep
last fall when Etihad Rail seemingly
abruptly cancelled key contracts with
two American companies and a French
firm. In January, the company quietly
dismissed major design and management
contracts just two months after they had
been awarded. The railway cancelled
a management contract with a joint
venture between Parsons Corp. of
Pasadena, California, and the Paris-based
SYSTEA. It also dropped a preliminary
For engineering and construction frms, Etihad rails plans
present a lifeline at a time when the global economy
was still reeling from the slowdown in residential and
commercial construction.
GULF BUSINESS / 53
both religious and commercial purposes.
In total, Saudi has almost $20 billion in
rail investments, including four major
projects: the haramain high Speed
railway, the North-South railway, the
Saudi Landbridge railway and the
jeddah Monorail.
Saudi plans a 950 kms line from the
red Sea to the arabian Gulf, connecting
with the North-South railway and
serving to haul commodities such as
bauxite and phosphate.
the $1.8 billion Mecca Metro opened for
partial service last autumn in time for the
haj. Scheduled to be complete this year,
the 20-kms project is expected to carry
half a million pilgrims every six hours.
QATAR: WORLD CUP FEvER AND
AMBITION
the natural gas exporter is undergoing
a massive spending programme on
infrastructure in preparation for hosting
the world cup tournament in 2022, and
that includes rail projects.
Earlier this year, the tiny island
emirate founded the Qatar railways
company which will oversee the
management and construction of $17
billion in rail projects including the west
Bay people Mover in doha, Lusail citys
light rail system and the overall Qatar
railways project which will integrate all
of the networks.
Qatar is also doing the heavy fnancial
lifting to build a long-planned $3 billion
bridge linking the island emirate to
Bahrain about 40 kms away. First
announced in 2001, the project has been
beset by delays.
OMAN: LINKING ASIA WITH THE GULF
the Sultanate is planning a $10-billion,
1,600 kms network that hugs the omani
coastline from Salalah in the south
through the capital of Muscat and on to
the port city of Sohar. the frst phase
is construction of the 1,000 kms linking
Sohar, which is the site of the countrys
steel and aluminium plants, to the
capital and on to the border with
abu dhabi.
construction on whats being called
the National Freight and passenger
railway has not yet begun. oman plans
on appointing contractors and design
consultants from a short list of 10 frms
in june, according to Salim al affani,
the head of planning for the Supreme
committee for town planning. Services
are expected to start in 2017.
ThE GCCS BURGEONING RAILwAY NETwORk IS ONE Of ThE BIGGEST BENEfICIARIES Of ThE RISING OIL pRICE
Qatar Railways Company
engineering agreement on the
projects first two phases with Parsons
Brinckerhoff of New York.
A decision was taken and we did it,
Bowker says, declining to detail reasons
why the contracts were dropped. No
projects has ever gone from A to Z without
difficult decisions that have to be executed
and that was probably one of them.
The industry, he says, has taken the
reversal in its stride. The evidence of
how keen the market is and how serious
we are can be seen in the fact that the
tenders for the main ETC contract due
March 1 had over 20 bidders. This tells us
the interest is overwhelming, he adds.
For engineering and construction firms,
Etihad Rails plans present a lifeline at
a time when the global economy is still
reeling from the slowdown in residential
and commercial construction.
Last September, Al Habtoor Leighton
formed a joint venture with John Holland,
the Advance Rail Group, specifically to
target opportunities in the rail sector. Al
Habtoor Leighton has been particularly
hurt by the crash in the construction
sector with many projects cancelled or
delayed. The diversification into rail is
an astute way to insulate the company
from further weakness in that core sector,
according to research firm, BMI.
The political unrest in the Middle East
has not deterred Abu Dhabi from pursuing
its aggressive plan of development. It hired
Bowker, a former vice chairman at British
Waterways, in 2009 and has aggressively
partnered with engineering and design
firms to build the network.
We are dead, dead serious Bowker
says. This is all-systems go.
54 / JUNE 2011
54-59 Japan.indd 54 5/25/11 5:43:00 PM
To make things worse, the escalation
in the Yen during the crisis has put Japan
at an export disadvantage.
Japanese firms in the region will
likely shelve any ambitious growth
plans for up to 18 months, according
to Lindsey McDonald, a consultant for
the information and communication
technologies practice at Frost & Sullivan.
Electronics companies are perhaps
the most impacted and theyve had
to either rethink or realign expansion
plans. Typically this would mean that
the expansion plans have been delayed.
There are also thoughts of outsourcing
and/or moving manufacturing facilities to
other production destinations to offset the
impact of a halt in Japanese production.
Japan has a long history selling its
goods in Dubai, and offering expertise
in engineering and technology. The
Dubai Metro, for instance, was built
by a consortium led by Japanese firm
Mitsubishi Heavy Industries, while the
Dubai Chamber building was designed by
Japanese architectural firm Nikken Sekkei.
The UAE is also home to over 300
Japanese companies that use Dubai as
their regional headquarters for the MENA
region, which translates to 41 per cent
of all Japanese companies based in the
Middle East.
The engineering and retail sectors
can expect delays in the coming months
as power outages in Japan hamper
manufacturing plants, choking off supply
to the Gulf. This is especially important
given that Japans exports to the UAE
are the highest in the Middle East and
the share of Japanese cars in the country
over the last 10 years has reached close
to 70 per cent, according to the Japan
External Trade Organisation.
To compound matters, GCC
governments have introduced restrictions
to prevent the sale of Japanese food
tainted with radioactive contaminates.
Japanese businesses in the Gulf have
gained a reputation for methodical and
prudent decision-making in recent times,
so few predict any knee-jerk withdrawals
from markets in the region. Instead,
expect some regional manoeuvring to
capture stable growth and avoid the
political unrest thats engulfed countries
like Bahrain.
W
hen an earthquake and
tsunami struck the north
east coast of Japan in
March it started an
economic chain reaction that is now
being felt on the shores of the Gulf.
The Great East Japan Earthquake,
as named by the Japanese government,
and resultant nuclear-plant disaster
disrupted the supply chain of industries
that have supported Gulf growth in
technology, engineering and automotives.
Japan, after decades of strong, steady
growth in the region, has been knocked
off track.
Car and electronics manufacturers
have been hit by a slow down in
production, leaving companies like
Toyota the worlds largest producer
of cars in 2010 announcing a drop in
sales in the UAE as it fails to meet
demand at showrooms.
GULF BUSINESS / 55
JAPAN
what japan's pain
means for the gulf
TEXT BY RYAN HARRISON
With a long history of trade, Japan and
the Gulf are closely linked. The ripples of
the tsunami and halted production are
directly affecting the Middle East.
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56 / JUNE 2011
JAPAN
Japanrecentlypassed
a$49billionemergency
budgettohelpfund
reconstruction.
Asiasufferedthehighest
economiclossesof$75
billionover2010,equivalent
to0.28percentofGDP.
Naturalcatastrophes
exceededman-made
disastersforthefrsttime
in2010with167compared
to137man-madedisasters.
Earthquakesaccounted
foralmostone-thirdofall
insuredlossesin2010.
Intermsofeconomic
losses,naturalcatastrophes
andman-madedisasters
cost$218billionin2010,
morethan60percent
higherthanthe$68billion
in2009.
2010rankedastheseventh
highestyearforinsured
lossesat$43billionsince
1970,althoughitsstill
lowerthanthe$83billion
ofinsuredlossesin2005
with$78billiontriggered
bynaturaleventssuchas
HurricaneKatrina.
Thecosttoprivate
insuranceoftheMarch
earthquakeisestimated
at$14-33billion,compared
with$783millionin1995.
THE COST Of diSASTErS
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54-59 Japan.indd 56 5/25/11 5:43:16 PM
Jane Kinninmont, senior research
fellow for MENA at Chatham House,
said: If youre selling cars and consumer
goods then Saudi is a pretty good bet
out of all the GCC states. A lot of the
huge rise in government public spending
has found its way to salaries, and with
credit conditions being tight recently
youd expect this trickle down to support
consumers spending power.
Whereas if youre looking at a
long-term loan to a state company
institutions banks have been asking
questions about government stability
in Saudi, especially in light of the
protests in Bahrain. You will look at
the transparency of Saudi as well and
that will feed into your risk perception.
Bahrain has raised concerns about
Saudi, especially in the Eastern
Province, said Kinninmont.
She added that the Gulf market is
unlikely to see a long-term shift in
strategy from Japanese firms, but rather
a short-term revision of tactics. This
is driven largely because demand for
products, especially Japanese cars,
depends on trust. At the end of the day
the tsunami was an act of god, she said.
Recruitment experts have reported
that Japans appetite for hiring has
been scaled back in the Gulf, a region it
has traditionally dominated in terms of
offering candidates long-term job security.
Ian Giulianotti, associate director of
human resource management consulting
at NADIA recruitment, said: Hiring is
going on but Japanese firms are taking
longer to make decisions. Theyre now
taking a longer-term view and because
theyre feeling the pinch the decision
time on average has doubled from eight
weeks to 16 weeks.
Theyre facing a reduction in power
across Japan, so the predicament they
have is: do we have enough power to
produce things? They dont want to
commit to expansion they cant deliver
or make promises they cant keep.
Giulianotti said that because long-
term relationships are the lifeblood
58 / JUNE 2011
A worker checks radiation levels on
a Nissan car produced in Japan.
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of the Japanese corporate world,
businesses will take the dip in activity
as a chance to foster ties with new
partners in the Gulf.
The unfolding crisis at home, which
latest estimates forecast could cost Japan
between 2.5 and four per cent of GDP
this year, is likely to severely crimp
the growth of Japanese firms overseas.
Most will at the very least take a more
cautious stance on expansion in the
Gulf as fears linger about their ability to
deliver popular exports.
Most analysts agree that the rest of
2011 will likely be a deceleration rather
than an emergency stop, but it does
present opportunities for Korean and
Chinese engineering firms to dislodge
Japans foothold in the Middle East.
Kinninmont added: Japan has been
highly respected in the Arab world for
some time, partly because it doesnt
have the colonial baggage of the Western
world. Its been viewed as a successful
non-Western power, but as its economy
has floundered in recent times it has lost
some standing.
One perhaps unexpected hard truth
that Japans multinational manufacturers
are facing in the aftermath of the
tsunami disaster is the degree to which
The unfolding crisis at home, which
latest estimates forecast could cost
Japan between 2.5 and four per cent
of GDP this year, is likely to severely
crimp the growth of Japanese frms
overseas. Most will at the very least take
a more cautious stance on expansion
in the Gulf as fears linger about their
ability to deliver popular exports.
they continue to depend on domestic
suppliers for parts.
While many Japanese companies
already have vast production facilities
in other countries, that investment
is likely to increase to guarantee the
smooth flowing of the supply chain
to critical regions like the Gulf.
JAPAN
54-59 Japan.indd 59 5/25/11 5:43:24 PM
Filippo Fantechi, CEO
of energy business
advisory rm Contax
Partners
60 / JUNE 2011
CHEMICAL
REACTION
The global petrochemicals industry is diversifying and the Gulf must shift gears to
claim its share.
TEXT BY MARK ATKINSON
Filippo Fantechi, CEO
of energy business
advisory rm Contax
Partners
of energy business of energy business of energy business of energy business
advisory rm Contax
of energy business
advisory rm Contax advisory rm Contax advisory rm Contax
Partners
gas (ethane) based. In some ways gas is
preferable to oil, which is more subject
to price volatility. Yet, according to an
Alpen Capital report, the industrys
cheap supply of ethane is becoming more
restrictive, with reduced exploration/
production activities and increased
energy demand primarily, electricity.
Project owners in the region will not
be able to rely on subsidised pricing
for feedstock to achieve a significant
competitive advantage, confirms
Fantechi. Historically, project owners in
countries such as Saudi Arabia received
gas feedstock at highly subsidised prices,
which enabled them to obtain a much
more attractive project IRR and operate
their plants more competitively in the
long run.
Due to the shortage of ethane, Fantechi
forecasts that project owners in Saudi
Arabia will struggle to
obtain these subsidised
rates (the Kingdom
is already looking
at increasing the
I
t is hard to imagine a world
without petrochemicals as the
name suggests, chemicals derived
from petroleum. From the technology in
our computers and mobile telephones,
to the medicines we take, personal care
products we use, the plastics contained
in most everyday items, the coolant we
put in our engines or the de-icer used
for aircraft, the downstream products of
petrochemicals are ingrained into every
aspect of our daily lives.
We all use products of the
petrochemical industry every day without
thinking about it, says Tony Potter,
managing director at CMAI Middle East,
a petrochemical market consultant.
Food in the supermarket is wrapped
in polyethylene film, we drink milk out
of polyethylene cartons, while water
and soft drinks are sold in polyethylene
terephthalate (PET a form of polyester)
bottles. More than half of the global fibre
used is polyester (there isnt enough
natural cotton in the world to clothe
us all), so without the petrochemical
industry, our wardrobes would be
severely depleted.
With its rich oil and gas reserves,
the GCC is a major source of raw
petrochemical materials. These are then
typically shipped to countries in Europe
and Asia where they are converted into
downstream consumer products.
Future demand looks promising
most notably through polysilicone, the
petrochemical used in memory chips,
high-performance processors and solar
technology. According to Filippo Fantechi,
CEO of energy business advisory firm
Contax Partners, the region is forecast to
supply 20 per cent of raw petrochemicals
by 2015 up from 16 per cent in 2009.
Much of this demand will be driven by
Asia, particularly China and India.
Petrochemical projects will constitute
20 per cent of all energy project
expenditure between 2010 and 2013,
Fantechi forecasts.
Sitting on around 23 per cent of the
worlds gas reserves, and with natural
gas feedstock supplies heavily subsidised
by governments, the GCC has so far had
an advantage compared to its Western
counterparts.
According to an Alpen Capital industry
report, markets such as the US may be
paying more than 2.5 times as much.
This has helped the region expand its
global petrochemicals capacity by more
than 50 per cent.
CHALLENGES AHEAD
But the days of subsidised gas
may be numbered. Feedstock for
petrochemicals can be either oil or
60-63 Petrochemicals.indd 60 5/25/11 5:59:08 PM
GULF BUSINESS / 61
PETROCHEMICALS
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price) and will need to look at alternative
liquid feedstock. One alternative is
naphtha, a light version of crude oil.
We understand that petroleum
ministries are wary of gas allocation,
says Vishnu Sankaran, chemicals and
materials manager at business consulting
firm, Frost & Sullivan. (They now)
evaluate projects based on the diversified
products for which they can be used, and
on value addition over and above what is
being made in the region today.
Furthermore, other territories may
now be developing cheaper feedstock
advantages. Shale gas developments
in the US have brought their gas
prices down dramatically, improving
the competitive position of the US
and making it newly attractive as an
investment location, he adds.
The US is not the only contender.
Competitive threats for petrochemical
products are expected from China, Iran and
African countries, such as Nigeria, Angola,
Ghana and South Africa, says Sankaran.
Fantechi explains that utilisation rates
have improved at many petrochemical
plants and supply currently outweighs
demand. By 2015, this is likely to change
with increasing demand from China and
India. Still, pressures on demand will
remain as the latter countries develop
their own internal capacity.
Terneuzen
Polyurethane
Plant
As the GCC plans to step up
its production of downstream
petrochemical products, WACKER
Chemie AG, one of Europes leaders in
the eld, highlights how the demands
of new technologies and emerging
markets will, is increasingly driving the
downstream petrochemicals market.
Founded in 1914 and headquartered
in Munich, Germany, WACKER Chemie
AG operates 26 production sites
worldwide, supplying more than 3,500
products to more than 3,500 customers
in over 100 countries. Its products
are found in various sectors such as
pharmaceuticals, household/personal
care products and electronics.
More recently, the fastest emerging
market has been in polysilicon wafers
primarily used for the production
of semiconductors an area of the
business that increased by more than
60 per cent in 2010.
We expect silicon-wafer demand
to increase (further) during this year
says Rudolf Staudigl, the companys
president and CEO. New devices,
such as tablet PCs, and smart phones,
and the growth of image and video
applications, will fuel demand for
memory chips and high-performance
processors(our) main investment
focus will be our polysilicon division.
Another fast emerging area is the
photovoltaics market (the convertion
of solar power into electricity using
semiconductors) which currently
accounts for around 15 per cent of the
companys polysilicon division, and is
expected to grow into the future.
Finally, research and development
remains a crucial part of the industry,
often long before markets emerge. As
Staudigl points out, the company has
been researching polysilicons for years,
but only 10 years ago did the market
really start. If we hadnt done the
research we wouldnt be in the market
right now, he asserts. The same applies
to current research in the biosolutions
market with its increasing focus on
the agricultural and
pharmaceutical industries.
In terms of the
companys business plan
for the GCC, There
is a high level of
construction in the
region, so we are
very interested in
that side, concludes
Staudigl. Another
issue is how
business in North
Africa is going to
develop.
construction in the
that side, concludes
Rudolf Staudigl, CEO & President of WACKER Chemie AG
THE CHIPS ARE UP
GULF BUSINESS / 63
PETROCHEMICALS
Can you provide us with some best
practice sustainability examples
from Dow?
Sustainability requires making decisions
with the future in mind. It is all to do
with our relationship with the world
creating economic prosperity and
social value while protecting our
planet. Dow has four sustainability
pillars: innovations for tomorrow,
smart solutions for today, partners for
change, and responsible operations. In
terms of specic examples, advances
in chemistry have allowed us to
down-gauge lm stretch by more than
25 per cent, saving over 450 million
kg of polyethylene annually the
equivalent of 293 million gallons of
gasoline, or heating and cooling for
643,000 average homes. We have
also discovered a new way to produce
propylene oxide (used in products such
as seat covers, toothpaste, cough syrup,
and aircraft de-icing uids), which uses
less capital, reduces wastewater by 70
per cent and energy by 35 per cent.
How seriously is the chemical
industry adopting sustainability
practices?
I would say the chemical sector is a
leading industry in sustainability. There
is a movement towards sustainability
around the world, including the Middle
East. Often sustainability is taken to mean
only the environment. Equally important
aspects are the community, harnessing
employee creativity and engaging the
next generation of leaders. The Middle
East has adopted a forward-thinking
approach with initiatives such as Young
Arab Leaders and LoYAC (a Kuwaiti non-
prot organisation empowering youth
through creativity). The world has no
shortage of challenges, including raising
standards of living and providing clean
drinking water. Companies should ask
themselves, how can we minimise our
footprint and deliver solutions that help
customers and society do the same.
How can businesses benet from
implementing sustainable
practices and standards?
As well as being good
for the environment,
sustainability is
a competitive
advantage not just
philanthropy. Look at
what your company is
doing. Water, greenhouse
gasses and energy
are some of the
rst places to
look. Mapping
mega trends to
your business
and technology will also lead you to
opportunities. First, look at your footprint
and then some of these trends. What we
did was look at some of the UN Millennium
Development Goals which gave us a great
place to start. Who would have thought
that the cellphone would change the
way you do business in Africa and India?
Sustainability makes business sense. Our
2005 sustainability goals delivered savings
of $5 billion on an investment of $1 billion.
Thats aside from the environmental
impact such as reduced water use by
83 billion kilograms.
How do you envisage the future of eco-
development in the Middle East?
I would expect it to be driving the efcient
use of resources, such as ways to reuse
water. There are also technologies
that can improve the energy
efciency of buildings. I would
expect Gulf countries to continue
diversifying their economies and
in the petrochemical industry,
to nd more sustainable ways to
produce higher value downstream
products. Consumers dont
want to give up the
value of the products
they are used to they
just want to see that
theyre delivered more
sustainably.
implementing sustainable
practices and standards?
As well as being good
for the environment,
advantage not just
philanthropy. Look at
what your company is
doing. Water, greenhouse
diversifying their economies and
in the petrochemical industry,
to nd more sustainable ways to
produce higher value downstream
to nd more sustainable ways to to nd more sustainable ways to to nd more sustainable ways to
produce higher value downstream produce higher value downstream produce higher value downstream
DOW CHEMICAL
Gulf Business discusses sustainability with Dr Anne Wallin, director EH&S and sustainability, EMEA, The Dow Chemical Company.
CHANGING TIMES
Pressure on gas feedstock prices and
increasing global competition are now
compelling GCC petrochemical giants to
look at their business model. The GCC
is moving downstream into intermediates
and more specialised chemicals, and
is also developing polymer conversion
parks, says Potter.
At the moment, plastic is exported to
China where it is converted into finished
and semi-finished goods for export
to developed regions such as Europe
and North America. Not all polymer
conversion is labour intensive and some
of the conversion could be done locally
to add value and, ultimately, contribute
to the manufacture of more finished
goods in the region.
Sankaran agrees. Today, many
primary petrochemical products are
exported, which are then converted
into more value-added products and
sold back to the GCC region, he says.
I think it is time that governments, as
well as private companies, looked at
investing further along the downstream
chain through forward integration or
diversification. This will help create
higher value products which, in turn,
will generate further employment and
higher revenues.
With such a huge and diverse
range of downstream products, the
potential benefits for the manufacturing
sector and wider economy are clear.
64 / JUNE 2011
BE MY GUEST
When Dubai won the
best global Fairmont
hotel award last year,
I said to my staff well
done and then I said
now, get over it. This
sums up Philip Barnes,
regional vice president at Fairmont
Hotels. Hes so straight-to-the-point that it
momentarily takes you aback, but after a
second or two, you cant help but agree.
Its Barnes flat-out inability to accept
anything as good enough that has
ricocheted him across four continents in
30 years, where he has managed hotels
at regional level for some of the worlds
top five-star chains including the Four
Seasons, Shangri-La and, of course, the
Fairmont. The biggest mistake you can
make in a hotel is the same one that you
can make in any business complacency.
When you start thinking youre good,
thats when youre in serious trouble and
youll fail, he says.
When Barnes decided to hop on a
plane to the States as a young man with
the Lex Service Group, which has hotels
in the US and the UK, it was a brave and
unusual move for the time you dont
get anywhere unless you do things other
people dont do, he says. By his own
admission, the north-east England terrace
he grew up in bares scant resemblance
to the five-star enclaves he now resides
in. I mean look at it, he says, pointing
to his palatial office in Fairmont Dubai,
where he is also the hotels general
manager I have to pinch myself.
When Barnes landed in Dubai amid the
gold rush in 2007, it must have seemed
every hoteliers dream: a city awash
with credit-rich punters and a haze of
speculative euphoria. Most businesses
were bent on cashing in on the bubble.
Not Barnes. Its better now, its more
realistic, when the crunch came, thats
when you got to see who really knew
what they were doing, he says of the
crash that battered the local hotel industry
in 2009. Barnes rolled up his sleeves and
faced the recession head-on because if it
was easy anyone could do it.
There was a danger of oversaturation
in the old days; everyone thought Ill build
a hotel and Ill fill it. Theres been a real
awakening since 2009, no you cant just
build a hotel. Youve got to look at what
makes a hotel work, he says. We went
through a major change in 2009, I had to
shift our entire strategy our rooms and
F&B. We also went after the corporate
groups, which we hadnt done before.
We now take in groups for the exhibition
centre. We had to go cap in hand and say
we havent done justice to you.
Loyalty and retention became the
Fairmonts key words during the
recession and Barnes staked everything
on giving customers a reason to come
back. He offers the small but telling
example of the Christmas brunch at the
hotels Spectrum on One restaurant:
Everyone wants to maximise the price
they get, but with customers that have
been with you for years, you just cant
do that. We kept our prices the same for
the Christmas brunch. Why? Because the
people who were coming to us over the
Philip Barnes indomitable get-up-and-go has taken him to every corner of
the globe in his 30-year career. Having established the Fairmont Dubai and
Abu Dhabi, the chains regional vice president is now set to bring his unique
brand of common-sense hospitality to three new UAE hotels. All he asks is
that each guest leaves a happy one.
TEXT BY ALICIA BULLER
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GULF BUSINESS / 65
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66 / JUNE 2011
festive period were the same people who
were coming to us all year round. Why
would we charge them more just because
everyone else was? For a party hat?
Barnes plan worked. The Dubai
hotels occupancy rates grew from
55 per cent in 2009 to 71 per cent in
2010, making his hotel the strongest
performer in Fairmonts global portfolio
last year. However, the VP is not
expecting growth on last years rate
for now, in part because of his new
neighbours on the Sheikh Zayed Road
the adjacent Jal Hotel and the Ritz-
Carton across the road at the Dubai
International Financial Centre.
Dubai has become very much a
neighbourhood destination, divided into
the hotels on Sheikh Zayed Road, Dubai
Mall hotels, the beach hotels, Bur Dubai
hotels, he says. Demand is still strong
but there is increased supply so people can
pick and choose where they want to be.
Surprisingly, Barnes says the glut of new
hotels has yet to bring down room rates;
a trend he attributes to the Middle East
unrest. While the groups two Egypt hotels
have suffered from the regional uprisings,
the UAE hospitality industry has benefitted
from a comparatively safe climate amid its
more turbulent neighbours.
Were seeing a lot of Saudi Arabian
guests who would normally go to other
destinations in the region. Theres also
a lot of business thats being done in
Dubai as a result of the unrest. We were
running at about 83 per cent occupancy
through the first five months of the year
and the figure last year was in the 70s. Is
that growth all about unrest in the region?
Well, its hard to say, says Barnes.
Its possible hes right. A recent
report by Citi Investment Research and
Analysis revealed that Dubai was the
only tourism destination in the region
in March that saw an increase of 7.9
per cent in revenues per available
room. The emirate also recorded a
4.4 per cent increase in room rates.
Middle East customers may be more
likely to come to Dubai for the summer
for an alternative to their usual holiday,
Europe is further away and a more
expensive option. This demand could
mean the UAE hotel industry sees a
better summer than usual, he says. In
Q4 were expecting to see a fairly fast
uptick on business travel, after Ramadan
ends the business will stream back in as
there is a desire to get on with things
which will be much more prevalent this
The world according To PhiliP Barnes
RISE AND SHINE My day starts at around 6.30am. Get up
and get going is my motto Im a morning person. Whereas,
later in the day forget it.
StAFF I refuse to use the word empowerment. Its a
buzzword. I say to my staff, just do the right thing. Use your
heart and use your brain.
tIME I am very disciplined about managing my time and
how I handle things. I hate it when I go back to something in
my inbox. If I have already looked at it, why havent I dealt
with it? Most of the time I deal with stuff as soon as it hits
my desk and just keep it moving.
CURIoSIty I drive the accounts and research guys crazy
trying to work out trends. I ask questions about everything
from airport arrivals to offce vacancy rates.
DREAMS If I didnt do this, Id be a rock star.
the frst thing you have to do is do something
that youre passionate about. If youre not doing
that, then forget it. youll never be good at it.
GULF BUSINESS / 67
Profile
year after the unrest.
The next two years are going to be
busy for Barnes. Along with hands-
on duties at the Fairmont Dubai, hes
masterminding the launches of Fairmont
Palm and Fairmont Fujeirah (2012) and
Fairmont Abu Dhabi Marina (2013). But
hes looking forward to the challenge.
Ive been blessed. Ive been doing
things I love all my life. I get as much
fun out of it today as I did 30 years ago,
he says. The first thing you have to do
is do something that youre passionate
about. If youre not doing that, then
forget it. Youll never be good at it.
Along with loving what you do, Barnes
insists youll never get far without a
team approach and common goals. You
have to really understand its all about
the people you work with. At this stage
in my career its not about what Ill
be doing 10 years from now, its about
what my team will be doing 10 years
from now. Thats how you create an
environment that people want to be in
and be a part of, he says.
I hire the best people and I say, right,
heres the expectations. Theyre in charge,
not me. I hold them accountable, I am not
going to sit on their shoulder and tell them
what to do but I am going to challenge
them and push their buttons. After all, Ive
never met anybody who has come to work
and said I want to do a lousy job.
Ive been in this business too long,
he says, followed by his trademark
chuckle. But its difficult to believe him
when he adds: I always say that if I
got hit by a truck, Ive lived all over the
world, I had the luck of a wife that put
up with me and transported the family
all over the world for decades. No one is
going to write a book about me, no one
is going to put a statue up, but I had a
party, I had a ball.
Fairmont, Dubai
68 / MAY 2011
DATA MONITOR
TOP DEALS AND GCC ECONOMIC INDICATORS
TOP DEALS GULF BUSINESS
114
112
42
30
ExxonMobil Corporation;
and Qatar Petroleum (QP)
Qube Logistics
Broadcom Corporation
Frigoglass SAIC
Terminale GNL Adriatico
Srl (2.7 per cent stake)
POTA Holdings Pty Limited
(47.3 per cent stake)
SC Square Ltd
Jebel Ali Container Glass
Factory Fze (80 per cent
stake)
Exxon Mobil Corporation, the US based listed company that engages in the exploration and
production of crude oil and natural gas and Qatar Petroleum, the Qatar based state owned
oil and gas company, have together acquired a further 2.703 per cent stake in Terminale
GNL Adriatico S.r.l, the Italy based company engaged in designing, building, and operating
liquefied natural gas (LNG) terminals, from Edison International, the listed Italy based
company engaged in the supply of electric energy, for a consideration of EUR 78.2m.
This transaction will result in a capital gain of EUR 5.1m for Edison. ExxonMobil and
Qatar Petroleum had acquired 90 per cent stake in Terminale GNL in May 2005. Post sale,
Edison will be left with a 7.29 per cent stake in Terminale GNL.
Qube Logistics, the listed Australia based investment fund focused on infrastructure and
logistics, has agreed to acquire remaining 47.3 per cent stake in POTA Holdings Pty Limited
(POTA), the Australia based operator of landside port service logistics business, servicing
import and export marine container provisions, from DP World Limited, the listed United
Arab Emirates based marine terminal ports operator, for a cash consideration of AUD 106m
($111.76m).
The consideration of AUD 106m ($111.76m) includes shares and related loans of DP
World. The transaction is funded by Qubes existing cash. The transaction is in respect of
POTAs exercise of the call and the put options agreed during initial investment in 2007.
Qube Logistics along with POTAs management had acquired 50 per cent stake in POTA
from DP World in 2007. Post acquisition, Qube will own around 94.5 per cent of POTA along
with management owning approximately 5.5 per cent. The transaction is expected to be
completed by the end of April 2011.
Broadcom Corporation, the listed US based company providing semiconductors for wired
and wireless communications, has agreed to acquire SC Square Ltd, the Israel based
company engaged in the business developing security software and providing security chip
and communication solutions, for a total consideration of $41.9m net of cash assumed.
The transaction is a part of Broadcoms strategy to acquire innovative technologies and
high quality teams in order to strengthen its business. The transaction which is subject to
closing conditions is expected to close in second quarter ending 30 June 2011.
Frigoglass SAIC, the listed Greece based manufacturer of commercial refrigerators and
frozen products packaging, has agreed to acquire 80 per cent stake in Jebel Ali Container
Glass Factory Fze, the UAE based producer of glass bottles, for a cash consideration of
$29.8m.
The consideration paid included net debt of $23m. Jebel Ali Container Glass Factory
Fze had revenues of approximately $41.6m for the year 2010 and employs 340 people.
The transaction was funded through new debt. The acquisition is in line with Frigoglass
strategy to expand its glass operations. The acquisition will enhance Frigoglass position in
Europe as well as in East and South Africa and Asia.
DEAL VALUE ($M) BIDDER TARGET DEAL DESCRIPTION
DATA MONITOR NEW.indd 68 5/25/11 6:08:02 PM
GULF BUSINESS / 69

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DEAL VALUE ($M) BIDDER TARGET DEAL DESCRIPTION
Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between April 18, 2011 and May 17, 2011. 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 $10 million. Activities excluded from the table include
property transactions and restructurings where the ultimate shareholders interests are not changed. Source: Mergermarket. All dollar ($) amounts indicated above are in US dollars.
GULF BUSINESS QUARTERLY M&A ACTIVITY
FROM 2004 TO 17 MAY 2011
BREAKDOWN: TAKEOVER ACTIVITY BY SECTOR AND VOLUME
MIDDLE EAST ANNUAL M&A ACTIVITY
FROM 2004 TO 17 MAY 2011
GULF BUSINESS ACTIVITY BY INDUSTRY SECTOR
YE 2011 VALUE
ACTIVITY BY INDUSTRY SECTOR
YE 2011 VALUE
Pharma, Medical & Biotech
19.4%
Construction
1.9%
Consumer
1.1%
Business Services
1.8%
Real Estate
10.3 %
Defence
1.1%
Transport
2.4%
Defence
2.4%
Consumer
4.9%
Business Services
14.6%
Financial Services
14.6%
19
SATS Ltd.
Government of Dubai
Adel Abuljadayel Flight
Catering Company Limited
(40 per cent Stake)
Dubai Bank
SATS Ltd., the listed Singapore based provider of integrated ground handling and
inflight catering services, has acquired a 40 per cent stake in Adel Abuljadayel Flight
Catering Company Limited (AAFC), the Saudi Arabia based in-flight catering services
company, for a cash consideration of $18.5m.
AAFC had revenues of about USD 11m in 2010. The consideration was fully paid using
internal resources in cash. The acquisition leverages SATS core competencies and
expands its offerings in the Middle East. This acquisition is not expected to have any
material impact on the consolidated net tangible assets per share and earnings per
share of SATS for the year ending 31 March 2012. As a part of the agreement, SATS has
appointed three executives for the positions of chief executive officer, chief financial
officer, and executive chef at AAFC.
The government of Dubai has acquired Dubai Bank, the United Arab Emirates
based commercial bank, from Dubai Holding LLC, the United Arab Emirates based
diversified investment company and Emaar Properties PJSC, the listed United Arab
Emirates based company engaged in property investment and development, property
management services, education, healthcare, retail and hospitality sectors, as well as
investing in financial service providers, for an undisclosed consideration.
After the completion of acquisition Government of Dubai will make a capital
investment in Dubai Bank in order to improvise the financial position of the bank.
Post acquisition the management of the Dubai bank will be retained. Prior to
acquisition Dubai Holding held 70 per cent stake in bank whereas Emaar properties
held 30 per cent stake.

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Financial Sercives
7.0%

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Industrials & Chemicals
50.7%
TMT
6.7 %
TMT
12.2%
Construction
7.3%
Real Estate
4.9%
Industrial &
Chemicals
19.5%
70 / JUNE 2011
In association with
TOTAL RETURN INDEX
HSBC/NASDAQ DUBAI MIDDLE EAST
SOVERIGNS
CORPORATES
BANKS
SUKUK
ISSUER COUPON MATURITY CURRENCY MID PRICE YIELD MOODYS S&P
Abu Dhabi Govt 5.5% 08/04/2014 USD 109.81 1.99% Aa2 AA
Dubai Govt 6.7% 05/10/2015 USD 105.38 5.31% NR NR
Qatar Govt 4% 20/01/2015 USD 105.19 2.51% Aa2 AA
Bahrain Govt 5.5% 31/03/2020 USD 98.13 5.77% NR BBB /*-
Egypt Govt 5.75% 29/04/2020 USD 96.50 6.27% Ba3 BB
Morocco Govt 4.5% 05/10/2020 EUR 90.38 5.86% NR BBB-
Taqa 4.75% 15/09/2014 USD 105.88 2.89% A3 NR
Aldar 10.75% 27/05/2014 USD 112.50 6.16% B1 /* B
Dubai Holding L+37.5bps 01/02/2012 USD 95.50 7.10% B3 NR
DEWA 6.375% 21/10/2016 USD 103.13 5.70% Ba2 NR
Qtel 3.375% 14/10/2016 USD 98.75 3.63% A2 A
Qatari Diar 5% 21/07/2020 USD 101.50 4.80% Aa2 AA
SABIC 3% 02/11/2015 USD 99.38 3.15% A1 A+
Mumtalakat 5% 30/06/2015 USD 99.25 5.20% NR BBB /*-
MBPS 11.25% 15/11/2015 USD 101.50 10.82% NR B+
KIPCO 8.875% 17/10/2016 USD 110.00 6.65% Baa2 /*- BBB-
ADCB 4.75% 08/10/2014 USD 103.75 3.57% A1 A-
NBAD 4.25% 25/03/2015 USD 104.38 3.04% Aa3 A+
Emirates NBD L+450bps 30/04/2012 USD 101.75 2.92% A3 NR
HSBC Bank ME 3% 21/10/2015 USD 98.38 3.40% A1 NR
CBQ 5% 18/11/2014 USD 106.25 3.10% A1 A-
Saudi British 3% 12/11/2015 USD 99.25 3.18% NR A
BBK 4.5% 28/10/2015 USD 96.25 5.46% A3 /*- NR
ISSUER P.D.A* MATURITY CURRENCY MID PRICE YIELD MOODYS S&P
TDIC 4.949% 21/10/2014 USD 107.38 2.68% A1 AA
ADIB 3.745% 04/11/2015 USD 102.50 3.14% A2 NR
DIFC L+37.5bps 13/06/2012 USD 93.75 6.62% B3 B+
JAFZA L+130bps 27/11/2012 AED 94.63 7.16% B2 B
DP World 6.25% 02/07/2017 USD 103.88 5.50% Baa3 BB
Emaar 8.5% 03/08/2016 USD 104.88 7.35% B1e BB
RAK 5.2392% 28/01/2016 USD 107.88 3.41% NR A
Dar Al Arkan 10.75% 18/02/2015 USD 99.25 10.99% NR BB-
The HSBC/NASDAQ Dubai Middle East Total Return
Index tracks the total return of an emerging Middle
East sukuk/bond portfolio. Total return takes into
account the income from coupon payments, in
addition to any appreciation/depreciation in the
price of the security.
MAIN REGIONAL BONDS: CURRENT PRICES
145
144
143
142
141
140
139
138
137
February 2011 March 2011 April 2011 May 2011
THE EXPERTS
VIEW
Bond prices ended the month on a year-to-date
high as the impact of regional unrest started to
subside. While its clear that international investors
remain concerned about regional events, the initial
sell-off this caused in prices has, to some degree,
been reversed. Whats perhaps more interesting
is where investors have started allocating funds,
with Dubai government bonds the main beneficiary.
When we look at the CDS levels the cost of
insuring a bond against default (and one measure
of the confidence markets have in a particular
credit) Dubai appears to be seen as a regional
safe haven for investors. The cost of insuring
Dubai debt has actually dropped 46 basis points
year to date compared to an increase of 115
basis points for Egypt. Qatar and Abu Dhabi have
shown more stability, nudging just a few basis
points higher. What we can conclude from this is
that international investors looking at the GCC are
increasingly comfortable with Dubai as
an investment choice.
But what else has been driving this upturn?
Primary issuance of bonds has been slow this year,
especially when we look at this in the context of
the glut of issuance last year (more than $30bn).
This scarcity of new issues has actually helped
secondary spreads to tighten. Regional bond
issuers have largely remained on the sidelines
over the last few months, largely due to the
regional uncertainty caused by geo-political events.
However, there are strong signs of improvement.
Over the last few weeks, HSBC has announced
three new deals to come to market soon. More are
expected as issuers take advantage of the current
low rate environment to tap the market before the
quiet summer months. After a tough start to the
year, we are now seeing investors returning to the
region, and that can only be a good thing.
JAMES MILLIGAN,
Head of credit trading, HSBC
Issued by HSBC Bank Middle East Limited. Regulated byJersey Financial Services
Commission. All figures quoted are sourced from Bloomberg and HSBC and are
correct at the time of publication. Past performance is an not an accurate guide to the
future. This information is general and does not take into account your circumstances,
objectives or needs. You should consider these matters and consult your financial
advisor prior to making any investment decisions. For professional assistance, contact
HSBC on 800 40 4443.
*periodic distribution amount
72 / JUNE 2011
Salzburg needs little introduction. Yet the birthplace of Mozart offers a lot
more than The Sound of Music and arty festivals, reports Guido Duken.
W
e all know that Salzburg was the birthplace
of wolfgang amadeus Mozart and the setting for
The Sound of Music. These twin attractions draw thousands
of tourists annually, so working for the Salzburg marketing
department must be a pleasant job. But whats left when
you take Mozart and the musical out of the picture? Plenty!
Salzburg is an incredibly picturesque place. This city of
150,000 inhabitants is situated between the 1,972-metre
Untersberg the closest alpine peak and two smaller
mountains, the Mnchsberg and kapuzinerberg. at the heart
of Salzburg is the altstadt (old Town) that is bisected by the
meandering Salzach river.
The altstadts famous baroque architecture largely survived
world war II intact and was listed as a UneSCo world
Heritage Site in 1997. Towering over this festive medley of
roofs, church spires and towers is the impressive Festung
Hohensalzburg, one of europes largest medieval castles.
Thanks to the river, fortress and mountains it is virtually
impossible to get lost, even if you try.
The Mirabell palace and garden
with the Festung Hohensalzburg
in the background.
Backstage in salzBurg
I armed myself with a tourist map and, more importantly,
the Salzburg Card (25.00 for 24 hours) that gives you one
time free entry to the citys attractions plus a host of other
goodies including public transport. I was staying at the five-
star Sheraton Salzburg (sheratonsalzburg.com), right next to
the famous Mirabell palace and garden, within easy walking
distance of the altstadt. and so it was that on a bright spring
day I set off on foot.
The Mirabell palace has an intriguing history that would do
any soap opera proud with its cast of princes, archbishops,
mistresses and villains. But the beautiful garden is far more
famous than the palace as it provided the perfect Hollywood
setting for Maria (Julie andrews) and the children to sing Do-Re-
Mi in The Sound of Music. I got a live performance when some
schoolgirls, probably on an outing, burst into an impromptu
rendition of that very song. a typical Salzburg moment?
Most of Salzburgs attractions are crammed into the
altstadt on the left bank, so I crossed the Salzach river on the
Mozartsteg pedestrian bridge. That landed me right in Mozart
DOWNTIME
ART, STYLE, CRUISE, bYTES, HOTELS & SCENE
72-73 Downtime.indd 72 5/26/11 11:57:47 AM
72 / JUNE 2011
DOWNTIME BYTES
Salzburg needs little introduction. Yet the birthplace of Mozart offers a lot
more than The Sound of Music and arty festivals, reports Guido Duken.
W
e all know that Salzburg was the birthplace
of wolfgang amadeus Mozart and the setting for
The Sound of Music. These twin attractions draw thousands
of tourists annually, so working for the Salzburg marketing
department must be a pleasant job. But whats left when
you take Mozart and the musical out of the picture? Plenty!
Salzburg is an incredibly picturesque place. This city of
150,000 inhabitants is situated between the 1,972-metre
Untersberg the closest alpine peak and two smaller
mountains, the Mnchsberg and kapuzinerberg. at the heart
of Salzburg is the altstadt (old Town) that is bisected by the
meandering Salzach river.
The altstadts famous baroque architecture largely survived
world war II intact and was listed as a UneSCo world
Heritage Site in 1997. Towering over this festive medley of
roofs, church spires and towers is the impressive Festung
Hohensalzburg, one of europes largest medieval castles.
Thanks to the river, fortress and mountains it is virtually
impossible to get lost, even if you try.
The Mirabell palace and garden
with the Festung Hohensalzburg
in the background.
Backstage in salzBurg
I armed myself with a tourist map and, more importantly,
the Salzburg Card (25.00 for 24 hours) that gives you one
time free entry to the citys attractions plus a host of other
goodies including public transport. I was staying at the five-
star Sheraton Salzburg (sheratonsalzburg.com), right next to
the famous Mirabell palace and garden, within easy walking
distance of the altstadt. and so it was that on a bright spring
day I set off on foot.
The Mirabell palace has an intriguing history that would do
any soap opera proud with its cast of princes, archbishops,
mistresses and villains. But the beautiful garden is far more
famous than the palace as it provided the perfect Hollywood
setting for Maria (Julie andrews) and the children to sing Do-Re-
Mi in The Sound of Music. I got a live performance when some
schoolgirls, probably on an outing, burst into an impromptu
rendition of that very song. a typical Salzburg moment?
Most of Salzburgs attractions are crammed into the
altstadt on the left bank, so I crossed the Salzach river on the
Mozartsteg pedestrian bridge. That landed me right in Mozart
72-73 Downtime.indd 72 5/25/11 5:47:06 PM
GULF BUSINESS / 73
TRAVEL DOWNTIME
Salzburgerland daytripS
the gastein Valley
This side valley in the scenic Hohe Tauern range
is home to the quaint villages of Bad Gastein
and Bad Hofgastein plus Sportgastein. Have a
spa experience at the new Felsentherme Gastein,
Alpen Therme Gastein or the Spa & Rehabilitation
Centre. Sportgastein is a famous skiing centre
in winter and offers fabulous hiking in summer.
national park Hohe tauern
This 1,800 square kilometre park is Austrias
largest and Europes second largest national
park. It encompasses Austrias highest mountain,
the Groglockner (3,789 metres), as well as one
third of Austrias plant species and some 10,000
animal species. The largest visitor centre is found
in Mittersill, which offers a fun and educational
experience for kids.
the Krimmler Waterfalls
This is Austrias highest waterfall at 380 metres.
The three cascades are stunningly beautiful and
theres a hiking path next to them. Besides the
healthy hike, ongoing research by the Paracelsus
Private Medical University Salzburg has proven
that the falls fne atomised water has a healing
effect on allergic asthma.
Scenic beauty
In Salzburgerland the journey is often as
interesting as the end destination. High Alpine
peaks, dazzling green valleys and villages with
their picture-book wooden houses just keep
rolling past. Pop in at a local inn for an
Austrian specialty while enjoying the view.
Square that, naturally, features a statue
of the famous composer. For many
tourists this is also the starting point of
a variety of guided tours.
not that you need a guide. The
Residenzplatz (another Sound of
Music location), old Residenz Palace,
the Festival Hall Complex, Mozarts
Birth Place and Mozarts Residence all
appeared in quick succession. and I
wasnt even looking for them!
It was at this point that I started getting
cultural overload, and the Grnmarkt
on Universittsplatz with its fresh fruit,
smoked meats and tourist knick-knacks
provided the perfect antidote. The
Salzburgers are a jovial lot as I discovered
when I joined the throng at a sausage
stand for a ksekrainer (a sausage with
bits of cheese) and mustard. The etiquette
is to eat your sausage at the counter,
wash it down with a cold one, and then
make space for the next customer.
after that cholesterol overdose it was
perhaps fitting that I walked through St
Peters cemetery. Mozarts sister is buried
here, as is Paul Frst who invented the
Mozartkugel, that ubiquitous chocolate
ball that is found in every shop window.
The cemetery also featured in The Sound
of Music as a hiding place for the Von
Trapp family.
Duly inspired by eight centuries
worth of gravestones I took the
Festungbahn (Funicular), which
take you up to the Hohensalzburg
Fortress. The views are stunning from
up there and the 1.2 kilometre hike
along a wooded path to The Museum
der Moderne Salzburg (museum for
modern art) made me forget about
graveyards and fatty sausages.
From the museum theres an
elevator that takes you down to city
level and lands you pretty much at
the beginning of the Getreidegasse,
Salzburgs famous shopping
street. If you have the urge to buy
Mozartkuglen, louis Vuitton or a
Salzburg fridge magnet, its all here.
as are a multitude of shoppers.
I decided to end my day with
another famous austrian institution,
the coffeeshop. Salzburg is peppered
with them, their clientele overflowing
into the many squares to have a good
kaffeeklatsch (gossip over a cup of
coffee). Relaxing with my cup of Joe
I came to the conclusion that Salzburg
really has it all. Culture, history,
friendly people, beautiful buildings
and a striking natural setting give
Mozart and The Sound of Music a run
for their money.
After thAt cholesterol overdose it wAs
perhAps fitting thAt i wAlked through st peters
cemetery. mozArts sister is buried here, As is
pAul frst who invented the mozArtkugel
Salzburg
Gastein Valley
Krimmler Waterfalls
Hohe Tauern National Park
Groglockner
I
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U
S
t
r
a
t
I
o
N
:

r
o
U
I

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r
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N
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I
S
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o
72-73 Downtime.indd 73 5/25/11 5:47:14 PM
The Aston Martin Virage is designed to get you quickly from
point A to B in comfort and style. That it does with aplomb.
Style, Beauty, Power
T
he AndAlusiAn town of Ronda,
about 100 kilometres northwest from
Mlaga, is as historic as it is beautiful.
The Guadalevn River runs through the
city, dividing it in two and carving out the
steep 100-metre deep el Tajo canyon upon
which the city perches. looking out from
this lofty perch all you see is rolling hills
and roads that snake, carve and hug the
countryside like mad pieces of spaghetti.
in other words, if you want to seriously
drive a car and test its limits, this is the
place to do it.
The islamic poet salih ben sharif
al-Rundi was born in Ronda, and if he
had laid his eyes on the Aston Martin
Virage it might have inspired some epic
verse. The Virage is a moving work of art
with its clean lines, muscular stance and
aggressive front. The attention to detail is
immaculate both inside and outside and
the Aston Martin team was beaming like
proud parents as they showed off their
latest addition to the family.
under the bonnet the Virage has a V12
6.0-litre engine that delivers 490bhp and
570nm of torque that propels the Aston
cruise DOWNTIME
TEXT by GUIDO DUKEN
from 0-100km/h in 4.6 seconds. The top
speed is a sizzling 299km/h. Keeping
control of all that speed and power are
huge carbon ceramic brakes, a very
sweet six-speed Touchtronic 2 automatic
transmission and a new Adaptive
damping system.
Those winding spanish B roads didnt
know what hit them. The Virage is
perfectly well behaved, tackling corners
confidently and cruising with ease. But
when you push the accelerator the V12
barks with excitement and the unleashed
torque slightly lifts the nose and pushes
you back in your seat. stuck behind a
caravan of cars with only 30 metres of
straight road ahead? no problemo! The
Virage accelerates so quickly it might as
well be a kilometre.
That, in a nutshell, is the beauty of
the Virage. it is an extremely comfortable
GT (gran turismo) with the body and
brawn of a finely honed athlete. You can
drive it any which way you want
and it always delivers exactly
what you want, when
you want it. Thats what
makes driving it so much fun. The only
downside is that all that pedigree will set
you back around $240,000.
The Virage combines outright sports car
performance with luxury, comfort and refnement.
More than 70 man hours of expert craftsmanship
is lavished on the Virage to create a stylish but
simple interior.
GULF bUSINESS / 75
75 Downtime-Cruise.indd 75 5/25/11 6:13:01 PM
GULF BUSINESS / 77
BYTES DOWNTIME

Very fast

Flash runs very smoothly

Slick scrolling and zooming

Packed with Android features

Tonnes of available apps
Apple the market share remains steady, theres a new
iPhone due later this year and its prot margins are the best.
Its a tie, but the more applications there are for Android,
the more people might consider buying the products it
powers. That could affect Apples bottom line.

Chrome-trimmed case looks
fairly 80s

User interface could be more attractive

Some widgets are temperamental
DUAL POWER
ROUND 1
GOOGLE VS. APPLE
ROUND 2
APP WARS
C
ONSUMERS HAVE been crying out
for a dual-core smartphone and
LG and Nvidia have delivered the first
one (Samsungs Galaxy S2 and the HTC
Sensation are in the pipeline). Key to
the LG Optimus 2X is the impressive
dual-core Tegra 2 1GHz CPU, coupled
with an impressive low-power GPU
from graphics specialist Nvidia. Video
is the main beneficiary of the dual-
core processor, which is why LG has
outfitted the Optimus 2X with 1080p
video recording on the eight-megapixel
camera, 1080p playback over a mini-
HDMI port (cable included) and DLNA
media streaming.
The processor makes the user
interface noticeably quick and smooth
when, for example, youre switching
from portrait to landscape view while
looking at a web page or photo. It also
shows what Googles Android operating
system is capable of on the Optimus
2Xs four-inch 480 x 800 WVGA
touchscreen. Theres also a 1.3MP
front-facing camera, Wi-Fi and 3G
connectivity, and a microSD card slot to
compliment the 8GB of built-in memory.
Googles Android operating platform is grabbing market share.
According to the latest Nielsen research, Android has grown
from a 29 per cent share in the US last autumn to 37 while
the iPhone has remained a steady 27 per cent. BlackBerry has
been the biggest loser.
If current trends persist, Google could take Apples application
crown in July according to market research firm Distimo.
Google has already made headway on attacking Apple on the
volume front with 134,342 free applications versus the App
Store for iPhone and iPod Touchs 121,845 free applications.
The firm estimates that Google will be 40,000 applications
short of levelling out with Apples overall volume (around
350,000 currently) by the end of June, and will catch up
completely in July.
Good
Winner
Winner
Bad
SMARTPHONE
MARKET
SHARE
FUTURE DEVELOPMENTS IN THE APP STORE ECOSYSTEM
Forecast rst half 2011 United States
KEY
KEY
Symbian OS
Palm/Web OS
Microsoft Windows
Mobile/WP7
Rim Blackberry OS
Apple iOS
Android OS
Apple App store for iPhone
Google Android Market
2%
3%
10%
22%
27%
37%
MARCH 2011, NIELSEN MOBILE INSIGHTS, NATIONAL
I
N
F
O
G
R
A
P
H
I
C
S
:

T
A
R
A
K

P
A
R
E
K
H
303,113
371,675
151,036
332,114
77 Downtime-Bytes.indd 77 5/25/11 6:15:01 PM
GULFBUSINESS / 79
EVENTS REGULARS
DUBAI INTERNATIONAL CONVENTION AND EXHIBITION
CENTRE, JUNE 1-2, 2011
UNITED ARAB EMIRATES
Abu Dhabi
June 3-4 ICICI Bank Home Utsav Abu Dhabi National Exhibition Centre fairexhibitionorganisers.com
6-8 5th Middle East Energy Security Forum Park Rotana Hotel fleminggulf.com
12-15 SCADA MENA Summit 2011 Le Royal Mridien iqpc.com
19-22 National Security Summit 2011 Le Royal Mridien iqpc.com
Dubai
7-8 Bonds & Loans Middle East Shangri La-Hotel gulffinancialconferences.com
7-9 Automechanika Middle East 2011 Dubai International Convention and Exhibition
Centre, Halls 1-8
messefrankfurtme.com
13-15 Hospital Build Middle East Exhibition & Congress 2011 Dubai International Convention and Exhibition
Centre, Sheikh Rashid Hall
iirme.com
16 GCC Job Localisation Challenges Conference Al Bustan Rotana Hotel datamatixgroup.com
20-21 15th Annual Compensation & Benefits Forum Dusit Thani Hotel iirme.com
20-21 Market Insights Summit 2011 Mvenpick Hotel Jumeirah Beach iirme.com
26-29 Click 5.0 The Digital Marketing Event for the Middle East Arjaan by Rotana iqpc.com
26-29 Pricing Strategies and Revenue Optimisation Summit Grand Millennium Hotel iqpc.com
QATAR
May 30 - June 2 Underground Infrastructure and Deep Foundations Qatar InterContinental Hotel, Doha iqpc.com
June 19-22 2nd Annual Marine and Coastal Engineering Middle East Oryx Rotana Hotel, Doha iqp.com
20-21 Middle East Contract Management Conference Oryx Rotana Hotel, Doha iirme.com
SAUDI ARABIA
June 4-7 3rd Annual Saudi HR Summit 2011 Riyadh Marriott Hotel iirme.com
4-7 Saudi Brand And Communications Summit Riyadh Marriott Hotel iirme.com
11-13 Cityscape Jeddah Jeddah Centre for Forums & Events iirme.com
12-15 Horeca 2011 Riyadh International Convention
& Exhibition Centre
semark.com.sa
12-13 4th International Cloud Computing Riyadh Marriott Hotel iirme.com
T
HIS MONTH, DUBAI will play host to the Middle East
Event Show, bringing together the regions events and
entertainment suppliers and buyers under one roof. A wide
range of service providers, including event management and
equipment rental will also be on display. The event offers
one of the years best networking opportunities for marketing
and PR agencies, events organisers and MICE companies. To
wrap up, the show will also feature the fourth edition of the
Middle East Event Awards, a recognition of innovation and
achievement in the events industry in the region.
Middle East EVENT Show 2011
Calendar June2011.indd 79 5/25/11 6:11:21 PM
GULF BUSINESS / 81
GB preferred hotels regulars
GULF BUSINESS HOTELS COLLECTION
HOTEL LOCATION KEY UAE QATAR SAUDI ARABIA
DUBAI Conveniently located nearby
Dubai International Airport Terminal 2.
Offers exceptional levels of comfort with
232 rooms & suites, three dining options,
temperature-controlled swimming pool
and state-of-the-art ftness center.
Tel +971 4 233 4444
Fax +971 4 233 4445
welcome.plaza@layia.net
ABU DHABI This hotel is created
to provide the very best of traditional
Arabian hospitality. This unique jewel of
luxury and tranquility, offering magnifcent
services, awaits you for an unforgettable
visit to Abu Dhabi.
Tel +971 2 508 0555
Fax +971 2 508 0429
ABU DHABI Conveniently located
adjacent to Khalifa Park, the property
offers 318 luxurious rooms and suites,
6 world class dining venues, 6 meeting
rooms and spacious ballroom with day
light access and outdoor terrace.
Tel +971 2 657 3333
Fax +971 2 657 3000
park.hotel@rotana.com
DUBAI This 394-room hotel boasts 10
dining and entertainment venues a superb
spa and unrivalled meeting facilities.
Tel +971 4 332 5555
Fax +971 4 332 4555
dubai.reservations@fairmont.com
ABU DHABI t offers 192 spacious
rooms and suites, state of the art
conference and business center, as well as,
a multipurpose gym, indoor pool, and the
exclusive Cristal Spa.
Tel +971 2 652 0000
Fax +971 2 652 0001
res.auh@cristalhotels.ae
cristalhotelsandresorts.com
DUBAI Tailored to the savvy business
traveller, with large comfortable beds &
hi tech facilities. A vibrant collection of
cafes, bars & restaurants; state-of-the-art
conference facilities, a fully equipped gym
with ample parking.
Tel +971 4 427 1000
Fax +971 4 427 1001
cu@mediaonehotel.com
DUBAI Located in the centre of Dubais
business district and just fve minutes
away from DIFC, Jumeirah Beach, Burj
Khalifa and Dubai Mall, this 500-room hotel
offers you a convenient access the must
see and must go places in the emirates.
Tel +971 4 323 0000
Fax +971 4 323 0003
reservation@emiratesgrandhotel.com
DUBAI Located on Sheikh Zayed
Road, this hotel is a sleek architectural
masterpiece of steel and glass. It
redefnes the business hotel category,
seamlessly combining form with function,
high technology with unparalleled luxury
and elegance with effciency.
Tel +971 4 330 0000
jumeirah.com
DUBAI Offers 301 luxuriously appointed
guest rooms and suites, nine restaurants
and bars, health club and spa, tennis and
squash courts and outdoor swimming.
Tel +971 4 343 8888
Fax +971 4 343 8886
sldb@shangri-la.com
DUBAI Rising high above the fringe of
Media City on Sheikh Zayed Road, Fraser
Suites Dubai enjoys panoramic views
with superb 1, 2 & 3 bedroom apartments,
lifestyle facilities, relaxed dining in Aqua
Caf and the exclusive Awazen Spa.
Tel +971 4 440 1400
Fax +971 4 440 1401
reservations.dubai@frasershospitality.com
RAS AL KHAImAH This is a
superbly designed four star hotel complete
with Al Nakhla restaurant, the stylish
Flamingo bar, the vibrant Club Acacia, a
pristine pool serving as a backdrop to
varied and exciting Theme Nights, the
luxurious O-Zone Spa, and high-energy
Oxygen Gym.
Tel +971 7 243 4421
Fax +971 7243 4429
DUBAI The truly unique and exciting
fve stars hotel features 393 rooms, suites
and chalets together with Mall of the
Emirates shopping centre and Ski Dubais
alpine themed indoor snow resort.
Tel +971 4 341 0000
reservations.malloftheemirates@
kempinski.com
kempinski.com/dubai
DUBAI Discover a new attitude hotel
directly linked to the regions ultimate
shopping destination amidst Dubais
sophisticated metropolis. Elegant 481
guestrooms complemented with chic
dining experiences awaits both leisure
and business guests.
Tel +971 4 702 8000
Fax +971 4 702 8001
H7337@accor.com
Layia pLaza hoteL dubai aL Raha beach hoteL paRK RotaNa abu dhabi the faiRmoNt dubai cRistaL hoteL abu dhabi
media oNe hoteL emiRates gRaNd hoteL JumeiRah emiRates toWeRs
shaNgRi-La fRaseR suites dubai acacia hoteL
KempiNsKi hoteL
maLL of the emiRates
puLLmaN dubai
maLL of the emiRates
DUBAI Offering 161 furnished units
ranging from 81 sqm to 160 sqm, 3
dining venues, 3 multi-purpose meeting
rooms, recreation facilities & a majestic
landscaped area around the temperature-
controlled pool.
Tel +971 4 437 7888
Fax +971 4 437 7999
welcome.oak@layia.net
Layia oaK hoteL & suites
Our lOcatiOn
DOHA Superbly located in the
prestigious West Bay area and within
easy reach of the city centre. With its
various dining options, 257 guest rooms
and suites, private beach and a 24-hour
state-of-the-art gymnasium, it is an idyllic
setting for business and leisure.
Tel +974 4484 4444
Fax +974 4483 9555
iNteRcoNtiNeNtaL doha
DOHA Located on the Corniche Road,
opposite the Museum of Islamic Art,
the hotel offers 154 rooms and suites,
a business centre and meeting rooms.
Recreation facilities are also available.
Tel +974 4429 1111
Fax +974 4429 1100
moevenpick-doha.com
mveNpicK hoteL doha
RIYADH The frst 5 star Holiday Inn
hotel in the Kingdom, with 289 new and
trendy accommodations, huge lobby with
W-Fi access, outdoor pools, sauna, Jacuzzi
and health club. Also has state-of-the-art
meeting rooms, 24-hour business center
with professional secretarial support.
Tel +966 1 450 5054
Fax +966 1 450 5056
hoLiday iNN Riyadh, izdihaR GULF BUSINESS maGazINE IS avaILaBLE
IN aLL oF tHESE ExcLUSIvE Gcc HotELS
Is YoUr hotel lIsted oN thIs pAGe?
Become one of Gulf Business Preferred Hotels
and beneft from the exposure to our extensive
Gcc readership.
contact: nayeem@motivate.ae
tel: +971 4 205 2290
81 Preferred Hotel.indd 81 5/25/11 6:17:03 PM
82 / JUNE 2011
REgulaRs in your shoes
B
efore I jumped on a plane to Bangkok to look at pandoras
factory last month, I hadnt really heard of the jewellery
brand but my 21-year-old sister had. What, you havent seen
the pandora charm bracelets? she said with a customary roll
of her eyes youre so old. As it turns out, pandora produces
around 60 million units a year across over 10,000 points of sale in
55 countries. At my sisters school near London, uK, the charm
bracelets popularity reached near melting point, because of its
relative affordability and personalisation options.
Theyve become a real ice-breaker, says the factorys
managing director, Thomas Nyborg, my wife stops to have
conversations with strangers about their charms. Women collect
them for special occasions births, anniversaries and graduations.
each bracelet tells a personal story and this is the secret to
pandoras success.
The factory itself, which is fast monopolising Bangkoks
Gemopolis park as it spreads in size, is as far removed from a
Alicia Buller takes a peek behind the scenes
at Pandora jewellerys Thailand factory
Jewels of the east
Hard Times, dickensian-style factory as you can imagine. rows of
neatly dressed workers in brightly-lit rooms diligently concentrate
on the task at hand personally making each facet of pandoras
bracelets and other jewellery.
Around 4,000 people work at the factory and only four of them
are non-Thai, says Nyborg. every few months the firm holds a
recruitment open day and its not unknown for 2,000 people to
queue up for interviews in a day. The wages are competitive,
he says.
pandora, which was founded by danish goldsmiths per
enevolden and Winnie enevoldsen in 1982, is now the worlds
third largest jewellery brand by retail value and raked in around
$1.3 billion revenue last year.
Steen Bock, the companys dubai chairman, tells me that the
firm relocated its production facilities to Thailand in 2003 because
of the high-quality craftsmanship. The country also boasts a
highly developed infrastructure for jewellery production and is
one of the worlds largest jewellery exporters.
pandora is firmly rooted in the affordable luxury segment, but
as the firm ramps up its middle east presence, with five stores
in dubai, the question is: will the brand be glitzy enough for
the region?
Steen says that pandora offers a breadth of range up
from dhs200 to ten of thousands of dirhams stacked with
enough gold and diamonds to satiate even the most extreme
appetite for bling.
Without being inside the factory, it would be difficult to
imagine just how handmade the bracelets are at every stage,
with real gold, silver and gems.
pandoras director invites me to try my hand at shaping one
of the gorgeous murano glass beads over a flame. The jeweller,
whose seat Ive usurped, looks at me with a mix of curiosity and
pity as I melt bead after bead into an oblong-shaped monstrosity.
This is experts work, indeed.
my wifE stops to havE coNvErsatioNs with straNgErs
aboUt thEir charms. womEN collEct thEm for spEcial
occasioNs births, aNNivErsariEs aNd gradUatioNs.
Each bracElEt tElls a pErsoNal story aNd this is thE
sEcrEt to paNdoras sUccEss.
In Your SHoes.indd 82 5/25/11 6:13:20 PM

Gulf Business - June 2011

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