HOSPITALITY SURVEY: DOWN BUT NOT OUT IN THE REGION’S BIG CITIES

Vol. 15 Issue 2 June 2010

Action!
How the Gulf’s booming cinemas are
throwing the spotlight on local talent

NEW FRONTIERS
Opportunities for the brave
in Sri Lanka and Taiwan

BACK ON TRACK
Kuwait’s mega projects
finally get under way

HOME GROWN
Saudi shrimp farm
to make big waves

HEALTHY GROWTH
Western insurers drawn
by lure of the uninsured

Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10
www.gulfbusiness.com
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 THE DETAILS
Vol. 15 Issue 2 June 2010

THE COMMENT
12
Investment
High-tech Taiwan is a favourite in the
emerging markets’ shooting stars.

14
Money
A precious metals boom may be
in the works today with silver the
potential winner.

16
Inside Track
The rationale behind investment and
the secret of its irrationality.

18
Emerging Markets
Peace brings savvy investors to
emerging Sri Lanka.
Big screen business
The Gulf appears engrossed by cinema, with the debut
20
Guest Column of the first Emirati-directed feature film in the UAE,
Agriculture is rising from the dry ongoing cinema construction, and the launch of the
sands of the Middle East as a Doha Film Institute in Qatar. But it isn’t all fun and
verdant growth sector. games, with industry insiders warning of challenges
22
Letters
ahead and limitations in the market.
56
THE BRIEFING 40 THE BUSINESS
Ensured growth
26 The Gulf’s widely uninsured
Regional Briefing population attract Western insurers. 44
Humble hopes
34 42 Hospitality in the Gulf continues
Do your homework Jumbo shrimp with its more measured growth and
With the economic upswing Little-known Saudi aquaculture budget-friendly expansions.
underway, Gulf companies must be farm aims to take global prawn
ready to gain from good times. market by storm. 50
A return to the ring
36 44 After years of fire-fighting, Kuwait
State of the art Sealing the leaks seems back on track for growth with
Christie’s is upbeat about the The trick to better sales may be in major project investment.
Middle East’s art market. better team training.
54
38 46 On the right track
A helpful push Computing costs Transport investments are
Dubai’s real estate woes could be Dell promises savings with data stimulating development and
eased by improving visa protocols. management systems. repositioning the Gulf globally.

June 2010 gulfbusiness.com 7

F
THE DETAILS
Editor-in-Chief Obaid Humaid Al Tayer
Group Editor and Managing Partner Ian Fairservice

Group Senior Editor Gina Johnson

Group Editor-Business Alistair Crighton
Deputy Editor Zarina Khan
Lifestyle Editor Claire Hill
Editorial Coordinator-Business Concessa D’Souza

Art Director Cris Domdom

Senior Designer B Raveendran

Special Contributors and

International Correspondents
Berlin Wolfram Bielenstein
Hong Kong Michael McKay
Johannesburg Bill Cain

70 London Robert Bailey/Karen Thomas

New Delhi Rahul Bedi
Shanghai Gordon Hu
Washington Kevin J Kelley
Hospitality Guy Standish-Wilkinson

General Manager Production

and Circulation S Sasidharan
Production Manager C Sudhakar

72
General Manager Group Sales
Anthony Milne
Senior Advertisement Manager
Abraham Koshy
72 Advertisement Manager
Ajay Mathews

71
Motoring
Glenn Freeman falls to the siren
call of the 2010 Mustang GT.

THE PEOPLE 73
Technology
62 The difference between
Close up innovation and theft is a fine line.
UAE-based film producer Tim Smythe
talks about movie making in the Gulf.
THE ESSENTIALS
66
Competition 74
Books Head Office:
PO Box 2331, Dubai, UAE
68 76
Tel: +971 4 282 4060, Fax: +971 4 282 4436,
E-mail: motivate@motivate.ae
Executive Moves Calendar Dubai Media City: Office 508,
Who is moving up in the GCC 5th Floor, Building 8, Dubai, UAE,
Tel: +971 4 390 3550, Fax: +971 4 390 4845
business world. 78 Abu Dhabi: PO Box 43072, UAE,
Hotels Tel: +971 2 677 2005, Fax: +971 2 677 0124,
THE LIFESTYLE Where to stay in the GCC. E-mail: motivate-adh@motivate.ae
London: Acre House, 11/15 William Road,
London NW1 3ER, UK,
70 80 E-mail: motivateuk@motivate.ae
Travel Stats & Facts For editorial syndication details,
Visit the off-the-beaten-path of Belize We unpack the data for you. please call + 971 4 2824060
or e-mail gb@motivate.ae
for a taste of unspoilt beauty.
82
71 Out to Lunch 22,774
Art Terry Tyrell of The Brand Union copies
A wave of theft and forgeries reveals talks advertising over brunch at June 2009
the underside of the art world. The Rotisserie. Printed by Emirates Printing Press, Dubai

8 gulfbusiness.com June 2010

17th of September 1755. In the offices of the solicitor Mr. Choisy, a young
Master Watchmaker from Geneva named Jean-Marc Vacheron is about
to hire his first apprentice. This agreement is the first known reference
to the founding watchmaker of a prestigious dynasty and it represents
the establishment of Vacheron Constantin, the oldest watchmaking
manufacturer in the world in continuous operation.

Ever since this agreement, and true to the history that built
its reputation, Vacheron Constantin has been committed
to passing on its knowledge to each of its Master
Watchmakers in order to guarantee the excellence and
durability of its craftsmanship and of its timepieces.

Quai de l’Ile Day-Date and Power-reserve, Pink gold and titanium case,
Hallmark of Geneva, Self-winding mechanical movement
F THE COMMENT LEADERS
[ ISLAMIC FINANCE ]
Sweet dreams?
Dubai Islamic Bank’s sugar-backed loan is as vague as it is unusual.
D ubai Islamic Bank’s (DIB) rollout of its
latest product last month, Al Islami Salam
Finance, reveals some of the outstanding
issues that the growing field of Islamic finance
still faces.
In trying to replicate conventional financial
products – in this case, a consumer loan –
Shari’ah-compliant instruments can come
over as just plain complicated. The premise of
Salam isn’t a simple one to grasp: at the press
conference, the FAQ on the product appeared to
contradict answers given during the conference
itself, and the DIB team spent more time talking
up the Islamic bona fides of the product, rather
than explain how it works in the real world.
And that’s the billion-dirham question (and
also the amount the bank is setting aside to
capitalise this). Salam resembles a futures
contract more than anything else. There is
a real underlying asset, in this case, sugar,
chosen because of its relative in-volatility.
Essentially, a borrower works out how much
upfront cash he or she needs (from $6,800 to
about $273,000), the bank supplies this, and
the borrower then pays back that amount on a
monthly basis – in sugar. Through the bank’s
commodity account, the physical delivery of
sugar is not the borrower’s problem, so bags
[ INFRASTRUCTURE ]
Waiting for a go
After watching its neighbours make hay, Kuwait is finally getting its time in the sun.
W AY, way back in 2006, when Dubai’s
economy was storming ahead and
infrastructure projects were being signed off
left, right and centre, Kuwait’s businessmen
were not a happy bunch. Democracy, they
said, was holding them back. Indeed, Kuwait’s
peculiar form of democratic process was
hostage to a number of factors including self-
serving MPs and tribal factionalism. On top
of that, the whole process of government was
10 gulfbusiness.com June 2010
of Tate & Lyle aren’t going to gum up the
bank’s ATMs.
Still, questions remain. According to the FAQ,
the bank makes its profit by selling the sugar
on the open market. Now, unless the original
contract is designed so the borrower is buying
his sugar at a significant premium to market
rates, to offset any future declines in the sugar
price, this looks incredibly risky. Without
further clarification, some may wonder – is the
bank, in effect, taking a giant, and unhedged,
bet on the sugar market? Hussain Hamed
Hassan, the head of DIB’s Shari’ah Supervisory
Board, insisted at the press conference that
analysts know the markets well enough to
ensure this isn’t mere speculation – which
would be contra to the values of Shari’ah
finance – while Adnan Chilwan, the bank’s head
of retail and business banking, said that it’s the
sugar wholesalers who will carry the risk.
But no analyst can reliably tell you what the
sugar price will be tomorrow, never mind three
years from now – a point brought home by the
slump in sugar prices beginning from January
this year – and a billion dirhams appears to be
a lot to commit to a product that, ultimately,
could leave the bank with a bitter aftertaste.
These issues must be clarified. ■
weighed down by a bureaucratic machine that
spewed a constant stream of red tape.
So, as towers rose in neighbouring counties,
as ports elsewhere were made deeper and
larger, and as eight-lane highways cut
through bordering deserts, Kuwait stagnated,
frequently in the dark as the sclerotic power
system failed to even keep up with demand
from city residents.
Fast forward to 2010, and contractors

throughout the Gulf, still licking their wounds
after the property crash in Dubai left them
over-exposed and under-employed, are shifting
their focus to Kuwait. That same parliament
that was problematic a decade ago has put
aside differences to overwhelmingly back a
$100 billion development plan to fund more
than 1,000 projects – some of them very large
indeed. This includes work on an oil and gas
infrastructure, a major roads upgrade, a new
airport terminal and “Silk City” – a vast urban
project destined to be second only to the
capital in size.
Of course, a lot of this was scheduled to be
completed years ago, and spending isn’t going
to solve all of Kuwait’s problems. The stock
market remains woefully under regulated,
and the nation needs to tackle a serious
“dependency culture” among its citizens.
National Bank of Kuwait aside, the country’s
banking sector was hit hard by the financial
crisis, and remains weak, and MPs are pushing
for these same banks to write off some $6.3
[ ECONOMY ]
Deal on Dubai World debt draws near
There is light showing at the end of Shindagha tunnel.
T he acceptance of the Dubai World debt
restructuring deal by 60 per cent of lenders
last month represents a significant milestone in
the emirate’s battle to get itself out of its debt
crisis. For the first time in a long while, some
positive ink was splashed around about Dubai,
with some commentators, notably the Financial
Times, even suggesting that Greece could
learn a thing or two from how the emirate has
handled the negotiations.
But that doesn’t mean Dubai is out of the
woods yet. Some 66 creditors are still holding
out for a better deal, notably, the local banks
that are unhappy with the low interest rate
on offer. Getting them onside – and actually
putting pen to paper on the deal – may still be
a month or two off. Then there’s the issue of
other indebted government-related entities.
THE COMMENT LEADERS
billion of interest on the entire consumer
debt portfolio, arguing that corporations
were bailed out, so why not individuals? The
government has so far resisted these populist
moves, recognising that financial stimulation
will require much more than cash handouts or
debt forgiveness.
A constricting bureaucracy remains
a serious issue, and Kuwaitis still view
government work as something as a right,
with 80 per cent of citizens employed in the
public sector.
For those companies patient enough to deal
with the red tape, however, there’s another
prize, just across the border. The political links
may be lacking, but the state’s proximity to
Iraq must be seen as attractive; any contractor
looking at taking a slice of the estimated $600
billion in infrastructure work on the cards in
the war-torn country would do well to look
at projects in Kuwait as something of a dress
rehearsal, and, as a logistics base for Iraq
development work, it can’t be bettered. ■
Dubai Holding has, according to news sources,
brought in an advisory group to pre-empt its
own much-anticipated debt restructuring, and,
according to our figures from January this year,
there is still some $54 billion in short-term
credit to be serviced by 2014 – and that doesn’t
include bilateral bank loans that will run to
many billions more.
Still, and excuse the pun, we must give
credit where it’s due. In strictly public
relations terms, Dubai has come a long
way from the shock announcement of the
Dubai World debt standstill in November. In
financial terms, it’s playing its hand as well as
– or better than – anyone could have expected.
If Dubai has been fleet-footed enough to
dodge the knock-out blows, there’s still hope it
can get itself off the ropes. ■
June 2010 gulfbusiness.com 11
THE COMMENT INVESTMENT

THE BULLISH CASE FOR

TAIWAN EQUITIES
The emerging market has a ripe contender to be the new shooting star
in the form of Taiwan – China’s overshadowed sister.
MATEIN KHALID

T
he Cinderella fairy tale is an apt metaphor One, Taiwan’s exports to China are greater than its
for the onset of a secular bull market in exports to the US, Eurozone and Japan put together. China
emerging markets. It is the moment when a will be the world’s largest PC, mobile phone, consumer
market is cheap, unloved, under-owned and electronics, plasma TV and network computing market in
even misunderstood. This was the case with India in the next decade, as the Chinese middle class surges from
2002 when the Sensex traded below 3,000, the forward 200 to 500 million people. Chinese and emerging Asian tech
valuation was a mere nine times earnings and offshore exports will lead to a double bagger in Taiwanese earnings
investors, traumatised by the recent Silicon Valley tech per share in the next two years.
meltdown, had zero interest chasing the corporate Two, political relations between the ruling Taiwan
Cinderellas of Dalal Street, even though industrial KMT (Kuomintang), ironically the party of Mao’s rival
restructuring had created an earnings explosion. Six Generalissimo Chiang Kai Shek, and Beijing have improved
years later, the Sensex soared to 21,000, a stratospheric significantly since the election of President Ma Ying Jeou.
valuation of 23 times earnings and India was the darling In essence, unlike his disgraced predecessor, President Ma
of the emerging markets. Of course, as we learnt the hard has abandoned the rhetoric of Taiwanese independence.
way in the Gulf, it is all too easy to mistake Cinderella (a This has led to the historic China-Taiwan economic
secular bull market) for the ugly stepsisters (value traps) cooperation treaty that will significantly boost the island’s
in the ballroom (a leveraged credit bubble). Amid yet financial linkage to the Mainland and incorporate a growth
another spasm of risk aversion in the premium in Taiwan equities.
financial markets, I search for the next It is all too easy to Three, Taiwan has the lowest
emerging markets Cinderella, which I
believe is Taiwan.
mistake Cinderella government bond yield in the Asian
Pacific, with ten year debt trading below
Taiwan, demonised as the “renegade (a secular bull 2 per cent. This means Taiwan’s equity
province” of the Middle Kingdom by the market) for the risk premium is excessive at its current
mandarins of Beijing ever since Chairman modest valuation. This will not last.
Mao founded the People’s Republic of
ugly stepsisters Four, Taiwan is extremely cheap
China six decades ago, is one of the (value traps) in relative to its own past trading history.
world’s true economic and political fairy the ballroom... Taiwan shares traded at 17 times forward
tales. An impoverished, pariah, dynastic earnings since the 1990s, when the
dictatorship at continual risk of invasion rapprochement with the world’s rising
from the mainland, morphed into a vibrant democracy financial superpower across the Straits of Taiwan was not
with a tech export economy in the span of one lifetime, remotely on the geopolitical agenda.
with some of the highest hard currency reserves in the Five, China’s WTO promise mean that it will eventually
Pacific Basin and a constellation of world class technology allow Taiwanese banks to open branches in the mainland.
manufacturers. However, despite being Silicon Valley’s This prospect is not priced into current bank valuations.
foundry and assembly line, Taiwan has not been valued as Six, Taiwanese blue chips TSMC, Hon Hai, AO Optronics,
a growth market by fund managers since the collapse of Wisteron, China Life, Fubon and Chinatrust are some of the
the tech bubble a decade ago. Taiwan trades at a mere 13 biggest, best managed business in the Far East.
times earnings and twice book value even though earnings And lastly, offshore fund managers and even locals are
will double in 2010 and 2011. The financial markets price underweight in Taiwan shares. Excellent. Bull markets
Taiwan as a low-end, commodity manufacturer that is climb a wall of worry. It is time investors reexamined the
hostage to the US and Japanese consumer. Taiwan is the island Cinderella on the edge of China. The Taiwan story is
Cinderella of Asian stock markets, a gem on the verge of a simply compelling to me.
significant valuation re-rating. I believe the TAIEX could Matein Khalid is a global macro trader, economics
well rise from the current 7,400 – 7,600 to 12,000 in the next professor, fund manager in a royal investment office
two years. Why? and writer in finance and geopolitics.

12 gulfbusiness.com June 2010

THE COMMENT MONEY

SILVER TO SHINE BRIGHTER

THAN GOLD?
There is an argument to be made about a repeat of the 1970s precious
metals boom being in the works today, with silver the possible winner.
PETER COOPER

I
t was the 1970s when we saw the last precious metals deficits due to their bailout packages and a shortfall
boom. In the later part of that decade gold prices rose in taxation from the worst recession since the Second
eight-fold and silver by a factor of 25. World War. This means a gigantic government-
Fast-forward to today and you have this columnist borrowing programme is in progress. And what follows
predicting a rise in gold prices to $5,000 as the world goes increased government borrowing? Higher. This slowly,
through something like a re-run of the mid-70s. Then, as or not so slowly, devalues the debt burden of high bond
now, a massive credit expansion produced a huge bust in issuance over time.
property and then stock prices, and governments reflated Then what happens is that bond buyers wise up and
their economies to counter the downswing. demand higher and higher rates of interest to fund
Inflation resulted after the initial price deflation, government debt. So you end up like in the late 1970s
although stock and real estate prices stayed low, and with high interest rates and high inflation. That also
bond prices fell. Even gold prices took a nasty tumble means lower bond prices as interest rates rise.
in 1976 as they did in late 2008. But then came the The result is more buyers for gold and silver to
spectacular 1979-80 blow-off in beat inflation in a tight market on
precious metal prices with gold at Note that silver is the supply side, and the price goes
$850 and silver at $50 an ounce. Is that shooting up.
final spike about where we are today, the only commodity Interest in buying silver as
only to far higher price levels? in the world not the precious metal best suited
Note that silver is the only to hedging against inflationary
commodity in the world not to have to have passed its government debt levels around the
passed its previous all-time high, and previous all-time world is growing among investors.
that was set three decades ago now. If you look rationally at 10 years of
So will history repeat itself again?
high. rising precious metal prices then the
If we look at what has happened to story to date has been one of slow
house prices and stocks (about due for another dip if but sure growth, leaving gold prices four times higher
1970s volatility is any guide) then things do look very and actually the best performing asset class of the past
similar. Governments have also been taking desperate decade, apart from silver which is up six-fold, albeit
measures to counter the financial crash, and signs of with far greater volatility along the way.
inflation are already emerging in places like China There is no 80 per cent price spike in the past 13
and the UK. months like US stocks. Indeed, the fundamental drivers
The next shoe to drop will surely be the bond market of gold and especially silver prices are still in place.
as it did over 30 years ago. Interest rates rocketed in However, life is never that easy for investors. Silver
the late 1970s and that is bad for bond prices. Today is volatile and fell by more than gold in the 2008 sell-
governments around the world need to borrow a lot of off. Will this happen again if industrial commodities
money to finance their deficits and the markets are going fall due to margin calls in a falling stock market? And
to exact a higher price for that money. it was this liquidation of the carry trade that brought
As real estate, stocks and bonds cease to be attractive precious metals down in 2008.
investments, that leaves the precious metals as a store You cannot be sure. Then again if you do not invest
of value. The silver market is much smaller than the gold now you might miss the best price levels. The market
market and in the 1970s became cornered by the Hunt cycle has moved on since 2008 and investors are not
Brothers, forcing the price through the roof until the so highly leveraged and therefore may well not have to
market rules were changed and the price slumped. dump their gold and silver in a crash. ■
All over the world governments face mounting Peter Cooper is the editor of arabianmoney.net

14 gulfbusiness.com June 2010

THE COMMENT INSIDE TRACK
GREED AND FEAR DRIVE
IRRATIONAL INVESTORS
A succession of economic bubbles disprove the myth of the rational investor.
Emotions are still at the heart of most of our stupid decisions.
MISHAL KANOO
I
t is a given in any finance class that the investor
is rational. The investor, it is taught, makes his
decisions based on facts and never allows his
emotions to play a role in his actions.
What a load of rubbish. Most people have been
taught this theory which makes no sense yet we tend
to accept it as a reality. As blood-and-guts humans,
we are expected to make what is in essence a very
personal decision – where to put one’s money – with an
impersonal eye - Of course, it is nearly impossible.
How did this unrealistic expectation become the
standard that people base their investing ideas on?
Simple rational is easy to calculate in formulas while
irrational is not. This is why you will see that taught in
universities as well as in the many
books talking about investing. Financial
Over the past two decades, just in
the US stock market alone, we have
meltdowns keep
had three significant crashes. The on happening and
first was in 1987. The second was in
2001. The last one was the crisis that
will continue to
the Lehman Brothers’ collapse set because the old
into motion. In that same period of adage “never again”
time, we have had the same people
investing in the market overall only applies to
with the exception being the new rational thinkers.
investors who had not experienced
these shocks. Had they not learned from these dramatic
if not seismic shifts? The clear answer is no because
they all played their part in either making it happen or
worsening it after it happened. Financial meltdowns
keep on happening and will continue to because the old
adage “never again” only applies to rational thinkers and
not to the people who are driven by greed or by fear. The
only ones who will never suffer from these great shifts
are those who have allowed themselves to be disciplined
enough to take themselves away from the gyrations
caused by either greed or fear. In other words, they train
themselves to be rational investors. This, I am sad to
say, is not the norm.
We too have experienced our own irrational behavior
in the region. Race, intelligence, religion or political
leanings have no bearing on this kind of irrational
16 gulfbusiness.com June 2010
behavior. The reason for that is that greed and fear –
the two motivators behind it – are shared by all peoples.
And those emotions have contributed to making these
crises greater in magnitude. Over the last five years we
saw what irrational behavior on the part of the investor
can do in the long run. We saw a growth in land value
at a frightening pace, with 20-50 per cent increases
per annum not uncommon. In fact, there was a special
phenomenon happening in the real estate industry were
people were lining up to buy direct from the developer at
exorbitant prices only to immediately sell it to another
irrational investor at a mark up but with no added
value. This was considered acceptable because people
were using the adage of “richer than thou, stupider
than thou” without actually knowing
that to be the case. Their irrational
behavior made it acceptable for them
to sell something that they did not
actually have to someone else who
had, in his mind, already sold it to yet
another person at a profit even though
nothing physically actually happened.
And nearly everyone bought into
the scheme because they reasoned
quite wrongly that it was a solid
investment. Nothing could have been
further from the truth.
Yet these phenomena keep on repeating themselves
time and time again. All we have to do is look back to
what the Kuwaitis called “souq al manakh” in the eighties
and what happened there or the Saudi stock exchange
only recently when it dropped from 20,000 points to
6,000, or there about, in a matter of months, wiping out
billions of Saudi riyals that never really existed. The
same could have been said for the UAE when in 1998
within a three week period the nascent stock market
exploded to new heights a hundred fold and then, for no
apparent reason, imploded with the same gusto. Yet these
investors are supposed to be rational?
The old Arabs used to say that they don’t buy fish in
the sea. Now that is a rational investor.
Mishal Kanoo is deputy chairman of the Kanoo Group.
gb@motivate.ae
THE COMMENT EMERGING MARKETS
SRI LANKA: AN ISLAND OF
INVESTMENT OPPORTUNITY
Amid the ruins of Sri Lanka’s civil war lie gems of stock market opportunity
and massive investment need.
MICHAEL PREISS
L
egendary billionaire investor George Soros put it
best when he remarked: “the most money is made
when things go from terribly-awful to just awful.”
That is exactly the situation we see in Sri Lanka
today. The war-torn island nation is this year’s sixth best
performing equity market with +26 per cent return, and a
market where the trend is your friend.
Sri Lanka so far was considered the emerging markets in
the true sense, but last year’s peace process and the end of
the decades-long civil war has investors taking notice.
In 2010 the country formerly known as Ceylon is now
on top of the list as a market where things are happening.
Many investors increasingly believe the country’s time has
finally come.
The death of the Tamil Tiger’s infamous leader Velupillai
Prabhakaran was crucial to ending
the civil war. Once the mysterious and In 2010 the
powerful Prabhakaran was dead, the
Tamil Tiger movement collapsed, paving
country formerly
the way for lasting peace. known as Ceylon is
Sri Lanka is going to be one of the
best investment opportunities on the
now on top of the
planet for the next two to three years. list as a market
Re-building after the long civil war and where things are
record low interest rates in the developed
world is leading to ample liquidity and happening.
a willingness among global investors to
increase exposure to a market that so far has been only on
the radar screen of the most farsighted investors.
Sri Lanka has traditionally excelled in tea, tourism,
garments and rubber but the new opportunities will not
be in the sectors Sri Lanka is known for. They will be
in real estate, business process outsourcing, banking,
timber, pepper, fisheries, education, healthcare and, of
course, infrastructure.
It is expected that the Sri Lankan government will soon
rebuild infrastructure, social facilities and government
offices across the northern regions which were long
controlled by the Tamil Tigers. The redevelopment blueprint
may be modelled after the one in eastern Sri Lanka, in
which the government had begun construction on a series
of projects after the military expelled the Tamil Tigers from
their former stronghold.
Sri Lanka’s long coastline is one of its precious resources.
In the past, sandy beaches attracted holiday makers and
surfers from around the world.
18 gulfbusiness.com June 2010
The decades of civil war have scared away many
mainstream tourists, even though the fighting was mostly
confined to the north and northeast. Today, however, some
observers believe Sri Lanka could become the Thailand of
South Asia for tourists.
As an investment theme this might attract funds into Sri
Lankan Hotel stocks that trade at low valuations and multi-
year lows. During the first peace talks in 2005, Sri Lankan
Hotel stocks surged +200 per cent. Now we could see a
replay of this going forward.
The end of the civil war has also sped up the Sri
Lankan government’s negotiations with the International
Monetary Fund (IMF) for a standby facility of $1.9 billion.
An IMF agreement would provide support to reserves
and have other positive effects such as improving
investor confidence and support for the
exchange rate.
Just how much money Sri Lanka
in total needs to rebuild itself is still
unknown. But just the initial investment
needed to fix the stalled economy in the
north and east is $5 billion, according to
government estimates. Roads, bridges,
schools, hospitals, power plants and even
homes have to be built afresh. So, the
final tally will be several times larger.
But the sweet spot for the foreign
investor is not the war zone. The relatively peaceful
Western Province, where Colombo is located, is a ready
market waiting to be tapped fully. The infrastructure and
a consumer economy are already there, but the war kept
away many providers of goods and services. They will come
now. The capital, Colombo, which accounts for half of Sri
Lanka’s $40 billion economy, will be the first to gain from
peace. According to recent World Bank report, increases in
foreign direct investment and tourism, along with improved
employment and large-scale reconstruction projects, are
expected to sustain and accelerate Sri Lanka’s growth
throughout 2010. Prospects are positive.
Next to just making money, investors in Sri Lanka know
that their capital is helping a war-torn nation re-build and
giving people and their families a brighter future.
This is the true meaning of equity investing.
Michael Preiss is an investment advisor
and finance professor and can be reached at:
Michael@michaelpreiss.net
Advertisment Feature
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THE COMMENT AGRICULTURE
RENEWED HOPE FOR
AGRICULTURE
A flagging industry offers new possibilities for economic growth
for the Middle East and North Africa.
BOOZ & COMPANY
A
fter years of neglect, agriculture has re-emerged as
a sector to watch. The recent surge in food demand
and the associated rise in international food
prices have revitalised agriculture. Countries that
have maintained a strong sector have benefited in terms of
greater opportunities in agricultural and processed food
exports. They are also able to ensure that their own people
have available and affordable food. Countries with under-
achieving or limited agriculture sectors may face an upward
spiral of shortages and increasing food subsidies.
Recent estimates indicate that gross domestic product
(GDP) originating from agriculture is at least twice as
effective in reducing poverty as GDP from other sectors.
These emerging trends and shifts are repositioning
the sector for increased investment and innovation, and
placing it at the forefront of government policy. As a
result, Middle East and North Africa (MENA) countries
are redirecting their attention towards
the agriculture sector. Their aim is
to transform it into an engine for
MENA countries
economic growth, job creation, and are encouraged
international trade.
MENA countries are encouraged by
by the example of
the example of other countries that other countries that
have successfully transformed their have successfully
agriculture sectors. For instance, Brazil
adjusted its crop mix to better respond transformed their
to local and international demand, agriculture sectors.
and as a result tripled its agriculture
trade surplus over a period of ten
years. In another example, Indonesia reformed legislation,
infrastructure, technology and services. It succeeded in
realising significant productivity gains; it also increased
agriculture’s contribution to national GDP while reducing
the percentage of the budget spent on it, since the sector
became more attractive to private investors.
To replicate such agricultural transformation in the
MENA region, policymakers must first evaluate the
availability and quality of their basic resources: arable
land, water, seeds, fertilisers, pesticides, farm labour, and
capital. For many MENA countries, particularly in the
Gulf, issues such as water shortages make it unlikely that
agriculture will be a viable sector for reform.
For countries whose basic resources do offer a strong
basis for reform, policymakers should consider three
critical steps to capitalise on agriculture’s turnaround.
20 gulfbusiness.com June 2010
Assess sector strengths and weaknesses: To seize the
sector’s potential, governments must put enablers in place to
support and promote it. These include policy and regulations,
organisation and sector governance, infrastructure, research
and technology, and agricultural services.
As policymakers strike a balance between the efficient use
of resources and the development of supporting enablers,
they should systematically identify areas of strength and
opportunity, as well as challenges, threats, and underlying
causes of problems.
Develop a comprehensive transformation plan: Based
on the overview of the sector’s weaknesses, policymakers
must develop a transformation strategy by determining
their strategic objectives and designing initiatives to
reach them. For instance, to realise productivity gains
and increase scale, initiatives would include increasing
investments in agriculture research
and development, revamping farmers’
training programmes and incentivising
land consolidation and group farming.
Assess the plan’s economic impact: The
final step is to assess how the strategy
will affect the critical macroeconomic
and sector-specific indicators.
Estimating and communicating the
impact on indicators such as GDP,
employment, trade balance, farmer
profitability, productivity and foreign
direct investment is pivotal in securing buy-in and
commitment from entities.
Agriculture’s history of low profitability, stagnant
productivity and rising input costs have rendered the sector
unattractive to investors, policymakers, and the workforce.
It is in need of deep structural reforms. Fortunately, the
recently emerging global trends have triggered a major
shift in the sector’s economic potential. There are new
opportunities for governments and private investors to work
collaboratively in transforming agriculture in the MENA
region. With combined public and private support and
investments, agriculture can shed its reputation as a burden
on government resources and reclaim its role as one of the
first and most important engines of economic growth.
By George Atallah (pictured) partner with Booz & Company,
and Bisma Berti, consultant with Booz & Company.
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THE COMMENT letters@gulfbusiness.com

THE NEW GUARD: UNPOLISHED OMAN TAKES ON GLITZY UAE TOURISM

Vol. 15 Issue 1 May 2010
LETTER OF THE MONTH

CLUTTER IN THE MAKING?

It is interesting to note the intense competition between Gulf
economies in a bid to assume pole position in the region –
from the Yas Marina Circuit challenging the Bahrain Grand
Prix to the DIFC in Dubai wrestling with $1.5 billion Bahrain
Financial Harbour and now a vast $8 billion King Abdullah
Financial District brewing in Riyadh. While this might be good
for the region, it is worth weighing whether it is equally healthy.
Your article ‘A place on the stage’ (Gulf Business, May 2010)
TOP BANKS IN THE GCC raises a very legitimate concern: Bricks and mortar alone will
HIGH HOPES
Mongolia the new bluechips market
GAME CHANGER
Landmark’s Vipen Sethi
not establish and underpin the solid reputation for financial
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
CONSOLATION PRIZE
Cityscape focuses on delivery
IF YOU BUILD IT...
Gulf financial centres still struggling
dealings achieved by the world’s more mature locations.
It was just over a year ago in another article titled ‘Cluster
UAE.................. DHS 10
WWWGULFBUSINESSCOM

GB Regional cover May 2010 .indd 1 4/28/10 2:35:07 PM

clutter’ that a similar concern was noted – ‘Do industrial

cluster developments in the Gulf help stimulate innovation as
believed?’ (Gulf Business, January 2009). Only time will tell.
Gulf Business has been at the forefront of developments
in region and little wonder why it is my favourite business
magazine, providing an unbiased coverage of critical business
and management developments in the region. From your cover
pages since 2008 starting with interesting questions such as –
GCC Insurance, a pledge too far? (Gulf Business, 14-28 December
2008) To the 13th anniversary issue (Gulf Business, May 2009) on
Arab healthcare losing patience to and the big question ‘What
next for Dubai World?’ as well as possible merger activities of
regional banks ‘Do regional banks want to consolidate?’ (Gulf
Business, January 2010) – well done!
Nnamdi O. Madichie
Assistant Professor of Marketing
University of Sharjah

weekly calls from this bank or the other Lexus LS 600hl is beyond my budget, but
CELEBRATING CLARITY
offering me a credit card or a loan. That’s it gives me something to aspire to. I can’t
Thank you for the comprehensive what got us ALL in to trouble last time. wait till buying something less harmful
report on banks – ‘Bottomed out’ (Gulf Give it a rest! to the environment is not a direct trade-
Business, May 2010) I hope the report Juan Mendoza, Dubai off on price. One can’t expect the car
is a lesson to the Gulf’s banks. The manufacturers to forego the novelty cost
ones that have fallen in the rankings GROWING GREEN extras that they are privy to with their
have probably done so because of poor uncommon hybrids, but I think it would
policies. The standard of service and the I am currently looking into buying a car be great if businesses and even the
integrity of investment and analysis all and have been saddened by the lack of government gave some sort of incentive
need to be raised. And perhaps the bit ‘green’ options here in the UAE. So you to buying them. It would help those of us
on non-performing loans – blamed for can imagine my pleasure in reading with green aspirations but humble bank
much of the region’s weakness in profit about a hybrid in your last car review balances to be better able to do their bit.
performance – means I’ll stop getting (Gulf Business, May 2010). I think the Teresa May Allen, Sharjah

Gulf Business welcomes your comments about the magazine or issues regarding business in the region. Please write to: The Editor, Gulf Business,
Motivate Publishing, PO Box 2331, Dubai, UAE; Fax to + 971 4 2827593; or email to: letters@gulfbusiness.com. We reserve the right to edit correspondence.

22 gulfbusiness.com June 2010

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THE BRIEFING THE REGION

30
[ UAE ]
Seconds to make
sense of…football Dubai World debt deal
in the Middle East
Kevin Keegan ‘is potential model for
former England manager and co-developer of Soccer Circus

How was your interactive football skills concept, Soccer

Greece’
Circus, conceived and developed? Debt-rocked Dubai
The project has taken over ten years to develop and an World’s agreement with
investment of $8.7 million in research and development its core bank creditors
work in the UK. to extend maturities on
loan repayments should
Why did you decide to bring this concept to Dubai? be seen as an example
With the strong interest in football across the Middle East of how Dubai and
I can see lots of visitors enjoying the attraction. It creates a Greece could manage
place to go to live and breath football, to play the interactive their debt problems, a
games and to see what it’s like to be a professional leading banker has said.
footballer. Visitors can also compare their scores and see
how they match up to the professionals. ”They started a
process, the market
How much local talent have you detected at Soccer is favourable, it’s an indication of how things should
Circus Dubai? be done,” Henry Azzam, Deutsche Bank’s (DB) chief
Even after just three weeks we have seen some very good executive in the Middle East and North Africa told
youngsters who have talent. Dow Jones Newswires. F
Azzam said the restructuring deal could be a lesson
Who do you favour to win the World Cup and what do you for Dubai– which roiled world markets last year with
think of the chances of England? its debt crisis – in handling its total debt, which is
I am really looking forward to the World Cup. There are estimated by some analysts to be above $100 billion.
some very good teams, such as Spain, Argentina and, of Speaking at an economic forum in Lebanon, Azzam
course, Brazil. There is also the possibility of an African said: “The success of Dubai in restructuring its debt”
team doing well. England has a talented squad and I can see could also be an example for Greece, whose sovereign
them going a long way in the competition, perhaps to the debt troubles continue to weigh on global markets,
semi-finals. despite a rescue package from the European Union and
OFF THE CHARTS International Monetary Fund.
Oil spills in context ”In my personal view, the problems of Greece cannot
be solved by just giving them money to pay their
Deepwater Horizon Amoco Cadiz Exxon Valdez
deepest oil spill ever 1978: largest loss 1989: Devastating maturing debts…They need restructuring,” he said.
In a chart from of marine life due to remote Azzam added that a continued tightening of fiscal
Information location
IsBeautiful.net, 450,000 rich in sea life policy in Greece, through reforms, is likely to bring on
we compare barrels more social unrest.
Deepwater ”Restructuring – this is what Dubai did: admitting that
Horizon’s 1,600,000 we cannot repay on time and repaying over a longer period
estimated oil barrels of time at possibly lower interest rates,” said Azzam.
spill, to past spills. 271,000
barrels Dubai World has agreed in principle with its main
would fill creditors on restructuring $23.5 billion of debt, lifting a
900,000 cars cloud of uncertainty that hung over the emirate’s economy.
*Data from CIA Factbook, International Energy Association and press
reports – all figures estimated and rounded.
The government-owned conglomerate said it would
pay $4.4 billion of the loans in five years and another
BY THE NUMBERS $10 billion over eight years. Dubai’s government,
● In millions of dirhams, the amount Etisalat has

30
been ordered to pay an Abu Dhabi resident for
using his invention without permission.
● In percentage points, the estimated increase in
Takaful premiums expected globally this year,
according to the Kuwait Finance House.
● In millions of dollars, the amount of money
spent on gold in the Gulf Cooperation Council
during the Hindu Akshaya Tritiya festival.
meanwhile, will convert $8.9 billion of its loans to
Dubai World into equity.
The announced agreement accounts for about 60
per cent of Dubai World’s bank lenders. The remaining
creditors holding 40 per cent of the group’s debt still
have to accept the deal.
”Once you have 60 per cent of the largest creditors,
that is a good indication that others would follow,“
Azzam said.

26 gulfbusiness.com June 2010


■
■
■ three times as much as
■ The average monthly pay
[ SAUDI ARABIA ]
$10.6 billion in
projects approved
Saudi Arabia has approved
over $10.6 billion in projects
in the first four months of
the year, its foreign minister
has revealed.
The approvals of some
652 projects valued at
$10.67 billion underscores
that Saudi is continuing a
policy of spending heavily
on infrastructure projects to
cushion its economy from
the effects of the global
economic crisis.
Last year, the Kingdom
spent $33.83 billion in
project investment, an
amount it is now on track
to surpass.
[ KUWAIT ]
KFH leases
planes to Turkey
Kuwait Finance House
has leased three Airbus
■ private sector, a survey
■ package in the government
A320s to Turkish Airlines, it
announced. In a statement,
Kuwait’s largest Islamic
lender, which owns an
aircraft leasing business,
said that its subsidiary,
Kuwait’s Aviation Lease
and Finance Co, will run
the leasing process on
behalf of the bank.
”KFH signed an agreement
to lease three Airbus A320-
200 to Turkish Airlines for a
period of seven years,” KFH
said in a statement. Alafco
has previously leased five
aircraft to Turkish Airlines
and three to Turkey’s Sky
Airlines, the statement said.
[ OMAN ]
Al Jazeera Steel
doubles revenues
Oman-based steelmaker
Al Jazeera Steel Products
Company generated
revenues of $39.8 million in
the first quarter of 2010, as
THE BRIEFING THE REGION
compared to $18.9 million
for the same period last
year, it has been reported.
This growth in revenues was
supported by the increase in
regional and global demand
for steel products.
The company’s total
production, including its
pipe mill and merchant bar
mill, surged to 56,023 metric
tonnes in the first quarter
of 2010, as compared to
20,703 metric tonnes in the
corresponding period last
year, recording a growth of
170 per cent.
[ BAHRAIN ]
Better ranking for
enabling business
The Enabling Trade Index
2010 has moved Bahrain up
two positions in its latest
results, to 22nd place, it has
been announced.
The index, published
by the World Economic
Forum, assesses countries
across the globe on the
institutions and policies
they have in place to
enable trade.
The kingdom was ranked
15th globally on efficient
border administration
and 27th in availability
and use of information
and technology.
Bahrain also ranked
highly in terms of
the quality of its port
infrastructure (17th), its
airport infrastructure
(20th) and regulatory
environment (25th).
June 2010 gulfbusiness.com
[ QATAR ]
Govt employees
get triple the pay
Public sector employees
in Qatar earn almost
those working in the
has indicated.
sector is $4,018 while the
average private sector
salary is $1,480, according
to the Labour Force Sample
Survey conducted by Qatar
Statistic Authority.
Gulf nationals have
invariably favoured the
public sector for its
association with shorter
working hours, longer
holidays and lighter
workload. According to the
study, the average monthly
salary in Qatar is $2,142.
[ UAE ]
Masdar investing
in carbon
Abu Dhabi’s clean energy
venture Masdar has jointly
agreed with German power
giant E.ON to put up $140
million for an enterprise to
capitalise on reducing gas
emissions. The project aims
to end the practice of flaring
and to lift energy efficiency
for companies across South
East Asia, central Asia and
Africa, said Frederic Boeuf,
the general manager.
27
THE BRIEFING THE REGION
[ FINANCE ]
Loans sweetened
for Islamic market
Dubai Islamic Bank (DIB)
has launched an unusual
offering – personal loans
backed by sugar. The
country’s oldest Islamic
institution is offering the
first Shari’ah-compliant
personal loan in the
Arab world.
Under Shari’ah a bank
can offer financing only if
real goods change hands.
DIB’s new product, Al Islami
Salam Finance, is based
on a centuries-old Islamic
custom that gives farmers
cash for a later delivery
of dates. Instead of using
dates as the underlying
commodity, DIB’s financing
will be based on a sugar
futures contract.
[ FINANCE ]
Sukuk offerings
rise 24 per cent
Islamic bond sales are
growing at the fastest pace
since 2007 as yields on
securities complying with
the religions ban on interest
fall more than those on
emerging-market debt,
even as Europe’s debt
crisis worsens.
Offerings of sukuk
climbed 24 per cent to
$4.6 billion so far in 2010,
the most since a 50 per
cent increase in the same
period three years ago,
according to data compiled
by Bloomberg.
The spread between
the average yield for the
debt and the three-month
London interbank offered
rate narrowed 301 basis
points, or 3.01 percentage
points, to 437 basis points
in the past year, according
to the HSBC/Nasdaq Dubai
US Dollar Sukuk Index.
28gulfbusiness.com June 2010
[ ENTERTAINMENT ]
Doha plants seeds of Dollywood
The Doha Film Institute
(DFI) - Qatar’s first year-
round international cultural
film organisation – has been
launched in Cannes.
The institute aims to build
a sustainable film industry
in Qatar with strong
links to the international
film community and an
education focus for the
local community.
Martin Scorsese’s World
Cinema Foundation has
signed a three-year cultural
partnership with DFI
to restore and preserve film finance and production. Cannes saw the launch of
international films of The launch, on the other Gulf film initiatives
cultural significance. sidelines of the Cannes – including the Abu Dhabi
The DFI, which is backed International Film Festival, Film Festival’s Sanad, a
by the Qatar Investment
Authority, brings the state’s
is the latest in the Gulf’s
major investment in the
F $500,000 film fund, while
the Dubai Film Connection
various film initiatives cinema industry (see recently announced a
under one banner, including Making movies, page 56). $120,000 fund as well.
[ REAL ESTATE ]
Abu Dhabi Hydra issues repossession notices
Repossession notices are masterplan changes, local and have now been hit with
being issued to defaulting media have reported. a letter outlining Hydra’s
investors in Abu Dhabi Launched in 2006 and “unfettered right” over the
developer Hydra Properties’ originally scheduled for unfinished units.
flagship project. completion in 2009, the The letter says defaulting
Letters have been sent to residential community is investors are liable for a
investors in the $545 million now slated for delivery charge of $136 per unit
Hydra Village project, in 2011. per day since they first
which has been dogged by In response to the defaulted, according to the
controversy over imposed delays, some investors developer, which insists the
price hikes on properties, refused to honour their project is on schedule for
construction delays and original payment plans, completion in 2011.
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[ TELECOM ]
Virgin Mobile
service launched
in Qatar
British entrepreneur
Sir Richard Branson
has launched his first
telecommunications venture
in the region with the start
of Virgin Mobile in Qatar
in partnership with local
telecoms leader Qtel.
The new service, available
in stores and online, will
be wholly owned by Qtel,
which licensed the Virgin
brand for an undisclosed
sum. The deal represents
the youth-oriented brand’s
first foray into the
MENA region.
“Qatar will be the first
in the region to do this,”
Nasser Marafih, the Qtel
chief executive said at the
launch. “We are focusing
on youth and the young-at-
heart because we believe
the Virgin brand offers fun
services.”
Serving eight countries
and 15 million customers
worldwide, the UK-based
Virgin Mobile offers
pre-paid mobile service
while piggybacking on a
national network. In the US,
Sprint Nextel provides the
service’s backbone. In the
UK, it is T-mobile. Virgin
Mobile Qatar officials said
locals contributed to the
look and feel of the new
brand, the outlets and even
the SIM cards.
“Its about connecting
people not just to
technology, but to each
other and the hottest events
around town,” said Ed
Jennings, the head of Virgin
Mobile Qatar.
Virgin Mobile Qatar
will only offer a pre-paid
service initially at six outlets
across Doha. National and
international calls will cost
the same at all times.
30gulfbusiness.com June 2010
[ CORPORATE GOVERNANCE ]
Former DIFC governor released from jail
The former governor of other irregularities, the
the Dubai International prosecution said in an
Financial Centre has been emailed statement.
freed from jail after paying Bin Sulaiman, who was
back a total of $13.6 million detained in March in a case
he was accused of illegally of misuse of public funds,
taking as bonuses. is the most senior Dubai
Omar Bin Sulaiman, official to be involved in a
former governor of the corruption investigation.
financial services centre, Bin Sulaiman was not
is still under investigation immediately available for
and may be implicated in comment on the case.
[ REAL ESTATE ]
Dubai starts to deregister properties
Dubai investors who have
missed payments on their
off-plan properties are
being stripped of their titles
as Dubai Land Department
F
starts to deregulate
problematic properties.
Hundreds of letters
were reportedly sent to
errant investors on behalf
of developers that have
completed 80 per cent or
more of a project.
The release on April
15 of Executive Council
Resolution 6 of 2010
has allowed developers,
including Emaar Properties,
Deyaar Development,
Omniyat Properties, Al Fajer
Properties and Al Mazaya
Real Estate, to repossess the of which 200 investors been put up for auction.
properties and retain 40 per were willing to have their Still, there are dozens of
cent of their value. contracts cancelled. investors now considering
Mohammed Sultan Thani, ”It’s mostly happening legal action against a
the assistant director through mutual agreement ruling they consider
general of the Dubai Land ... only a few people are favours developers.
Department, said ”some” making problems,” Thani Nabil Ahmed, the head
properties had been told local media. of research for the region
deregistered since the Seized properties will at Deutsche Bank, said the
procedure began, adding be auctioned by the Land move to cancel contracts
that buyers were agreeing Department, with the funds and repossess properties
because they ”don‘t want to going to the developer was a last resort for
pay any more”. unless the sales generate developers whose profits
He referred to one a surplus, which will be had dwindled since the
developer, which he declined passed on to the original financial crisis took hold
to name, that had issued buyers. Thani added that and it was also a way to
about 225 notices, out no properties had yet ”clean out” the market.
THE BRIEFING THE REGION
[ AVIATION ]
Emirates to
restart A380 to
New York
Dubai carrier Emirates will
restart its A380 flights to
New York on October 31, it
announced. The aircraft’s
reinstatement on one of
Emirates’ double daily JFK
routes comes as the carrier
reported a significant
increase in revenue for
the Americas in 2009-10,
representing a year-on-year
rise of 8.1 per cent.
Senior company officials
said the airline was
looking to add further US
destinations to its network.
Growth in the Americas
helped steer the airline
to a net profit of $964
million, the airline said
in a statement.
Tim Clark, airline
president, added: ”We
promised to return the A380
to New York as soon as
demand recovered and we
have been true to our word.”
”Against some of
the toughest operating
conditions ever faced, the
results for the Americas have
been hugely encouraging.
This achievement reflects
our success in maintaining
our business-as-usual
approach and remaining
faithful to our strategy
of product and service
excellence.”
32 gulfbusiness.com June 2010
[ MEDIA ]
Young Lion winners announced
The winners of the
UAE Young Lions 2010,
honouring advertising
professionals below the age
of 28, have been selected
and announced.
Dubai Media City,
Motivate Val Morgan and
Emirates airline announced
the competition winners,
who will be flown on an
all-expense paid trip to
Cannes to participate in the
Young Lions Competition
as part of the 57th Cannes
Lions International
Advertising Festival.
The UAE winning
team comprises Ashraf
Majiet, art director, and
Dario Albuquerque,
copywriter from Tonic
Communications. The duo
was selected from the
ten teams from leading
creative agencies that
participated. Each year, the
participating teams design
a campaign for a charitable
[ ECONOMY ]
Dubai Holding nearing
needed debt revamp: analyst
Debt restructuring for
Dubai Holding is becoming
more likely due to its
exposure to the property
sector and cash flow
problems, an analyst
has claimed.
The government-
owned conglomerate is
seen as the next subject
of the emirate’s debt
restructuring programme,
which started with Dubai
World in November, Saud
Masud, head of research
for the Middle East and
North Africa at bank UBS,
was quoted as saying by
Reuters Insider.
organisation based on a
creative brief that outlines
the campaign objectives.
This year’s charitable
organisation was Helping
Hands UAE, which provides
assistance to construction
workers. The Creative
F advertising industry. Their
Club comprising senior
creatives from Dubai’s
advertising agencies
among other distinguished
panelists participated in
the judging process.
Ian Fairservice, managing
”We believe Dubai
Holding has roughly $15
billion in loans and bonds
but this does not include
any off-balance liabilities
arising from investor
or end-user default on
properties that have
dramatically declined in
18 months,” Masud said.
”There is a clear cash
flow risk in Dubai and I
wouldn’t be surprised if
the same holds true for
Dubai Holding.”
Dubai Holding holds a
substantial portfolio of
brands in the property
and hospitality sectors,
partner of Motivate Group,
said: “This is the eighth
year that we have hosted
this event. We are proud
of the young creative
professionals from the UAE
high quality of work is
reflected in the outstanding
entries at the 2010 Young
Lions competition.”
The UAE Young
Lions Competition was
supported by Gallo/Getty
Images and Xerox.
organised under three main
groupings: Dubai Holding
Commercial Operations
Group, Dubai International
Capital and Dubai Group.
A debt restructuring
of Dubai Holding would
further dent Dubai’s
reputation following the
shock of Dubai World’s
difficulties, Masud said.
Dubai Holding may
struggle to service debt
and keep enough working
capital at the same time,
making a debt restructuring
crucial, he added.
F THE BRIEFING ECONOMIC PREPAREDNESS
Catching the wave
Now is the time for managers to ready their businesses for the opportunities and growth
of the awaited economic upturn, ZARINA KHAN reports.
W
ith most analysts saying
the worst of the Gulf’s
economic downturn is
over, the time has come
for businesses to ready themselves to
take advantage of the upturn lest they
find themselves left in the dust by
their competitors.
“Making the most of the possible
upturn is all about being ready. If you
wait for the upturn to be upon you,
it’ll be too late by the time it happens.
Being prepared requires a bit of
work and is not something you can
do overnight,” Amanda Line, Middle
East regional director of the Institute
of Chartered Accountants in England
and Wales told Gulf Business.
“I was in Asia when its massive
crisis hit years back and saw that a
number of companies that survived
the downturn failed when the upturn
came because they didn’t have
sufficient capital to complete the
projects they undertook or the right
teams to lead their projects. There
is danger in a downturn and in an
upturn,” she warned.
The Gulf and the greater Middle
East and North Africa region are
expected to see improvements in
economic performance this year.
According to the Global Outlook
report by the Economist Intelligence
Unit, the region’s real gross domestic
product is expected to grow by 4.2
per cent, while Emirates NBD has
predicted growth of 2.5 per cent.
But even the more conservative
estimates, like the International
Monetary Fund’s expectation that the
UAE – one of the Gulf’s hardest hit
economies – will grow only 0.5 per
cent, is still in the black and offers
opportunities to businesses that can
capitalise on the growth.
Line said that the major challenges
businesses will face in capitalising
34 gulfbusiness.com June 2010
on the upturn are securing access
to finance to fund projects and
expansion, the availability of quality
staff to handle the new opportunities
and risk management.
“One of the opportunities in this
part of the world is that there is
significant progress that can be
made in simple things, like the
quality of financial reporting. These
things can be easily improved
which will improve investor and
customer confidence.”
Making the most of the possible upturn
is all about being ready. If you wait for
the upturn to be upon you, it’ll be too
late by the time it happens.
A lingering and perhaps permanent
impact of the region’s economic
crisis is reduced access to finance,
particularly from banks, who have
seriously tightened lending criteria.
“Something businesses can do to
position themselves is to make sure
they have excellent quality financial
information about their company to
take to the bank. It inspires confidence
in your business not just with banks
and investors. Anyone who puts
money in a business is going to want
to understand much more than they
did a few years ago. There are going to
be a lot more questions asked. Being
prepared to answer those questions
with clear information about your
business is critical.”
With secure access to funding,
businesses can then look to staffing
their projects and operations with the
type of professionals who will help
improve a business’ chances of success.
“One of the good things with the
downturn is that there is more talent
available. We are so much aware of
quality today. Before companies were
just hiring, they weren’t fussing about
who they were hiring. Now they are
much more conscious of what they’re
spending on human resources.
You can hire better qualified people
for the budget you have. It’s a flight
to quality.”
Line also said the time when chief
risk officers were only part of the
larger corporations is gone, and most
businesses can benefit from hiring or
contracting professionals to assess
and mitigate risk.
A recent survey by the Regus
Business Tracker found that business
leaders in the Gulf expect a robust
local economic recovery to begin in
the first half of 2010, with 78 per
cent of respondents predicting local
economic growth within a year. ■
gb@motivate.ae
F THE BRIEFING ART AUCTION
Painting a positive picture
Though deflated greatly by the recession, the Arab art market still has some areas of vibrancy and
international auction house Christie’s is upbeat on interest in local art. By GLENN FREEMAN
T
he art market in the Gulf
is still strong despite a
recession-linked deflation in
pricing, a senior official from
Christie’s claims on the back of its
seventh Dubai art auction.
“The art market has held up
reasonably well, as savvy investors
have flocked to tangible assets in
which to tie up their money,” said
Jussi Pylkkanen, Christie’s president –
Europe and Middle East.
Christie’s raised over $15 million
at its Dubai auction last month, in a
sale featuring works by prominent
Middle Eastern and Western artists
including Picasso, Farhad Moshiri,
and Parviz Tanavoli.
Among the more notable and
highly-prized regionally-produced
works to go under the hammer were
installations such as Moshiri’s Flying
Carpet and Tanavoli’s Poet and Cage,
among some 20 works from Middle
East artists spanning the Levant and
Gulf regions. A number of the best
works from Middle East artists were
from the collection of Dr Mohammed
Said Farsi, former Lord Mayor of
Jeddah. One of the highlight sales was
Mahmoud Said’s Les Chadoufs, which
sold for a record $2,434,500.
The market’s viability then,
Pylkkanen believes, speaks for
itself. As the head of Christie’s
impressionist and modern
department in Europe, he ticked off
a number of reasons why he believes
money has continued to circulate
within the lucrative global art
market. He believes that objets d’art
provide greater liquidity and security
than property, particularly in light
of the buffeting real estate markets
took, both regionally and globally.
Pylkkanen pointed out that tougher
conditions also means that there
have been a lot of ‘distressed’ sales
of high value artworks at bargain
36 gulfbusiness.com June 2010
Middle Eastern artist Farhad
Moshiri’s Flying Carpet.
basement prices.
“A lot of art collectors are very
wealthy, buying artworks with
spare capital. Often – even in times
of general economic adversity – the
wealthy do become wealthier, and they
have capital which is expendable,”
said Pylkkanen. “In times of pressure,
some collectors are also forced to sell,
so some very important works of art
can come onto the market, such as
Picasso, Cezanne…it’s highly likely
that those with capital will chase
them [during such times].”
One of 500 art auctions held by
Christie’s each year, the Dubai auction
marks the opening of their seas, and
as such, Pylkkanen said it is “very
important that it succeeds.”
The day before the auction he told
The art market has held up reasonably
well, as savvy investors have flocked
to tangible assets in which to tie up
their money.
Gulf Business that: “The Dubai market
now represents the opening race of
the card, if you like. And it’s very
important that it succeeds and is seen
to be successful.”
“Sometimes when I speak to Middle
East collectors…they don’t see the
broader context of what’s going on
here. So when the markets dropped
because of the financial problems [that
started] 18 months ago, when sellers
were less confident to put things on
the market…people were concerned
that artworks wouldn’t hold value and
that problems would undermine the
market here.
“But that’s not how it works.
The pictures hold their value.
They might decrease slightly [in
price] because there’s slightly less
demand at any one given moment,
but major works of art, whether
here at $250,000 to $500,000, or in
New York…they really do hold their
value pretty well.”
While the picture painted by
Pylkkanen is rather of a rosy hue,
some attendees at the auction
expressed disappointment at its
results. Though billed as a sale of
masterpieces, one industry source
who wished to remain anonymous
said there was “too much new work
by artists, which should be sold
by local galleries rather than big
auction houses.” Flicking through
the catalogue, he listed off a few
highly-rated works that failed to
sell, and many others that did sell,
but only for the lowest estimates
anticipated by Christie’s.
With 125 pieces in total, he said it
was a “weak sale” overall, with the
margins made by Christie’s coming
from less than 10 per cent of the
pieces on sale. “Many collectors
were disappointed, there were many
works by key artists that didn’t sell,
and many at cost price.” ■
gb@motivate.ae
THE BRIEFING REAL ESTATE
Settle down, people
The answer to Dubai’s real estate woes lies in improving freehold visas, insiders say,
and they think hope is on the way, ZARINA KHAN reports.
W
ith no immediate
abatement to the
stagnant and even
gloomy forecasts for
Dubai’s real estate sector, experts
say the time has come for the
emirate to consider improving
freehold property visa provisions.
“We believe a key issue is the
residency visa situation. We would
suggest that in order to attract
more international investment,
it would be preferable to have a
longer visa. This will allow for more
security in the market,” said Steve
Morgan, head of Cluttons Dubai
and Abu Dhabi, while commenting
on staid market predictions.
Since late 2008, when the global
recession sapped liquidity from the
economy, the Gulf’s former boomtown
has seen a steady deflation in its
former blue-chip sector of real estate,
which was noted in Clutton’s Dubai
property market overview, Quarter
Four 2009. Regarding performance in
2010, Cluttons found that the average
residential rent prices in Dubai
declined over five per cent in the first
quarter of the year.
Since the recession kicked off,
there has not been much new
interest in the Dubai residential real
estate market from non-resident
investors. Analysts say most of
the movement recorded in Dubai
property in early 2010 and late 2009
was mainly in the form of existing
UAE residents taking advantage of
relatively low prices to shift from
renting to owning. The fall seen in
residential unit pricing – in some
developments as high as 50 per cent
– had also attracted not only Dubai
residents who had been renting, but
also those who had been residing in
the more affordable neighbouring
emirates. But that shift-based
growth is not sustainable. The
available supply of UAE residents
38 gulfbusiness.com June 2010
with money to buy may not be
sufficient to keep the market afloat.
And as yet, there have not been
significant signs of improvement
to hint that the rest of the year will
be any better. In fact, Clutton says
Dubai’s residential market has yet to
We believe a key issue is the residency
visa situation... it would be preferable to
have a longer visa.
reach its bottom. The local real estate
research firm is not alone in that
assessment. A Reuters poll found that
most analysts believed that Dubai
house prices and rents would fall 10
per cent more in 2010 and not recover
until 2012.
But changing the freehold property
visa situation may reinvigorate the
market. Currently in the UAE,
foreigners are barred from purchasing
and owning land, save for those
in specially zoned ‘freehold’
developments. Originally the law
stated that, upon purchase, freehold
properties provide the foreign owner
with a six-month renewable visa.
However, there have been ongoning
changes in the law that have left
uncertainties.
While last year there was some
progress made on the issue, with
an amendment to article 33 of the
property law allowing only those
foreigners whose property in Dubai
was valued at Dhs1 million ($272,242)
or more to be issued a six-month
renewable residence visa – real
estate analysts say it is not enough.
They suggest that lengthening the
visa term may draw more moneyed
foreigners looking for a secure and
comfortable place to call home.
Mohammed Nimer, chief executive
officer of MAG Group Property
Development, is another expert in
favour of relaxing Dubai’s freehold
visa restrictions. Nimer, speaking
at the Infrastructure and Property
Development MEA Summit, explained
that the relaxation of visa rules was a
federal issue in the UAE but it needed
to be consistent and investor friendly.
“Malaysia and Thailand lead emerging
markets in encouraging international
property buyers and as such this
country could learn from them,” he
told attendees of the summit.
Though no developments in
regulation have been announced in
the recent past, it is reported that
changes are afoot. A report in local
media in January quoted Dubai Land
Department sources as saying six
pieces of legislation were being looked
at this year.
“We definitely need some further
regulation and I feel like we’re on the
verge of that regulation being put into
place,” Morgan added.
gb@motivate.ae
F THE BRIEFING INSURANCE
Ensured growth
Stagnating growth and a crowded insurance market in the US and the UK is drawing Western
insurance companies to the ever-evolving Gulf economies. By GLENN FREEMAN
T
he growing need for
insurance in the Gulf is
attracting Western firms
looking to diversify their
services away from the fairly stagnant
and oversaturated American and
British markets.
“The UK market is very competitive,
very difficult at the moment…there’s
no growth…whereas overseas,
even in a place like this, which has
had a slow-down, it has wonderful
opportunities. We’re very bullish
about our overseas business,” said
Trevor Matthews, chief executive
officer of well-established British
insurance company Friends Provident.
While health insurance in the
West has been around for decades
and coverage is widespread, the Gulf
region’s still developing economies
and modernising policies mean
that there are still many uninsured
residents and many insured ones still
looking for better options. Companies
like Friends Provident, which already
gets over 50 per cent of its revenue
from its overseas operations, are
now eyeing the UAE, Qatar and
Saudi Arabia in particular, with
great interest.
According to Matthews, the demand
for conventional insurance from
within the UAE, and the greater Gulf
region, offers significant potential for
them. He believes that the business
model adapted and refined by Friends
Provident over its 178-year history
– which he describes as a ‘hub-and-
spoke’ model utilising the outsourcing
of non-core activities – works
extremely well in this region.
“Other companies with operations
in different countries are trying
to adopt this model we’re using.
The model is quite good, and quite
unique. We can get the best ideas
from different places and plug them
40 gulfbusiness.com June 2010
in here,” Matthews said, adding that
they will also be introducing a locally
based team of underwriters to their
UAE operations soon.
Being first and foremost a
conventional insurance business,
the UAE forms the core of their
focus in the Middle East, given the
favourable population demographics,
with over 80 per cent of residents
being expatriates. Particularly among
western expatriates, individuals are
Even in a place like this, which has
had a slow-down, it has wonderful
opportunities. We’re very bullish
about our overseas business.
already well aware of the benefits of
insurance in protecting wealth and the
livelihoods of family members.
In addition to westerners living
in the UAE, non-resident Indians
also hold huge potential, as they
are the largest single expat group in
many Gulf countries like the UAE.
Additionally, there are expatriates
from other parts of the Middle East,
whom Friends Provident Middle East
and Africa general manager Matthew
Waterfield believes represent a huge
part of the UAE population. “About
23 per cent of the population here
are Arab expatriates, which is a very
interesting segment of the market,”
said Waterfield, though he highlights
that “they have a different savings
culture. The key to this market
is education.”
The awareness – or education - of
the consumer is one of the challenges
to popularising insurance in general
in the Gulf. Waterfield says there
is also a lack of “drivers” such as
taxation breaks and legislative
imperatives. In markets such as the
UK and US, the tax-deductibility of
life insurance and income protection
insurance premiums is an additional
incentive for clients. For corporations
in these regions, the legally mandated
provision of pension schemes
for employees, which often also
incorporate insurance elements, also
works in favour of companies such as
Friends Provident. Within the GCC,
penetration of life insurance only
amounts to around 1 per cent of gross
domestic product, compared to 9 per
cent in more developed markets.
While there have been reports
among the local UAE media that
Friends Provident will be moving
into Islamic insurance products such
as Takaful, Waterfield hosed down
such speculation by saying that
currently it is only in the idea stage
and is being researched.
The plan is to grow the scale of
their operations in the UAE first, with
the aim of then branching out further
into other areas of the Gulf – though
this also depends largely on whether
they decide to introduce Shari’ah-
compliant products. ■ gb@motivate.ae
F THE BRIEFING AQUACULTURE
Prawns in the game
A little-known Saudi shrimp farm is doubling its massive capacity to provide premium
seafood to gourmet tables across the world, ZARINA KHAN reports.
I
t can perhaps be considered one
of Saudi Arabia’s better-kept
secrets: in a marshy corner of
the Saudi Arabian desert there
is a high-tech facility growing some
of the highest quality edible prawns
available around the world.
The image may seem a bit sci-
fi Hollywood, but it is true. Just
south of Jeddah exists the National
Prawn Company’s (NPC) 250-square
kilometre farm – the world’s largest
fully integrated prawn farming
facility and the only one that grows
the high-end white prawns known as
penaeus indicus.
The NPC has been quietly producing
premium seawater shrimp since it
turned its 18 years of research into
a commercial project in 2000 – a fact
seemingly known only to a handful of
chefs and supermarkets around the
globe. But that is set to change, as
the privately owned Saudi company
works on doubling its capacity with
a total of $799 million in investment.
It wants the region and the world
at large to know the proud fact that
they have pioneered a way of growing
prawns that promotes food security,
sustainability and corporate social
responsibility – while also making it
easier to get some of the best tasting
prawns in the world.
Wild-caught shrimp are captured
through trawling – a damaging and
inefficient way of combing the seabed
in hopes of capturing the bottom-
dwelling animals. The shrimp fishing
bycatch – meaning other species
captured in the trawling nets – ranges
from 5-20 pounds per 1 pound of
shrimp. While shrimp trawl fisheries
only represent 2 per cent of the global
fish catch, they reportedly produce
over one-third of the world's bycatch.
Shrimp and prawn farming is
considered to be an alternative to the
high intensity wild fishing, but tends
42 gulfbusiness.com June 2010
to come at its own cost in the quality
of the seafood produced. But the
NPC has developed a way of growing
prawns that are also of the highest
food standards.
“Where we are different from
other prawn farms is that we’re
in the desert but raise our shrimp
entirely in fresh saltwater piped
in from the sea. Currently we’re
producing about 14,000 tonnes of
white prawns [per annum]. When
we complete our current expansion
in 2012, we will be producing
Where we are different from other
prawn farms is that we’re in the desert
but raise our shrimp entirely in fresh
saltwater piped in from the sea.
up to 45,000 tonnes [per annum],”
said Laurence Cook, corporate
communications director of NPC.
That is, to put it simply, a massive
amount of prawns. Which is why
NPC has shifted gears from simple
production over the last 18 months,
to include marketing. Saudi Arabia,
unsurprisingly, is not known as
a producer of premium farmed
seafood. And the Gulf consumer
does not yet have the sophisticated
taste to appreciate the quality and
sustainability of prawns grown in
seawater but free of the usual farm-
raised antibiotics diet and wild-caught
environmental exploitation issues.
“One of our big pushes is to
increase the consumption of prawns.
We have to educate the consumer.
They should know our prawn is a
premium product. We fly it to London
four times a week, to individual
chefs, Harrods, Waitrose, etc. In
addition to that, we offer the only
warm water farmed prawn that
can be eaten raw. It is sushi grade,
which is a very high standard. The
fact that you can eat our prawns raw
is a testament to the fact that we
have not put anything unsavoury in
them, and that our processing is very
fast. We also keep up to speed with
accreditation for standards. We’re
EU approved – and possibly the only
guaranteed food exporter in Saudi
who is,” Cook explained.
And while NPC’s communications
director takes his show on the road,
with participation at Gulf Food and
other trade shows, work is underway
to double the extent and production
capacity of the Saudi farms. NPC
is also planning to branch out into
other products – farmed fish, sea
cucumbers and even phytoplankton.
“We produce 60-70 tonnes of
prawns a day. But when we finish
our second phase of expansion, we
will be producing up to 180 tonnes.
It means we can’t just be a trader.
The focus has to be on developing
the market. Our view is to be the
largest niche marketer in the world,”
said Peter Fraser, NPC director of
commercial business. ■
gb@motivate.ae
 ties
Speciali
racic
Cardiotho
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Cardiolo
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De
Dentis try
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Emergen
logy
Endoc o rin
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Gastroen
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Intern M a l
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Orthop
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Plastic S
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Psych
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Phys
M.O.H: No: 903/2/5/31/7/10

Covered by major national and international insurance companies.

Tel: +971 4 345 4000 Tel: +971 4 273 3333

www.belhouleuropean.com www.belhoulspeciality.com
F THE BRIEFING SALES EFFICIENCY

Sealing sales leaks

Companies wanting to improve their efficiency need to look more carefully at their sales teams,
a UAE-based company tells ROCEL FELIX.

E
fficiency is a catch-word to
be heard in the corridors in
most companies today, in this
post-recession environment.
And in the Gulf, the efficiency of
sales teams is often one of the most
problematic parts of a business.
MaxSale Solutions offers businesses
a service to help them increase
their sales teams’ productivity and
professionalism. The company says
the Gulf still has much to adapt
to in the new economic reality –
particularly with regard to sales.
“In the old world of good times
in the UAE, especially in 2007 and
2008, it wasn’t necessary to focus
on the skills of sales people. The
business came to companies, it was
a matter of demand, but suddenly
the tide has gone out,” said Peter
Heredia, managing director of
MaxSale Solutions.
MaxSales Solutions, which Heredia
co-founded, offers sales automation
systems, targeting small and medium
enterprises (SMEs) in the Gulf. The
recession, he said, has exposed glaring
ineptitudes in the sales teams of many
companies operating in the region.
“The SMEs are the ones really
hurting from the recession. They do
not have the tools to measure the level
of efficiency of their sales force. There
is no measure of their performance
other than the typical route of the
number of deals that get closed.”
In improving its clients’ sales
performance, MaxSale Solutions
helps SMEs identify the most critical
activities that will have the biggest
impact on sales. These activities are
then incorporated into a custom
automated sales process that provides
clear performance visibility.
“The key thing is to improve sales
efficiency and the core of this pursuit
is to raise the output of sales people,
especially for SMEs in the region,
if they are to keep their bottomline
healthy,” says Heredia. Raising the
level of productivity of sales people is
good business sense, not just in boom
times, but even more so in a recession,
Heredia said.
“The pie is smaller, there is less
business, but people are still buying.
The biggest challenge now for
SMEs is to get business from their
competitors because the market is
not growing. That’s the big difference
and that’s why sales efficiencies have
to be improved.”
In the old world of good times in
the UAE, especially in 2007 and 2008,
it wasn’t necessary to focus on the
skills of sales people.
Unlike some companies that sell
online automation tools, MaxSales
Solutions are extensive, running a
12-week sales excellence program of
workshops, training and one-on-one
management support.
“It is important to look at every
aspect of the sales activity. Once the
key activities are defined, it is easier to
manage and monitor the sales team’s
performance. Every day, a sales person
logs in to the system and reports
all of the activities done for the day.
The information that is captured is
important because it tells managers
how close or how far off they are from
their targets by the progress of the
combined key activity areas. We then
ensure these areas of shortfall are
focused on and our payment structure
guarantees these improvements,”
Heredia explained.
“The solutions that we offer make
companies more effective in their
corporate planning, they become
better in managing opportunities.
Our programmes also help companies
become better at identifying and
targeting new businesses, as well
as helping them decide to get rid of
deadwood, or to simply relegate them
temporarily, as future opportunities.”
In the UAE, raising sales efficiency
through sales automation tools
is still a novel concept, although
it is catching on. Since it started
operations in the UAE 18 months
ago, MaxSale Solutions’ clientele
has grown. However, even efficiency
service providers are feeling the
recession pinch, with fewer businesses
having the present funds to take
on such system studies. Still, the
enthusiasm for good service and
profitable sales has not wavered, but
with the uncertainty, SMEs are buying
time. ■ gb@motivate.ae

44 gulfbusiness.com June 2010

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F THE BRIEFING INFORMATION TECHNOLOGY
Co-operating costs
A new data management system – built on existing hardware – may be just what the doctor
ordered for companies hungry to make savings, Dell tells ZARINA KHAN.
T
rue system efficiency is
not just about how quickly
new IT networks access
information, but also relates
to how they are created, with Dell
being among very few solution
providers who say that they can
work with existing and competitor
hardware and software to come up
with better systems.
For organisations mindful of the
fiscal conservativism that is the
heritage of the recession, throwing
out functional hardware and
software so a new system can be
installed from scratch is no longer a
realistic possibility.
According to Anthony Dina, Dell’s
director of solutions marketing, their
Intelligent Data Management solutions
are open and untethered, meaning
they are compatible with other
software and hardware. As such, they
do not require a complete razing and
reconstruction of an organisation’s
data management system. “There is a
culture of tear and replace in IT right
now. We just don’t think that’s viable.
Use what you have. Increase at your
own pace,” said Dina.
The new range of management
solutions claim to help customers
facing challenges in storing and
managing data, which in its commonly
unmanaged and unstructured state,
is a huge drain on organisations’
resources and time.
“Some 11-17 per cent of a
company’s IT budget tends to go
into data management. And the
cost of it is increasing. Of data in a
company, we believe that 90 per cent
is unstructured, and 95 per cent is
never looked at again. We think we
can save 50 per cent on the cost of
storage through our tier method –
where we file data according to how
often it needs to be accessed, to put
it simply,” Dina explained.
When the data is unstructured, the
46 gulfbusiness.com June 2010
Anthony Dina, Dell’s director of solutions
marketing.
IT network of an organisation becomes
like a tangled web, full of time- and
energy-consuming detours and dead
ends to getting information.
“In IT spend, two thirds goes to
paying for labour. That means 80 per
cent is just the routine maintenance
There is a culture of tear and replace in
IT right now. We just don’t think that’s
viable. Use what you have. Increase at
your own pace.
of systems – ‘keeping the lights on’ as
we say. There are a lot of IT janitors
out there, fixing and cleaning the
networks, repairing a deployment
that’s gone wrong,” he added.
Dell is offering Gulf organisations
its new object storage solution, which
addresses the attachment of metadata
to a file, which then stores the object
in an enormous, flat address space –
creating a sort of tag-based data filing
system, which takes into account the
importance of access to a piece of
data. Dell’s officials say they can help a
company reduce its IT operating costs
by 30 per cent.
Saving time and resources on data
is no longer optional for companies.
Now that the recession has begun to
wane, many are actively working to
strengthen their competitive edge.
“Customers are telling us today
that they’d held off on upgrading their
systems or taking on new IT services
because they’d been uncertain about
the economy. But now customers
are preparing for growth. There
is significant pent up demand for
upgrading aged systems, bringing in
unified communications convergence.
There are lots of opportunities
out there in businesses to improve
communication and decrease
operational cost,” Dina said.
“An IT organisation that is spending
less time on janitorial work can focus
on more important services. Being able
to fix your own problems doesn’t, to
the eye of the customer, differentiate
one company from another, but its
operational speed does.”
Dell is also offering Data Archiving
Consulting, Cloud Infrastructure
Solutions and Intelligent
Infrastructure and Management
products that all potentially
contribute to the $200 billion of
inefficiency out of the $1.2 trillion in
total IT spend each year, as promised
by chief executive officer Michael Dell
last October. Dell’s visiting officials
said the Gulf could see a significant
portion of that saving, as the region’s
young business community tightens
up their operations to edge out the
competition. ■ gb@motivate.ae
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THE BUSINESS HOSPITALITY
Room at the inn
The recession has taken some of the shine off the Gulf’s glitzy hotels,
yet launches, expansions and diversification continue, albeit at a
somewhat more humble pace, GUY WILKENSON reports.
D
espite taking some undeni-
able hits, the Gulf’s hospital-
ity sector is in relatively good
form, with this year’s pipeline
of new hotel rooms confirmed as being
the second largest on record, according
to Gulf Business’ 12th consecutive sur-
vey of the sector.
Conducted by Dubai-based hospital-
ity consulting specialists Viability, the
annual survey of chains active in the
Gulf Cooperation Council (GCC) con-
firmed 283 planned hotels with 83,604
rooms as of May 2010, compared with
325 properties and 92,026 rooms at the
same time last year (reductions of 20 and
19 per cent respectively) and 295 hotels
with 82,357 rooms in 2008 – which was
itself an all-time record year.
US chain Marriott Hotels & Resorts
squeezed out Accor to top the rankings
for both hotels and rooms, up from
third and fourth places respectively
last year, with 29 properties and 9,572
rooms under development. Accor’s
pipeline comprises 23 hotels with 6,433
rooms under its Sofitel, Pullman, Novo-
tel, Mercure and Ibis insignia.
Other chains in the top ten places
were, in order of their confirmed-room
pipelines, Rotana, InterContinental,
Millennium, Fairmont, Movenpick,
Rezidor, Starwood and Golden Tulip.
Each of these companies also has mul-
tiple brands, and each reported a pipe-
line of between 3,000 and 5,500 rooms.
48 gulfbusiness.com June 2010
Of some 80 hotel chains surveyed, 55
confirmed future GCC projects, with 19
chains each declaring more than 1,000
rooms under development, compared to
23 in 2009 and 20 in 2008.
DEFINITE DELAYS
However, as a direct result of the cur-
rent economic conditions, the number
of hotel projects delayed has increased
significantly since last year. “Almost
half (48 per cent) of the confirmed ho-
tels that were also contained in the
2009 research have been delayed by
between one and four years, compared
to 38 per cent in 2009, and as many as
29 per cent of the 2010 projects were
Those figures are in addition to a further
33 projects with as many as 9,000 rooms
that were cancelled outright last year.
behind schedule by a year,” explained
Viability partner, Barbara Wilkinson.
These delays exclude any that were al-
ready reported last year, meaning that
a number of projects have experienced
several revisions in their programmes.
There were also 42 other hotel
projects with more than 11,000 rooms
that were declared ‘on hold’ with no
firm recommencement date and a fur-
ther 25 projects with more than 5,400
rooms had been cancelled altogether
since the 2009 rankings. “Those figures
are in addition to a further 33 projects
with as many as 9,000 rooms that were
cancelled outright last year in the first
throes of the recession,” says Wilkin-
son. “These include projects that could
obtain no financing due to the current
debt freeze, or have lost their financing
due either to overly optimistic balance
sheet structures, or the developers’
need to allocate available funds to more
pressing ventures. Other losers include
hotel projects in poor locations, for ex-
ample, on remote green field sites or in
secondary and over-supplied markets;
and those associated with new brands
with little or no track record in the re-
gional market.”
ROBUST PIPELINES
Despite reports from all the chains in
the survey regarding delays and can-
cellations, some were less affected than
others. The mighty InterContinental
Hotels Group (IHG) experienced only
three cancelled projects out of almost
50 in the Middle East and North Africa
over the past year.
Another chain that remains highly
bullish about its regional pipeline
is Starwood, which recently opened
its 1,000th property worldwide and
 THE BUSINESS HOSPITALITY

Future chain hotel rooms in GCC, declared ‘on hold’ or ‘cancelled’, 2010 vs 2009
2010 2009
6,789
UAE UAE
2,599 7,582 5,421

1,255 Saudi 970

Saudi Arabia Arabia 220
1,064

990
Qatar Qatar
650 1,030

672 833
Oman Oman 1,072
825

1,324 285
Kuwait Kuwait
578

358
Bahrain Bahrain 720
300

2,000 4,000 6,000 8,000 2,000 4,000 6,000 8,000

Source: Viability Management Consultants (05/2010) On hold Cancelled

Confirmed future chain hotel rooms in the GCC, 2010

12,000

10,000
9,572
8,219
8,000

33
6,4
09
6,000 5.5 64 1
5,1 5
4,9 08 9
4,5 4,23 ,225
4 55
4,000 3,6 ,285 7
3 0 8
2,9 2,85 91
2,5 ,100
2 08 0
2,000 1,6 1,46 ,331 277 57
1 1, ,0 41
1 9 96 06 51 28 24 5 0 4
7 7 7 7 7 71 65 64

0
tt or a G m nt k or d ip n m h ia ki ia x aj s e H ia n rn oi al k s rs
rio cc otan IH niu rmo npic zid woo Tul Hiltodha eira lor ins var yma T son ame QN Lay n Su ste ber J roc Rixo the
ar A R n i e e r n n m G p a i t e a R r e O rd O
M ille Fa öv R ta de
S ol y u
W J Ke
m B C S he W Ha
M M G o ur o ut est
F S B
Source: Viability Management Consultants (05/2010)

June 2010 gulfbusiness.com 49

THE BUSINESS HOSPITALITY

Summary of totals Confirmed hotel projects

in GCC by progress status
No. Chain Hotels Rooms No. Chain Hotels Rooms
1 Marriott 29 9572 26 JAL 2 715
Delayed 4 years,
2 Accor 23 6433 27 Hard Rock 2 650 3,1%
Delayed 3 years, Ahead 1 year,
3 Rotana 17 5509 28 Rixos 2 644 11,4% 6,2%
4 IHG 16 5164 29 Swiss Belhotel 4 653
5 Millennium 14 4951 30 City Seasons 2 529 Delayed 2 years,
6 Fairmont Raffles 8 4508 31 Banyan Tree 3 506 39,14%
On schedule,
7 Rezidor 15 4225 32 Rocco Forte 2 427 142,50%
Delayed 1 year,
8 Movenpick 12 4239 33 Hyatt 2 459 81,29%
9 Starwood 14 3655 34 Coral 3 441
10 Golden Tulip 13 3285 35 ADNH 1 436
11 Hilton 9 2907 36 Tamani 2 421
12 Wyndham 9 2858 37 Dusit 1 401 Ahead 1 year Delayed 2 years
13 Jumeirah 9 2591 38 Rosewood 3 486 On schedule Delayed 3 years
14 Gloria 2 2100 39 Hamra Hotels 1 348 Delayed 1 year Delayed 4 years
15 Kempinski 5 1608 40 Baccarat 1 362 Source: Viability Management Consultants
(05/2010)
16 Bavaria 4 1460 41 Shangri-La 1 272
17 Citymax 3 1331 42 Oetker Hotel Coll. 1 250
ties lie, as IHG’s Kasselis comments:
18 Taj 5 1277 43 Viceroy 1 250 “As a global company, we are constant-
19 Four Seasons 4 1057 44 Premier Inn 1 242 ly updating our assessment of what we
term ‘head-room for growth’ and ac-
20 Ramee 6 941 45 Gulf Hotels Group 1 237
cordingly if we see one region slowing
21 QNH 4 796 46 Auris 2 230 down and another region picking up,
22 Layia 3 706 47 Park Plaza 1 220 then that influences how we deploy our
23 Southern Sun 3 751 48 Sunland 1 215 resources for development.”
On the other hand, despite having the
24 Best Western 4 728 49 Sonesta 1 198 largest pipeline, Marriott’s assessment
25 Oberoi 3 724 50 Anantara 3 178 of the region is somewhat downbeat. “I
believe the entire GCC market has been
will debut in its 100th country later percent,” HMH chief executive officer, affected by the slowdown,” says Aboudi
this year. Abu Dhabi-based Rotana, Michel Noblet, told Gulf Business. With Asali, vice president of international
ranked number three in the survey, new properties recently opened as far lodging development. “However, we are
claims to have been overwhelmed with afield as South Africa and Sudan, the still seeing some new development in
management opportunities. “We have company claims 55 hotels signed, with Bahrain, Saudi Arabia and Abu Dhabi.”
turned down 35 so far this year alone, a target of 100 by 2012. By contrast, Marc Dardenne, chief ex-
compared with 108 in 2009 and 105 in ecutive officer of the Emaar Hospitality
2008,” states Makram El Zyr, the chain’s HOT SPOTS Group and Emaar Hotels & Resorts,
director of development. HMH’s incursions into Africa are symp- operators of Dubai’s five upscale ho-
Even local operator Hospitality Man- tomatic of a new geographical focus by tels of the The Address brand, believes
agement Holdings (HMH), owner of the the region’s operators, who are increas- the opposite: “We see positive trends
Coral brand is optimistic. “2010 is set ingly looking beyond the traditional throughout all GCC countries. In fact,
to be a landmark year for our group and now highly competitive GCC mar- The Address Hotels & Resorts launched
with a hotel opening practically every kets, to less developed markets such as and built its portfolio during the thick
three weeks across our four brands. those of North Africa and Syria. of the financial crisis.”
We have 17 new openings lined up this Different chains, however, have Overall the UAE remains the epicentre
year, taking our existing portfolio of 33 widely differing perspectives on the of hotel development in the GCC, with
to 50 – thus increasing the group’s to- local markets. The big international 163 confirmed hotel projects containing
tal number of rooms by more than 40 chains simply go where the opportuni- almost 52,000 rooms, equivalent to 58

50 gulfbusiness.com June 2010


per cent of the total planned GCC hotels
and 62 per cent of the rooms. The ma-
jority of these properties are coming up
in Dubai, although Ras Al Khaimah and
especially Abu Dhabi are also gaining
in prominence. However, many consid-
er Dubai to be now dangerously over-
supplied, with the worse still to come,
while Abu Dhabi and Doha – both now
among the current ‘hot markets’ in the
Gulf – could also soon reach saturation
point, especially at the 4- and 5-star
level, as they grow rapidly from a very
low base, although the mid-market will
remain attractive.
Nevertheless, Dubai still has many
fans. Christophe Landais, managing
director of Accor Middle East echoes
a shared sentiment of many: “Dubai is
and will remain in my opinion a stra-
tegic place as the regional hub for UAE
and a centre of expertise in the GCC with
so many companies being based there.
The satisfactory occupancy rates in all
our hotels are evidence of the resilience
of Dubai, especially in comparison with
other international destinations.”
The region’s operators are unanimous
in their aspiration to grow in Saudi Ara-
bia, which is perceived to hold enormous
potential due to its large and growing
population, continuing economic prow-
ess and strong, self-contained domestic
travel and tourism market. No less than
20 of HMH’s 33 hotels are in the King-
dom, while Golden Tulip plans to in-
crease its Saudi portfolio from 15 to 30
hotels in the next few years.
MID-MARKET POTENTIAL
“Saudi Arabia is a market of huge po-
tential,” agrees IHG’s Kasselis. “We
have been there since the 1960s so
we know the market well. Some of the
investors there are becoming less fo-
cussed on 5 stars and recognise the
potential for mid-scale hotels – and
that’s where Holiday Inn is ideally po-
sitioned right now, as well as Holiday
Inn Express. The GCC in general has
made a major shift from 5-star pal-
aces, as investors are becoming more
savvy and return-focused.”
In a bold move, Accor has also decid-
ed to introduce franchising for the first
time in the region, a formula previously
THE BUSINESS HOSPITALITY
Confirmed future chain hotels in GCC
by state, 2010 vs 2009
200
193
180
160
160
140
120
100
2010
2009
80
60
52
46
40 29
24 27
20 16 18
20
10 13
0
Bahrain Kuwait Oman Qatar Saudi Arabia UAE
Source: Viability Management Consultants (05/2010)
We have turned down 35 management
offers so far this year alone, compared
with 108 in 2009 and 105 in 2008.
only undertaken successfully by Golden brand available for the first time in the
Tulip and Wyndham’s Ramada brand. region, and already reports strong in-
According to Landais, the French op- terest from investors.
erator will franchise its Mercure brand In Dubai, the first of a new midscale
on hotels of 100 rooms or less, includ-
ing conversions of existing operations,
which previously had been non-viable ABOUT THE SURVEY
for the big chain.
Indeed, most operators perceive t12th continual year of survey.
mid-market and economy brands to tAll chains active in the GCC are
represent the next great opportunity canvassed directly.
for hotel development in the GCC. Star- tRanking based on numbers of rooms
wood, which had some years ago been and suites only.
active solely in the luxury segment, is tRanking includes only chain hotel
this year pushing its so-called ‘select projects that are firmly committed.
service’ brands – Aloft, Element and Excluded:
Four Points by Sheraton. Louvre Ho- tAll rumoured projects.
tels, owned by Starwood Hotels & Re- tAll unsigned projects.
sorts offshoot Starwood Capital, will tAll projects for which opening dates
soon be rolling out its economy brands have yet to be confirmed.
Campanile and Premiere Classe via an tAll single owner-operated properties.
alliance with Flamingo Hotel Manage- tAll serviced and residential
ment, the Middle East representatives apartments, chalets and villas
of Golden Tulip, which was recently (but any true ‘all-suites’ hotels are
purchased by Louvre. Even Marriott included).
is making its midscale Residence Inn
June 2010 gulfbusiness.com 51
THE BUSINESS HOSPITALITY

Future chain hotel projects in GCC, declared ‘on hold’ or ‘cancelled’, 2010 vs 2009
2010 2009
27 26
UAE UAE 11
17

5 6
Saudi Arabia 2 Saudi Arabia 6

4 0
Qatar 4 Qatar 2

5 3
Oman 5 Oman 5

0 6
Kuwait 3 Kuwait 0

1 1
Bahrain 2 Bahrain 1
0 10 20 30 0 10 20 30
Source: Viability Management Consultants (05/2010) On Hold Cancelled

Confirmed future chain hotels in the GCC, 2010

40

35
34
30 29

25 23

20
17 16
15 14
15 14 13
12
10 9 9 9
8
6
5 5
5 4 4 4 4 4
3 3 3 3 3 3 3 3

0
tt or a G or m d ip k n h m nt e ki aj ia rn s H el x ia n oi e al d ra rs
rio cc otan IH zid niu woo Tul npic Hilto eira dha rmo ame ins T var ste son QN lhot yma Lay n Su ber Tre Cor woo nta the
ar A R e n r p a e a t n
M n
R ille ta lde öv e m
Ju Wy Fa
n i R m B W Se e
B C i
he
r O ya se Ana O
M S Go M Ke e st our i ss o ut an Ro
B
B F Sw S
Source: Viability Management Consultants (05/2010)

brand called Citymax, part of the suc-
cessful Landmark Gulf Group retail
empire, is opening imminently beside
the Mall of the Emirates with two more
properties coming up soon in Bur Du-
bai and Sharjah. “The timing couldn’t
be better,” states the company’s general
manager, Michael Weyland, who claims
that his budget has altered little since
he first drafted it three years ago, on
the basis of an average room rate well
below $100. “It’s a fact that midmar-
ket and economy hotels have proven
themselves resilient in times of eco-
nomic turmoil.”
A number of the chains surveyed re-
ported remaining on target with
their regional or global expansion

52 gulfbusiness.com June 2010

 THE BUSINESS HOSPITALITY

plans, regardless of the economic

conditions. For some operators, the MANAGEMENT CONTRACT TRENDS
only way to beat the recession is
to take on ever more management
contracts. Take Singapore’s Banyan
Tree chain, for example: “As part of
our diversification strategy, we are
already managing properties across
the globe – in the Middle East, Asia
Pacific and the Americas – and with
close to 40 more projects in the pipe-
line, we fully expect to be on track to
fulfil our global aspirations,” states
Ho Kwon Ping, the company’s execu-
tive chairman.
HMH’s Noblet explains: “It takes a
few years to develop a new property
so you cannot afford to slow down
the pace of expansion. Rather you
have to accelerate to boost your port-
folio and stimulate your business.”
Others take a slightly different ap-
proach, like Neil George, vice presi-
dent of acquisitions and develop-
ment at Starwood EMEA, who says:
“We do not believe in expansion for
M ost branded hotels in the
region are operated under a
management contract. Effectively,
Nevertheless, most operators,
including the major international
chains, admitted to becoming more
the sake of it. Our growth is deliber- the operator runs the hotel for the flexible with regard to performance
ate and thoughtful. We will grow in owner, incurring costs and generating provisions and geographical protection
the right places, with the right part- revenues and profits on his behalf, in areas. The provisions range from
ners and the right properties.” return for management fees typically accepting sliding scales of incentive
equivalent to about 7 to 8 per cent of fees (dependant on profit levels) to
GETTING BACK TO GOOD? total revenues. accepting an ‘owner’s priority return’,
Most operators were cautiously opti- Gulf Business asked operators meaning they get paid their incentive
mistic about future growth prospects, whether the recession had affected fees only after owner commitments
although few were prepared to state their bargaining position when such as loan repayments are first
exactly when growth would resume. negotiating contracts. The larger honoured. Geographical protection
“We believe that pipeline growth will chains admitted to devoting a lot more areas are defined as regions in which
return once the markets have settled, time to their hotel owners, not least in the operator is prevented from opening
new supply is absorbed and some vis- helping them get troubled projects off a hotel of the same brand. Most
ibility on macro-economics returns,” the ground, but not to lowering their operators prefer to accept them only
says George of Starwood. “Debt mar- fees or charges, as Accor’s Landais for a limited period, which is known as
kets need to come online again for the comments: “The brands as well as all a ‘burn-off provision’.
pipeline to re-start and that may take the support systems of Accor have a On the flip side, the larger operators
some time yet.” value, a real cost, as they represent like IHG felt that their services and
Many, however, were resigned to an upstream investment for the ‘value added’ had come into sharper
playing the waiting game, while ac- hospitality group and as such must focus during the recession. According
knowledging that the hotel sector of be remunerated at their right value.” to Kasselis, IHG also feels able to
the Middle East as a whole has been Banyan Tree’s Ping also speaks for demand termination provisions
less impacted than many other re- many when he says: “We have always favouring them in the event of an
gions, and remaining cautiously opti- sought to align our interests with owner not performing or complying
mistic about future potential. ■ our owners for the long term, and with its brand standards (as can
because of this, a specific short-term happen when costs are being cut),
Guy Wilkinson is a partner of Viabil- event such as a recession, a natural and also when it becomes clear that a
ity, a specialist hotel and real estate disaster or health epidemic, does not particular development is not going to
consulting firm in Dubai. affect our management terms.” be completed.
Email him at guy@viability.ae.

June 2010 gulfbusiness.com 53

THE BUSINESS LOGISTICS
Trains, planes
and automobiles
The Gulf’s long road to better logistics continues, though there will be
a few detours along the way, ROBERT BAILEY reports.
D
riven by the need to market
its hydrocarbon and petro-
chemical products and satiate
development and import re-
quirements the Gulf has invested more
than $40 billion in ports and related in-
frastructure in the last decade.
The multi-billion dollar spending
spree has stimulated extraordinarily
rapid development but it also reflects
the region’s advantageous location on
the Europe-Asia transport lane as a
stopover for air cargo, sea freight and
sea-to-air cargo conversion.
However, the region’s transport and
logistic industry remains heavily de-
pendent on the global economy and
trade flows. Last year was bleak, with
the World Bank estimating a 9.7 per
cent contraction in global trade vol-
umes, the worse decline since the Sec-
ond World War.
Middle Eastern ports experienced
an average drop in volumes of be-
tween 5-10 per cent in 2009. Dubai,
for example, saw handling volumes
decline 6.1 per cent.
There continues to be severe pres-
sure on margins for every player in the
sector and few believe there will be an
early return to the sort of double-digit
growth seen in recent years.
London-based shipping consultant
Drewry expects there will be little or no
growth this year and that it will be 2011
54 gulfbusiness.com June 2010
before a modest recovery in demand
will return and not until 2012-2013
before most regions see their through-
puts regain pre-recession levels.
In spite of recession, investment
decisions are being made on a long-
term basis.
US management consultant Booz and
Company estimates that the Middle
East transport and logistics market will
be worth $27 billion by 2012 compared
to $18 billion in 2008 much of it ac-
counted for by projects in the Gulf.
Middle Eastern ports experienced an
average drop in volumes of between
5-10 per cent in 2009.
Even during the worse of last year’s
downturn expansion projects still went
ahead on schedule. These included Bah-
rain’s new $362.5 million Khalifa Bin
Salman Port officially opened in late
November 2009.
After the opening of its third con-
tainer terminal, Jeddah Islamic Port is
already planning a fourth with a feasi-
bility study already submitted by PSA
Singapore. The expanded port would
then be able to handle up to 11 million
containers by 2020 compared to 7 mil-
lion twenty-foot equivalent unit (TEUs)
at present.
The kingdom will also have ma-
jor new capacity with King Abdullah
Economic City’s Port at Rabigh. When
completed the port is planned to have
a handling capacity of up to 10 million
TEUs a year.
Jebel Ali has long-term plans to ex-
pand its container handling capacity to
50 million TEUs by 2030. However, plans
to build a third container terminal to
raise capacity in the medium term from
11 million to 15 million containers are
being reviewed.
Abu Dhabi’s new Mina Khalifa Port is
being developed over five stages. The
target is for the new facility to handle
up to 15 million TEUs and 35 million
tonnes of general cargo by 2030. An
adjacent 51 square kilometres indus-
trial zone is also being created on a
site 35 kilometres north east of Abu
Dhabi City.
Qatar is pushing ahead with plans for
a new Doha port on a 20-square-kilome-
tre site with four container terminals
able to handle 2 million TEUs.
Kuwait’s Bubiyan Island container
terminal is also moving forward. The
port’s initial 1 million TEUs annual ca-
pacity is planned to increase to 2.5 mil-

TAKAFUL CONTRIBUTIONS AS % OF TOTAL PREMIUMS WRITTEN
lion TEUs by 2016 when a total of four
container terminals will have been com-
pleted. The port could play a significant
role in Iraq’s reconstruction.
Oman too is set to continue on a path
of ports development. Minister of Na-
tional Economy Ahmed bin Abdulnabi
Macki recently confirmed that the Sul-
tanate’s new port at Duqm, 700-kilome-
tres south of Muscat, would include a
crude export terminal and dry dock and
will be ready by 2012. Later stages will
see a free zone complex and an airport
developed nearby.
Oman’s southern port at Salalah
bucked the regional trend in 2009
THE BUSINESS LOGISTICS
with throughput up 14 per cent to 3.5
million TEUs at the port, which has
an annual handling capacity of 5 mil-
lion containers.
An important element for Oman and
the GCC is the introduction of rail-
ways. Tenders are expected this year
for the initial phase of a Gulf-wide
railway system. An early phase in-
volves construction of a 574-kilometre
line from Ghuweifat, on the borders of
Saudi Arabia and Abu Dhabi to Jebel
Ali port in Dubai.
The new UAE railway, budgeted at
between $6-8 billion will be a signifi-
cant part of the planned 2,000 kilome-
tres GCC-wide rail network planned
to connect Kuwait, Saudi Arabia,
Oman, the UAE, Qatar and Bahrain by
the end of 2017.
Railways will generate new economic
opportunities as a result of improved
capacity and faster transport chains
along the Gulf coast and a strong trans-
Saudi Arabia transport flow.
Each state has its own national rail
strategy and Saudi Arabia’s is ep-
och-making. The Kingdom’s planned
east-west line will enable shippers to
avoid the long sea route through the
Gulf of Aden, delivering cargo instead
to ports such as Dubai and Dammam,
June 2010 gulfbusiness.com 55
THE BUSINESS LOGISTICS
There has been serious thinking
towards mass transit in the Gulf and
broader Middle East region.
to be delivered to western ports such as
Jeddah for onward shipment to Europe.
The biggest problem is how to fund
the projects. Originally conceived as a
50-year build-operate-transfer scheme,
financed mainly by debt, the east-west
Landbridge project has not proved to
be bankable.
Last year the Saudi Railways Organi-
sation finally acknowledged the private
sector’s lack of appetite and announced
that the estimated $7 billion project
would be funded by the Public Invest-
ment Fund and re-tendered as an engi-
neering, procurement and construction
(EPC) contract.
The problems have yet to be fully
resolved and the tender process has
lurched from one state of paralysis to
another with bids and re-bids, a pre-
ferred bidder announced only to be
suspended and then merged with the
reserved bidder.
“When you have a project that costs
$1 billion or more, the smallest change
in your calculations can cost millions.
It is hardly surprising that schemes in
the region have taken so long to build,”
says Nigel Harris, managing director
56 gulfbusiness.com June 2010
of the UK’s Railway Consultancy.
The Landbridge and other major
planned rail schemes in the region are
huge undertakings and some question
whether the targeted delivery schedules
are feasible.
Perhaps the most positive factor is
the fact that every Gulf state has a stat-
ed intent to develop railways.
“It is not only on paper, these are
projects that will see the light. There
has been serious thinking towards
mass transit in the Gulf and broader
Middle East region,” says Ramiz al
Assar, senior transport analyst at the
World Bank and advisor to the GCC on
its railway strategy.
Some big schemes are already moving
ahead. The main civil works package for
the 444-kilometre Haramain high-speed
rail link has been awarded to Al Rajhi
Alliance involving France’s Alsthom and
China Railway Engineering. The $5 bil-
lion link is designed to connect Makkah
and Medina via Rabigh and Jeddah.
Meanwhile work on the first phase
of the Kingdom’s north-south railway
is proceeding at about one kilometre a
day under a contract awarded to a joint
venture of Australia’s Barclay Mowlem
and Japan’s Mitsui.
The track’s primary purpose is to
transport phosphate and bauxite for
processing at Rasa Az Zour. The line
will link mines at Al Jalamid and Al Za-
bairah to Rasa Az Zour via Al Jawf, Hail
and Al Zubairah. Later stages envisage
passenger and general cargo services
and an extension of the line to the Jor-
danian border.
Both the Haramain link and north-
south minerals railway were first
planned as a build-operate-transfer
projects but this financing model had
to be abandoned and the projects tak-
en under the wing of the Ministry of
Finance’s Public Investment Fund.
Elsewhere in the Gulf, rail projects
are also being mobilised. Last Novem-
ber, the state-owned Qatari Diar Real
Estate Investment Company and Deut-
sche Bahn International established a
joint venture, Qatar Railways Develop-
ment Company (QRDC), to build a na-
tional rail network.
The German concern has a 49 per
cent stake in the venture, which will
develop 650 kilometres of track and 98
stations. Later stages allow for a rail
link with Bahrain across the proposed
45-kilometre causeway between the
two Gulf states.
Oman has invited bids for the first
phase of its planned rail network. This
involves a 260-kilometre long line link-
ing Barka with Sohar Port and the UAE
border at Khatmat Alhar. A rail net-
work of some 2,000 kilometres is en-
visaged, that will eventually link Sala-
lah on the Sultanate’s southern coast
with Kuwait’s border with Iraq.
The region’s rail strategy is ambi-
tious and progress may be slow since
some railways make no sense in terms
of pure profit and have very little at-
traction for private investors.
But there does seem to be commit-
ment to a strategy that will have con-
siderable strategic benefits for the wid-
er economy, from encouraging trade to
linking regional economies and creat-
ing jobs. Such benefits may seem obvi-
ous but the economics of these schemes
will take time to become clear. ■
gb@motivate.ae
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SPECIAL REPORT: KUWAIT
Back on track
With mega-projects on hold across the GCC, how is Kuwait, until recently
a byword for stagnation and corruption, finally managing to get its own
ambitious plans off the ground? ROBERT BAILEY reports
T
here is a growing sense that
Kuwait’s big ticket projects are
firmly back on the agenda. Op-
timism has taken hold follow-
ing agreement on a $102 billion nation-
al development plan that was approved
in February by a 95 per cent majority in
the National Assembly.
Sheikh Ahmed Fahad Al Sabah, depu-
ty prime minister for economic affairs
and minister of housing and adminis-
trative development, has even dubbed
2010 as the year of the mega projects.
The plan includes many familiar,
but delayed schemes, such as the
Subiya causeway, Silk Road City, Bu-
biyan seaport, a metro system and
railway network as well as major in-
vestments in new residential areas,
hospitals and roads.
Mustafa Al Shamali, the finance
minister, has said that the govern-
ment could increase spending to as
much as $52 billion in the 2010-2011
budget alone.
The plan embraces up to 1,100
projects, many of them very large scale.
Significantly, it represents the first de-
velopment plan agreed to in almost
25 years and is part of a longer-term
programme, designated Kuwait Vision
2035, which is to be executed in five-
year phases.
In truth many of the projects should
have been long completed. Money
has never been the problem. Kuwait
had a budget surplus of $20 billion
in 2008-2009, marking the tenth con-
secutive year of multi-billion dollar
budget surpluses.
58 gulfbusiness.com June 2010
Kuwait also has vast sovereign funds
and assets available. According to Ran-
da Azar Khoury, chief economist at the
National Bank of Kuwait, these amount
to $500 billion.
The most intractable problem has
been the country’s political infight-
ing. This has reflected administrative
weaknesses, not the least of which is
the state’s inability to deploy its plen-
tiful funds to deliver long-promised
improvements in social and physical
infrastructure and projects to diversify
the economic base.
The turning point came in May 2009
when the country’s parliament took on a
different shape, including the inclusion
of women members for the first time.
Kuwait’s government is bloated with
bureaucrats. Eighty per cent of the
working population is employed
by the state.
Rola Dashti, one of the women MPs,
says: “There is no question that people
want to see the country move forward.
Progressives have won the vote to chair
committees and we will vote through
new legislation which I think will give
the country the momentum it needs.”
The much improved atmosphere was
shown when Prime Minister Shaikh
Nasser Al Mohammed Al Ahmed Al
Sabah agreed to face parliamentary
questions last December. This was the
first time in the GCC that a Gulf leader
had agreed to address open criticism
from elected politicians. Perhaps there
had been some input from former Brit-
ish Prime Minister Tony Blair who was
recently revealed as being a consultant
on “sound governance” to the Kuwait
government for a fee of $1.5 million.
Nevertheless a daunting challenge
still lies ahead even though most of
the necessary moves are pretty obvi-
ous. Fundamentally, there needs to be
a change to the way the country is run
which has nothing to do with elections
and personalities.
Kuwait’s government is bloated with
bureaucrats. Eighty per cent of the
working population is employed by the
state. There are perhaps 300,000 on the
state payroll, by some estimates at least
five times more than required. Many
civil servants reportedly owe their po-
sitions to social or clan affiliations,
rather than to skills or abilities.
Part of the cure requires the private
sector and an end to the population’s
dependency culture. In the wake of
the collapse in stock and real estate
values many so-called ordinary citi-
zens burned their hands while spec-
ulating on the country’s stock mar-
ket. The latter incredibly still lacks
the independent regulation that has
been in place in other parts of the re-
gion for decades.
Apart from a consistently robust
June 2010 gulfbusiness.com 59
SPECIAL REPORT: KUWAIT

LAYING GROUND

V irtually every aspect of Kuwait’s

transport infrastructure is scheduled
for major development in the coming
term. At Kuwait International Airport
expansion involves building a new
terminal building and extending the
existing two runways by 600 metres each.
A third runway is to be built as well
as new hangars and access roads.
Contracts for electrical infrastructure
have already been awarded to
Germany’s Siemens.
Road schemes are also a critical part
of Kuwait’s development plan. Roads
in Kuwait City are heavily congested
and links to neighbouring countries
need upgrading.
A trans-Kuwait national highway wider highways to the rest of the GCC, involving four lines across Kuwait City
network is planned which will run from cutting transport times. including 60 kilometres of them built
the Iraqi border to Saudi Arabia. The plan Studies are also being reviewed on underground.
is to build four or five main segments a proposed rapid transit system linking A new national railway system is also
each of about 100 kilometres, according Kuwait City to outlying areas of the capital. projected to extend 518 kilometres and
to Glen Thorn, regional head of transport This is expected to be implemented be integrated with the GCC’s planned
for Halcrow, the UK consultant that is on a build-operate-transfer (BOT) 2,000 kilometres long railway system.
working on the feasibility study for the basis through a shareholding company Kuwait’s tracks are planned to connect
first phase of the project. where the public will own 50 per cent, with the Saudi Arabia border in the
Improved roads will enhance Kuwait’s a strategic investor 26 per cent and the south and the border with Iraq to the
ports sector. Goods unloaded at the twin government 24 per cent. north as well as linking communities
ports of Shuaiba and Shuwaikh will reach Work on the metro will involve east and west. The project will cost
their destinations quicker with faster, construction of a 171-kilometre network around $6.2 billion.

performance by the National Bank of

Kuwait, the country’s largest financial
institution, the banking system in gen-
eral has remained weak in the after-
math of the 2008 global credit crisis
limiting its ability to help businesses
or individuals.
Assembly members have called for
the government to buy up the entire
consumer loan portfolios of local banks
and cancel $6.3 billion interest on mon-
ey owed by consumer borrowers.
They argue that a financial stability
law, decreed after parliament was dis-
solved in April 2008, helped large cor-
porations but not struggling individu-
als. The government, so far, has resisted
these demands.
Some think that a compromise solu-
tion may involve a cash handout to all
Kuwaiti citizens. While avoiding the
Family businesses in the Gulf may be
driven to greater corporate governance
due to increased wariness by banks and a
resulting greater scrutiny on finance.
moral hazard of total debt forgiveness
this in turn could prove divisive since
a significant number of Arab Kuwait
residents do not have the qualification
of full citizenship granted only to those
with documents proving continued res-
idence since at least 1965.
Inevitably the emirate’s broader
progress will be measured by practi-
cal actions to stimulate the economy
and institutional reforms rather than
handouts.
After a troubling 18 months there is
now greater confidence that the finan-
cial sector’s crisis is over. A bill has
been passed creating an independent
Capital Market Authority. The planned
five-member committee will supervise
listing and trading on the Kuwait Stock
Exchange, which is oldest bourse in
the Gulf.
A crucial element in attempts to ac-
celerate development is encouraging
increased public participation in the
economy. The government aims to kick-
start this through five new publicly-
listed companies.
Each firm will develop a different

60 gulfbusiness.com June 2010

 SPECIAL REPORT: KUWAIT

OIL & GAS SILK CITY

T he new found consensus in Kuwaiti

public life may have positive
consequences for the country’s vital
hydrocarbons sector both up and
downstream. This year is very much a
year of decisions.
The Kuwait Oil Company is planning
investment of up to $2 billion to raise
pressure levels in its giant Burgan Oil
Field in southern Kuwait. The project
is one of the largest planned in the
region’s oil industry and will require a
water treatment plant, water storage
tanks, pumps and a 700-kilometre
pipeline network linking the field to
northern oil fields.
Much more problematical is the fate
of the emirate’s planned downstream
ventures to develop new refining and
K uwait’s hugely ambitious Madinat
Al Hareer “Silk City” project is
expected to become the emirate’s
which is pivotal to the new city’s
development.
The causeway, designated the Sheikh
petrochemicals capacity. second biggest urban community. Jaber Al Ahmed Al Sabah Bridge, will
In December 2008 the country’s Located in Subiya in northern Kuwait cross Kuwait Bay, linking Kuwait City
Supreme Petroleum Council the 250-square-kilometre project will see with the Subiya promontory and Bubiyan
cancelled a $17 billion joint venture four principal areas developed involving Island, where major residential and port
with US petrochemicals major Dow hotels, retail and recreational facilities as projects are proposed.
Chemical Company after pressure well residential areas. A financial district Danish consultant COWI has
from parliament. Unless there is an will be a prominent feature. completed a feasibility study for the link
out of court settlement, international One of the centre pieces is intended which would half the travel time by road
arbitration on a $2.5 billion to be the “Burj Mubarak Al Kabeer”, between the area and Kuwait City.
compensation claim by Dow is due to competing to be the tallest structure ever Bids are expected from local
take place in London this summer. built. An Olympic size stadium is also contractors in consortium with a number
Plans for a 615,000 barrels-a-day planned. The target date for completion of foreign companies. These include
refinery at Al Zour have also been has been put at 2023 when Silk City will Germany’s Bilfinger & Berger as well as
scuppered. The project was derailed have a planned population of 750,000. Hochtief, France’s Bouygues and Vinci,
after National Assembly critics Kuwait’s Public Works Ministry is South Korea’s Hyundai Engineering &
questioned the way five earlier EPC inviting contractors to bid by June 8 for Construction Company, Denmark’s MT
contracts had been drawn up. a deal to design and build the long- Hojgaard, Japan’s Obayashi Corporation
discussed $3.7 billion Subiya causeway and the Saudi Binladen Group.

sector of the country’s economy, with
the government starting the process in
the banking sector. In September 2009,
the creation of Warba Islamic Bank was
announced.
The bank’s start-up capital of $349
million is being provided from the sov-
ereign wealth fund, with the Kuwait
Investment Authority retaining a 24
per cent shareholding. The remaining
shares will be distributed among Ku-
wait’s estimated 1.1 million citizens.
There are to be companies for pow-
er developments, construction of real
estate and housing, ports and health-
care in addition to banking. These are
designed to act as part of a wider plan
to use public-private partnerships to
develop the country’s economy and at-
tract foreign investment.
Adopting the build-operate-trans-
fer (BOT) model will allow the private
sector to become more involved in the
ongoing development of Kuwait. The
government is said to be examining
regulations to permit more flexibility in
awarding concessions from the initially
envisaged 20-year timeframes.
International consultant firms are
waiting for decisions on their bids to

June 2010 gulfbusiness.com 61

SPECIAL REPORT: KUWAIT
OUT OF THE DARKNESS
I n spite of the severe power cuts
experienced since 2006, the Ministry
of Electricity and Water has so far been
slow to implement vitally needed new
schemes. Projects in the pipeline involve
new power plants in Al Zour, Al Subiya,
Al Jalai’ah and Al Shuaiba in addition
to developing existing facilities and
building new water desalination plants.
The most ambitious project is the
long-delayed Al Zour North Power and
Water Project. However, a tender has
been issued on the basis of a design-
build-operate and maintain for the first
phase of development to provide 1,500
MW of power and 102 million gallons-
a-day of desalinated water.
Subsequent developments could
result in a further tripling of power
and desalinated water output from the
proposed plant.
A number of consortiums have
been pre-qualified. These include the
US’ General Electric with the local
Abdulaziz Abdulmohain Al Rashed
Sons Company, Japan’s Mitsui
with Thuwainy Trading Company,
Germany’s Siemens, the local
Matajer Al Khaleej United Trading &
Construction Company, Saudi Arabia’s
Allied Technical General Trading with
Spain’s Iberdrola, and the local Heavy
Engineering Industries & Shipbuilding
Company with Canada’s SNC Lavalin.
assist the Finance Ministry’s Partner-
ships Technical Bureau to oversee BOT
projects including the emirate’s first in-
dependent water and power project.
The government is keen to develop
public-private partnerships. However,
experience elsewhere shows these are
very difficult to implement in practice
and participants from the private sec-
tor are going to need real incentives and
a strong legal framework to take part.
Kuwait faces more than just inter-
nal challenges with Iraq still viewed
with suspicion.
There are simmering tensions with
Baghdad principally concerning Iraqi
requests for a write off of $24 billion of
outstanding reparations for the occu-
62 gulfbusiness.com June 2010
ISLAND LIFE
S eparated from the mainland by
the Subiya channel, Bubiyan is the
largest of the offshore Kuwait islands.
Together with Al Warba island it lies
in a strategic position at the mouth of
Iraq’s port of Umm Qasr opposite the
Faw peninsula.
Plans to develop a major new
seaport and associated facilities on
the 530-square-kilometres Bubiyan
island have been on the drawing
board for several years.
The project calls for a commercial
seaport to be built on the island in five
phases with the government financing
the building of infrastructure and the port,
dredging works and land reclamation
as well as roads and bridges, port
infrastructure and ground improvements.
When completed the port is expected
have a handling capacity of 2.5 million
containers a year.
A number of international groups
together with local partners have been
linked with the project. They include
South Korea’s Hyundai Engineering
& Construction Company, Turkey’s
Tadamon Company and STFA Marine,
and Belgium’s Jan de Nul, Geneva-
registered Archirodon Construction
Services and Egypt’s Arab Contractors.
The Public Works Ministry has
already tendered marine works for the
new port which involve the design and
pation owed to Kuwait as well as long
standing disputes over the two coun-
tries land and sea borders.
But not everybody is looking to the
past. Kuwait is the logical and viable
route for the massive reconstruction
effort that Iraq desperately needs.
Jasem Al Sadoun, chairman of Alshall
Investment, believes: “We should try
to be the gateway into Iraq. Iraq will
not continue to be a mess forever, and
given its economic potential and oil re-
serves it could in the future be the larg-
est Arab economy.”
There is a growing sentiment in Ku-
wait that there is going to be change
for the better and that planned mega
projects will allow Kuwait to play an
construction of a container terminal,
four berths and a 1,300 metre long quay,
plus port buildings and utilities. A further
tender is due this year for dredging work
at the port.
In addition to the seaport, various
tourism ventures are also planned for
Bubiyan as well as Failaka Island,
20-kilometres off the coast of Kuwait.
Al Mal Real estate Company has
already embarked on plans to build a
100-room luxury hotel, chalets, sports
facilities including golf course and health
spa on Failaka Island.
Observers believe that Failaka, with
its heritage of Hellenic and Dilmun era
antiquities, could eventually become one
of the Gulf’s best known tourist areas as
plans for hotels, marinas and other visitor
attractions are taken forward.
increasing role in regional trade and
development.
While major projects will take time
to evolve, the coming months are
likely to see the green light given to
projects to enhance oil production,
build infrastructure and improve ed-
ucation, health care as well as build
more homes.
Both the government and the Nation-
al Assembly want to be credited with
achieving results. As a result spend-
ing on medium-sized capital projects
during 2010-2011 is likely to speed
up because they are likely to have the
most immediate impact on boosting
the economy and employment after the
recession. ■ gb@motivate.ae
THE BUSINESS GULF CINEMA
Making movies
With the region’s film making beginning to take off, Gulf Business
examines the infrastructure, investment and interest in local cinema.
GLENN FREEMAN reports
A
fatal taxi accident on Du-
bai’s Sheikh Zayed Road; a
troubled Emirati youth and
a tempestuous relationship
between an air hostess and an adver-
tising executive: all sub-plots of City
of Life, the first locally-produced
feature film directed by an Emirati,
Ali Mostafa.
Following its May debut the film has
been attracting strong interest locally.
This is the first large-scale production
of its kind for Dubai and it could be
just the first drop of a waterfall, as in-
vestment in films and the screens they
show on builds momentum across the
Middle East.
Massive investments are being
poured into establishing some sem-
blance of a local film industry, with Abu
Dhabi’s ImageNation the most notable
of these. The all-important infrastruc-
ture for this industry has gone through
interesting times in the last few dec-
ades, particularly within the last 18
months. Cinemas and the distributors
that deliver the films to their customers
are now jostling for position in what
has been a tough environment.
Films – even without a highly de-
veloped film-making sector – are big
business in the region in the form
of cinema viewing. In the UAE, the
cinema market has grown rapidly
in recent years, fuelled by a boom
in shopping mall construction and
64 gulfbusiness.com June 2010
population growth. Figures from UK-
based Dodona Research show that
number of screens has grown to more
than 200, up from just 140 in 2003.
Gross box office revenue has also ris-
en rapidly year-on-year. From a base
of $22.8 million in 2003, this climbed
to $49.2 million in 2006 and pushed
beyond $71.3 million in 2009.
Driven by a number of factors, in-
cluding overwhelmingly young demo-
graphics across the region and a cli-
mate that forces most people to seek
indoor entertainment for much of the
year, cinemas form a large part of the
modern lifestyle for both the local and
expatriate populations.
Along with wealth, much of it comes down
to wasta – an Arabic word that is most
closely interpreted as ‘influence’ in English.
According to Cameron Mitchell, gen-
eral manager of the UAE’s well known
entertainment provider CineStar, in
terms of audience nationality demo-
graphics, all the GCC countries have
their own unique make up, “but I think
the UAE is definitely the most diverse...
with the most content and the most
film releases.”
In the UAE, around 70 per cent of films
shown are Western, 15 per cent Hindi,
10 per cent Arabic and the remainder
split between other foreign-language
films. Other Gulf markets have their
own demographics, with Mitchell gen-
eralising that the bulk of Kuwaiti audi-
ences are Arabic, along with a smaller
mix of Indians and Westerners, with a
similar breakdown in Bahrain.
Given the relative youth of the UAE
as a nation, and the still-emerging
economic centres across the GCC, the
significant opportunities are offset by
a number of difficulties. One of these
is the uneven playing field. Along with
wealth, much of it comes down to wasta
– an Arabic word that is most closely
interpreted as ‘influence’ in English.
Powerful, well-connected, highly-
capitalised local family corporations
trading on reputation and financial
clout still dominate the business.
So says Gianluca Chakra, managing
director of Front Row Filmed Enter-
tainment (FRFE), a Dubai-based film
distributor concentrating primarily
on independent cinema. A fast-talking
Lebanese-Italian with an American ac-
cent, Chakra has been based in the UAE
for years and has carved out his own
niche within the local film industry.
 THE BUSINESS GULF CINEMA

A still from newly-released film City of Life.

But it hasn’t come easily. Chakra
speaks frankly about the early situa-
tion of the film business in the Middle
East, particularly the Gulf countries
and more specifically the UAE. Talking
about what he describes as a monopoly
situation, he says that a tie-up between
trail-blazing regional distributor Gulf
Film and Grand Cinemas created some-
thing of a vacuum for those seeking to
operate within the local cinema indus-
try. “It lasted for quite a long time. I’ve
been here for seven years now and trust
me, releasing a film is a constant bat-
tle,” he says.
According to Chakra, the business
relationship between Grand Cinemas,
the UAE’s first and largest cinema com-
pany, and dominant distributor Gulf
Films, effectively controlled which films
where shown in which cinemas. Of the
UAE’s screens, Grand Cinemas operates
133, CineStar 40, Al Massa Cinemas 34
and the remaining 32 divided among
smaller, independent.
Gulf Film, a partnership between Ah-
mad Golchin and Salim Ramia, has been
operating in the region for around 30
years. It also owns Grand Cinemas, the
largest chain of cinemas in the Middle
East. Sitting alongside Grand Cinemas,
which concentrates on the distribution
of western blockbusters, are its whol-
ly-owned subsidiaries Phars Film and
Al Nisr Cinema and Film distribution,
which cover the distribution of English
and Hindi ‘Bollywood’ titles within the
UAE and broader Gulf region.
As the dominant player, Chakra says
that Gulf Films had access to first
screening nights for Hollywood block-
busters, which are the highest-ticket
sellers in this market. “The rest of the
films were then left for the other dis-
tributors and exhibitors,” he says.

June 2010 gulfbusiness.com 65

THE BUSINESS GULF CINEMA
Emirati director Ali Mostafa on the set of City of Life.
A lot of cinemas in the UAE lose money…It
is very much a low-margin business. If you
don’t get to a certain level, you lose money.
The difficult business environment
Chakra encountered in the UAE prompt-
ed their 2005 alliance with Kuwait Na-
tional Cinema Company (KNCC). Kuwait
has the second-largest film industry in
the Gulf, after the UAE, with the small
Gulf country bordering Iraq accounting
for around 45 per cent of movie ticket
sales in the Middle East.
At the time of the partnership for-
66 gulfbusiness.com June 2010
mation, KNCC owned all the cinema
screens in Kuwait. Chakra says this
relationship enabled his company to
wrest back some control of the UAE
film industry from Gulf Films, using
its influence in the Kuwaiti film mar-
ket to offset that of its UAE competitor.
By bartering access to Kuwait cinemas
in exchange for similar access to more
UAE cinemas, Chakra says they were
able to create a more tenable situation
in this market, but it is still difficult.
“In the US for example, there are
anti-trust laws that prevent an ex-
hibitor from distributing titles in his
cinema [only], as it would not favour
competition. This is a major point
that the US government has taken
into consideration, giving everyone a
chance to compete.”
“Unfortunately, the UAE and GCC
governments [and] the National Me-
dia Council do not know this, and I
don’t think they will ever give it con-
sideration,” he says.
Though difficulties continue, Chakra
believes the situation here has im-
proved since the entry of CineStar
which in 2006 heralded a more open
and competitive environment. CineStar
in the UAE is a joint venture between
Australian cinema giant Greater Union
and Majid Al-Futtaim (MAF), a local
company with an extensive portfolio
of companies including some of the
biggest malls across the Gulf. MAF
owns a 51 per cent stake in the ven-
ture, but Mitchell emphasises that it
is managed by Greater Union, “and
we pay market rent, we don’t get any
favours.” He alludes here to MAF’s
ownership of Mall of the Emirates
and the newly opened Mirdif City
Centre, two of CineStar’s main UAE
revenue centres.
From the group’s newest cinema in-
side the palatial retail development,
Mirdif City Centre, Mitchell spoke
generally about the cinema industry,
and more specifically about the op-
portunities and challenges within the
Middle East.
“We have massive costs and over-
heads…it is tough, without food and
beverage, cinemas wouldn’t be feasi-
ble,” he says. “A lot of cinemas in the
UAE lose money. Sixty per cent of box
office revenue goes to film distributors,
you’re paying massive rent, with mas-
sive overheads in regards to electricity
and water. It is very much a low-margin
business. If you don’t get to a certain
level, you lose money,” he says candidly,
but concedes that, “overall, the right cin-
emas, matched with the right mall in the
right area, they make a bit of money.”
 THE BUSINESS GULF CINEMA

Though costs across the board

continue to increase – the price of elec-
tricity and water alone have risen six-
fold in the last few years – ticket prices
have remained at the same level for over
a decade, at around $8 for adult admis-
sion to a film. “If you look at anything in
the UAE, what’s the same price [today]
as it was 11 years ago?” asks Mitchell.
However, this is both a curse and a
blessing. The relatively low cost has
meant that the entertainment industry
has, in some ways, weathered the reces-
sion better than others. Mitchell makes
the interesting point that, during the
recession, the travel and aviation indus-
try’s losses have been the cinema indus-
try’s gain. When people choose to either
spend their holidays at home or to trav-
el domestically, they are more likely to
visit cinemas and shopping malls.
The spacious floor plans of the UAE’s
malls provide an ideal environment for
cinemas. According to Mitchell, this en-
ables them to continually ramp up their
offerings to stave off the ever-present
threat of home cinema technology and
film piracy. “We need to constantly re-
vise our offering to ensure we offer
an experience above and beyond what
people can get in their own lounges: the
drinks, the digital surround sound, the SHOOTING THE GULF
snacks and so forth,” he says, mention-
ing its various packages including Pre-
mium Gold Class and executive class
and standard seating.
W hile local film production slowly
gathers pace and the cinema
sector continues to play whatever
Dubai, but ultimately approvals were not
granted. Instead, the desert scenes from
the film were shot in Morocco, which
The danger of an over-abundance of it can, wherever it can, the greater were referenced as Abu Dhabi.
cinemas in the UAE is another threat Middle East is seeing its popularity as a “What Dubai has been holding out
Mitchell raises. Drawing comparisons backdrop for international films rise. for is the right film to promote the city…
with the effect of residential property Over the past few years a number of they’ve always wanted the James Bond-
oversupply on the local real estate mar- films have shown stories taking place in type film to be associated with Brand
ket, he describes the potential impact the Gulf, with some of the more notable Dubai,” says Tim Smythe, who produced
if too many cinema screens flood the recent films being Syriana (2005) maiden Emirati feature film City of Life
market in the UAE. and The Kingdom (2007). Both films after much difficulty. “That’s one of the
He says that if some developers had were shot in various Middle Eastern main reasons Dubai has really held
followed through with plans in 2007 locations, including Morocco, Abu back on permissions for a lot of films,
and 2008, at the height of the boom, Dhabi and Oman. because they didn’t feel the calibre or the
“they would have killed the business There have also been a number exposure would be big enough.”
here. We had developers coming in say- of stillborn attempts of international Smythe, who is also chief executive
ing they were going to build individual producers attempting to film in the and executive producer at Dubai’s
cinemas with 200 screens.” region. The most notable example Filmworks, estimates that the
The flip side of that glut situation can of this was the multi-million dollar international exposure a film like Sex
be found just next-door in Saudi Arabia. Sex and the City 2 film. According to and the City 2 generates would be
The largest and most populous of the various sources, scenes of the film worth at least $100 million in above-
GCC nations, with a population pushing were originally going to be filmed in the-line promotion.
beyond 28 million, is unusual in that

June 2010 gulfbusiness.com 67

THE BUSINESS GULF CINEMA
CAPITAL FILM INVESTMENT
A bu Dhabi’s tilt at building a film
industry in the UAE, ImageNation,
has gradually gathered momentum
since it launched two years ago. A
well-funded initiative entirely owned
by the UAE capital’s media giant,
Abu Dhabi Media Company, has the
raison d’etre of working with directors
and producers to boost both locally-
produced and international film
production in the emirate.
ImageNation’s first project was
announced at the end of May, during
the Cannes Film Festival. This is an
Emirati film called Sea Shadow, from
directorial debutante Nawaf Al Janahi.
A coming-of-age story, it revolves
around two friends growing up
together in a small village, and it is due
to shoot in October/November 2010.
According to Stefano Brunner,
chief operating officer, ImageNation,
their two-pronged approach is
weighted towards encouraging the
grass roots growth of local films,
but it will also look to bring more
foreign, independent films to Abu
Dhabi. “Everything we do, we do
with generating revenue in mind,” he
says, but stresses that the cultural
68 gulfbusiness.com June 2010
imperative to build a local film industry
is a driving force.
“We’re doing this through co-
investments with international
production companies in Los Angeles,
but also India and Singapore. Through
this, we’re looking at increasing the
exposure of those industries in this
region, paired with local talent,”
says Brunner.
“We take our responsibility to focus
on the local film-making industry
very seriously, so we try to maximise
those local elements and pair them,
where necessary, with the international
expertise we’ve acquired through
our partnerships.”
Through this approach, he says they
are looking to facilitate three or four
locally-made movies per year, and six
to eight international productions. He
stresses that they aren’t looking at big-
scale Hollywood productions, instead
eyeing mid-sized, independent films, “but
if we can help bring parts of production
into the region, and produce them here,
we’re happy to do so. Very often, we’re
just looking at the commercial side of
these projects. Sometimes it makes
sense, sometimes it doesn’t.”
there are no commercial cinemas, with
the display of films forbidden by the
Kingdom’s religious authorities.
So far it seems that reality is un-
likely to be changed any time soon. A
trial run of film screening last Novem-
ber did not go down well. A limited
screening of Menahi, a locally-made
comedy about a young Saudi Bedouin
who moves to the city, saw an angry
reaction from conservatives. Though a
poll of Saudi nationals showed some
90 per cent were in favour of the open-
ing of movie halls in the Kingdom, the
screening of Menahi evoked an outcry
from some clerics who issued fatwas
against watching the film, claiming
it would lead to forbidden activities,
such as the free mixing of men and
women, and listening to music.
Given such opposition, industry in-
siders have mixed feelings on the fu-
ture of cinema in Saudi Arabia, despite
persistent rumours that it will one day
allow the opening of cinemas. Mitchell
is non-committal, referring to specula-
tion that Saudi Arabia may soon move
away from the strict ban, but airing
uncertainty as to whether it will ever
eventuate. However, he does mention
that most of the new malls built there
have the construction ‘shell’ necessary
for cinemas to be added at a later date.
Chakra is less optimistic when
speaking about the future of film in
Saudi Arabia. “It’s doomed,” he says.
He feels that although Saudi Arabia’s
demographic does represent so much
potential, with the strict censorship
and religious aspects counting against
it, there will never be a film indus-
try there. “I’ve been hearing it will be
opened up for about five or six years,”
he says, but doesn’t place much stock in
these rumours.
For neighbouring Bahrain, however,
Saudi Arabia’s lack of cinemas seems to
works in its favour. According to vari-
ous sources, one of the reasons Bah-
rain’s cinema market is so strong is
that Saudi Arabian nationals can drive
across the causeway into Bahrain to
watch films. And for the rest of the Gulf,
the interest, and thus the investment
potential, of film remains strong. ■
gb@motivate.ae
THE PEOPLE TIM SMYTHE
Screen test
UAE-based film producer Tim Smythe talks about the country’s maiden
English feature film and the challenges of the country’s movie business.
GLENN FREEMAN reports
I
n his 25 years in the film business,
Tim Smythe, founder and chief
executive at Filmworks Dubai,
has worked on feature films,
television productions, commercials
and everything in between, across
the Middle East, South Africa and the
United States.
After 12 years in Dubai, Smythe has
just wrapped up the emirate’s first
big-budget feature film directed by a
UAE national – City of Life. Lauded by
audiences and critics for its honest
and multi-faceted look at life in the
glitzy emirate, City of Life is the only
significant film catering to a global
audience to come out of Dubai.
With some describing the film
as a Middle Eastern melange of US
blockbusters Crash and Babel; City
of Life opened in late April to mixed
reviews. Its plot revolves around three
intersecting lives – an Indian taxi
driver with Bollywood ambitions, a
Western couple and a young Emirati
man from a privileged background.
“For a first time director, it was a
very ambitious film. It had 80 actors
[and was filmed in] 42 locations, which
is massive for a first-time film. Not
only with the cast and the locations,
but also the three different stories
happening at different times – it’s one
of the most complex schedules I’ve ever
worked on,” says Smythe.
This is a significant statement, given
some of the high-profile films, directors
and production companies Smythe
has worked with. Both as a freelancer
70 gulfbusiness.com June 2010
and through his company, Filmworks,
Smythe has worked on a number of big
budget films while in the Middle East.
These include Syriana, which starred
George Clooney and Matt Damon and
The Kingdom, whose cast included
Jamie Foxx, Jason Bateman and other
notable actors.
On City of Life, Smythe worked
closely with the 28-year-old Emirati
director Ali Mostafa, who made
his directorial debut with the film.
Though he describes Mostafa as being
“remarkably confident” given it was
his first feature film, Smythe says he
was on hand to provide the necessary
encouragement and input throughout
production.
“I’ve worked with quite a number
of first-time directors, and Ali’s quite
For a first time director, it was a very
ambitious film. It had 80 actors [and was
filmed in] 42 locations, which is massive
for a first-time film.
a confident young man. But [with
producing you have to] give advice,
support, encouragement, make
suggestions, criticise at times, bounce
ideas around. It still weaves, and you’ll
try different things, different camera
angles and so on.”
Filming on the movie – which was
written by Mostafa over a four-year
period – took place over a 15-week
schedule. According to Smythe, on most
days, he and other cast and crew put
in 14 to 15 hour days, which for him
started before sunrise and often didn’t
end until late in the evening.
“Normally, if I’d budgeted that film
as I would for one of the Hollywood
films we’ve worked on, I would have
had double the budget, and two to
three weeks more shooting time. What
that comes down to is how much
you have to fill the day to stay on
schedule,” he says.
Smythe explains that the goal for
most Hollywood films is to shoot two to
three minutes of ‘screen time’ – which
refers to edited footage – per day. The
actual amount of film produced per day
is necessarily many times bigger than
this, with much of it ending up on the
cutting room floor. For City of Life, they
needed to shoot at least five minutes
of screen time per day, which put the
director, producers and whole crew
under considerable pressure.
However, it seems that Smythe
thrives in this type of intense
environment and enjoys keeping busy.
Having grown up in South Africa’s
largest city, Johannesburg, Smythe
explains how his career trajectory
was initially quite different. Before
breaking into the film industry, he
worked in organisational consultancy,
June 2010 gulfbusiness.com 71
THE PEOPLE TIM SMYTHE
assessing client’s companies against
productivity and other benchmarks.
“I basically was in management.
My younger brother, who’s now one
of my partners and is a director of
photography [with Filmworks], went
into the film industry and he kept
trying to lure me into it,” says Smythe.
“I was 28 years old and had been
promoted as high as I could be, before
you begin to backstab your boss, and
I just didn’t like it…it was giving me
financial returns, but no rewards. So
I joined the film industry and had to
start at the bottom, as a production
assistant, and then just worked my way
up. I was quite lucky that I could work
my way up reasonably quickly.”
In South Africa, he worked primarily
in filming for television, including
commercials and features, but soon
found his work as a freelance producer
was taking him to parts of the Middle
East. Once his career began to take
off, he moved his base of operations to
Dubai 12 years ago, and soon after he
established Filmworks.
At the time, there were around five
or six other production companies in
the UAE, “a combination of Lebanese,
British and some Emirati – it was
a real mixture,” says Smythe, who
I was 28 years old and had been
promoted as high as I could be, before
you begin to backstab your boss, and I
just didn’t like it...
spotted the opportunities available
in this market. “Generally, production
standards were low and there was
a common belief that you couldn’t
produce good work in Dubai. Because
of the standard of the work we
produced, we grew very quickly.”
Defining what he means by the term
‘production standards’, Smythe says:
“Really, it’s about the approach you
have to production and the type of
people you employ to execute it. It’s
the skill-sets you keep around it – the
cameraman, the type of video editor
– all the visual ingredients you put
behind the production.”
72 gulfbusiness.com June 2010
When asked why he has chosen to
focus on the film industry here in the
Middle East rather than his home
country, Smythe explains that he just
doesn’t see the same opportunities in
the African continent. However, that’s
not to say he hasn’t faced difficulties
working in film here.
“When I opened here…I thought
I could really change the landscape
here. The first thing I did was shoot a
pilot version – an Arabic version of a
programme similar to friends,” says
Smythe. With a multi-national cast
of characters including a Kuwaiti,
a Saudi Arabian, a Pakistani and
an Emirati, all making fun of each
other, the UAE television channels
Dubai TV and Abu Dhabi TV loved the
programme. But constraints inherent
in the television industry here
eventually scuppered what was an
extremely promising concept.”
His frustrations with the local
industry almost prompted him to leave
just before the financial crisis. “I’ve had
a number of job offers from Hollywood,
and nearly moved to Santa Monica just
before the crunch, and the reason for
that is because, after we had all these
films blocked, I got to the stage where
I didn’t think there was ever going to
be a film industry here. So I set up an
office in Santa Monica and was about
to buy a house there.”
Somewhat fortuitously, given the
battering real estate markets around
the world have taken, he eventually
decided not to give up on working in
this region.
One of the main reasons for his
frustration was the last minute
cancellation of permission for the
prominent Ridley Scott production,
Body of Lies, by the Abu Dhabi
government. Having worked for six
months in attracting Scott to film in
the region and on all the preparation
this involved, Smythe was left feeling
deflated by the experience.
“That’s when I felt that there was
no future in the industry [here]…
having worked so hard, having had a
feature film division set up for three
years, with 40 projects coming across
our table, we just managed to do
one, City of Life,” says Smythe. “The
potential to get a lot of those other
projects done all existed, but they
were either not allowed, or there was
no tangible interest in attracting the
film [to the region].”
He is much more upbeat these days,
with encouraging signs coming out
of the UAE, particularly Abu Dhabi,
which has now also established a film
commission – a move Smythe believes
is crucial in building a local industry.
“Abu Dhabi has been more proactive
when it comes to film. There are a lot
of positive signs. I no longer want to
move. I can see a resurgence of film,
because eventually, there are levels of
support that are going to help develop
film and allow film to come into the
country, so I’m quite positive about the
next few years,” he says.
With the UAE’s first locally-produced
feature, City of Life, achieving
strong ticket sales locally and set to
show at Cannes, Smythe’s renewed
optimism seems well-founded. He
hints at further reasons for his more
positive outlook on film here, referring
somewhat cryptically to a current
Filmworks project as “another big
Hollywood production that’ll come out
later this year.” However, in true show-
business fashion, he refuses to ‘spoil
the ending’ by giving further details.
We will just have to wait and see. ■
gb@motivate.ae
THE LIFESTYLE COMPETITION
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THE PEOPLE EXECUTIVE MOVES
Emaar Hospitality Group’s five- Etihad Airways has
star premium hotel brand, The appointed Roy Kinnear as
Address Hotels + Resorts, has the new senior vice president
appointed Thomas Norberg of Etihad Crystal Cargo.
as the general manager of Kinnear, who will be based at
The Address Dubai Mall. Etihad’s headquarters in Abu
An experienced hospitality Dhabi, will be responsible
professional, Norberg will for the strategic development
be responsible for further and growth of Etihad’s cargo
strengthening the hotel’s division, which offers a range
brand attributes in line with of cargo services linked to
the philosophy of The Address the airline’s expanding route
Hotels + Resorts to ensure network and fleet.
tangible benefits for guests.

BMI Bank has announced Damas International, a leading retail jewellery company
the appointment of in the Middle East, has announced the appointment
seasoned Bahraini banker of Anan Fakhreddin as chief executive officer of the
Jamal Ali Al Hazeem company. He is also a member of the Board of Directors of
as its new Bahrain chief Damas International. Recently, Fakhreddin served as the
executive officer. BMI is the Dubai-based managing director for the Middle East and
Bahrain-based associate of Turkey at the World Gold Council.
BankMuscat – the largest
financial services provider Nicolas Kahale has joined DB Advisors – Deutsche Bank’s
in Oman. In reporting to global institutional asset management business – as
Andrew Bainbridge, who head of the Middle East, Africa and Central Asia. Kahale
becomes the group CEO, Al has more than 16 years of relevant experience and will
Hazeem takes on the responsibility of overseeing the banks be responsible for introducing institutional investors in
expansion plans and its international operations. the Middle East, Africa and Central Asia to DB Advisors’
global investment capabilities, and for creating investment
National Bonds solutions for clients across the regions. In his previous
Corporation has announced roles he covered sovereign wealth funds, central banks,
the appointment of Omar government organisations and other institutions in the
Subhi as its chief financial Middle East, Africa and Central Asia.
officer. Subhi fills this newly
created post following a DNV, a classification and certification company that
distinguished career in focuses on managing risk, has appointed Antony DSouza
finance spanning more as its regional manager for the Middle East and Indian
than 13 years. Prior to this Subcontinent. He will lead the strategic direction for
appointment, Subhi was DNV’s efforts in the expanded region Middle East and
executive director, finance Indian Subcontinent.
and treasury with National
Bonds Corporation.
TECOM Investments has
Building on the recent successful announced the appointment
launch of its mobile telephone of Badr Al Gergawi as the
service, Wataniya Palestine new chief executive officer
has announced the appointment of TAMDEEN, its specialist
of Dr Bassam Hannoun as its firm in technical project
new chief executive officer. Dr management and a member
Hannoun brings to this role of TECOM Investments. Al
strong regional and international Gergawi was formerly the
experience. His experience in the chief operating officer of
mobile industry cuts across 2G TAMDEEN and played a key
and 3G systems, both in technical role in its foundation and
and commercial capacities. growth.

At Gulf Business we try to keep you up to date on the region’s movers and shakers. If you know of any new faces or company reshuffles, please write to The Editor, Gulf
Business, Motivate Publishing, PO Box 2331, Dubai, UAE; fax to +971 4 2827593; or send an email to theresa@motivate.ae. We reserve the right to edit material.

76 gulfbusiness.com June 2010

F
THE LIFESTYLE TRAVEL
Becoming
one with
nature
Finding a holiday
destination that has not
been ruined by over-
development can be
tough, which is why
simple Belize offers so
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B
elize is not on the beaten path
for nature-loving travellers,
but perhaps it should be. For
starters it has a long barrier reef,
vast areas of unspoilt rainforest,
a friendly, English-speaking
population, stable democratic
government and exemplary
conservationist approach to its
natural and Mayan cultural heritage.
In particular, the waters around
Glover’s Reef at Long Caye, Belize
are thought to be some of the most
stunning the country has to offer.
SLEEPS&EATS
Embers
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When a hard
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Bloomingdales, ‘Ember’, is the Address
Dubai Mall’s signature restaurant, which
unapologetically exudes style. The open
kitchen serves grill cuisine (Japanese
robatas, seafood, Australian ribs, vintage
beefs, rotisserie) and in keeping with the
design, the food is sophisticated and
interestingly constructed.
www.theaddress.com
78 gulfbusiness.com June 2010
The reef comprises an 82-square
mile shallow lagoon surrounded
by deep waters of the open sea.
Within this there are more than 700
pristine patch reefs brimming with
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the Caribbean – from the delicate
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area that overlooks the harbour on which
busy abras (water taxis) transport guests
around the complex. Lovers of seafood
flock to the restaurant on Wednesdays for
the Seafood Harvest Night while oriental
foodies enjoy over 40 dishes from regions
such as Malaysia to Japan every Thursday.
www.jumeirah.com/hotels-and-resorts
the back of Long Caye. The island has
its own dive centre for those who wish
to discover the underwater world.
The resort at Long Caye is as rustic
as it gets and there are cabanas
available for hire – although don’t
expect luxury here. It’s fairly simple
and unpolished with its solar-powered
water pumps, no maid service, no air-
conditioning and no flush toilets – this
is a place to be at one with nature.
For wildlife viewing, the June-July
period can be the best time because the
fresh rains bring out the wildlife after
Al Samadi Cafe and
Sweet Shop, Downtown
Burj Khalifa
A new flavour
is being offered
to the popular
business lunch
format with Al
Samadi’s Franco-
Lebanese cuisine. The restaurant’s
location on The Boulevard in Downtown
Burj Khalifa makes it a convenient
location for a working lunch. Relaxed, yet
elegant, Al Samadi offers customers a
quiet atmosphere at lunchtime in which
they can also entertain clients – the
underground car park makes the venue
very accessible.
www.alsamadicafes.com

the stifling heat of May.
During the rainy season, a
‘mauger’ which translates to
‘little dry’ occurs but due to the
fact the overall precipitation only
varies a little between the seasons,
Belize can be seen as a year-round
destination. Only avoid September
and October when the hurricane
season can strike.
Left Bank,
Souq Madinat, Dubai
Set amongst the
swish Madinat
Jumeirah, this venue
has a beautiful
waterfront location.
Billed as a chic
lounge, bar and restaurant – it’s a lively spot
at the weekends. With its funky décor, it’s
ideal for an intimate dinner for two, special
occasions or a night out with friends.
The new menu offers some mouth-
watering dishes such as meat skewers,
juicy lamb cutlets with tomato and onion
salad and crumbled feta and the pea and
leek risotto. During the day, it’s the ideal
setting for business lunches, dinners and
even corporate events. www.leftbank.com
THE LIFESTYLE ART
CHARLES POCOCK CANVAS OPINION
The dark arts
Recent thefts from museums and collections have brought the darker side
of the art market into the spotlight again.
In May this year there were high profile cases with the multiple thefts
from the Museum of Modern Art in Paris and from a collection in Marseilles
the following day. The works were by Pablo Picasso, Henri Matisse, Georges
Braque, Amedeo Modigliani and Fernand Leger and had an estimated
market value of $150 million.
The problem is not contained
to Europe. The continued looting
of treasures from Iraq and
Afghanistan has been noted
by the US Federal Bureau of
Investigation as being carried
out “on a massive scale”.
And then there are forgeries
of Middle Eastern modern
masters. We have lately
witnessed the appearance of
several highly-questionable
modern pieces. Two forged
works by Dia Al Azzawi were
discovered, one on Ebay.com
in the US and the other at a
London Gallery. The work from
the US made its way to the Gulf
and was dealt with there. The other piece was dealt with by Scotland Yard.
Here in the region one continues to see questionable works in private
collections, galleries and art fairs. During Art Dubai, for a second year
running, a London Gallery displayed problematic works by the Egyptian
artist Adam Henein.
Maliha Tabari of Artspace Gallery, noting the problem, called a meeting
with John Martin, Henein and Salma Feriani of Le Violin Bleu/ Salma
Feriani Gallery. There Tabari raised the issue that Henein’s sculptures, being
sold by Le Violin Bleu Gallery, were signed by someone other than the artist.
Henein confirmed on site that they were not signed by him.
Feriani has confirmed to me that the questioned works were signed by
employees of the Bocqeul Foundry in France, where the sculptures were
cast and not signed by the artist, as the artist could not hold the electric
pen to sign the work. But Henein has no problem signing his works at his
studio in Cairo, which puts the provenance of the sculptures in question.
The gallery has told buying clients that the works are signed by the artist,
although they have now been proven not to be. If they had said the works
were signed by the foundry on behalf of the artist then there would be no
issue, but since they did not, that is an issue.
This brings to light the need for more due diligience when it comes to
buying high value items. I suggested to Ben Floyd of Art Dubai the need
for a vetting committee at fairs here in the Gulf, like they have in Europe
and North America, giving patrons more security. He agrees. With regard
to works by Middle Eastern modern masters, there are so few experts
and resources available that one can rarely investigate a work and its
provenance thoroughly. At Meem Gallery, with the Al Noor Library, we have
8,000 titles and in excess of 20,000 images in the picture library, making the
job at hand a little bit easier. ■
June 2010 gulfbusiness.com 79
F THE LIFESTYLE LEISURE
Muscle
that hustles
Quick enough to outrun
the fastest margin call, the
2010 Ford Mustang GT
puts a smile on the dial,
writes Glenn Freeman.
W
ith its striking bright blue
paintjob, a broad, muscular
stance and a gloriously
guttural V8 roar, there’s a lot to love
about this vehicle. Sliding into the
black leather driver’s seat, twisting
the key and revelling in the sound
of the 315 horsepower engine, one
can’t help but smile.
It doesn’t even matter that the
2010 model of Ford’s pony-car is
slightly down on power compared
to some others in its class,
including the 2011 Mustang.
While the 2010 model I drove had
a 4.6L V8, next year’s release has a
new 5.0L V8 that produces 540-
horsepower. But that knowledge did
nothing to dent my enthusiasm.
ROBBIE GREENFIELD IN THE SWING
Reinvention too far afield
T
here’s a joke from British comedy
Only Fools and Horses that
strikes a relevant chord in golf
today. Dopey Trigger tells Sid that he’s
just received a medal for using the
same broom for the past 20 years. “That
old broom’s had 17 new heads and 14
new handles,” he announces. Sid looks
confused, and replies: “Well how can
it be the same broom then?” After its
radical overhaul, you could ask the
same of Wentworth’s West course.
The most famous inland course
in Britain was at the heart of such a
heated debate at last month’s BMW
PGA Championship that it was
difficult to focus on the golf. Ernie
Els and Richard Caring, the wealthy
Wentworth owner, have transformed
80 gulfbusiness.com June 2010
The predominantly straight
roads of Dubai provide the perfect
playground for the ‘stang. Its hefty
1611.16 kg bulk and 1877 mm width,
paired with a steering system with
a little too much play for my liking,
mean that, as always, the Mustang
is still mainly a vehicle for straight
line fun. The brakes, which are
adequate but don’t quite provide
enough bite, also add to its slight
aversion for corners.
Inside, the 2010 Mustang gets the
SYNC entertainment and navigation
system rolled out across other new
model Ford vehicles. Though it isn’t
this English institution into a course
that is unrecognisable from the classic
track first laid out by Harry Colt in
1926. According to Els, the goal was
to make it a test-worthy of hosting
what he refers to as the tour’s ‘fifth
major’. “When players learn to master
this golf course they will have a lot of
confidence going forward into events
like the US Open,” he insisted.
But in achieving this aim, the
charming old West course now looks
like it belongs on the PGA Tour –
with its raised greens, enormous
bunkers and made-for-TV water
hazards. “Wentworth has lost its
English feel,” said Chris Wood, one
of a number of players to publicly
criticise the changes.
the most intuitive I’ve used, after a
few minutes of head-scratching and
button-pressing, it’s not too hard to
figure out.
Another more handy feature is
the reversing camera. Cleverly inset
within the drivers’ rearview mirror,
this gives you a clear perspective on
what’s happening behind you when
backing up. Given the postage-stamp
size of the rear window, this is a very
welcome addition – though it has no
sensors, just the camera.
If you’re looking for a sporty two-
door and bang for your buck, the 2010
Mustang is hard to go past. ■
Wentworth is by no means alone
in a modern era where golf course
architects are continually fighting a
losing battle against ever-improving
technology but surely things have gone
too far down in Surrey.
Like famous historical buildings
and landmarks, classic golf courses
are institutions that should be
protected from the whims of
experimentally creative owners. As
Paul Casey pointed out in one of
the more damning criticisms of the
new Wentworth, “Ernie Els owns
that house by the 16th hole, but that
doesn’t give him the right to paint it
pink and put a tin roof on it.”
If Caring wanted a ‘US Open’ course
perhaps he could made one elsewhere.
As it is, the world of golf has lost a
Colt classic and introduced a worrying
precedent for the future. ■
 THE LIFESTYLE TECHNOLOGY

Hot stuff
THOMAS SHAMBLER GEEK SPEAK

Theft or innovation?
Sony Walkman A845 Did you ever see the film, Pirates of
$215 Silicon Valley? It ranked quite high on the
Sony makes some fantastic-sounding geekometer for some. For those who didn’t
media players. Pity then, that most in its make the docudrama leap though, here’s
range have been dwarfed by Apple’s market- the gist: young Steve Jobs and young Bill
busting iPods. Still, it soldiers on, this time Gates go through life building, coding and
with a new Nano-baiting A845. With a 2.8in somewhat stealing their way to the top.
OLED screen, 16GB of memory and noise- But my opinion on a semi-decent film does
canceling EX headphones it has everything not a good column make. And it wouldn’t be
but an Apple logo. www.sony.com worth bringing up in this world of blue-
clad aliens and CGI effects, except for this
one scene. In it, Jobs and the rest of Apple
has just discovered that Bill Gates has been
ripping off the original Macintosh software
for what would become Microsoft’s DOS. A
deplorable act of thievery of course, that is, if
Apple had not already nicked it from Xerox.
It’s this theme, some call it borrowing
(others say piracy) that echoes throughout
the film, and dare I say it, our tech trade
Asus N61 in general. It comes from a quote of Pablo
from $900 Picasso’s “good artists copy, great artists
It might look like your steal.” Of course, where do you draw the
bog-standard lap-friendly line? Every car in the world has a steering
PC from the outside, but wheel, yet no manufacturer claims it’s theirs
stick a microscope at its alone. Move that analogy into the gadget
insides and you might spot world, and you might say every touchscreen
a few differences. It’s one of mobile has an on-screen QWERTY keypad,
the first computers to sport but no one can say that something so generic
super-speedy USB 3.0 tech. How is theirs (although most do try).
speedy? Well it will shoot through Right now, some of the biggest names in
a typical MP3 song in a flash 0.1 technology are currently sat on this fine line.
seconds or a 25GB Blu-ray in just When the iPhone became popular, a host
over a minute. of iPhone-clones appeared, from the illegal
www.asus.com Chinese knock-offs to the legit handsets.
And we’re on the cusp of another gadget
revolution with the iPad. This hugely popular
bit of tech is still outselling demand in the
states, let alone the rest of the world where
it hasn’t even been properly released. Give
it a few months, and there will be a host
of look-alikes, similarly-specced tablet PCs
looking to cash in on Apple’s popularity.
Philips Of course, Apple’s design philosophy lends
itself well to copycats. Its products are unlike
Sound any other. But don’t think that makes Steve
Sphere Jobs and Co. any less likely to jump on a
MCi900 digital bandwagon.
Whether or not these tech companies steal
$1,385 is without question. What you should be
You won’t find a more high-tech hi-fi than this. They promise asking, is whether that makes them a good
100W of wide-open sound for your tunes, whether that’s from the artist, or a great one. ■
MCi900’s removable 160GB hard disk, USB input, CD/DVD player, net Thomas Shambler is the features editor of Stuff
radio or streamed from a Mac or PC. They even look snazzy too. Magazine Middle East. thomas@motivate.ae
www.philips.com

June 2010 gulfbusiness.com 81

THE ESSENTIALS BOOKS
Free or easy?
This month Gulf Business examines the viability of the free content model and
explores the serious organisational renewal needed to ride out the recession.
C hris Anderson’s
first book, The
Long Tail, explained
how retail businesses
would be transformed
by online models
that cut the cost
of inventory and
distribution to near
zero and allowed
companies to reap
fortunes from niche
interests.
Free: the Future of a Radical Price
(Hyperion) is the same, but different.
Still looking at how online models
have caused a seismic shift in the
economics of inventory management
and distribution, Anderson argues that
the new price point for many goods
and services is a revolutionary one:
nothing at all. The book, out for a year
now, garnered lukewarm reviews on
publication, with the Free concept
he espoused being criticised as too
compromised. However, many critics
are reassessing it now, especially
in the wake of the newspaper
“paywall” arguments and the fact
that laws outlawing music sharing
are being criticised for criminalising
mainstream consumer behaviour.
While perhaps not as fully formed
as The Long Tail, Free is better as
the concepts Anderson discusses
are still ongoing: free content isn’t,
as yet, a done deal, but it’s certainly
where we’re headed. Anderson offers
a vague roadmap to where this will
end up, and it’s increasingly clear
that even a vague map is better than
no map at all.
82 gulfbusiness.com June 2010
At the heart of Free is the
idea that, while marginal
costs of creating new copies
of something are essentially
zero, the costs of making the
content are still the same;
and in the online world,
the initial investment in
servers and computers and
infrastructure can be very,
very high. That’s where the
difficulties start. Of course,
nothing is free. A Facebook
user doesn’t pay an annual fee, but
their opinions, interests and friends
are still a valuable commodity as
information to be sold on. Recent
criticisms of Facebook’s privacy
policy reveal that for some, those
costs are just too high. It remains
to be seen just how much privacy
consumers are willing to barter for
their ostensibly free entertainment
and news, and this book as an
essential read for anyone looking at
a digital model for a new or existing
business.
B eyond Crisis –
Achieving Renewal in
a Turbulent World (Wiley)
is the book for the serious
manager seeking to lead
his organisation out of the
recession stronger. Written
by three strategists – Gill
Ringland, Oliver Sparrow
and Patricia Lustig – it
is unsurprisingly a very
technical read but one
that aims to provide real
answers and direction to
the manager in a crisis. Chock full of
diagrams, case studies and practical
suggestions – it would seem that by
pulling no punches – beginning with
a detailed cause-focussed narrative
on the global recession, then moving
in for a closer snapshot on the
specific impacts it has had on the
culture and psychology of business
and management, to the structural
weaknesses the crisis exposed on an
individual business level – the authors
are very methodically attempting to
fix problems from the bottom up.
As the jacket reminds us – after the
turmoil of the recession, there is no
return to business as usual.
Viable and successful entities
in today’s economic reality need
to be Purposefully Self-Renewing
Organisations – the core focus of
the book. The authors lay out what
they believe senior managers need
to do to help their employer become
that through renewal, correction and
strengthening of their organisation’s
business models, foundations and
operational structures.
Beyond Crisis is
potentially a life-
changing book for a
senior manager, one that
prompts the examination
of every layer of his
organisation’s functions,
its goals and its actual
output. As such, it is also
at times an exhausting
read and not one that
can be adequately done
without a good amount
of time and introspection.
THE ESSENTIALS CALENDAR

Exhibitions, conferences & seminars

Gulf Business presents a comprehensive listing of business-related exhibitions,
conferences, events and seminars in the GCC for the forthcoming month.

EVENT DATE LOCATION ORGANISER Bahrain Society of Engineers,

HR in Healthcare Jun 01-02 DIEC, Dubai IIR The on tel +973 17727100,
fax +973 17729819
Beauty World Middle East and Wellness & Spa Exhibition Jun 01-03 DIEC, Dubai Epoc Messe
BME Global on tel +442075119582,
Hospital Build Exhibition & Congress - Middle East Jun 01-03 DIEC, Dubai IIR fax +442070221722
Saudi Brand and Communications Summit Jun 05-08 Marriott Riyadh Hotel, IIR Datamatix on tel +9714 3326688,
fax +9714 3328223.
Anti-Money Laundering Conference Jun 06-07 Hyatt Regency Dubai, Dubai Marcus
ECS (Expo Centre Sharjah)
WEPOWER 2010 Jun 06-08 Dhahran International Exhibition Centre BME Global on tel +9716-5770000,
China Sourcing Fair Jun 08-10 DIEC, Dubai Global sources fax +9716-5770111.

Future Museums Congress Jun 07-09 ADNEC, AbuDhabi Turret EPOC Messe Int’l on tel +9714 3380102,
fax +9714 3380041.
Middle East Desalination Summit Jun 07-09 Abu Dhabi Fleming Gulf
Fleming Gulf LLC on tel. +971 4 390 2764,
Cityscape Jeddah Jun 07-09 Jeddah Center for Forums and Events IIR Fax: +971 4 366 1048
2nd GCC Job Localisation Challenges and Jun 08-10 Dubai Datamatix Global Sources on tel +65 65472800,
Talent Management Conference fax +65 65472888
Façade Design and Engineering Saudi Arabia Jun 12-15 Radisson Blu Hotel, Riyadh, Saudi Arabia IQPC IIR Middle East on tel+9714 3365161,
fax +9714 3352682.
Cost Effective Sustainable Design and Jun 12-15 Hilton Garden Inn Riyadh Olaya, Riyadh, IQPC
Construction Saudi Arabia Summit Kingdom of Saudi Arabia IQPC ME on tel +9714 3602800,
Fertilisers MENA Summit 2010 Jun 13-15 Hilton Hotel Abu Dhabi, United Arab IQPC fax +9714 3631938.
Emirates
MARCUS EVANS Kuala Lumpur
National Security Summit Middle East 2010 Jun 13-16 Le Royal Meridien, Abu Dhabi, UAE IQPC on tel +603-2723-6604,
fax +603-2723-6699
Gas Processing MENA Jun 13-16 Beach Rotana, Abu Dhabi, UAE IQPC
Turret ME on tel ++9712 4446011,
Energy & Water Conservation Expo 2010 Jun 14-16 BIEC, Bahrain BSE fax +9712 4443987
Submarine Networks MENA 2010 Jun 20-23 Arjaan Rotana Hotel, Dubai, UAE IQPC Terrapinn on tel +44 20 72421548,
fax +44 20 72421508.
Marine & Coastal Engineering Middle East Summit Jun 20-23 Millennium Hotel, Doha, Qatar IQPC
Gulf Business and Motivate Publishing
4th Annual Click Digital Marketing Summit Middle East Jun 20-23 Grand Millenium Hotel, Dubai IQPC accept no responsibility for errors and
omissions, date and location changes or
14th Annual Compensation & Benefits Forum Jun 20-24 Dusit Thani Hotel, Dubai IIR cancellations.
Customer Service Forum Jun 21-24 Park Rotana, Abu Dhabi IIR Please contact the organisers directly for
further information.

If you are organising or know of an event taking place in the GCC, please send full details to: Exhibitions, Gulf Business, Motivate Publishing, Box 2331, Dubai, United Arab Emirates,
or fax to +9714 2827593, or email gb@motivate.ae.

WEPOWER 2010 National Security Summit 14th Annual Compensation

WEPower 2010 will bring together the
biggest clients in the water and power
industries under one roof, combining an
industry-led conference and exhibitors
from across the globe showcasing their
latest products and services. Water
continues to be a basic need and one
that attracts major investment in the
Gulf. This event is an opportunity for
sector players to become a part of
Saudi Arabia’s developing water and
power industries and will be a good
networking event for professionals in
water and power sectors.
Middle East 2010
The theme this year for the summit is
Counter Terrorism & Border Security.
The event offers a comprehensive
agenda to address the emerging
threats and critical strategies that will
overcome the barriers to information-
sharing between government agencies
and international security agencies.
The agenda will also identify the latest
technologies and solutions for border
security and control and how you can
enforce these cutting-edge measures
within your organisation.
& Benefits Forum
As corporations struggle to navigate the
current economic storm, compensation
professionals are challenged with
developing reward philosophies that
support corporate strategy but at the
same time contain costs. The 14th
Annual Compensation & Benefits
Forum will address those challenges by
focusing on ‘Managing Your Employee
Expectations By Keeping Benefits
Innovative In A Changing And
Cost-Contained Environment’. Sector
professionals are invited to attend.

84 gulfbusiness.com June 2010

THE ESSENTIALS WHERE TO STAY

AL RAHA BEACH HOTEL SHANGRI-LA LAYIA OAK HOTEL & SUITES MEDIA ROTANA DUBAI SOFITEL AL HAMRA JEDDAH

Abu Dhabi
Al Raha Beach Hotel, created to
provide the very best of traditional
Arabian hospitality. This unique jewel
of luxury and tranquility, offering
magnificent services, awaits you for
an unforgettable visit to Abu Dhabi.
Tel 00971 2 50 80 555
Fax 00971 2 50 80 429
Sheikh Zayed Road, Dubai
Offers 301 luxuriously appointed guest
rooms and suites, nine restaurants and
bars, health club and spa, tennis and
squash courts and outdoor swimming.
Tel 00971 4 3438888
Fax 00971 4 3438886
Email: sldb@shangri-la.com
Al-Barsha, Dubai
Offering 161 furnished units ranging
from 81 sqm to 160 sqm, 3 dining
venues, 3 multi-purpose meeting
rooms, recreation facilities & a
majestic landscaped area around the
temperature-controlled pool.
Tel 00 971 4 437 78 88
Fax 00 971 4 437 79 99
Email: welcome.oak@layia.net
Al Barsha South-TECOM
Located in the heart of Dubai’s new
business hub and opposite Dubai Media
City and Internet City the Media Rotana
Dubai has 460 rooms, suites and deluxe
hotel apartments, 5 award winning
dining venues and 15 meeting rooms.
Tel: 00971 4 4350000
Fax: 00971 4 4350011
Email: media.dubai@rotana.com
Jeddah, Saudi Arabia
The hotel situated in the heart of the
business centre offers 211 rooms, 17
suites and 25 apartments. 5 meeting
rooms and 2 reception rooms to
accommodate up to 350 people.
Tel 00966 2 6602000
Fax 00966 2 6604145

PARK ROTANA ABU DHABI THE FAIRMONT DUBAI TAMANI HOTEL MARINA ACACIA HOTEL HOLIDAY INN RIYADH, IZDIHAR

Khalifa Park area, Abu Dhabi
Conveniently located adjacent to Khalifa
Park, the property offers 318 luxurious
rooms and suites, 6 world class dining
venues, 6 meeting rooms and spacious
ballroom with day light access and
outdoor terrace.
Tel 00971 2 6573333
Fax 00971 2 6573000
Email park.hotel@rotana.com
Sheikh Zayed Road, Dubai
This 394-room hotel boasts 10 dining
and entertainment venues a superb
spa and unrivalled meeting facilities.
Tel 00971 4 3325555
Fax 00971 4 3324555
Email: dubai.reservations@fairmont.com
Dubai Marina
This hotel boasts 240 units, including
studios, 2 or 3 bedroom units, and
penthouses. There is also one restaurant. a
health club, indoor and outdoor swimming
pools and 5 meeting rooms.
PO Box 215855, Dubai, U.A.E
Tel 00971 4 3992500
Fax 00971 4 3993225
Email sales@tamanimarina.ae
Ras al Khaimah
The Acacia Hotel is a superbly designed
four star hotel complete with Al Nakhla
restaurant, the stylish Flamingo bar, the
vibrant Club Acacia, a pristine pool serving
as a backdrop to varied and exciting
Theme Nights, the luxurious O-Zone Spa,
and high-energy Oxygen Gym.
Tel 00971 7 2434421
Fax 00971 7 2434429
Riyadh, Saudi Arabia
The first 5 star Holiday Inn hotel in the
Kingdom, with 289 new and trendy
accommodations, huge lobby with W-Fi
access, outdoor pools, sauna, Jacuzzi
and health club. Also has state-of-the-art
meeting rooms, 24-hour business center
with professional secretarial support.
Tel 00966 1 4505054
Fax 00966 1 4505056

JUMEIRAH EMIRATES TOWERS INTERCONTINENTAL DOHA MÖVENPICK HOTEL DOHA JEDDAH HILTON

Sheikh Zayed Road, Dubai
Jumeirah Emirates Towers is a sleek
architectural masterpiece of steel
and glass. It redefines the business
hotel category, seamlessly combining
form with function, high technology
with unparalleled luxury and elegance
with efficiency.
Tel 971 4 3300000
www.Jumeriah.com
Doha, Qatar
Situated in the West Bay area, yet
located near the city. With its various
dining options, 24 suites, 234 rooms,
private beach and state-of-the-art
gymnasium, it is an idyllic setting for
business and leisure.
Tel 00974 4844444
Fax 00974 4839555
Doha, Qatar
Located on the Corniche Road, opposite
the Museum of Islamic Art, the hotel
offers 154 rooms and suites, a business
centre and meeting rooms. Recreation
facilities are also available.
Tel 00974 4291111
Fax 00974 4291100
www.moevenpick-doha.com
Jeddah, Saudi Arabia
Located a 10-minute drive from the
Jeddah International Airport. Offers over
414 rooms including 46 suites. 10th
and 11th floors are Executive floors
addressing all the needs of a modern-
day businessman.
Tel 00966 2 659 0000
Fax 00966 2 658 2489

IS YOUR HOTEL LISTED ON THIS PAGE?

To become one of Gulf Business’ Preferred Hotels and benefit from exposure to the extensive readership of Gulf Business throughout the GCC
contact Circulation Department on 00971 4 2052497

Gulf Business magazine is available in all of these GCC hotels

86 gulfbusiness.com June 2010

THE ESSENTIALS STATS & FACTS

MERGERMARKET TOP DEALS OF THE MONTH

Deal Value ($m) Bidder Company Target Company Deal Description
2150 Qatar Holding LLC Harrods Limited Qatar Holding LLC, the Qatar-based investment arm of Qatar Investment Authority, the Qatari
sovereign wealth fund, has acquired Harrods Limited, the UK based operator of the upper market
department store Harrods, from Mohamed Al Fayed, the UK based businessman, for a total
consideration of $2.15 billion.
1300 TPG Capital LP American Tire Distributors Holdings Inc TPG Capital LP has agreed to acquire American Tire Distributors Holdings, Inc from Investcorp SA,
Berkshire Partners LLC, and Greenbriar Equity Group LLC for an enterprise value of approximately
$1.3 billion.
American Tire, the US-based company headquartered in Huntersville, NC, is a replacement
tyre distributor. TPG Capital, Berkshire Partners, and Greenbriar Equity Group, the US based
companies headquartered in Fort Worth, TX, Boston, MA, and Rye, NY, respectively, are private
equity firms. Investcorp, the listed Bahrain based company headquartered in Manama, is
an alternative fund manager.

7 Astra Polymers Constab Middle East Polimer AS Astra Polymers Compounding Co Ltd, the Saudi Arabia-based producer of masterbatch additive
Compounding systems, thermoplastic compounds and liquid based or paste colourants, and a subsidiary of Astra
Co Ltd Industrial Group, the listed Saudi Arabia-based Conglomerate, has agreed to acquire Constab Middle
East Polimer AS, the Turkey-based producer of masterbatch, additive and thermoplastic compounds,
for a total consideration of $7.37 million.
- MIC STME Limited MIC, the Saudi Arabia-based investment house, has acquired, STME Limited, the Saudi Arabia-based
provider of advanced enterprise IT solutions, for an undisclosed consideration. This acquisition
compliements MIC’s operational strengths and other investments. Post acquisition, MIC will add STME
to its current ICT portfolio.
- Tamin Telecom 3G License (Iran) Tamin Telecom, the Iran-based telecommunications company, has been granted the 3G mobile license
ownership, from the Iranian government, for an undisclosed consideration.Tamin Telecom becomes
the third mobile operator in Iran to offer 3rd generation mobile services.
- Qatar Electricity AES Ras Laffan Operating Company Qatar Electricity & Water Co QSC, the listed Qatar-based power and desalination company, has agreed
& Water Co QSC WLL (70% stake); and Ras Laffan Power to acquire 55 per cent stake in Ras Laffan Power Company Limited QSC, the Qatar-based owner of an
Company Limited QSC (55% stake) independent power and water desalination plant and 70 per cent stake in AES Ras Laffan Operating
Company WLL, the Qatar-based operation and maintenance service provider, from AES Corporation,
the listed US-based company engaged in power generation, distribution, supply and other
intermediaries, for an undisclosed consideration.
Notes: Based on announced deals, including lapsed and withdrawn bids. Based on geography of target, bidder or vendor being Middle East. Based on period betwewen 20 April 2010 and 19 May 2010. Includes all
deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m. Activities excluded from table include property transactions and restructurings
where the ultimate shareholders’ interests are not changed. Data correct as of 20 May 2010. Source: mergermarket

MIDDLE EAST QUARTERLY M&A ACTIVITY GULF BUSINESS ACTIVITY BY INDUSTRY SECTOR YTD 2010 – VOLUME
FROM 2004 TO MAY 19, 2010 *
Leisure Business Services
14,000 60 12.5% 12.5%
Value [$m]
12,000 Volume Energy, Mining & Consumer
Utilities 12.5% 12.5%
10,000
Number of deals

40
8,000
Value [$m]

6,000
20
4,000

Technology,
2,000
Media & Telecom
0 0 50.0%
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q109 Q209 Q309 Q409 Q110 Q210*

MIDDLE EAST ANNUAL M&A ACTIVITY GULF BUSINESS ACTIVITY BY INDUSTRY SECTOR YTD 2010 – VALUE
FROM 2004 TO MAY 19 , 2010*
30,000 250
Leisure
Value [$m]
19.3% Technology,
Volume Media & Telecom
25,000
200 80.7%
20,000
Numbers of deals

150
Value [$m]

15,000
100
10,000

50
5,000

0 0
2004 2005 2006 2007 2008 2009 YTD 2010*
Mergermarket tracks all M&A deals of more than $5m where the target, bidder or parent is a Middle Eastern company. For further details, call +9714 4376482.

88 gulfbusiness.com June
May 2010
2010
OUT TO LUNCH TERRY TYRRELL
All things to all men
GLENN FREEMAN gets a peek into future changes in the advertising and branding
sectors with Terry Tyrrell of The Brand Union over a buffet at The Rotisserie.
T
raditional advertising agencies
are being left behind by multi-
service agencies that are hybrids
of marketing, branding, advertising
and business consultancies. So says Terry
Tyrrell, global chairman of The Brand Union,
over breakfast in the plush surrounds of The
Rotisserie, in the Arabian Court at Dubai’s The
One and Only Royal Mirage.
In town for The Brand Union’s annual
general meeting – their first held in this
region – Tyrrell took some time out for a
chat about his branding agency and the
Terry Tyrrell business in general, which is extremely
bullish in its approach to the entire Middle
East/North Africa.
While waiting for our coffees to arrive,
before we ventured over to the buffet, Tyrrell
spoke about his vision for the future of the
branding business.
“Now, the brand and business strategy are
becoming more closely linked…brand sits
in the boardroom now. And that’s great for
us, because more and more, we are dealing
not just with the marketing guys, but with
the CEOs,” he said, just as a smiling waitress
arrives with two steaming cappuccinos.
“It means that we’re no longer seen as
second-cousins to the ad agencies…we’re all
that they are, plus the strategic umbrella,”
he said. “I can see that in 18 months to two
years, The Brand Union will become a sort of
hybrid between a management consultancy
and what used to be called a brand agency,
because increasingly we’re being asked to
solve business problems through the lens of
the brand.”
Having piled our plates with a selection from
the buffet – I had pancakes with maple syrup,
glazed, fruit-filled Danish pastries and still-
warm miniature croissants – our conversation
turns to The Brand Union’s operations within
the Middle East.
The branding company has two offices
in the UAE – one in Dubai, which opened in
2002, and another that opened in Abu Dhabi
in 2008. Motioning around the room, Tyrrell
points out that The One and Only Royal
Mirage was among the first clients of its
90 gulfbusiness.com June 2010
Dubai office, having helped them re-create
their visual identity for the region.
He conceded that the economic slowdown
has impacted their offices globally and
in the UAE, where they shed a number
of staff amid shrinking marketing and
advertising spend from local companies.
However, Tyrrell’s outlook for the future of
the branding business in the Middle East is
extremely upbeat.
In particular, he believes that The Brand
Union’s association with the behemoth that
is WPP – the world’s largest communication
services group – stands them in good stead
relative to smaller competitors with fewer
friends in such high places.
“One of the good things about being part
of the global WPP group is that we can
tap into the different national offices,”
Tyrrell explained. While he accepts that
clients are no longer committed to working
with any particular company purely on
the strength of their reputation – pointing
to the failures of such venerable banking
names as Goldman Sachs and Merrill Lynch
as prominent examples – it certainly doesn’t
hurt to be associated with a brand like WPP.
“Being part of a stable, international
group actually helps us enormously. We
can go into a business as little old Brand
Union – we’re not a big business at all – but
to say we’re part of WPP is a tremendous
competitive advantage. It says to the client
‘these guys are going to be around for a bit,
they’re not going to disappear overnight’.
Particularly during a period where many
companies have severed ties with existing
marketing agencies, or held off on hiring
them, due to budgetary constraints, they
have been able to leverage this partnership
to their advantage. “Now that we’ve been
living through difficult times…we’ve been
using the WPP ‘glue’, if you like, more
prominently than we have in the past,”
Tyrrell said.
Such glue could come in handy for many
more businesses across the UAE, as they
look to pick up the pieces following the
global economic downturn. ■