EXCLUSIVE: FRANK KHOIE ON PRISON, PROPERTY AND POWER SUPPLIES

Vol. 15 Issue 3 July 2010

THE HIGH
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After the Deepwater Horizon
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 THE DETAILS
Vol. 15 Issue 3 July 2010

THE COMMENT
12
Taking Stock
Savvy traders opt for bullish
Saudi shares.

14
Local Knowledge
Investment bankers are the
white-collared crooks.

16
Money
Debt refinancing threatens
regional recovery.

18
Emerging Markets

Be prepared
As the World Cup rolled into Africa,
so did investors.

20
Guest Column The oil spill disaster in the Gulf of Mexico is still
Pockets of Dubai are still offering ongoing. The environmental impact continues to grow
good returns. and there is little relief in sight for BP. With hundreds
22 of wells in the Arabian Gulf, decaying facilities in Iraq
Letters and Iran and complicated ownership structures, we

THE BRIEFING
ask: what is the contingency plan?
44
24 40 56
Regional Briefing
Driving down cost Cut the classroom
32 Is outsourcing the answer to costly As businesses scale back
fleet management? expenditure, training is one of
What’s the fuss about? the casualties.
What exchange traded funds mean
for the Tadawul.
42
Tailored investing 60
34 Swiss bank talks of tailoring That fission thing
investments to female needs.
Back-to-basics The UAE is applauded for its
Six Senses launches a tented camp to peaceful nuclear strategy.
lure big-spending nature lovers. THE BUSINESS
36 48 THE PEOPLE
Sweet dreams Buildings of the brave
Mars launches a new factory in the Rebuilding war-torn Iraq is lucrative 64
diabetes capital of the world. for those who dare. Building a reputation
Frank Khoie is out of jail and reeling
38 52 investors back to RAK.
Drug dealing Bugs in banking
Pharmaceutical giant urges action Strategic realignment needed to rid 70
to beat counterfeits. banks of poor health. Executive Moves

July 2010 gulfbusiness.com 5

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
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

72
London Robert Bailey/Karen Thomas
New Delhi Rahul Bedi
Shanghai Gordon Hu
Washington Kevin J Kelley
Hospitality Guy Standish-Wilkinson

74
General Manager Production
and Circulation S Sasidharan
Production Manager C Sudhakar

General Manager Group Sales

Anthony Milne
Senior Advertisement Manager
Abraham Koshy
Advertisement Manager
Ajay Mathews

71
Competition 75
THE LIFESTYLE THE ESSENTIALS
72 76
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Art 79
Abu Dhabi: PO Box 43072, UAE,
The influence of Islamic art on Hotels Tel: +971 2 677 2005, Fax: +971 2 677 0124,
medieval Europe. Where to stay in the GCC. E-mail: motivate-adh@motivate.ae
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What is the latest ‘must-have’ watch
on the market? at Bistro Madeleine. Printed by Emirates Printing Press, Dubai

6 gulfbusiness.com July 2010

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F THE COMMENT LEADERS
[ MARKETS ]
No excuses for ‘frontier’ economies
MSCI issues its report card on GCC states: “must try harder”.
E xcitement over the UAE, Kuwait and Qatar
making it into MSCI’s emerging markets
list proved premature when the index provider
decided at the last minute to keep the countries
firmly within the “frontier” category.
The effect was immediate, but limited – a four-
day rally was brought to a halt, and local analysts
insisted the move was not exactly unexpected
and had already been priced in. It’s the long-term
effects that are a cause for concern, however,
as fund managers throughout the world rely on
MSCI’s indices to allocate funds. An upgrade for
the GCC states would have seen considerably
more international funds wash ashore, bringing
badly-needed liquidity to the stagnant and
under-performing markets. The flight of foreign
capital from the GCC has been alarming – in
January 2008, as the DFM hit a two-year peak,
foreign investors bought almost $3 billion worth
of shares in UAE stocks. That shrunk to $136
million by the year’s end, and, by March this year,
foreign investors had sold shares worth some
$2.2 billion, though buying activity picked up a
little in April and May.
In citing its reasons, MSCI listed a litany of
depressingly familiar subjects, with a lack of
formal separation between trading accounts
and restrictions on foreign ownership topping
the list. All the more depressing given that the
[ IRAQ ]
Help wanted. Apply: Baghdad
Financial services professionals should look to Iraq for risky, but rewarding opportunities.
Y ears of war and neglect have left Iraq’s
infrastructure in ruins, and we’re not just
talking about roads and buildings. The banking
system is in disarray, with carrier bags of cash
still being the preferred method of transaction;
the legal system is both complicated and
ineffectual; and finding essential insurance
cover for most aspects of business and trading is
frustrating and expensive.
10 gulfbusiness.com July 2010
markets knew exactly what was expected of them
and still failed to make the grade. “The need to set
up and operate with a dual account structure is
still a major concern to a number of international
institutional investors and is incompatible with
general emerging markets standards,” the MSCI
said in explaining its decision not to upgrade the
UAE. It added that the Emirates and Qatar would
remain on its emerging markets “watch list”,
while Kuwait has been dropped as the hurdles it
needs to clear are judged simply to be too great.
Also not making the grade is Saudi Arabia, which
is not even on MSCI’s frontier list, and is merely
lumped in with its neighbours in a “GCC list”. While
Matein Khalid makes a bullish case for the GCC’s
largest market in these pages this month, access to
the Tadawul is notoriously difficult for non-Saudi
investors. The latest buzz is the exchange traded
funds managed by Falcom. Effectively replicating
the Tadawul – minus fees, of course – the funds
promise to offer an easy entry into the Saudi
market, though from the prospectus it’s hard to
see any killer advantages from going the ETF route
rather than buying mutual funds that Saudi banks
have long offered investors. Also, given concerns
about separation of accounts by MSCI elsewhere in
the Gulf, potential investors should take note that
Falcom isn’t just the manager of these vehicles – it’s
also the custodian and market maker. ■
But, according to speakers at a recent
conference, Doing Business in Iraq, organised
by Dubai-based lawyers Al Tamimi & Company,
for all this – plus, of course, its ongoing security
woes, political deadlock and fractious ethnic
make-up – Iraq is a very, very attractive place
right now.
There are some $600 billion worth of essential
infrastructure projects up for grabs, with the sorely

neglected oil industry – absolutely essential to the
running of Iraq’s economy – at the top of the list.
But, while multinationals throng to
surrounding states and tentative offices are
opened within the relative safety of the Green
Zone, there’s still a lot to be done before the really
big movers and shakers of the global economy are
ready to set up shop for good.
It’s been seven years since the overthrow of
Saddam Hussein, and, while it’s premature to
talk of an atmosphere of normalcy, we’re a long
way from the peak violence of 2007. But intrepid
investors and entrepreneurs have a wealth of
opportunities, and not just in fixing the leaky oil
pipes, building the new refineries and pouring
cement for the new office blocks and apartment
[ OIL ]
Who’s in charge here?
Is there a comprehensive plan to tackle an oil spill in the Gulf?
A good chunk of the world’s hydrocarbons;
crumbling oil infrastructure; a confusing mix of
rules and regulations spanning a dozen states and
hundreds of companies; and a security situation that
can be charitably described as “fluid” – these factors
do not bode well for the fragile Gulf ecosystem.
Already host to the worst oil spill in history,
during the 1991 Gulf War, events across the
world in Louisiana have focused attention on
the potentially huge cost to the environment of
extracting oil and gas from the waters of the Gulf.
Given the huge importance put on public relations
– BP chief Tony Hayward’s gaffes have now entered
almost mythical status – you’d expect the legions
of PR operatives working for oil companies and
ministries to be all over the topic, confidently
explaining safety procedures and contingency
plans should another catastrophe hit here.
Not a bit of it. Questions on planning in the
event of an emergency and on who is responsible
for a clean-up, and who foots the bill, were
swatted away or conveniently ignored by a
large number of operators and insurers. Still,
ADNOC stands out and should be applauded for
an enthusiastic response that comprehensively
explained its palliative and preventative
strategies. The company has a team of experts
THE COMMENT LEADERS
buildings. In fact, before that begins in earnest,
Iraq needs to fill the huge gaps in its basic
operating structure. Companies like Tamimi, with
its profitable law office in Baghdad, are going
some way to doing that, providing investors
and contractors with an array of experienced
lawyers with strong local knowledge. And other
institutional voids still need to be plugged, such
as accountancy, insurance, banking and all the
basics. It’s in these fields that the early, intrepid
entrepreneurs stand to make the most, both in
terms of earnings and, vitally, in helping establish
Iraq as a, if not a safe, than at least a feasible place
to do business. After all, it’s only when those basics
are in the place that the bulldozers can move in en
masse and the real work of rebuilding can begin. ■
who, so far, have been restricted to drills and
practice in the Gulf, but have obtained some real
world experience dealing with spills in Lebanon
and Egypt, and has even offered to send a team
to the US to help out in the Gulf of Mexico. But
the biggest oil company in one of the richest
countries in the world can be expected to have
first class response teams – even if a bigger one,
BP, fell widely short of the mark. The gravest
concerns are over the decaying wells, pipelines
and storage facilities in Iran and Iraq, who share
the same sea and are hardly likely, given their
financial constraints, to pay the same sort of
attention to expensive safety measures.
Given that ADNOC is a commercial concern,
however, it is only fair that it should only be
concerned about its own operations, and not have
to worry about footing the bill for others’ mistakes.
This is the preserve of governments and their
environment agencies. So it’s hardly reassuring
that these agencies were unwilling to state that a
comprehensive, Gulf-wide plan is in place to deal
with a major spill. We can hope that, behind the
scenes at least, pan-GCC groups have contingencies
in place. Given the obvious PR coup this would
represent, though, one would hope this information
could be made public soon. ■
July 2010 gulfbusiness.com 11
THE COMMENT TAKING STOCK
TAKING THE BULL BY THE
HORNS ON SAUDI SHARES
With record lows on the DFM and worrying indications over the strength of
the euro, the quintessential value play right now is Saudi Arabia.
MATEIN KHALID
T
he GCC stock markets have underperformed the
rally in the emerging markets, even though crude
oil trades in the mid-70s and the collapse in the
euro means that imported inflation in the GCC has
peaked. The DFM has fallen below 1,500 to six-month lows
after successive downgrades of local banks by international
credit rating agencies, the exodus of Western hedge
funds, the risk aversion and scramble for liquidity in the
post-Lehman financial world, debt shocks (Saad-Gosaibi,
Nakheel restructuring, the failure of several Kuwaiti
investment companies) and the dominant retail turnover
have made country selection and stock picking imperative
for investors in the GCC equities markets. I believe Saudi
Arabia is the quintessential value play in the GCC for the
next 12 months. Why?
One, the Tadawul index is cheap at
6,200, having lost 11 per cent in May’s
global financial carnage and oil price The big money
swoon. The Tadawul index now trades is made when
at 12 times earnings and two times
book value. This is a fraction of its things go from
bubble valuations four years ago when catastrophic to just
the Tadawul peaked at 21,000 and Saudi
bank valuations were a stratospheric plain awful. Value
five to eight times book value. The bear investors buy fear
market is Saudi Arabia, since 2006
has been as brutal and protracted as
and sell greed.
its earlier bull run (1999 – 2006) was
parabolic and euphoric. However, the big money is made
when things go from catastrophic to just plain awful. This
is the exchange milieu in which bull markets are born.
Value investors buy fear and sell greed.
Two, Saudi Arabia has the largest, most liquid, most
high growth potential banking system in the GCC.
Retail loans are a mere 13 per cent of GDP in the largest
consumer economy in the Arab world, where youthful
demographics alone dictate a secular growth explosion
in auto loans, credit cards, mortgages, insurances
and personal loans. The Saudi banking system is also
not dependent on inter banking funding, Euromarket
borrowing or offshore hot money, since customer deposits
fund almost the entire loan book. The loan to deposit
ratio in Saudi banking is far lower than any other GCC
state, with Basle Tier One capital ratios at an impressive
12 gulfbusiness.com July 2010
15 per cent. Saudi banks will benefit most from the $400
billion government infrastructure spending. Economic
growth is unthinkable without private sector bank credit
growth, which has begun to revive in the Kingdom, unlike
elsewhere in the Gulf, where the collapse of property
bubbles and systemic debt shocks have forced banks to
slash balance sheets.
Three, Saudi Arabia has the largest, youngest
population in the GCC with a rising per capita income
and an embryonic data traffic, Internet and broadband
hyper growth metrics. This is a superb opportunity
for Saudi Arabian telecoms. Mobily (Etisalat Etihad),
Saudi Arabia’s second mobile operator, is cheap at 10
times earnings with 18 million subscribers and almost
a million new broadband subscriber additions since
January 2009. Mobily commands 40
per cent margins, has a far lower
geared balance sheet than Zain and
a $3 billion capex budget. Saudi
Telecom, the legacy operator, will also
benefit from the broadband revolution
in the Kingdom as its existing fixed
line subs convert. Saudi Arabia has
three million broadband Internet
users and 10 million Internet users, a
critical mass unthinkable in smaller
Gulf societies. Mobily and STC are the
clear beneficiaries of the Arab world’s
most exciting broadband revolution.
Four, Saudi blue chips offer some of the highest return
on shareholder equity in the Middle East. SABIC, Mobily,
Al Rajhi Bank and Saudi Arabian Fertilisers all boast
ROEs in the 25-34 per cent range. This stock market does
not deserve its rock bottom valuation metrics at a time
when economic growth will be at least five to six per cent,
crude oil prices are still above $70, King Abdullah’s reform
momentum is accelerating and SAMA no longer has any
reason to raise riyal money market rates as inflation falls.
Saudi Arabia is cheap, unloved, and under owned. A classic
value buy at Tadawul 6,000 – 6,400 for a potential one-year
8,000 target.
Matein Khalid is a global macro trader, economics
professor, fund manager in a royal investment office
and writer in finance and geopolitics.
THE COMMENT LOCAL KNOWLEDGE
TODAY YOU DON’T NEED A
GUN TO HOLD UP A BANK
Forget about the small time crooks and two-bit thieves of popular culture.
White-collar criminals are robbing from all of us, and on an epic scale.
MISHAL KANOO
W
hen we think of thefts, we think of news
items about small time crooks who robbed
a bank or a hotel, or a shop. Or we think
of organised crimes such as the Italian/
Russian/Chinese/Indian mafias. What if I told you that
the greatest thieves come in pin stripped suits, went to
the best universities and actually believe that when they
steal, it is not theft but a reward for their intelligence?
Who, you may ask yourselves, are these people whom I
am talking about? Well, here is where the picture becomes
a bit blurry. They could be civil servants or bankers or
businessmen – or a combination of all three.
I am sure that by now I have ruffled enough feathers
and have created more enemies for
myself than even before but the reality Most people got
is that we, as humans, punish the
weak and the poor and lavishly reward
angry not because
the strong and powerful – not the of the theft, but
physically powerful, mind you, but the
mentally strong.
because they
For over two decades in the US, did not have the
investment banks have been playing
a gamble that finally could not be
chance to share in
sustained. They bet on everything the theft.
under the sun. Whether it was equities,
bonds, funds, commodities or even the latest variation
to the theme – subprime mortgage insurance – they did
it. And what do you think a futures contract is? It is
a bet that something positive or negative will happen
to a certain commodity or equity, including money, in
the future that the investor is betting on today. In the
investment parlance they like to use the word hedging
because it sounds more respectable than gambling. The
fact that would have an adverse repercussion on the end
user was not even factored when these artificial papers
were created. It reached a point in the farce that there
was far more paper being traded between these banks
than the actual underlying commodities or equities.
Yet nobody cared. The investors did not care as long
as they made money. The regulatory bodies did not
care as long as they followed the law, even though the
concept itself was mad. The bankers did not care as they
made a cut whether the item made money or not. When
14 gulfbusiness.com July 2010
the proverbial manure hit the fan, then the questions
started to resonate in the hallowed halls. But what did
they ask? Who stole money? How was it done? How
long are we going to punish the people who perpetrated
these actions? All questions went unanswered. Why?
Because it was known who stole the money. The method
was also known, as these people made no secret as
to what they were doing. Why did they not try to hide
their actions? Because they knew that nobody would
hold them accountable.
A few months after the financial meltdown, the mantra
making its way around the world was that of the death of
capitalism. As though a concept caused the problem! The
reality is that these people who stole,
obviously did not steal enough. They
were given second chances and like a
Swiss precision time piece, they stole
again on the hour, every hour. It was
said that the world finally woke up
and now they would hold the thieves
accountable. We have a saying in
Arabic: “it is the guardian who is the
thief”. How could the clients implicate
the investment banks when they
were complicit with allowing it to
happen by feeding them the money they needed to make
it happen? Moreover, how could the regulators hold the
investment bankers to account when they were supposed
to safeguard the clients in particular and society in
general? All knew what was happening so if one was to
be held accountable, so would the other parties. This is
why nothing will change in the system.
Thieves come in many shapes and forms. We are
trained to look at the blue-collar thief, but the damage
this small fry does is, well, small. We fail to see what
significant damages the white-collar thieves do to
society until it is too late. And even if we could, we won’t
because we played a role in empowering the thief and
to be honest, most people got angry not because of the
theft, but because they did not have the chance to share
in the theft.
Mishal Kanoo is deputy chairman of the Kanoo Group.
gb@motivate.ae
THE COMMENT MONEY
UPHILL BATTLE AS GULF
STRUGGLES WITH DEBT
Moody’s warns that the sheer scale of debt refinancing in the UAE could
halt a nascent regional economic recovery.
PETER COOPER
T
he need to refinance around $100 billion out of an
estimated $148 billion owed by Gulf companies,
mainly in Dubai and Abu Dhabi, over the next 18 to
30 months is going to hobble the regional economic
recovery, says credit rating agency Moody’s, now rather
more cautious about making economic projections than in
the boom times.
BNP Paribas cites $41 billion in refinancing requirements
for regional companies in 2011, while Moody’s cites $28
billion of out of a total $148 billion debt maturing in 2012.
These are substantial sums even for the oil rich Gulf States.
This is clearly going to be a drag on the local debt
market and crowd out financing for other companies. That
is unless the UAE government intervenes and provides the
banks with access to longer maturity
debt. The lobbying for that has surely This is clearly going
already begun.
At the same time the government to be a drag on the
could take this opportunity to improve local debt market
its regulatory framework, in particular
the insolvency law that is widely and crowd out
recognised as completely inadequate for financing for other
a nation as wealthy and diversified as
the UAE has become in recent years. companies.
There is also the opportunity to create
a market for government bonds that would facilitate better
management of the currency and lower interest rates.
Economists have been recommending a wider and deeper
local bond market for years as a necessary part of the
maturing of the UAE currency regime.
Indeed what the UAE most requires for a swift economic
recovery is more credit in the right places. For example,
mortgage finance at reasonable cost so that nationals and
expatriates can buy the growing stock of real estate.
It is happening. Abu Dhabi Finance is promoting
mortgage finance from 5.75 per cent, a considerable fall
from the peak mortgage rates of 9.25 per cent in the early
days of the real estate crash 20 months ago. But it is a
shame that so far this new low rate is only available for
loans on residential property in Abu Dhabi and not Dubai.
Cheaper home loans create a virtuous circle by relieving
pressure on the banking system by improving the finances
of developers and reducing the number of bad debts.
16 gulfbusiness.com July 2010
Housing finance is also a great engine of growth for any
consumer economy and would bring benefits to most
businesses in the country.
It does seem ridiculous that a nation as wealthy as the
UAE should see its economic growth constrained by the
regional refinancing of $100 billion in debts over the next
two and a half years. Abu Dhabi has something not far short
of $1 trillion in savings in its sovereign wealth funds.
If this money is not for preserving and enhancing
economic growth through difficult times then what is it for?
The UAE is like China in that it has the resources available
to deploy at this time. Could the wherewithal not be found
to do so?
It should not become a matter of bailing out everybody, or
thinking that some bankrupt companies
are too big to fail, but there is no reason
why Europe’s new age of austerity
should be repeated in the Gulf States.
The economic problems of the euro
zone are far away. Greek overspending
should not be allowed to arrest
economic development through a
further credit squeeze in the GCC and
push the region back in to recession.
There is no need for severe belt
tightening to relieve the debt burden in the GCC. Assets
should be sold down overseas and the money used to pay
off debts. Conglomerates should be broken up and the parts
privatized. Stakes in major companies should be sold.
Government bonds should be issued and that money used
to re-finance short-term debt with longer maturity finance.
In short, the imagination of a rich person with a short-term
liquidity problem ought to be brought into play.
The structural deficits of the US, Japan and Europe,
including the UK, are something completely different.
These are not development projects gone awry. This is
a national debt that will probably only ever be paid
by devaluation and inflation, whatever the austerity
proponents argue, and it will leave those countries
considerably poorer in the process.
So let’s hope the Gulf States shake off the gloom about
their debts soon, and remember their true net worth. ■
Peter Cooper is the editor of arabianmoney.net
 Marcelo Bermudez | Senior Vice President | Banking

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THE COMMENT EMERGING MARKETS
AFRICA LOOKS TO 2010
WORLD CUP FOR SUCCESS
The continent’s football teams might not match international expectations, but
some of its economies are exceeding them.
MICHAEL PREISS
I
t is the first time that a sporting event as significant as
the FIFA Football World Cup has been held on African
soil, and, while the event may be in South Africa, it is
truly a World Cup for all of Africa.
Not just on the football fields but also in economics,
growth figures and stock market performance, Africa’s time
has come.
Year-to-date, three out of the 10 best performing equity
markets are in Africa. Nigeria (+22 per cent), Kenya (+19 per
cent) and Ghana (+18 per cent). Compare this with America’s
S&P500 (+0.2 per cent), Japan’s Nikkei (-5.3 per cent), China’s
Shanghai Composite (-23 per cent) or with Greece
(-40 per cent).
2010 is the year the world increasingly focused on Africa.
Nigeria now trades at a tighter spread in the bond markets
than some European countries. This is a clear
vote of confidence that African markets
are now a fundamental part of the global Thanks to rising
economy.
Over the past 10 years, Africa’s annual
living standards,
output grew by +4.8 per cent, twice as some 200m
fast as in the 1990s and faster than the
global average of +3.8 per cent.
Africans will enter
Most of the natural resources helping the market for
to develop India are coming from consumer goods in
Africa, and African minerals are a key
component of China’s growth story. Many the next five years.
investors increasingly realise that you
cannot have a China strategy, or an India strategy, without
having an Africa strategy.
Thanks to rising living standards, some 200 million
Africans will enter the market for consumer goods in the
next five years.
Traditionally, the best investment theme is one that
is over-looked and under-researched, somehow illiquid
and often considered boring or insignificant by many. In
addition, the most profitable investments for clients have
virtually no LTV (loan-to-value ratio).
This was the case for most emerging markets in the last
decade and it is now the case in Africa.
However, in this decade, emerging markets have come of
age and many investors realise they must have a large part
of their wealth invested in the growth markets of the future.
When it comes to emerging market investing, being too
conservative often is the biggest risk.
Illiquidity is often a risk in emergng markets, but it tends
to be ‘smoothed’ out over longer periods of time. Receiving
18 gulfbusiness.com July 2010
no investment is a bigger risk than medium-term volatility.
Africa presents a largely under-explored investment area.
African economies and capital markets are still over-looked
and under-researched by many, hence offering excellent
long-term returns for the far-sighted investor.
Over the past three years, African markets have
consistently provided some of the world’s strongest returns,
despite the perceived risk. You have to get beyond the
perception to see the opportunity.
By definition, the way to make money is to be ahead of
the curve and to invest in markets that are still overlooked
and under-researched, but have an underlying growth
momentum in their favour.
Africa arguably is the ‘Last Frontier’, both in terms of
assets and geography, in an emerging market portfolio.
Strong underlying growth and the fact that East/West
African markets and stocks in particular
are un-correlated to Western markets,
and the already emerged of emerging
markets, means that investors benefit
from diversification and low correlation
risk.
Today, many parts of Africa have
undergone a considerable transformation
and development, and they now offer
far-sighted investors the chance to get
exposure to the last frontier markets and
an expanding universe of high quality
and attractively valued African companies.
Africa as a continent is indeed richer than you might
think. Africa is richer than India on the basis of gross
national income (GNI) per capita, and a dozen African
countries have a higher GNI per capita than China.
Over time, Africa will capture a larger share of the global
savings pool. While there is risk in investing in Africa,
some or even most of these risks are over-stated due to a
lack of familiarity with the reality of Africa in 2010. The
World Cup is changing this. No matter who will win the
final in Johannesburg, the reality of the Africa story is now
unfolding. It’s a win/win for the whole of Africa and its
changing perceptions.
In the final analysis, in business just like in the financial
markets, when and wherever there is a gap between reality
and perception, the best business and greatest returns are to
be made.
Michael Preiss is an investment advisor and finance
professor and can be reached at: Michael@michaelpreiss.net
THE COMMENT REAL ESTATE
BARGAINS TO BE HAD FOR
THOSE IN THE KNOW
Despite the declining real estate market, pockets of Dubai still offer investors
healthy rental yields, but the wise are investing for the long haul.
MOHANAD ALWADIYA
.
B
oth local and overseas buyers, seeking value with
long-term investment returns, are looking to
Dubai. These buyers are astute and are looking
for properties that provide the fundamentals
to guarantee long-term capital growth along with an
acceptable rental yield.
With prices somewhat stabilising in parts of the Dubai
property landscape, the opportunities for buyers and
investors is unlikely to get better. With the recent economic
downturn, the price of entry has never been lower.
The appeal lies in the fact that prices are not expected to
fall further and the most desirable areas are now established
as iconic locations.
However, the generation of a short-term net yield of
around five to six per cent should not be an issue, as the
immediate appeal for prospective tenants is derived from the
project‘s reputation, infrastructure, amenities and location.
Demand in the longer-term will be driven
by the same factors and should ensure
a healthier capital growth of six to eight
Distress sales by
per cent per annum, as Dubai emerges owners facing
from the gloom of the global recession. difficulties in
A Palm residence will always be a
sought-after address, derived from its meeting their
prestige, distinction and status, while mortgage
Downtown Dubai comes a close second,
providing an excellent lifestyle, close to commitments can
the heart of the city with virtually every lead to big savings.
amenity available.
Dubai Marina, Emirates Living and JBR are prime
examples of well-established and respected areas of Dubai.
The Marina Walk and the JBR Walk have attracted a lot of
interest from investors, owner-occupiers and visitors alike
and with the opening of the Marina Mall, the area has gained
even more popularity. Apartments can be bought for as
little as Dhs 750 per sq ft in the Marina while a beachfront
apartment within JBR can now be purchased for Dhs 930
per sq ft; prices which are 35 per cent down from June 2008.
Opportunities do not only reside in the iconic
developments. Jumeirah Lake Towers (JLT) is a case in
point and it is considered to be very much underrated.
JLT possesses a very good balance between office and
residential space, which will reflect positively on the lifestyle
it provides. The price of entry is lower than some of the more
established projects, with prices at least 15 per cent below
those of Dubai Marina.
20 gulfbusiness.com July 2010
At the lower cost end of the spectrum, developments such
as International City, Discovery Gardens and the soon to be
released Sky Courts in Dubailand also offer good long-term
prospects, while requiring a smaller initial investment.
Created to provide a more affordable lifestyle without
compromising on quality, Sky Courts has significant
potential given its appeal to the middle-income earner.
Spacious studio, one bedroom and two bedroom units can
be bought at as low as Dhs 630 per sq ft.
While off-plan opportunities are being viewed
suspiciously, investors should not dismiss the
opportunities that reside in projects that are nearing
completion. Distress sales by owners who are facing
difficulties in making final payments or meeting mortgage
commitments can lead to big savings. Investors will
always consider the elements of yield and capital growth.
While the aim is to maximise both, different properties
in different areas will provide varying
performance levels in each of these two
elements. There are properties in Dubai
that will provide a minimum four per
cent net rental yield (the annual rental
income received as a percentage of the
property value, after maintenance and
service charges have been deducted).
For this reason, investors should be
diligent in investigating what the
service charges will be.
Service charges vary widely, from
around Dhs 15 per sq ft for a Marina apartment to as high
as Dhs 30+ per sq ft for a Downtown Dubai apartment.
The difference can have a significant effect on yield.
A higher net rental yield may be on offer in some areas,
but the longer-term capital appreciation may not be as
promising. Capital growth projections require some
careful thinking. This is where certain considerations
such as location, property type, quality of structure, fit
and finish and amenities are taken into account.
As with all investments, professional advice should
always be sought from consultants who are experts in
the industry. Real Estate investing is for the long-term,
so the more investigation and consultation prior to
making a decision will help reduce risk and increase the
expected return.
Mohanad Alwadiya is managing director
of Harbor Real Estate
Today’s emerging markets demand local expertise.
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For more information call us at +971 4 365 8066 or visit ga.natixis.ae
This communication is provided in and from the DIFC financial district by Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is regulated by the
DFSA. Related financial products or services are only available to persons who have sufficient financial experience and understanding to participate in financial markets within the DIFC,
and qualify as Professional Clients as defined by the DFSA. Registered office: PO Box 118257, 5th Floor, Building 8, Gate Village, DIFC, Dubai, United Arab Emirates. Natixis Global Associates
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consider the investment objectives, risks and expenses of any investment carefully before investing. ADINT115-0310
F
THE COMMENT letters@gulfbusiness.com

LETTER OF THE MONTH

HOSPITALITY SURVEY: DOWN BUT NOT OUT IN THE REGION’S BIG CITIES
Vol. 15 Issue 2 June 2010
CONFUSION OVER VISAS
I started reading with keen interest the above article having
become a victim of the abrupt about turn in the Investors’ Visa
arrangement for property buyers in Dubai.
The article states that “originally the law stated that, upon
Action!
How the Gulf’s booming cinemas are
purchase, freehold properties provided the foreign owner with a
throwing the spotlight on local talent six-month renewable visa”. This is not the case as I know it. I was
granted a three-year renewable visa based upon which I could
NEW FRONTIERS
Opportunities for the brave
in Sri Lanka and Taiwan
sponsor my wife and maid and do all the things a resident can
BACK ON TRACK
Kuwait’s mega projects
do. As I understand it, that’s what everyone got. The article goes
finally get under way

HOME GROWN on to say that “last year there was some progress made on the
Saudi shrimp farm
to make big waves
issue…”. Wrong again. Last year’s shock announcement was of
HEALTHY GROWTH
Western insurers drawn
by lure of the uninsured the withdrawal of three-year visas to be replaced by six-month
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
renewable visas. These visas do not enable residents to live like
residents and this announcement was a major, major blow –
UAE.................. DHS 10
WWWGULFBUSINESSCOM

GB Regional June cover .indd 1 5/30/10 10:46:52 AM

progress seriously in reverse. All this dampened my expectations of

the positive changes forecast towards the end of the article.
We, and many others are in a very uncomfortable position. We
sold our Mediterranean retirement house and bought here having
lived and worked in Dubai for over 20 years, only to have the Visa
rug pulled out from under our feet.
Keith Stack, Dubai
THE EDITOR WRITES: At any one time, visas from three months to three years in
length, or even none at all, have been promised by developers and the government
alike, with adverts, offers and official policy frequently contradicting one another.
The magazine reiterates its view that confusion on this continues to have a negative
impact on the property market here, and does not necessarily share the optimistic
outlook of the experts quoted in the article.

CINEMATIC HISTORY big business. While reading about increase amongst the local population
Making Movies (Gulf Business, June City of Life, the first locally-produced when they see popular attractions
2010) made a good script of its own. feature film directed by Ali Mostafa, such as the Dubai Mall, Dubai Metro
The plot includes three key pointers, an Emirati, however, I was surprised to and the Burj Khalifa in Hollywood
which I have decided to tag the “3i’s” of learn about Dubai’s reluctance to allow movies. One of the reasons we are told
movie making – notably infrastructure, itself to be the backdrop of international why Bahrain’s cinema market is so
investment and interest. Taking these in blockbuster movies. Obviously such strong is that Saudi Arabian nationals
turn, from the infrastructure epitomised stifling approvals procedures may not can drive across the causeway into
by Abu Dhabi’s ImageNation; through only mar Dubai’s, and by extension, the Bharain to watch films. How long will
the investments prompted by the UAE’s rankings in the Doing Business in it be before we start flocking to Oman?
boom in shopping malls with Grand the Arab World report, but could impact Let’s not forget that the Cannes Film
Cinemas and Cinestar ever present, as the triple bottom-line of the country for Festival is not the Oscars, but then again
well as partnerships with international three related reasons. it has put Nawaf Al Janahi’s “
production companies in Los Angeles, Waiting for the big game such as Sea Shadow in the media spotlight –
India and Singapore; to the renewed James Bond, which according to Tim despite the fact that the Emirati film is
interested typified by box office takings Smythe, producer of City of Life, is better yet to shoot until October/ November.
grossing about US$71.3 million in 2009. associated with ‘Brand Dubai’, may not Are sweet dreams really made of these?
Undoubtedly cinema in the UAE has be the best way of attracting investments. Dr Nnamdi O Madichie
not only come of age but has also become In terms of interest, this is bound to University of 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 July 2010

THE BRIEFING THE REGION

30
Seconds to
make sense
of…online retail
Saygin Yalcin
CEO, Sukar.com
What exactly is Sukar.com?
Sukar is the first online private shopping club in the Middle
East, providing invitation-only access to fashion, lifestyle
and luxury brands at up to 70 per cent off retail. There is no
membership fee or obligation to buy.
Isn’t all this “exclusive” and “luxury” stuff like, so 2007?
Don’t you know there’s a recession on?
Sukar does not focus on luxury, but rather offers a vast
variety of lifestyle items to its members. While always
respecting the brands’ look and feel, Sukar will remain
invitation-only to ensure controlled, privileged sales.
Sukar’s business model has been recession-proof, as it
offers a unique way of combining high-value items with
privileged prices.
Don’t people like to shop for these kind of up-market
items in a real store?
Yes, they do. Sukar does not cannibalise any of the offered
brands’ offline sales. Sukar is an additional distribution
channel for our brand partners.
How quickly do you deliver?
If the products are already in our warehouse, our call centre
will confirm all orders with our customers within three
days and ship it one day later to the respective destinations,
free of charge (for a limited time). If the products are still in
the warehouse of the respective brand partners, we deliver
within 10-14 days.
How many customers do you expect to get by year’s end?
Sukar is growing very fast. Even before launch, 45,000
people registered to become a member. Within the first
month of launch, we have almost doubled this number, as
our members are very active inviting their friends and we
are rewarding them with $25 per friend, who buys.
By the end of this year, we are expecting to exceed half a
million registrations.
OFF THE CHARTS
BP faces a clean-up
bill that could see
annual profits wiped
out. Contrast the daily
cost of the clean-up
operation – that’s the
big barrel – versus
daily profits in the first
quarter of this year.
$100 million $66 million
[ GCC ]
GCC roaming tariff cap
The GCC Telecommunications Ministers Committee has
approved the recommendation of the Telecommunications
Steering Committee for setting a maximum cap on mobile
roaming tariffs within GCC countries.
The Telecommunications Regulatory Authority (TRA) is
now working on an appropriate approach to implement the
roaming recommendation by September 1, 2010.
The GCC mobile roaming recommendation sets a
maximum price cap
for origination calls
or calls made by the
roaming customers
either back to their
home country or any
other GCC country.
The approved
recommendation will
provide a reduction
of up to 38 per cent
on roaming charges
F currently paid by
GCC consumers.
Commenting
on the approved
recommendation,
TRA chairman and
acting general director, Dr Mohammed Al Amer, stated:
’’This recommendation, when implemented, will support
cross border business activities and support growth in the
roaming traffic.‘‘
Adel Darwish, manager of Market and Competition
and head of the Bahrain delegation in the Working Group
committee, stated that “current roaming charges for
Bahraini customers within other GCC countries reach as
high as 550 fils and with this recommendation approved
consumers will benefit and will feel more comfortable in
using their mobiles while roaming‘‘.
The approved recommendation will set the price ceiling
at around 340 fils in the first year and down to 250 fils in
the second year of implementation. The rates will also be
reviewed annually. Operators still have the opportunity to
provide prices lower that those recommended.
The next objective assigned to the working group is to
study roaming charges for SMS, MMS and Data.
Meanwhile, the Bahrain Telecommunications Co,
(Batelco) has embarked on a project to expand its mobile
network services with an investment of 14.5 million
Bahraini dinars ($38.46 million) in order to meet growing
demand from local customers.
Demand for mobile broadband services keeps on
growing extensively due to an increase in consumers’
use of mobile data cards, smart phones, and BlackBerry
devices to access the Internet and emails and to download
data while on the move, according to Gert Rieder, chief
executive of Batelco.

24 gulfbusiness.com July 2010


■ (OCIOC), has won a $265
■
■ the Kingdom of Bahrain.
■ cent of the total contract
[ KUWAIT ]
Banks told to
disclose
Banks in Kuwait are
expected to submit to
the country’s central
bank detailed financial
statements for the past
17 quarters, Al Qabas
newspaper reports.
The Central Bank is
increasingly looking into
the dispute between various
firms in Kuwait since the
financial crisis and this
information is essential
for a better understanding
of those cases and their
repercussions on the overall
economy, the paper adds.
[ SAUDI ARABIA ]
Oil refinery
site set
State oil company Saudi
Arabian Oil Co. (Saudi
Aramco) has determined the
location of a $10 billion oil
refinery project within the
Jizan Economic City (JEC).
The long-awaited oil
THE BRIEFING THE REGION
Construction Industries
million contract as part of a
joint venture with the Haji
Hassan Group to build the
North Manama Causeway in
Besix Group’s share of the
■ contract is approximately
$203 million, or 78 per
■ value, OCIOC said in the
statement.
The project will provide
road access to the Bahrain
Financial Harbour and
Bahrain Business Bay.
[ QATAR ]
refinery will be located
south of JEC, or 60
World Cup
kilometres north of spurs work
the province of Jizan, Qatar’s Public Works
bordering Yemen, said Authority (Qatar Ashghal)
Mohammed Al Attas, JEC’s plans to implement
public relations manager. infrastructure projects
worth $20 billion in the
country over the next five
years, the Doha-based Al
Arab daily reports.
Local companies are
able to compete for these
[ BAHRAIN ] projects and they will be
Public debt awarded 30 per cent of
the projects’ value, said
Al Attas said that Saudi hits high Jamal Al Kaabi, manager of
Aramco was commissioned Bahrain’s public debt grew drainage and road design
by the government to build 1.07 per cent in April to at Ashghal.
and fund the 250,000 to 1.89 billion Bahraini dinars Saad Khodr, senior
400,000 barrels per day ($5.02 billion), or 38.75 transportation engineer at
refinery in place of the per cent of the country’s the ministry of municipality
private firms that had bid gross domestic product at and urban planning, said
for the project. fixed prices, according to the fact that Qatar is
Manama-based Al Wasat. bidding to host the World
[ BAHRAIN ] The growth was the result Cup in 2022 will accelerate
Besix in Manama of the central bank issuing the implementation of these
treasury bonds worth projects, Al Arab reports.
Causeway BHD85 million and sukuk
The Besix Group, part worth BHD22 million during
owned by Orascom that month, the paper
reports.
Meanwhile, Bahrain
banks’ loans to the local
business sector dropped to
3.75 billion Bahraini dinars
($9.94 billion) in April, down
BHD62 million or 1.6 per
cent compared with the
previous month, according
to Al Wasat.
July 2010 gulfbusiness.com 25
THE BRIEFING THE REGION
[ REAL ESTATE ]
Canary sold
for a song
Qatar’s sovereign wealth
fund is set to take over
Songbird, the listed owner
of Canary Wharf, as the Gulf
state steps up its London
spending spree.
The Qatar Investment
Authority (QIA), which
already owns Harrods and
stakes in Barclays (BCS),
the London Stock Exchange
(LSE), and 24 per cent in
Songbird, plans to spend
more than GBP700 million
to buy the remaining
76 per cent.
Qatar recently added
another landmark to its
portfolio with the GBP250
million acquisition of
Park House, a 310,000 sqft
property on Oxford Street,
London. The Qataris have
invested heavily in the
UK since 2007 and are
now estimated to hold
assets worth as much as
GBP10 billion.
[ AVIATION ]
British Airways in
charm offensive
British Airways has
acknowledged the need
to regain the faith of its
customers in the Middle
East by launching a sale
on economy and business
class fares to Europe and
[ TECHNOLOGY ]
ME meets Far East in genome map
A team of researchers
from Saudi Arabia and
China are the first ever
to map the full genome
of the Arabian camel
(Camelus dromedarius).
The research team from
King Abdulaziz City for
Science and Technology
(KACST) and BGI (formerly
known as Beijing Genomics
Institute), were the first to
fully sequence mammalian
livestock in Saudi Arabia.
The research revealed
that camel genome is
approximately 2.2 gigabase
(billion nucleotides) in size
with remarkable similarities
to other reported mammals,
particularly cattle, and
interestingly also possess
57 per cent shared genes
F
with the human genome, that enable this animal to thereby elucidating genetic
which is a comparable to survive in such inhospitable aspects of camel milk
findings in other sequenced environments as the desert. composition and also
mammals. The Arabian Further, unlocking the helping in the selective
camel genome research unique aspects of the breeding of animals with
project has generated an camel immune system increased yield of milk.
enormous database of will help to develop new Compared to other
genetic information that will vaccination approaches, dairy animals, the milk
be used to improve camel, novel therapeutic from camels is highly
as well as human, health. antibodies, and small nutritious and believed to
The completion of peptide-based therapy. The have remarkable medicinal
the genome will help camel genome data will also properties that can help
in understanding the be utilised to reconstruct fight diseases like cancer,
physiological and metabolic pathways for AIDS, Alzheimer’s and
biochemical characteristics milk production in camels, Hepatitis C.
[ BUSINESS ]

Glass ceiling reflects lower pay for women

North America.
Despite Middle Eastern
routes remaining fairly
stable during the volcanic
ash incident and recent
industrial action, the airline
is determined to reward the
loyalty of its passengers.
Paolo De Renzis, British
Airways’ area commercial
manager, Middle East, said:
“We are well aware of the
challenges facing the airline
industry, and we remain
absolutely determined to
keep our passengers flying.”
Almost half of all women
working in the Gulf are paid
less money than their male
colleagues for the same
workload, with less chance
of promotion, according
research conducted by
Bayt.com, in conjunction
with research specialists
YouGovSiraj.
With 51 per cent of
women feeling that
appreciation in the
workplace is based on merit
(and a comparatively small
15 per cent claiming men
receive more recognition),
it seems most women in
the region feel reasonably
content about their career
worth. However, the
picture becomes more
complicated when looking
at remuneration.
Some 90 per cent of
women claim to work equal
or longer hours to their
male colleagues, but 42 per
cent feel they receive less
pay (as much as 54 per cent
less for Western women
and 53 per cent less for
GCC). Furthermore, 43 per
cent feel they have a lesser
chance of promotion and
20 per cent feel women in
their company are not able
to progress beyond a certain
level or ‘glass ceiling’.

26gulfbusiness.com July 2010


[ BANKING ]
SAIB rated A with
a Stable Outlook
Fitch Ratings has affirmed
the Saudi Investment Bank
(SAIB) Long-term Issuer
Default Rating (IDR) at
”A” with a Stable Outlook.
Fitch also affirmed SAIB’s
Short-term IDR at ”F2”,
Individual Rating at ”C/D”,
Support Rating at ”1” and
Support Rating Floor at ”A”.
SAIB‘s Long and Short-term
IDRs and Support Rating
reflect the high probability
of support from the Saudi
authorities. The Individual
Rating reflects SAIB’s new
strategy, adequate liquidity
and capital position. The
rating is constrained by its
small franchise, high loan
and deposit concentrations
and weakened asset quality
indicators.
[ ENERGY ]
Iraq seeks to
export petroleum
Iraq is seeking around $20
billion to build four new
refineries as it looks to
become a net exporter of
petroleum products. Iraq
aims to boost its refining
capacity by 740,000 barrels
per day (bpd) on top of the
current 550,000 bpd through
construction of the four
refineries in the central
province of Karbala, in the
northern oil hub of Kirkuk
and in Nasiriyah and Maysan
in the south of the country.
“The investment will not be
constrained – we are looking
for real partners and in
any ratio,” said Oil Minister
Hussein al-Shahristani. “Any
investor can invest in full
or in partnership with Iraq,”
he added.
THE BRIEFING THE REGION
[ FINANCE ]
DIFC in green
trading drive
The Dubai International
Financial Centre (DIFC)
should encourage the
renewable energy industry
by establishing a carbon
exchange, requiring carbon
certificates and taxes,
according to DIFC chief
economist Nasser Saidi. ”We
want to be promoters of
renewable energy and can
do this by developing carbon
trading in emissions,” Saidi
told delegates at a Dubai
energy conference.
Saidi said governments
should provide regulatory
and financial incentives for
increased consumption and
production of renewable
energy, and phase out
subsidies for petroleum-
based energy production.
July 2010 gulfbusiness.com
[ BUSINESS ]
Zafco to raise
capital with IPO
Dubai-based Zafco
Holding, a diversified
tyre distribution and
manufacturing company,
plans to tap the capital
market with a Dhs700
million ($190.5 million)
initial public issue next year.
This will be one of the first
family-owned businesses to
go public.
Listing is planned on the
Nasdaq Dubai, Luxembourg
and Singapore bourses, said
Zafco CEO Gopiraj KV.
The company is now
valued at $136.1 million
and by the time it is ready
for approaching the capital
market, sales will have
reached $999.1 million from
the current $272.2 million,
Gopiraj said.
27
THE BRIEFING THE REGION
[ CURRENCIES ]
GCC-wide stock
exchange proposal
The committee of stock
exchange chiefs from
across the Gulf Cooperation
Council (GCC) will discuss
an incorporation plan
during a forthcoming
two-day meeting at the
Secretariat headquarters
in Riyadh. The ministerial
meeting will consider a
proposed working plan
based on a clear timeline
and studies conducted by
GCC stock exchanges.
The committee is
directed towards meeting
the needs of GCC’s joint
market regarding equal
treatment of GCC countries
in all economic fields and
especially share trading and
establishing companies.
[ EQUITY ]
Crisis deters
corporate raiders
The global financial crisis
has left fewer corporate
raiders vying for deals in
the Middle East, with those
remaining hoping for a
revival in buyout activity by
the end of the year.
“The private equity
industry was challenged
over the last two years,
resulting in less players
chasing opportunities,”
said Amjad Ahmad, senior
managing director of
Alternative Investments at
Dubai-based NBK Capital.
In 2009, the total number
of private equity
transactions in the Middle
East and North Africa
region dropped almost 71
per cent to just 15, worth
a combined $156.8 million.
This compared to 51 deals
a year earlier, valued at
$5.18 billion, according
to Kuwait’s Global
Investment House.
28gulfbusiness.com July 2010
[ BUSINESS ]
Middle East and Africa activity returns
Following a dry spell of
merger and acquisition
(M&A) activity in 2009, the
Middle East and Africa
(MENA) are core areas for
Technology, Media and
Telecommunications (TMT)
transactions in the next
three years, according to
Value Partners, a leading
global management
consultancy firm.
Assets worth between
$25 billion – $30 billion are
being considered for sale in
the region. “The availability
of attractive targets is due
to market consolidation and
government privatisation
programmes, combined with
the presence of buyers with
cash-rich balance sheets.
“This is conducive to a
[ FINANCE ]
Credit Suisse predicts GDP boost
The Middle East and
Africa (MENA) region
is expected to record
sustained GDP growth
rates over the medium
to longer-term, backed
by structural advantages
and robust fundamentals,
according to Credit
Suisse analysts.
Kamran Butt, head of
Middle East Equities
Research at Credit Suisse,
Private Banking, said: “In
[ INVESTMENT ]
KHC looks to Qatar deal
The Kingdom Holding
Company (KHC) has
discussed future potential
business collaboration with
Qatar Holding, the prime
vehicle for strategic and
direct investments by the
Gulf state.
As the owner of KHC,
Saudi Arabia‘s billionaire
Prince Alwaleed Bin Talal
Zoran Vasiljev, managing
director, Value Partners Dubai.
new phase of M&A, but
with more well-defined
strategic objectives and
more prudent investment
principles,” said Zoran
Vasiljev, managing director,
Value Partners Dubai.
Value Partners expects
that the next wave of
acquisitions will aim to
grow capabilities in other
F a medium-to-long-term
our view, stable oil prices
and improved business
confidence will be the
major catalysts for a
robust rebound in GDP
growth in 2010.
“While the region is
set to witness improved
economic conditions
across all markets, the
growth in GDP will not be
evenly distributed, with
Qatar leading in 2010.“
Commenting on regional
Bin Abdulaziz Al Saud, held
a meeting in Riyadh with
Ahmad Al-Sayed, the chief
executive of the investment
arm of the Qatar Investment
Authority (QIA), the Gulf
state‘s sovereign wealth
fund. In April, Qatari Diar,
the property investment arm
of the QIA, paid 3.2 billion
Saudi riyals ($847million)
revenue-generating services.
Hence, another focus will
be on acquiring capabilities
in technology, content,
and innovation. Further
activity is expected as
IPTV technology matures
in the region, and popular
platforms emerge.
Value Partners claim that
while acquisitions used
to be part of aggressive
expansion plans in the
region, the current phase
of consolidating gains and
streamlining operations
will be more focused on
either making acquisitions
of a strategic importance,
or on the opportunistic
acquisition of assets as
investment vehicle.
markets, Mohammad Hawa,
head of MENA Equity
Strategy and Financials
Research at Credit Suisse,
Investment Banking, said:
“MENA markets, although
flat year-to-date, have
managed to outperform
GEM and EMEA equities,
which suffered from fear of
the contagion effect from
Greece, Hungary, and the
possibility of slowdown
in China.”
for a 40 per cent stake in
Fairmont Raffles Holdings
International, a subsidiary
of Kingdom Holding
Company.
Prince Alwaleed, who
owns 95 per cent of
KHC, has focused his
investments on banks,
hotels and media firms,
building sizable stakes in
companies like Citigroup
Inc, News Corp, Apple Inc,
and Time Warner Inc.
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THE BRIEFING INVESTMENT
ETF fever hits Middle East
With the launch of Saudi Arabia’s first exchange traded fund, investors have been flocking
to see what the fuss is about. SARAH ABDULLAH reports from Jeddah.
O
ver the past few years,
Exchange Traded Mutual
Funds, or ETFs, have been
getting a lot of press, with
investment companies worldwide
seemingly launching a new type of
ETF daily, but what are ETFs and why
have they been gaining popularity with
some investors while others shy away?
The main reason behind investors’
apprehension in ETFs is confusion
over how they work. They are said to
be mutual funds but actually are not,
as they spread risk by diversifying
investments and they pose drawbacks
such as the management and
operating expenses associated with
managing mutual funds. Another
unappealing characteristic of ETFs
is that they tend to merely occupy a
portfolio for years without the ability
for investors to take advantage of
short-term market movements as
investors must wait until the end of
the business day to calculate Net Asset
Value ( NAV) before they can purchase
shares. Therefore, the time it takes to
buy and sell the shares could remove
the chance to profit because of the
split-second fluctuations in prices,
such as commodity and Forex markets.
In fact, Deborah Fuhr, BlackRock’s
Global Head of ETF Research &
Implementation Strategy, commented
on the issue of confusion and its
effects on the ETF market in her
predictions for the market into 2012.
“We are at a crossroads in the
ETF industry. We are seeing funds
calling themselves ETFs which do
not provide transparency on their
underlying portfolios, they also do
not offer in-kind creation/redemption
and do not have real time indicative
Net Asset Values. Products which are
not even funds are being called ETFs.
Now that the industry accounts for
over $1 trillion, product developers
are working hard to find ways to put
structured products, hedge funds,
32 gulfbusiness.com July 2010
and active funds into an ETF wrapper the low expense ratio, meaning that
without maintaining the basic investors have more available money
features of an ETF. to invest, making ETFs the best
“If this is allowed to continue we investment choice in today’s volatility.
risk confusion, disappointment and Because of these features, Fuhr
disillusionment among investors believes that ETF assets will rise
which would be very negative for the by 30 per cent this year and expects
ETF industry,” Fuhr said. European ETF AUM to exceed $500
She added that clarity is critical if the billion by 2012, adding that the
industry is to help investors understand preference for core beta ETFs will
structure, mechanics, tax and the continue with significant growth
regulatory implications of using ETFs. across both institutional and retail
“Agreeing definitions for the various investment markets.
product structures is one of the “Regulatory changes, such as the
pressing needs of the industry in Retail Distribution Review (RDR)
2010,” she said. seeking a ban on commission in
Aside from these issues ETFs the UK retail market, will have a
have been gaining rave reviews with significant impact on ETF usage in the
global investors mainly because of next 18 months,” she added.
their ability to mirror indexes while Proving their mettle, ETFs have shown
being tradable like stocks, providing to have preformed well even with major
investors more flexibility and reduced international exchanges suffering losses.
risk due to the diversification. According to Dubai’s Arabian Money.net,
One of the biggest advantages to a basket of 10 short ETFs gained more
investors, however, is that ETFs are than 4.5 per cent in May as the Dow
much cheaper than actively managed Jones had its worst moment since 1940,
mutual funds or index funds. Investors and the S&P fell to 1962 lows.
have especially fallen in love with Boasting the largest economy in the
CONFUSED? FOR ALL THEIR POPULARITY, ETFS ARE COMPLICATED VEHICLES
The Relationship Diagram for FALCOM’s first ETF
2.1 Submit
creation application
Fund Manager
3. Approve 1. Purchase Stock Basket
creation Equity
application
Market
ETF Acc.
2.2 Transfer
4. Transfer
basket of
stocks
Custodian basket of Tadawul
stocks Market Maker
Secondary Market
MM Acc.
7. Transfer
ETF units
8. Place ETF
orders
5. Submit 6. Deposit
creation new ETFs 10. TF units
request units ETF Investors
Market
9. Cash
Tadawul
(CSD)

Gulf, Saudi Arabia is the latest to join
the bandwagon and introduced its first
ETF three months ago. The “FALCOM
Saudi Equity ETF,” a Shari’ah-compliant
exchange traded fund, has allowed the
Kingdom to attract investment to its
equity market from both domestic and
international investors.
The move has been called
unprecedented as it allows for the first
time non-GCC residents to participate,
when up until now foreign investors
have been banned from trading openly
on the Saudi Stock exchange, also
known as the Tadawul.
According to the Capital Market
Authority (CMA), regulators of the Saudi
bourse, the fund was initially launched
to include only Saudi stock shares,
however, plans are also in the works
to allow Saudi exchange traded funds
to include Islamic bonds or Sukuk and
commodities such as silver and gold.
According to statistics from the
CMA, there are currently 139 listed
companies on the Saudi bourse
estimated at a market capitalisation of
$365 billion, making the Saudi equity
We risk confusion,
disappointment and disillusionment
among investors.
market the largest in the region, in
addition to being one of the only
economies to have weathered the
global and European financial crisis.
“We have been working with the
CMA and Tadawul for the last two
years to participate in the enabling
process of gradually opening up
the financial services sector and
to connect the capital market to
international investors who see
tremendous opportunities and a
robust economy but had no conduit to
participate or invest,” Shankar Biswas,
head of marketing, FALCOM Financial
Services in Riyadh, told Gulf Business,
predicting a continuous growing
involvement in the GCC market
concerning the company’s ETFs.
Talking about the response received
THE BRIEFING INVESTMENT
by FALCOM since its launch of the ETF,
Biswas said: “Foreign investors have
been gradually bee-lining to invest
in the market through ETFs, they
understand the value of it, you probably
know ETF AUM are worth $1 trillion
and include 3,000 plus ETFs of various
shapes and sizes across the world
enjoying tremendous growth.
“The global community was eagerly
awaiting this news. Once compliance
and specific investment related issues
such as market risk and allocations
are sorted out, it is a matter of time
before you see them [other financial
institutions launching ETFs] coming
into the region as it is fairly secure and
remains untouched by the European
crisis, and because of this we have had
a terrific response so far and they are
willing to come in both the primary and
in the secondary market.”
Commenting on the safety of
investing in the company’s ETF,
Biswas said: “Since the study to launch
ETF in Saudi and with the beginning
of FALCOM 30, it was clear that the
characteristics provide full protection
to both investors and financial
institutions. We have not heard of any
abuse.”
But with the success story of one
company which has managed to break
the glass ceiling on certain financial
regulations, always comes a flood
of others seeking the same success.
One of the early birds to announce
that it too was in talks with the CMA
to launch an ETF, is Shuaa Capital
Saudi Arabia which announced in
March that it would be opening up
its exchange traded fund in either the
third or fourth quarter of this year.
The group has aimed at opening
several types of ETF, with one being
called a “plain vanilla” structure to
trace rising stock prices, and others
for hedging purposes.
TOP TEN ETFS TO WATCH
1 SPDR Russell/Nomura Small Cap Japan ETF
2 WisdomTree Dreyfus Emerging
Currency Fund
3 SPDR Barclays Capital High Yield Bond ETF
4 Utilities Select Sector SPDR Fund
5 IndexIQ CPI Inflation Hedged ETF
6 Global X FTSE Nordic 30 ETF
7 iPath S&P 500 VIX Short-Term Futures ETN
8 Dow Jones Emerging Markets Financials
Titans Index Fund
9 Market Vectors Gaming ETF
10 PowerShares Global Listed Private
Equity Portfolio
Source: SeekingAlpha
In both their conventional form and
Shari’ah-complaint structure, the doors
have been opened to more ETFs to
enter the Kingdom by way of individual
company launches to partnerships
between international investment firms
and Saudi companies.
In the Kingdom last month, Nigel
Denison, executive director and head
of markets at Bank of London and
the Middle East (BLME), said that
he sees the launch of the first ETF in
Saudi Arabia as a bold move which
will both open up the local market
and expand the market by including
foreign investors. He agreed that it
would most likely be only a short time
until others follow launching similar
products in Saudi Arabia, and is not
ruling out the likelihood that BLME
would like to enter the market itself.
“It would be quite nice to launch a
Shari’ah-complaint ETF in Saudi Arabia
perhaps after BLME has grown and we
have located a partner in the Kingdom
to work with on this,” he said.
ETFs have become the chosen way
global investors, and those in Saudi
Arabia and the Gulf, are investing,
especially in such a globally volatile
market. We will have to wait and see
what else will emerge as far as new
investing products, but one thing is
clear, the wait won’t be long as the
ETF market continues to heat up
worldwide. gb@motivate.ae
July 2010 gulfbusiness.com 33
THE BRIEFING SIX SENSES
Green is the valley
The Six Senses resort group is hoping a back-to-basics tented camp will lure big-spenders to
the most remote places in the Gulf. ALISTAIR CRIGHTON reports
G
reen washing” – the
opportunistic promotion
of faux-environmental
credentials for marketing
purposes – is reaching epidemic
proportions, with the hotels and
resorts sector one of the most
susceptible to the disease.
So it’s refreshing to see a hospitality
company making an effort to ensure its
latest enviro-tourism venture is a lot
more than just a brochure made from
recycled paper.
To be fair, Six Senses, the global
resort brand that operates some 16
developments in six countries, already
has an impressive track record in
the region in eco-friendly tourism.
Its Zighy Bay resort, tucked away
in a hard to access part of Oman’s
Musandam Peninsula, may have
drawn some ire at first for developing
on what had been one of the region’s
best kept secrets, but the resulting
resort has garnered rave reviews for
both its setting and its commitment to
ecologically sound practices. Contrast
that with Bahrain’s Banyan Tree,
whose “green” claims drew the ire of
the UK’s Times newspaper in what
must have been the most damning
resort review every printed.
Now Six Senses, along with Horizons
Nouveaux and Al Marsa Musandam,
are taking the back-to-nature idea a
step further with a tented campus
concept that promises to have not just
a minimal impact on the landscape,
but a genuinely positive one. “The
tented camps have zero impact on
the environment. Actually, we take
away bags and bags of garbage from
the sites, so, when we leave, they’re
cleaner than they were before,” says
Six Senses Deputy Chairman, Bernhard
Bohnenberger.
The project consists of three
campsites, each offering different
surroundings and experiences. Food
and drink – inspired by local dishes
34 gulfbusiness.com July 2010
– follows the chain’s “slow-life
philosophy”, as does the use of
bread from local bakers, fish caught
in the Gulf and locally grown fruit
and vegetables.
It’s an interesting concept that has
garnered plenty of favourable press
coverage, and the company is banking
on it being a success – launching in
January 2008, the Zighy Bay resort
barely had time to find its feet before
the full impact of the economic crisis
hit Gulf shores.
We take away bags and bags of garbage
from the sites, so, when we leave,
they’re cleaner than they were before.
Bohnenberger freely admits
that, while weekends are proving
popular with short-stay business
from Dubai, midweek has been a
struggle, as a result of the economic
crisis and, perhaps ironically, a few
environmental factors out of his
control. “It’d be a lie to say the crisis
hasn’t affected us. Business has
been down,” he says. Crucially, the
all important well-heeled European
travellers stayed at home in their
droves, and while a fresh focus on
emerging markets, is replacing some
of that core market timing simply
hasn’t been on the resort’s side. “We
lost a lot of our historic European
market,” Bohnenberger says. “That’s
down to economics, of course: the
general mood in the economy, the
volcano flight issues recently; the red
tide for nine months.”
That red tide, the uncontrollable
environmental factor, was a natural
accumulation of algae that rendered
beaches un-swimmable and littered
with dead fish. This pollution lasted
nine months, dealing a blow to the
tourism industry along the east coast.
Earlier this year, nerves were frayed
as a similar “brown tide” rolled in,
dumping more dead fish (and the odd
live sea snake) along the pristine sand,
but it dispersed after a mere three days.
“We were all sweating a bit on that
one,” Bohnenberger says.
If the tented camps prove successful
on their launch in October, Six Senses
can look to any site, anywhere in the
world for growth. While Bohnenberger
admits the initial set-up of the facility
wasn’t cheap, with serious investment
required in portable recycling facilities
and solar-energy generation, that’s
mostly a one-time expenditure: given
the past two years, the ability to pack
up and leave political or environmental
hotspots must be a tempting business
model indeed. ■
THE BRIEFING CSR
Bittersweet sympathy
With the opening of a new factory in the UAE, Mars Inc is treading a fine line between
maximising sales and educating the public on healthy lifestyles. MICHAEL GORDON reports.
W
ith one in every five UAE
residents suffering from
diabetes, a new chocolate
factory is arguably the
last thing that the country needs.
However, Mars Inc argues that what is
needed is balance. That is a balance of
diet, exercise, awareness and scientific
development and, of course, sales.
With double digit growth year
on year since the beginning of the
decade, and net sales exceeded $450
million in 2009, Mars GCC opened a
new $40 million chocolate bar factory
in Dubai last month, with ambitions
to double its business, to $1 billion
sales, by 2015. The company is also in
the process of completing feasibility
studies for a further factory in the GCC,
based in the industrial zone of the King
Abdulla Economic City (KAEC), in Saudi
Arabia, which has a similar diabetes
pandemic to the UAE.
The company argues there is room in
everyone’s diet for chocolate providing
it’s consumed responsibility. Ashraf
Shehata, scientific & regulatory affairs
manager, Africa, India, Middle East
– Mars GCC, said: ”As a responsible
company we promote the consumption
of chocolate in moderation and as part
of a healthy balanced lifestyle.”
Yet for those averse to calorific
treats, the company is currently
developing sugar-free alternatives,
although these are limited to the US
market for the foreseeable future. More
interesting, though, is the company’s
work in flavanols, which are naturally
occurring super foods found in the
cocoa bean itself. Ironically, it is these
wonder drugs that could offer relief
to the many diabetes sufferers that
chocolate has blighted.
In the US, Mars Inc has a business
segment called Symbioscience
which operates as a research centre,
working in partnership with various
institutions.
This research has led Mars USA to
36 gulfbusiness.com July 2010
develop a sugar free Dove (Galaxy)
chocolate bar. The product is made
with non-sugar sweetener, which
makes the product easier to assimilate
for sugar-intolerant consumers and
it is even suitable for diabetics.
Production is still restricted to the US;
although plans to roll it out globally
are under consideration.
“We are in advanced research in the
US and we are looking to roll out our
lower sugar content chocolate, but
at end of day we recognise chocolate
is a pleasure food and fits nicely
in a balanced diet if consumed in
moderation,” said Ahmed Bayoumi,
general manager of Mars GCC.
Along with low sugar products,
Mars Inc has done extensive research
into flavanols. Research suggests
that flavanols may provide healthful
benefits to people with type-2 diabetes.
Studies have concluded that the daily
consumption of a beverage rich in
cocoa flavanols can positively impact
blood vessel dysfunction. Those
participants that regularly drank a
cocoa flavanols beverage, made using
the Mars Inc. Cocoapro process,
experienced a 30 per cent improvement
in blood vessel function at the end of a
30-day trial.
The traditional processing of cocoa
beans destroys many of the beneficial
phytonutrients, but Mars Inc’s
scientists have perfected this process
to reduce the cocoa bean’s exposure to
high temperatures, helping protect the
flavanols inside.
Shehata said: “To date we have been
limited to delivering these compounds
through dark chocolate. However, we
have now found a way to truly harness
their health value and pack them into
a patented extract.”
Known as Cirku, this recently
launched extract has led to the
development of a new dietary
supplement drink mix called
CirkuHealth.
Again, this extract is currently only
available in the US market, yet it has
been proven to help maintain healthy
circulation, which is essential for us
all, and especially diabetics who suffer
from poor circulation.
Reiterating the CSR commitment
of Mars Inc, Shehata added: “Mars is
proud to be one of the first chocolate
companies worldwide that has
voluntarily decided to implement
Guideline Daily Amount (GDA) nutrition
labeling on all of its chocolate, non-
chocolate confectionery and other
food products. All packages will be
redesigned to feature new graphics
on the front and back of packages,
which contain consumer-friendly,
clear and easy to understand nutrition
information that will help consumers
make informed choices at the point of
purchase.” gb@motivate.ae
 '%&%
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THE BRIEFING PHARMACEUTICALS

Drug problems
Merck Serono hopes to level the playing field for pharmaceutical
producers by eliminating counterfeits and collating cost
effectiveness data, as MICHAEL GORDON discovers.

E
ver taken medicine that
never really delivered a
remedy, or worse still,
compounded the problem?
Chances are you were supplied
counterfeit pharmaceuticals, because
a staggering 10 per cent of the entire
global supply is counterfeit, according
to Karim Smaira, managing director
Middle & Near East, Merck Serono.
“This could be counterfeit packaging,
counterfeit products or worse still a
counterfeit active substance,” he says.
You could require 10mg of an active
substance to ward off a heart attack
but your medication may be as little as
1mg, but how will you know until it’s
too late?
Merck Serono is one of the primary
partners of the World Health
Organisation (WHO) in fighting
counterfeit products. “We let the
WHO test the originality of products
in 350 of our labs worldwide
as part of our corporate social
responsibility,” says Smaira.
to 1668. As a majority owned (70 per
cent) family business, it is now in
its 14th generation. The company
reached a turnover of $9.5 billion
in 2009. Merck Serono is a bio
pharmaceutical/biotechnology drug
company, born from an acquisition
in 2007. The company focuses on
specific disease areas with an unmet
medical need.
Having been in the Gulf for more
than 50 years, Merck runs operations
in 13 Middle Eastern countries, with
240 employees across the region, all
centralised through its headquarters
in Dubai.
Smaira says: “We would like to
become even more of a local player.
Manufacturing in the region has
improved dramatically in the last few
years and we would like to look for
local partnerships.”
The company already does local
packaging in Saudi Arabia and
Lebanon, with intentions to expand
this operation to Iran by the end of

This problem will never disappear, all we

can do is implement measures that make
it more difficult to distribute counterfeits.
“We also give training to customs 2010 and the UAE by Q2/Q3 2011,
officers at the Ministry of Health with each facility dedicated to
[MoH] or at ports and airports in national distribution. In Iran, local
means of detecting counterfeits. manufacturers supply 96 per cent of
“The biggest problem is tracing all pharmaceuticals and there are 72
the origins. Largely, we find that the million people to cater for.
counterfeit products are coming from Because of the strict specification markets; we can only sell what we
emerging markets in Asia, China, India, laws in the Middle East, Merck is have registered with each MoH.
and a little from Latin America. unable to centralise production and “In the future, if the GCC goes into
“This problem will never disappear, distribute from country to country, a market union, on the model of the
all we can do is implement measures due to differences in the permitted European Union or the Monetary
that make it more difficult to chemical compounds. Union, it would facilitate the export of
distribute counterfeits,” he adds. Smaira adds: “Some of the goods. For us to prepare for this we are
Merck, the parent company, is specifications are very different building a warehouse in the UAE from
one of the oldest chemical and from market to market so we can’t which we can distribute to all GCC
pharmaceutical groups, dating back shift standardised products between countries – aside from Saudi Arabia.”

38 gulfbusiness.com July 2010


Although restricting, these
regulations do have an upside in that
they also preclude any parallel trade,
and to ensure it never materialises,
Merck is keen on the introduction of a
formalised regional level playing field.
He adds: “If you have harmonised
prices you avoid parallel pricing or a
grey market.”
Another emerging trend in terms of
THE BRIEFING PHARMACEUTICALS
pricing is that some multinationals
are looking at the GDP income, or
the means available in the countries
they sell to, and setting up prices
accordingly – this is known as “an
affordable price”. This is where cost
effectiveness data becomes important
on a national scale.
With every disease there are direct
costs and indirect costs. The cost being
the medicine and the indirect cost
being lost man-hours, hospitalisation
costs, hired help, etc. If a treatment
can prove to reduce both direct
and indirect costs, then the cost
effectiveness is positive.
However, Smaira does not prescribe
to a global level-playing field, he
says: “It would be very difficult to
establish because the regulations and
requirements of developing versus
developed worlds are not harmonised
and the GDP ratios differ. I don’t
think we will ever see one harmonised
standardised global trade of
pharmaceutical products – there will
always be national differences.”
Despite the growing generic
drug market, Merck Serano has not
recorded any negative impact. Smaira
explains: “People are brand oriented
in this region and we have a strong
brand equity.
“We have also seen huge
improvements in patent protection and
international property rights. Genetics
will, however, play a significant role
once the patent production of the
original products is expired, which is
normal global practise.
“The main point then must be
to ensure the safety of the generic
product – not just the price.
There are some very good generic
companies but others are not up to
the standard.”
Merck Serono is now in the
implementation of a five-year strategy,
established in 2009. “We expect to
double sales from $98.4m by 2013 with
organic growth, some new product
launches and business development.
In this regard we are looking at in and
out-licensing opportunities.
“We have signed two in-licensing
agreements with Biocodex (French)
and Lallemand Pharma (Canadian),
and we are looking for more. If I look
around and see all of the mergers and
acquisitions that have taken place I
look for more licensing opportunities
as products often lose the necessary
strategic focus,” adds Smaira. From
licensing, Merck hopes to generate
$24.5m by 2012. ■ gb@motivate.ae
July 2010 gulfbusiness.com 39
THE BRIEFING FLEET MANAGEMENT
Efficiency drive
The inefficient management of vehicles is costing Gulf companies a fortune.
Is it time to look at outsourcing, asks RICHARD WHITEHEAD
T
o rent or to buy, be it cars,
homes or even television
sets, has been an age-old
dilemma. On the one hand
you have the material value of
owning that treasured commodity,
but on the other you have to look
after it and you can’t return it when
it’s tired or out-of-date. For fleet
operators in large organisations with
several hundred cars to manage, the
dilemma becomes even greater.
There is no such dilemma for Robin
Voogd of Leaseplan who says the
solution is clear-cut: “Companies who
own their own cars aren’t as efficient
as they should be,” he adds: “It’s a
waste of resources.”
As an international fleet leasing
company, Leaseplan often comes up
against businesses with wild operating
inefficiencies. One recent example
involved a company that employed 50
staff to manage its fleet of 450 vehicles.
“This is absolutely mad. We only need
two or three people to look after that
number of vehicles,” Voogd adds.
Another leasing firm is Fast Rent
A Car, who install their own fleet
coordinators at a customer’s premises
to help fleet management run
smoothly. “It’s all about efficiency,”
explains Ahmed Abood, CEO of the car
rental and leasing firm, which is based
in Abu Dhabi. “There is less red tape,
our customers save many man hours.
There are no hassles with registration
and insurance.
“Instead of running and
maintaining their own fleet of
vehicles, companies who choose to
lease save money, avoid risk and
ultimately function more efficiently.”
This is bad news for fleet managers,
according to Voogd. He says: “It’s
extremely rare that we come across a
company that manages its fleet as well
as it could.” It is no surprise that most
corporate fleet personnel are happy
to keep the status quo, especially
40 gulfbusiness.com July 2010
as a change to leasing might mean
swinging departmental cuts. “Some
fleet managers quite like having a large
group of people reporting to them. But
leasing will catch on more and more,”
claims Voogd.
“Fleet managers don’t have any
external benchmarks — they only
look internally — and so aren’t able
to get the best prices. When it comes
to buying or repairing cars and
dealing with insurance costs, leasing
companies are in a much better
position to negotiate good deals. They
may think they are doing a good job,
What they consider a good insurance price
is likely to be much higher than a leasing
company will find.
but in reality they do not have access
to outside data. What they consider
a good insurance price is likely to be
much higher than a leasing company
will find.
“Another major problem is that
they are doing the job more or less on
their own with no one to keep them
motivated and oversee their work.
Typically their superiors have no
idea what is required to run a fleet
of cars efficiently so they are not in a
position to assess their performance;
and whether or not they are out to do
so, there is nothing to stop most fleet
managers from taking advantage.”
Fast Rent A Car forecasts a 25 per
cent increase in the leasing business
this year across its operations in
Abu Dhabi and Dubai. The bulk of
its business is provided by the major
government and engineering works
taking place in Abu Dhabi.
“Not only are there operational
advantages to leasing, there are also
clear cost benefits,” adds Abood.
“Companies will save on admin
costs and they can also cut out the
misuse of vehicles and unnecessary
manpower. They will not have to
worry about depreciation, repairs
and high purchase costs. Our
purchasing strength reflects on the
prices we pay for new cars – and
thus the comparatively low cost of
leasing – and then we can keep costs
down by using our own, in-house
workshops for repairs.”
And when a firm leases its fleet,
it has one fixed figure on the budget
sheet that doesn’t change. This
does away with the age-old variables
of depreciation, maintenance
and labour.
So what does the future hold for
corporate fleets? “As organisations
move towards outsourcing these kind
of non-core functions, the role of fleet
managers will move from organising
their own teams to managing a
professional relationship with
leasing companies,” says Voogd.
“Leasing is still relatively new in
the market, but already we are seeing
tremendous growth and it’s only a
matter of time before more companies
get rid of their private fleets and move
to leased ones. I can only assume that
those who haven’t already done so
haven’t yet taken time to really review
the situation.” gb@motivate.ae
THE BRIEFING BANKING

Gender studies
According to Swiss bank Lombard Odier, the current financial climate offers opportunities for
risk-averse female investors. MICHAEL GORDON reports

I
f Lehman Brothers were Lehman
Sisters, the investment bank
wouldn’t have ended up the way
it did. That, at least, is the view
of Arnaud Leclercq, head of new
markets at Swiss bank Lombard
Odier, who last month spoke to the
Dubai Chamber of Commerce on
“The Role of Women to Preserve and
Transmit Wealth”.
“We have many very successful
women, and they have different means
of managing wealth to men. They are
more risk averse, less leveraged, not
keen on debt, and they tend to have a
much longer-term view,” says Leclercq.
However, he argues that female
investors, particularly in the Middle
East, have been too focused on local
real estate; an investment vehicle
which , as we all know, has crashed.
“For some years there was a lot of
growth in real estate; but nevertheless,
diversity was needed as was a liquidity
in finance, because when the market
turns sour, as it has here, you need to
be able to move that investment.”
Along with real estate, Middle
Eastern women often keep their wealth
in cash, but today the cash market
provides no return and is not as secure
as it used to be.
In the past, people would put
deposits in large world banks or
sovereign funds, but since October
2008 the world has changed. Sovereign
bonds are not perceived as being as
secure as they once were because of the
huge debts of Western countries, and
the cash and security of banks is also
not viewed in the same way, as many
banks closed and others had to be
saved by the state. “People should not
forget this,” warns Leclercq.
He adds: “You cannot put your money
in an institution you feel is safe if it is
giving credits with your money, as a
commercial bank does. That is why we
only give credits based on portfolios,
not on our balance sheet.”
With $143 billion of assets under
management today, Lombard Odier
is the second largest private bank
in the world, but Leclercq says it
is important to look at Lombard
Odier as two entities, a bank that is
extremely conservative with strong risk
management, and an investor with a
full range of tailored services.
“It all depends how clients want
their money managed – it can be more
When the real estate market turns sour,
as it has here, you need to be able to
move that investment
dynamic, more risky – depending on
the client and their time of life.
“If you receive money in your 30s you
want to grow and expand and generate
more, but if you are in your 70s you
want to consolidate and secure funds
for future generations.”
Because of the volatility of the
investment market, Leclercq also
suggests that clients split their wealth
into “two buckets of investment”.
“One bucket of money would be
short-term investments – bonds,
FOREX, etc. The market visibility is
very limited and when you drive in the
fog you should slow down.
“For the second bucket of money I
would adopt a long-term view. When
there is a clear understanding of longer
trends and we are sure we can grow,
we will invest.”
Today, Lombard Odier’s long-term
investments are two fold – the first
being energy, particularly oil and gas,
and the second being products tailored
to our ageing population.
While Leclercq is an advocate of
renewable energy, he argues the market
is too immature to invest in right now.
“The problem is that these energies
are subsidised and not profitable.
The level of government support has
changed dramatically. For the next
five to10 years we will stick to non-
subsidised energy.”
The second element of long-term
investment is catering to all aspects
relating to the world’s ageing
population. Leclercq believes that
healthcare for the elderly is becoming
a global concern – especially in Asia,
which has a rapidly growing elderly
population – because breakthroughs in
science mean we are all living longer. ■
gb@motivate.ae

42 gulfbusiness.com July 2010

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THE BUSINESS BIG OIL
What lies beneath
As the blowout in the Gulf of Mexico shows the quest for oil can come
at a very heavy cost to the environment. MICHAEL GORDON investigates
just how at risk the Arabian Gulf is, and how prepared companies are
to deal with the unthinkable.
A
n estimated one million
tonnes of crude oil have been
dispelled into the Gulf in
what has been described as
the largest spill in human history. As it
washes ashore, nobody seems able to
forecast the ecological effects of such
a large quantity of oil on the fragile
coasts, but images of oil-coated wildlife
and ruined beaches hammer home the
magnitude of the calamity.
Although the Gulf has long been sub-
jected to oil pollution, both from natu-
ral seepages and industrial activities,
the size of this spill requires a swift,
international response.
No, we’re not talking about the Gulf
of Mexico. This scenario unfolded way
back in 1991, and the sea in question
was the Arabian Gulf. The devastation
was caused when Iraqi forces opened
oil terminal valves and dumped the
crude from several tankers into the sea
during the first Gulf War in 1991.
Given the Gulf’s history, and the cur-
rent attention on BP’s uncontrollable
blowout in the deep waters off Louisi-
ana, it’s a scenario that oil producers in
this part of the world need to be acutely
aware off – and, given BP’s woeful lack
of preparation, capable of handling.
But how at risk is the Gulf – our Gulf
– from Big Oil? Alan Taylor, upstream
sector commercial consultant, ATener-
gy, highlights the concerns: “The main
44 gulfbusiness.com July 2010
point in the Arabian Gulf is that it is an
enclosed space and if there was a ma-
jor oil spill, like in the Gulf of Mexico, it
would be devastating for the region.
“At least the Gulf of Mexico has very
deep water in which the oil can be dis-
sipated, but the Arabian Gulf is shal-
low, no more than a few hundred feet,
and so it would take no time for the oil
to reach the shores.”
However, while the deep water aided
The Gulf of Mexico, it also hindered it.
The Arabian Gulf is shallow and so it
would take no time for an oil spill to
reach the shores.
Taylor suggests that the deep water was
the reason, not the cause, of the disas-
ter because it made access to the leak
so much harder. “Problems become dif-
ficult to fix and you are always working
on the edge of technology,” he says.
Additionally, in shallow water the
well is connected to the surface by
the riser where the blowout preventer
(BOP) and control systems are located,
ie, on the drilling rig or platform. But in
deep water the BOP is at the sea floor,
hence “in deep water anything that goes
wrong with the BOP and control valves
is not easily accessible and far more
difficult to fix, as we have seen in the
Gulf of Mexico,” adds Taylor.
In the Arabian Gulf, a prescient
warning comes from Hamish McN-
inch, a former energy advisor to Coa-
lition military commanders in Iraq
who is now engaged in helping Iraq
to develop its energy infrastructure.
Writing in the Wall Street Journal
recently, he said: “The infrastructure
through which about 80 per cent of
Iraqi oil exports flow has suffered
from years of neglect, and is operat-
ing at maximum capacity.”
Iraq currently owns two terminals in
the Arabian Gulf, which are well past
their designed life expectancy. They
were neither inspected nor repaired
during much of the Saddam era, accord-
ing to McNinch, who adds: “Experts fear
that inspecting them now with modern
technology might damage them beyond
repair. Consequently they are being op-
erated at reduced pressure, while plans
for replacement have remained under
consideration since 2003.
“In the meantime, the risk of a major
oil spill from a fractured pipe remains
real and largely unmitigated. This
would damage not just the marine life
and the Iraqi economy, but potentially
July 2010 gulfbusiness.com 45
THE BUSINESS BIG OIL
Ocean oil spills (Barrels)
Largest spill
First Gulf War
Kuwait 1991
Largest US spill
Deepwater Horizon
Gulf of Mexico
April 28, 2010 –(ongoing)
Largest spill
from a well
Ixtoc 1- Mexico 1979
Largest previous
US spill
Exxon Valdez Alaska,
USA 1989
*Based on 35,000 to 60,000 barrels a day USGS estimate
the supply of water to the Gulf states,”
he wrote.
Only last month, WesternZagros
lost control of an onshore well in the
Kurdistan Region of Iraq. There was a
very real risk of the damaged drill pipe
failing and releasing hydrocarbons to
the surface.
Although ageing pipelines are
prevalent, we can, at least, be thank-
ful that the pressure of the reservoirs
in the Middle East is ‘normal’, or con-
siderably lower than the high pres-
sure and high flow rates compound-
ing BP at the moment. Low-pressure
reservoirs are easier to drill, control
and manage the risk, as well as repair
if anything does go wrong.
Another point in our favour, which
Taylor wishes to stress, is the level of
familiarity and experience in the re-
gion. In the Arabian Gulf drilling work
has been ongoing for decades, so there
is a lot of experience, but in the Gulf of
Mexico virtually every well drilled is
different in terms of geology and the
technology required.
“In the Arabian Gulf it would be very
unusual to encounter something new
that couldn’t be controlled, the chances
of a disaster are therefore very low but
the consequences are very high.”
46 gulfbusiness.com July 2010
5,700,000
2,100,000
to
3,600,000*
3,300,000
200,000
Regardless of our threat potential,
Taylor reassures that all disasters lead
to a better understanding of the issues
and much tighter regulations to help
stop situations arising again. “The US
government has already responded by
stopping activity elsewhere in the Gulf
of Mexico while checks are made, and
any new regulations are usually adopt-
ed in all major production areas.”
Of further reassurance in the UAE
is the crisis management team, which
is on hand should any disasters occur.
This unit is run through the Supreme
Petroleum Council (SPC) and the state-
oil company Abu Dhabi National Oil
Company (ADNOC), which is today
also the sole exploration company in
the region.
The head of that crisis management
team, Craig Buckingham, explains:
“The Supreme Petroleum Council Crisis
Management Team was formally estab-
lished within the Supreme Petroleum
Council in 2005, however, ADNOC has
maintained an oil spill response ca-
pability in terms of oil spill response
teams and equipment bases since the
mid 90s.
“Those oil spill response teams were
originally trained by oil spill re-
sponse consultant companies but over
the last few years we have carried out
our own staff training. In addition we
exercise with other organisations to en-
sure we remain current in our capabil-
ity,” he adds.
The primary focus across ADNOC
operations is on prevention, so thank-
fully the team is very rarely deployed in
emergencies. However, it has deployed
teams to assist in oil spills in Egypt and
Lebanon in the past. It also regularly
deploys teams for training exercises
within Abu Dhabi to ensure ongoing
preparedness.
In light of the Gulf of Mexico disas-
ter, the crisis team has offered to send a
group of experts to the US to help with
the clean-up effort.
Buckingham has 30 experts on stand-
by, made up of some six Emiratis along
with technicians from Egypt, Sudan, Al-
geria and the Philippines, all of whom
are based in the UAE.
He says: “The offer to the US Govern-
ment has been an offer of support to a
major environmental crisis. A team of
30 oil spill professionals, as well as a
package of oil spill booms and recov-
ery equipment, has been the basis of
the offer.”
Buckingham would not be drawn on
how great the threat was of a similar
incident to that of the Gulf of Mexico,
happening here in the Arabian Gulf. But
he did say that “the Gulf of Mexico is
already being looked at and we will re-
view the lessons learned closely”.
He adds: “Each ADNOC operating
company regularly assesses its operat-
ing environment and likely risks and
within the Supreme Petroleum Council
we have an HSE department who pro-
vide oversight of these likely risks and
appropriate mitigations.”
To ensure the ADNOC unit remains
up-to-date, it announced plans to buy
a number of high-speed offshore re-
sponse vessels and escort tugs by the
end of this year, to strengthen its emer-
gency response preparedness.
One high-speed offshore response
vessel will be equipped with offshore
oil spill response tools, and ADNOC will
build two equipped for oil spill opera-
tions and two as offshore ambulances.
“As well as oil spill equipment at each

operational site we have two oil spill
response bases (one at Mussafa and
one at Ruwais). These are equipped
with a large stockpile of floating
booms, oil recovery skimmers, tempo-
rary storage tanks as well as all the
logistical needs to mobilise equip-
ment to spill locations if required,”
adds Buckingham.
He reassures: “SPC has also pre-
pared shoreline protection plans to
limit the impact of any oil spill on
the coast.”
Currently, SPC has over 50 full-
time trained oil spill responders and
ADNOC has over 50 offshore ves-
sels equipped with dispersant spray
capability and three tow back tugs
equipped with built-in oil spill recov-
ery capability.
Buckingham highlighted the leader-
ship commitment, clear accountability
on preparedness and response, codes
of practice, planning and continued
monitoring of the resource capabili-
ties against risks within the group.
But he refused to comment on the
security protocols in place to limit
the impact of a spill, how equipped
the group would be in the event of a
similar incident, or to hypothesize as
to which Arabian coastlines would be
likely affected by a spill.
The chances of a
disaster are very
low but the
consequences
are very high.
Meanwhile, when questioned, the
UAE Environment Agency said it
had no contingency plans of its own
against the threat of an oil spill; in-
stead it works in conjunction with
the Critical National Infrastructure
Authority (CNIA). The CNIA is the
government authority tasked with
handling the protection and security
of Abu Dhabi’s vital assets and in-
frastructure from potential threats,
possible disruption and imminent
destruction.
To return to the US, it is too early
to put a cost on the Gulf of Mexico
disaster in terms of loss of life, loss
of income, pollution and remedia-
tion. But the cost to-date is already
way north of $1 billion. Naturally
BP will pay a heavy toll, in terms of
reputation, share value and even po-
tential legal threats, but how much of
the impact could the company insure
against.
THE BUSINESS BIG OIL
The Abu Dhabi National Insurance
Company (ADNIC) is one company in
the region that is experienced in insur-
ing exploration projects. Jugal Maadan,
deputy chief underwriting officer, ex-
plains that all offshore/inland oil explo-
ration activities can be insured.
He adds: “The limit of liability de-
pends upon the nature of the opera-
tions, any region specific factors and
the estimated clean-up and removal
cost, etc.”
Maadan says that ADNIC’s current
risk exposure, or client base, covers
a major part of the UAE’s total energy
risks. Undoubtedly, BP will be insured,
but the question is to what extent. We
are no longer talking about the loss of
revenue – the biggest concern is the
cost of remediation and the ever-rising
threat of legal action from individual
fishermen right up to Senate level.
If the Arabian Gulf spill in 1991
hasn’t been enough of a warning, the
material damage to BP’s share price –
and the vilification of CEO Tony Hay-
ward in the press – should be warning
enough for oil executives and govern-
ments here to make sure everything
possible is being done to prevent a
similar disaster, and to have the con-
tingency plans in place in case it does.
■ gb@motivate.ae
July 2010 gulfbusiness.com 47
THE BUSINESS IRAQ
Frontier territory
With half a trillion dollars worth of vital reconstruction projects in
the pipeline, Iraq is the ultimate prize for those willing to brave a still
precarious security situation and a virtual absence of basic financial
services. ROBERT BAILEY reports.
R
ecently described at a confer-
ence in Dubai as “the deal of
the century, a prize that out-
weighs all risks” rebuilding
Iraq is likely to involve half a trillion
dollars of investment contracts.
This enticing prize is proving elusive
though. There are too many unanswered
questions concerning not just the future
direction of Iraq’s economy, but also po-
litical stability following a bitterly con-
tested election and security concerns as
the remaining 70,000 US troops prepare
to withdraw from the country.
Few would contest Iraq’s long-term
potential, but in the near-term mobilis-
ing resources and stimulating vital in-
vestment is proving difficult. The main
inhibitors are a lack of political consen-
sus and failure to build a viable coali-
tion government.
A cohesive and strategic approach
to short and medium-term economic
and social problems is the core task
of whoever forms the new adminis-
tration. However, a clear co-ordinated
strategic investment blueprint has yet
to be implemented.
The country’s 2010 budget proposes
expenditure of $72.1 billion, a third of
which is scheduled for capital projects.
Implementation is difficult though,
due to a lack of adequate investment
finance, but most of all a shortage of
managerial talent hindered by a scle-
48 gulfbusiness.com July 2010
rotic governmental bureaucracy tainted
by allegations of corruption.
The International Monetary Fund ex-
pects Iraq’s economic growth in 2010
to average 7.3 per cent, higher than the
4.2 per cent achieved in 2009. Iraq still
requires additional financing to fill a $5
billion gap in its 2010-2011 budget. The
IMF approved a $3.6 billion loan at the
end of February to help Iraq manage
the shortfall.
A big handicap for Iraq is that it lacks
an international credit rating which
Iraq is still a cash society with the
physical transfer of “bricks”
of money still the norm.
makes it difficult to attract investment,
as potential investors see the risks as
just too high.
The country’s oil revenues are pivotal
to economic growth. Iraq has faced per-
sistent deficits since the 1990s. The IMF
expects that Iraq will face two more
years of budget shortfalls before strong-
er oil prices and increased production
lift it back into surplus in 2012.
In spite of the downside, there is
an opportunity for a much brighter
future as long as meaningful reforms
take place and the country holds to-
gether. The key is releasing Iraq’s oil
and gas potential.
Revenues generated are likely to be
more than enough to satisfy Iraq’s dis-
parate elements. Within a decade, Iraq
could even challenge Riyadh’s regional
dominance of the oil sector and gain all
the political clout such wealth bestows
on its owner.
James Hogan, CEO of HSBC Iraq,
believes that bank profitability in Iraq
could increase one hundred fold within
the next 10 to 20 years. The financial
sector has enormous growth potential.
There are at present some 36 banks with
about 800 branches serving a popula-
tion of 31 million. This contrasts with
Saudi Arabia which has 3,000 bank
branches serving a smaller population
of 26 million.
For the moment though, Iraq is still
a cash society with the physical trans-
fer of “bricks” of money still the norm.
This reflects a lack of trust in the over-
all system which is compounded by
“an immature accountancy profession.”
Nevertheless, “We are remarkably bull-
ish and can see a lot more activity in
the oil sector including spin off indus-
tries,” Hogan says.
John Bowler, director of country

risk at the Economist Intelligence Unit
is quoted as saying: “the last 10 years
have been a golden period for emerg-
ing markets, like China and India. But
these countries are no longer cheap. So
that means people will look for riskier
investments – frontier markets. As far
as frontiers go, Iraq is the Wild West.
If you get in early, that’s where the real
money is to be made.”
International oil companies are
talking about a series of multi-billion
dollar projects to boost the country’s
oil production to around seven mil-
lion barrels a day (b/d) by 2015 and as
much as 12 million by 2020. This could
boost national income by as much as
400 per cent.
Iraq’s oil minister has said another
200,000 b/d of production capacity is
expected by the end of 2010, bringing
total output to 2.7 million b/d. Baghdad
predicts that it can boost its crude ca-
pacity to as much as 12 million b/d in
just seven years, from around 2.5 mil-
lion b/d at present.
Analysts predict that the second li-
censing round that took place earlier
this year should increase the country’s
oil output to 4.8 million b/d by 2018
and provide an extra $100 billion a year
in revenues.
In May, Iraq signed off the final li-
cence out of the 11 oilfield development
licences offered in an international bid-
ding round last year. The latest licence
was ratified with China National Off-
shore Oil Corporation.
THE BUSINESS IRAQ
The main political leaders, Ayad Al-
lawi and Nouri Al-Maliki, have stated
they will stand by the signed oil con-
tracts, despite persistent challenges to
their legality.
However, little significant develop-
ment work is expected in Iraq’s oil fields
until a new government is in place.
A crucial caveat concerns agreement
on a new oil law which will form the
legal bedrock of Iraq’s entire hydro-
carbon sector. Proposed legislation has
been outstanding for four years and
there is no sign of a fractious parlia-
ment signing off a final agreement.
Oil companies also face technical
and logistical difficulties. Observers
say the quality of seismic data avail-
able is often poor. Companies are also
July 2010 gulfbusiness.com 49
THE BUSINESS IRAQ
going to need vast amounts of water for
injection into the oil fields in order to
maintain their pressure as well as pow-
er supplies, access roads and not least
convincing security.
In spite of Iraq’s economy still be-
ing mostly stuck in the slow lane,
there has been noticeable expansion
of activity over the last 18 months
with business access to Iraq gradu-
ally being normalised.
UAE exports to Iraq, for exam-
ple, increased 41 per cent in 2009 to
$4.24 billion while Iraq’s exports to
the Emirates grew nearly ten-fold to
$778 million.
Money has been found for a new
$550 million, 65,000 seat stadium
under construction in Basra for the
Middle East football cup in 2010.
The UAE’s two major airlines are
increasing their services to Iraq. Abu
Dhabi-based Etihad already has daily
flights to Baghdad and Dubai’s Emir-
ates is expected to commence serv-
ices in July. Some reports suggest
that the budget carriers flyDubai and
Sharjah-based Air Arabia may also
commence services.
50 gulfbusiness.com July 2010
Lufthansa is due to restart air serv-
ices to Iraq’s capital at the end of Sep-
tember after a 20-year break. Turkish
Airlines resumed scheduled flights
to Baghdad from Istanbul in October
2008. Gulf Air started up services from
Bahrain last September.
Iraq’s Civil Aviation Authority and
Transport Ministry are working on
a masterplan to expand and develop
Baghdad International Airport. This en-
visages building three more terminals
and doubling handling capacity to 15
million passengers a year.
A cargo village, business park and
free zone are also part of the $6 billion
expansion plan. Meanwhile, a start has
been made on a new $1 billion airport at
Karbala while a $250 million expansion
of Irbil’s airport is in its final stages.
The latter reflects the investment
focus on Kurdistan, a region that has
experienced much less violence and
instability than the rest of the country
since the 2003 invasion. Foreign direct
investment there now stands at an es-
timated $12.5 billion, mostly by Turkish
firms which account for more than half
of foreign companies registered in the
Kurdish region.
The investment scene in the rest of
Iraq is more faltering even though the
potential is huge. The transport sec-
tor alone has $17 billion of projects
planned including a metro system for
Baghdad and the upgrade of the coun-
try’s 44,000 kilometres of roads in ad-
dition to rehabilitation and expansion
of railways.
Italy’s Impregilo is leading a consor-
tium to design a $6 billion port at Faw
south of Basra. This is planned ulti-
mately to provide 7,000 metres of docks
for container vessels as well as 3,500
metres of docks for general cargo ships.
Upon completion it would rank as the
10th largest port in the world.
Infrastructure is likely to be a
principle investment focus for years
ahead. Iraq’s electricity plants oper-
ate at only 44 per cent of full capac-
ity. Peak demand is 13,000MW but the
country is only capable of producing
7,000MW of electricity. Large amounts
of power have to be imported from
Turkey and Iran.
Big power contracts are in the pipe-
line but mobilising financial resources
 THE BUSINESS IRAQ

is proving difficult. One of the biggest

impediments is export credit agencies
don’t look favourably on Iraq, so it is
proving difficult for (EPC) contractors
to secure some of the guarantees, ac-
cording to Jeff Larkin of US contrac-
tor Parsons Brinkerhoff.
Money has been found for a new $550
million, 65,000 seat stadium under con-
struction in Basra for the Middle East
football cup in 2013. Initial construction
work of the $450 million Basra Sports
City began late last year with the lo-
cal Al-Jabouri group working as main
contractor in conjunction with the US
Kansas-based 360 Architecture and
Missouri-based Newport Global Project
Management Group.
Iraq’s greatest need is homes. Af-
fordable housing is a big issue with
the government planning to build at
least 3.5 million housing units over the
next 10 years. The National Investment
Commission wants investors to supply
more than one million units in the next
three years.
Abu Dhabi-based Al-Maabar has an- As far as frontiers go, Iraq is the Wild
nounced a $10 billion investment plan
to build a mixed use residential, com-
West. If you get in early, that’s where
mercial and recreational complex on the real money is to be made.
12.5 square kilometres of the former
Al Rasheed air base near Baghdad. Al- Kurdistan. Tourism is also a focus for Arabia and Kuwait’’, Chris Gordon,
Maabar is backed by four leading Abu construction activity. This is centred general manager at UAE/Australian
Dhabi developers: Aldar, Sorouh, Reem largely on the Kurdish north and the contractor Al-Habtoor-Leighton is
and Al Qudra. Shiite religious centres of Karbala and quoted as saying. “We are looking at
Iraq’s crumbling industrial base also Najaf where some 10 million pilgrims the market and may venture later, de-
requires rehabilitation and more than are expected to visit this year alone. UK- pending on the safety of staff,” says
$10 billion of projects are planned. As based property developer Range Hospi- Riad Kamal, chairman of Arabtec
a consequence demand for cement and tality, with AbuDhabi-based Noor Capi- Construction.
steel in Iraq is expected to soar. The tal, won government approval in April HSBC’s Hogan is more sanguine:
government wants to raise Iraqi ce- to commence a $110 million project in “Things are getting an awful lot better
ment production capacity to 25 million Karbala to build a 650-room hotel. from a security point of view in spite
tonnes-a-year (t/y). Wasit Province Investment Commis- of spikes in incidents, though getting
A consortium of France’s Lafarge Ci- sion has outlined plans for a $1 billion around takes time and needs care-
ments and London-based Merchant- tourism development over a 500,000 ful planning. Accommodation options
bridge is investing in a new cement square-metre site overlooking the Ti- also are still limited. Security though
plant at Karbala with a two million gris River near Kut. The scheme has is a manageable cost. It is important to
capacity. Lafarge is also building a 2.7 reportedly already attracted interest take a long-term perspective.”
million t/y plant in northern Iraq in from companies in the US, Australia, Eric Le Blan, chief operating officer
consortium with Asiacell. Kuwait, Italy, Spain and Sweden. of Merchantbridge, is also optimis-
Luxembourg-based steel producer For all its many prospects, inter- tic: “We say to people be cautious, but
Arcelor Mittal has plans to refurbish national contractors are wary of Iraq. things are improving at a very fast
a steel plant in Basra. The company “We haven’t ruled out Iraq, but we will speed. The situation is still complex:
is also in joint venture with Turkey’s look at other markets before we start there is a lack of transparency, a lack
Dayen Dis Ticaret for construction of to consider it as there are enough op- of liquidity. But you don’t want to miss
a new steel plant in Sulaymaniyah in portunities in countries such as Saudi the boat.” ■ gb@motivate.ae

July 2010 gulfbusiness.com 51

THE BUSINESS BANKING PROSPECTS
A prescription
for profitability
The Gulf’s banking sector still suffers from poor health and niggling
ills that need some serious strategic realignments to correct,
ANDREW TAYLOR reports.
W
ith companies facing soar-
ing costs for credit in the
Gulf – borrowing costs in
the UAE rose by over 20 per
cent in the first quarter of 2010 – some
of the region’s most senior bankers
have been calling for action to bring
the cost of credit down. Michael Toma-
lin, chief executive of the National
Bank of Abu Dhabi, says the UAE Cen-
tral Bank should relax its rules gov-
erning how much banks are allowed to
lend – the so-called ‘loans to stable re-
sources’ ratio. It’s also been suggested
that the UAE government could repeat
its measure of October 2008, when it
injected an additional $14 billion into
the banking system.
But non-performing loans (NPLs) in
the region are up over 60 per cent in the
last year, and some analysts are begin-
ning to question whether the bankers
have got their priorities right. “In my
view, banks should focus on cleaning
their balance sheet even at the expense
of growth,” says Nuria Jorba, Emerg-
ing Markets Research analyst at Com-
merzbank Corporates and Markets in
London.
Government action so far – such as
the 2008 cash injection – means that
the bad debts do not pose an immedi-
ate threat to the stability of the sector,
she says – but the banks cannot afford
to ignore the likelihood of the problem
52 gulfbusiness.com July 2010
getting bigger. Otherwise an issue now
could turn into a major threat to future
profits later. “Since the beginning of the
credit crisis, banks have benefited from
the necessary funding and equity injec-
tions from the Central Bank. As a result,
the overall banking sector remains well
capitalised,” she says.
“But a continued deterioration of the
quality of the loan portfolio is likely to
have a negative impact on banks’ prof-
itability going forward, since they will
have to maintain significant provision
In my view, banks should focus on
cleaning their balance sheet even at
the expense of growth.
charges in order to cover potential
credit losses.” In other words, if the
banks continue to stack up bad debt,
they will have to seek to cover their
losses by increasing charges to their
customers – the very problem they are
seeking to solve.
Jorba’s expectation is that, with the
region’s economy still weak and highly
leveraged following the global recession
and the financial crisis in Dubai last
year, the rate of non-performing loans
is likely to increase again during 2010.
NBAD’s Tomalin, for instance, says his
own bank will have to make greater
provision for NPLs during 2010, while
Emirates NBD said earlier this year that
it expected its NPL level to continue to
grow until the middle of the year. Over-
all, officials at the UAE Central Bank
predicted earlier this year that bad
loans in the UAE would probably rise
from 4.4 per cent in 2009 to around 6.4
per cent – an increase of around 45 per
cent. And even that may be an optimis-
tic prediction. External analysts have
warned that much greater increases are
possible, with the Swiss wealth man-
agement company UBS AG suggesting
recently that bad loans could eventually
reach 15 per cent of total lending.
It all adds up to a difficult year ahead
for the region’s banking and financial
sector, despite the prospect – at least in
the short-term – of high oil prices. After
four years of apparently limitless boom,
with credit growth forging ahead in the
UAE by more than 30 per cent a year,
2009 saw an increase of less than three
per cent. That is largely the result of glo-
bal conditions – the world credit crisis
stifled economic growth, companies cut
their demand for loans as they tight-
ened their belts to see out the recession,
and bank profits suffered accordingly.

TAKAFUL CONTRIBUTIONS AS % OF TOTAL PREMIUMS WRITTEN
Cheaper loans might encourage more
companies to invest. But for the banks,
worries about borrowing costs may
prove to be a distraction from other
longer-term problems, which might
eventually be more serious. Analysts
from the ratings agency Standard and
Poor’s (S&P) have already warned that
the financial performance of the Gulf’s
banks over the next 12 months will be
hit by the efforts they need to make in
cleaning up their loan books.
This does not mean it is all doom
and gloom for the Gulf banking sector
during 2010. In fact, UAE Central Bank
THE BUSINESS BANKING PROSPECTS
governor Sultan bin Nasser Al Suwaidi
sounded positively bullish in a recent
speech in Khartoum. “The situation of
liquidity and deposits in the banking
system is normal and compatible with
the economy and its needs,” he said.
“The banks lend when there is demand,
when there are big projects that require
a lot of financing.”
Even analysts who take a less opti-
mistic view accept that what problems
exist are not spread evenly over the
Gulf region. Although Kuwait and the
UAE have been particularly hard-hit,
paying the price for their recent boom
times and also suffering from their de-
pendence on the international banking
system, banking in the Gulf as a whole
remains relatively resilient. “Credit
portfolios deteriorated rapidly in these
countries [Kuwait and the UAE] due to
the fast expansion of credit in previous
years, and their balance sheets remain
highly exposed to international funding,
which remains inaccessible for most of
the institutions,” says Jorba.
The UAE’s banking problems mir-
ror the country’s general economic
performance: while the International
Monetary Fund has been predicting
July 2010 gulfbusiness.com 53
THE BUSINESS BANKING PROSPECTS
growth during 2010 for Saudi Arabia
and Qatar of 3.8 per cent and 16.1 per
cent respectively, the UAE is expected
to struggle to reach one per cent. But
even though the financial sectors of the
various GCC states are closely inter-
twined, it is considered unlikely that
the problems in Kuwait and Dubai will
spread to the region’s powerhouses of
Saudi Arabia or Qatar.
S&P added Bahrain to the list of
countries with particular banking
problems to face during the next three
quarters, but also gave the Saudi and
Qatari banks a relatively clean bill of
health – even though the fall-out from
last year’s $22 billion defaults by Saad
and Al Gosaibi means that international
banks are still reluctant to lend to Saudi
companies. S&P credit analyst Moham-
ed Damak expects to see the Saudi and
Qatari banks increasing their profitabil-
ity through the year. “We see a growing
disparity in credit quality among banks
The banks lend when there is demand,
when there are big projects that require
a lot of financing.
in the Gulf, between the stronger Saudi
and Qatari banks on the one hand and
the relatively weaker Dubai, Kuwaiti,
and Bahraini investment banks on the
other,” he says.
The second big positive factor is the
continued growth of Islamic banking.
Usually sheltered from global financial
problems by high levels of cash and liq-
uid assets, Islamic banks are expected
to continue their recent rapid growth
not just in the Gulf but throughout the
world. In this sector at least, liquidity
remains less of an issue. Moody’s Inves-
tors Services, the influential interna-
tional credit ratings agency, predicts in
its latest report that that assets held by
Islamic financial institutions could rise
five-fold to more than $5 trillion across
the world.
Globally, the Islamic finance industry
managed about $950 billion of assets in
2009. Many of these were held in Ma-
laysia, which controls the world’s larg-
est Islamic bond market, but the Gulf
54 gulfbusiness.com July 2010
remains an important region. “Islamic
financial institutions are continuing
to deliver Shari’ah-compliant returns
whilst, at the same time, focusing on
effectively mitigating the associated
risks through a new risk management
approach, including the use of deriva-
tives,” says the Moody’s report.
Although Kuwait’s banking indus-
try generally may be under pressure
throughout 2010, there are hopes that
the Islamic sector, in which Kuwait is a
leader, may offset some of the difficul-
ties. Senior bankers, including Bayt Al
Mal chief executive Suliman Al Qimlas,
expect to see more Islamic financial
products coming onto the market as the
sector continues to grow.
That is one challenge highlighted by
the Moody’s Islamic banking report –
banks need to increase the uptake of
derivatives – sophisticated financial in-
struments derived from stocks, bonds,
loans, commodities, and currencies –
among their customers. Along with oth-
er financial instruments that are being
developed by Islamic finance houses,
they could provide the key to significant
growth throughout the sector.
Earlier this year, the Bahrain-based
International Islamic Financial Market
worked with the International Swaps
and Derivatives Association in New
York to prepare the ‘Hedging Master
Agreement’, a ground-breaking package
of global standards for Islamic deriva-
tives. The aim is to encourage Islamic
banks and other financial institutions
to increase their trade in derivatives
such as profit rates and currency swaps
in order to improve the efficiency of the
Islamic banking model without com-
promising its adherence to Shari’ah
principles. The question is whether in-
vestors, concerned about compliance
with the Shari’ah prohibition of spec-
ulation and the payment or receipt of
interest, will be prepared to take up the
new offerings.
And the third optimistic sign for
companies in the Gulf, as for the rest
of the world, is that borrowing costs
generally seem to be easing. Charges
in Europe in particular have been com-
ing down, which increases downward
pressure on costs in the Gulf. Compa-
nies in the Gulf continue to pay a pre-
mium for credit compared with their
western counterparts, but big names
such as Emirates Steel and Qatar Tele-
com have been taking advantage of the
new situation by refinancing big loans
to reduce their borrowing costs.
It’s a process that the Gulf banks
need to encourage – Commerzbank’s
Jorba has no doubt that cheaper
credit remains important for the
regional economy. For the banks
though, particularly those in the
UAE, she believes it is more impor-
tant to tighten up procedures and
start to take a more old-fashioned
attitude towards risk. “Banks in the
UAE need to secure borrowing at
more competitive rates in order to be
able to expand their balance sheets.
A rapid expansion of the loan port-
folio would help to ease pressures
on asset quality and provisions
although, unless lending policies
become more conservative, it will
be only a short-term measure and
weaknesses are likely to re-emerge,”
she says.
S&P’s most recent report makes grim
reading. “Lower business volumes, as-
set quality deterioration and subse-
quent provisioning needs and pressure
on liquidity appear to be affecting the
creditworthiness of Gulf banks to dif-
fering degrees,” it says. But even such
relatively downbeat observers believe
there is the possibility of economic
growth, and there are plenty of posi-
tive factors in which the banking sec-
tor can take comfort. Populations are
growing, oil prices – at least for the
time being – are buoyant, and most
analysts believe there is considerable
potential for increasing the take-up of
banking services throughout the Gulf
region. The next few months will show
whether the global recession has been
a crisis for the Gulf, or the start of a
new opportunity. ■
THE BUSINESS CORPORATE TRAINING
School’s out?
In these budget-constrained times, corporations around the world are
giving the status quo a second thought, with executive training, and its
outcome, one of the strategies called into question, ZARINA KHAN reports.
O
ne result of the financial cri-
sis has been the wave of in-
trospection that has rippled
through economists and ex-
ecutives the world over.
After so many things went so terribly
wrong on various levels, obvious truths
are no longer so obvious. One of those
truths – that spending on corporate
training and executive education is a
definite good with measurable and im-
measurable returns on investment – is
being subject to some rather unexpect-
ed scrutiny.
Training is one of the many ‘casu-
alties of the recession’ – as many
blogs, articles and even budget spend
surveys attest.
Being able to spend on employee train-
ing has generally been one of the aspira-
tions of small and medium enterprises,
and it is part of the attraction of multi-
national and large corporations global-
ly. Executives have viewed the ability to
polish and value-add their staffers as
a way of showing they ‘have arrived’ in
the elite of the business world – it’s a
form of self-serving largesse.
Employees, on the other hand, have
looked at training and education as be-
ing one of the rewards of a career man-
aged well. Corporate training, no matter
how you cut it, was a good thing. But,
perhaps, not so much today.
Training budgets were among the first
to be cut in the recession – with critics
calling the practice bloated at best, and
a wasteful and ego-stroking exercise in
56 gulfbusiness.com July 2010
futility at worst. In the early days pre-
ceding the global recession, surveys
from the US showed that average train-
ing expenditures per employee fell 11
per cent in 2008, according to a report
from research firm Bersin & Associates.
In the US, the country that perhaps
made the corporate training culture
what we know it as today, the corporate
training market shrunk from $58.5 bil-
lion in 2007 to $56.2 billion in 2008, the
greatest decline in more than 10 years.
The year following was no better, with
companies in 2009 still reducing their
training spend, as a survey in the UK’s
The Guardian newspaper in January
Was there one of my top 150 people
who was thinking,
‘You know, Jeff, commercial
real estate shouldn’t be so big.’
showed, with half its responding large
companies stating they were still cut-
ting back on training. Here in the Gulf,
business schools saw a marked drop
off in attendance persisting into 2009, a
year that saw two executive training in-
stitutions fall victim to the recession –
Bryn Mawr College, which cancelled its
plans to open a campus in Abu Dhabi,
and George Mason University, which
shut down its Ras Al Khaimah branch.
The Dubai School of Government told
Gulf Business it too saw a drop off in
participation in 2009 due to budget
cuts. Corporate training spend in the
Gulf reportedly dropped some 40 per
cent in the year following the kick-off
of the recession. “In the past year, we
have seen a lot of companies trimming
their training and education budgets,
but this is a short-term effect,” Kevin
Dunseath, director of London Business
School’s Dubai Centre told local media
last November.
Come 2010, however, when that short-
term effect should have begun to wear
off, there is little reported uptake of
training.
James Norbury, general manager of
the Specialised Management Group, ex-
plained the situation: “Midway through
2009, the narrowing of training budg-
ets was evident. However, because of
organisations’ pre-committed budgets
there was an impression that imminent
cuts of training were not in effect…But
2010 commenced with, in many of the
same companies, no training whatsoev-
er.” And now, halfway through the year,
General Electric (GE) – one of the cor-
porations best known for its culture of
instruction – is seemingly re-examining
its corporate training culture.
Jeff Immelt, chairman and CEO of
GE, told American magazine Business-
Week that he is undertaking a personal

re-evaluation of how GE equips its peo-
ple to lead. The international technol-
ogy and innovation giant has been go-
ing through an unprecedented difficult
time, with its company’s market cap at
nearly half what it was before the reces-
sion, and continuing operations falling
38 per cent in 2009 with no improve-
ment in sight in 2010.
GE is famous, if not slightly in-
famous, for its unique approach to
grooming its employees. It measures
its staff on five “growth traits” that are
external focus, clear thinking, imagina-
tion, inclusiveness and expertise. The
corporation has three levels of staff
training – skills training, business-
based training and the leadership
training for which it is best known. It
THE BUSINESS CORPORATE TRAINING
is estimated that GE spends about $1
billion a year on those three tiers of de-
veloping talent and devotes hundreds
if not thousands of man-hours to eval-
uating talent. And its crown jewel of
corporate training is the John F Welch
Leadership Center at Crotonville.
Called Crotonville for short, the facil-
ity is a 53-acre corporate learning cam-
pus in New York where every year some
9,000 of the corporation’s senior execs
are put through what GE calls a ‘trans-
formative learning experience and de-
finitive career event’.
And yet, in an interview with Busi-
nessWeek, Immelt admitted that such
regular and costly enrichment did not
help GE dodge the recessionary bullet.
In fact, GE is yet to recover from what
Immelt calls ‘a hellish decade’. Hence
its big rethink. Immelt reportedly could
not help but wonder: “Was there one of
my top 150 people who was thinking,
‘You know, Jeff, commercial real estate
shouldn’t be so big’, but didn’t have a
way to say [it]?”
But, Susan Peters, vice president
of executive development and chief
learning officer at GE, clarified to Gulf
Business, that re-evaluation is not so
much about the corporate training
culture of GE, but of the entire human
resources approach, structure and ex-
pected outcome.
“When the recession kicked-off last
year, GE made the decision not to cut
back on training. Our budget for train-
ing in 2009 stayed the same at a time
July 2010 gulfbusiness.com 57
THE BUSINESS CORPORATE TRAINING
when so many other budgets were
slashed. The reason for this was that
we felt that training was a retentive act.
We felt employees would remember the
experience when the markets got robust
again,” Peters explained.
“We don’t spend a lot of time trying to
measure the value of training because
we believe it’s intrinsic. GE would rath-
er have us work on developing new pro-
grammes than trying to measure the
return on investment of training,” she
told Gulf Business in February.
She did explain, however, that the
company was tweaking and tighten-
ing its upper-most level of training.
“We want to ensure we’re meeting the
goals. We have a staircase of experi-
ence from beginners to executives to
ensure learning.
“In February 2009, GE was having
one of the toughest times in its history.
When we went through our development
process, we, like many others, saw that
a whole lot of the economy had reset or
changed. We started to wonder what the
connotations would be on leadership.
“So we started to examine what was
different in leadership today com-
pared to how it has been historically.
We wanted to understand what was
needed for successful leaders today,
given the changes that are constantly
taking place. The term we came up
with for this was 21st Century Lead-
ership,” she said in an interview at
GE’s Dubai offices.
58 gulfbusiness.com July 2010
POLISHING THE TOP TIER
Khaled El Gohary, director of the
executive education programme at the
Dubai School of Government (DSG),
shared with Gulf Business his institute’s
experiences and realisations
post-recession.
Q. How would you describe the
benefit of DSG’s programmes for the
executives and organisations they
represent?
The DSG executive education
programme is designed to meet the
needs of the corporate world by using
a Western-educated faculty that
understands the Arab cultural sensitivity
and offers a mix of content that can help
the Arab world face the real challenges
of today’s business environment.
Q. How can a corporation measure
the return on investment of
corporate/executive training? Is it a
budgetary allotment that should even
have a measured ROI?
When the Dubai School of Government
designs a capacity-building programme
such as its executive education
programme, we make sure each
programme incorporates a practical
project to ensure the participants
contribute to improving the performance
of their organisations. This way, any
corporation can measure the ROI on its
executive education programme.
Q. What is the value of corporate
and executive level training for a
corporation in today’s economy?
Executive education has assumed
greater relevance during the global
Immelt is heading up that exami-
nation of leadership, and will report-
edly spend the rest of 2010 gathering
input from more than 100 companies
worldwide. “We are continuing the en-
gagement process. Evolving to a qual-
ity leader is a very personal journey.
Throughout 2010, we are creating a
number of experiences that will pro-
mote that introspection.
“I suspect that at some point we’ll
economic crisis as corporations realised
the real need for additional capacity
building in meeting today’s challenges.
The demand for such education was
increasingly felt in areas such as
fiscal policies, leadership, strategic
thinking and crisis management. One
of the most important areas in which
organisations discovered the urgent
need for extra skills during the crisis was
in dealing with the media and company
spokespersons.
Q. How has the recession impacted
on participation/enrolment in DSG?
At the beginning of 2009, the level of
participation from different sectors was
very low due to budget cuts. But by the
end of 2009, organisations recognised
that they needed to invest more in
capacity building and equip their staff
with the latest management skills to meet
the challenges of the economic crisis.
become more specific, but right now,
we want people to engage in that
thinking, revealing GE’s current and
ongoing focus on redefining leader-
ship so it can redefine its corporate
culture and training programmes ac-
cordingly,” Peters added.
So the value of corporate training is
not being questioned by GE, so much as
the efficacy of the outcome. And while
Immelt pursues his new definition of

GE would rather have us work on
developing new programmes than
trying to measure the return
on investment of training.
21st Century Leadership, GE says it is
bringing its expertise in developing tal-
ent to the Middle East and North Africa
region, where it already offers 38 dif-
ferent courses in business and leader-
ship training.
“I would say there is less enthusiasm
for training in this region than we see in
the corporate culture in other markets.
One definitely needs to localise content
to take into consideration the needs,
strengths and challenges of the local
culture,” Peters explained.
GE is reportedly doing just that with
its latest tie-up – an Abu Dhabi-based
leadership institute modelled on Cro-
tonville. “We are jointly setting up a
leadership institute with Mubadala
with Crotonville providing the back-
bone. We’re helping them create a local
centre for business leadership training.
THE BUSINESS CORPORATE TRAINING
“It will initially be for Emiratis and
those from Mubadala but it will branch
out in time. We will send out local folks
for a GE Crotonville training programme
there,” added Peters.
The Abu Dhabi Leadership Develop-
ment Center opens this month and it
aims to be the premier corporate lead-
ership and management development
destination in the region; developing
the skills of high-performing business
executives and leaders across the Mid-
dle East, Africa and near Asia region.
Courses will focus on executive and
emerging leaders with content rang-
ing from strategic thinking, operational
excellence and innovation to manager
development, financial basics, project
management and business simulation.
In addition, there will be customer pro-
grammes covering executive briefings,
change management and integration.
“Training helps create the culture
of a corporation. It is a chicken or egg
question – which comes first. Does good
leadership make a good corporate cul-
ture, or does a good corporate culture
lead to good leaders being formed. But
either way, it is crucial. When we get
new managers we train them in some
basic skills, like how to have a career
discussion, how to give feedback.
“How do we do that as a company to
become more innovative? How do we
as a company develop partnerships
and relationships? How do we deal
with governments, which have become
more and more active in the corpo-
rate realm? You know the direction the
company needs to go and you embed it
in the programme,” explained Peters.
“Changing a culture is like moving a
mountain, but clearly, it is an impor-
tant endeavour.”
So too, the experts say, is the need to
change the culture of corporate train-
ing – how much we spend, what is its
focus, and more importantly, what we
expect from it. ■ gb@motivate.ae
July 2010 gulfbusiness.com 59
THE BUSINESS NUCLEAR ENERGY
Gone fission
The UAE has been applauded for its peaceful nuclear
strategy and is setting an example to the rest of the
region. ANDREW TAYLOR reports.
T
he UAE is leading the line for
Arab nations, and the rest of
the world, in its push for a nu-
clear programme, according to
the prestigious International Institute
for Strategic Studies.
Plans have already been announced
for four 1,400 megawatt (MW) nuclear
reactors to be sited on a remote stretch
of beach near Ruwais, some 150 miles
west of Abu Dhabi. They will be staffed
by more than 2,000 engineers, techni-
cians, scientists and other workers,
and the first is expected to provide
power to the national grid by 2017,
making the UAE the first Arab nation
to generate its own nuclear energy. The
three remaining reactors are scheduled
to be complete by 2020.
“Many Arab nations have been look-
ing at the possibility of nuclear power
for some time, but their plans led no-
where. Now they are coming to fruition,”
said Mark Fitzpatrick, senior fellow for
non-proliferation at the International
Institute for Strategic Studies.
“The UAE’s project has set a gold stand-
ard for the Arab world and beyond. There
will always be debate over whether nu-
clear power may lead to the production
of nuclear weapons, but the way that the
60 gulfbusiness.com July 2010
UAE government has handled the issue
has laid those questions to rest.
“Firstly, they have decided voluntari-
ly not to pursue any of the sensitive fuel
cycle technologies that could lead to
weapons production, and secondly they
have committed themselves to the ut-
most transparency. They have agreed to
make extra reports to the International
Energy Agency, and also to permit snap
inspections by the Agency,” he said.
These are the key features of the
UAE’s nuclear programme that have
won broad-based international sup-
port and approval. Nuclear energy gen-
eration cannot be diverted to weapons
production without the enrichment of
uranium or the reprocessing of plutoni-
um – the two technologies that the UAE
has agreed not to employ – while the
acceptance of a tough international in- tions on access to international nucle-
spection regime provides important re- ar technology for generating energy,”
assurance about future developments. Fitzpatrick added.
“The UAE’s nuclear programme will The UAE’s nuclear programme, origi-
not be the first in the region, since nally announced in 2008, is part of a
Iran’s Bushehr project is expected to drive to develop new sources of energy
be operating later this year. But it will across the Arab world. In 2007, the Gulf
be far superior to Bushehr, employing Co-operation Council announced that
state-of-the-art technology and enjoy- it was studying the possibility of em-
ing the full support of the international barking on a joint nuclear programme,
community. There will be no restric- but since then, not only the UAE, but
 THE BUSINESS NUCLEAR ENERGY
“The UAE’s project has set a
gold standard for the Arab
world and beyond.
also Saudi Arabia, Bahrain, Kuwait, pushing forward with nuclear plans,
and Qatar have announced separate with Jordan widely expected to follow
national schemes. shortly after the UAE with the comple-
Elsewhere in the Arab world, Algeria, tion of its own nuclear power station
Egypt, Jordan, Libya and Syria are also sometime before 2020.
Saudi Arabia, Kuwait and Qatar
have been talking to French companies
about technological assistance, but the
$20 billion UAE nuclear programme
has been undertaken in partnership
with a consortium of Korean, Japanese
and US companies under the leader-
ship of the Korean government-owned
Korea Electric Power Corporation
(Kepco). Among the major internation-
al companies involved are Samsung,
July 2010 gulfbusiness.com 61
THE BUSINESS NUCLEAR ENERGY

WORLD NUCLEAR POWER REACTORS & URANIUM REQUIREMENTS

NUCLEAR ELECTRICITY REACTORS OPERABLE REACTORS UNDER REACTORS PLANNED REACTORS URANIUM
GENERATION 2009 1 June 2010 CONSTRUCTION June 2010 PROPOSED REQUIRED
COUNTRY 1 June 2010 June 2010 2010
billion kWh %e No. MWe No. MWe No. MWe No. MWe tonnes
Argentina 7.6 7 2 935 1 692 2 767 1 740 123
Armenia 2.3 45 1 376 0 0 1 1060 55
Bangladesh 0 0 0 0 0 0 0 0 2 2000 0
Belarus 0 0 0 0 0 0 2 2000 2 2000 0
Belgium 45 51.7 7 5943 0 0 0 0 0 0 1052
Brazil 12.2 3 2 1901 0 0 1 1245 4 4000 311
Bulgaria 14.2 35.9 2 1906 0 0 2 1900 0 0 272
Canada 85.3 14.8 18 12679 2 1500 4 4400 3 3800 1675
China 65.7 1.9 11 8587 23 25310 34 38160 120 120000 2875
Czech Republic 25.7 33.8 6 3686 0 0 2 2400 1 1200 678
Egypt 0 0 0 0 0 0 1 1000 1 1000 0
Finland 22.6 32.9 4 2696 1 1600 0 0 1 100 1149
France 391.7 75.2 58 63236 1 1630 1 1630 1 1630 10153
Germany 127.7 26.1 17 20339 0 0 0 0 0 0 3453
Hungary 14.3 43 4 1880 0 0 0 0 2 2200 295
India 14.8 2.2 19 4183 4 2572 20 16740 40 49000 908
Indonesia 0 0 0 0 0 0 2 2000 4 4000 0
Iran 0 0 0 0 1 915 2 1900 1 300 148
Italy 0 0 0 0 0 0 0 0 10 17000 0
Japan 263.1 28.9 55 47348 2 2756 12 16532 1 1300 8003
Jordan 0 0 0 0 0 0 1 1000 0
Kazakhstan 0 0 0 0 0 0 2 600 2 600 0
Korea DPR (North) 0 0 0 0 0 0 0 0 1 950 0
Korea RO (South) 141.1 34.8 20 17716 6 6700 6 8190 0 0 3804
Lithuania 10 76.2 0 0 0 0 0 0 2 3400 0
Malaysia 0 0 0 0 0 0 0 0 1 1200 0
Mexico 10.1 4.8 2 1310 0 0 0 0 2 2000 253
Netherlands 4 3.7 1 485 0 0 0 0 1 1000 107
Pakistan 2.6 2.7 2 400 1 300 2 600 2 2000 68
Poland 0 0 0 0 0 0 6 6000 0 0 0
Romania 10.8 20.6 2 1310 0 0 2 1310 1 655 175
Russia 152.8 17.8 32 23084 10 8960 14 16000 30 28000 4135
Slovakia 13.1 53.5 4 1760 2 840 0 0 1 1200 269
Slovenia 5.5 37.9 1 696 0 0 0 0 1 1000 145
South Africa 11.6 4.8 2 1842 0 0 3 3565 24 4000 321
Spain 50.6 17.5 8 7448 0 0 0 0 0 0 1458
Sweden 50 34.7 10 9399 0 0 0 0 0 0 1537
Switzerland 26.3 39.5 5 3252 0 0 0 0 3 4000 557
Thailand 0 0 0 0 0 0 2 2000 4 4000 0
Turkey 0 0 0 0 0 0 4 4800 4 5600 0
Ukraine 77.9 48.6 15 13168 0 0 2 1900 20 27000 2031
UAE 0 0 0 0 0 0 4 5600 10 14400 0
United Kingdom 62.9 17.9 19 11035 0 0 4 6600 6 8600 2235
USA 798.7 20.2 104 101163 1 1180 9 11800 23 33000 19538
Vietnam 0 0 0 0 0 0 4 4000 6 6000 0
WORLD** 2560 14 439 374,690 57 57,555 151 165,699 345 366,775 68,64
Sources: Reactor data: WNA to 3/6/10; IAEA- for nuclear electricity production & percentage of electricity (% e) 3/5/10.; WNA: Global Nuclear Fuel Market (reference scenario) - for U.

62 gulfbusiness.com July 2010


Hyundai and Doosan Heavy Industries
from South Korea, Westinghouse from
the US, and Toshiba from Japan.
Nuclear power is central to the gov-
ernment’s efforts to satisfy a massive
projected increase in demand for ener-
gy over the next decade. Latest studies
suggest that power consumption in the
UAE – currently around 16,000 mega-
watts a year – will grow at around nine
per cent a year, rising to more than
40,000 megawatts by 2020. By then, it
is expected that natural gas reserves
will satisfy barely half of the country’s
electricity demands. Renewable energy
sources, such as the solar power Mas-
dar Initiative, will be able to meet only
a small proportion of the shortfall.
Training, human resource devel-
opment and education programmes
included in the contract will result in the
building of an industrial and commer-
cial infrastructure to service a growing
nuclear energy industry. The eventual
aim is to provide local engineers, spe-
cialists and technicians to take on most
of the jobs within the project.
Latest estimates suggest that up
to 2,300 staff will be needed by 2020,
and Emirates Nuclear Energy Corpo-
ration is co-operating with the Kha-
The acceptance of a tough international
inspection regime provides important
reassurance about future developments.
lifa University of Science, Technology
and Research, the Institute of Applied
Technology, the Federal Authority for
Nuclear Regulation, other parts of the
UAE educational system and leading
international universities in a concert-
ed training effort.
The nuclear programme is the cul-
mination of increasing co-operation
between the UAE and South Korea over
recent years. Last year, trade between
the two nations increased by over 43
per cent, and more than 120 South Ko-
rean companies are currently operat-
ing in the UAE. Doosan’s involvement
in UAE projects includes the recent
construction of a power and desalina-
tion plant in Fujairah.
THE BUSINESS NUCLEAR ENERGY
Elsewhere, Arab nuclear projects have
attracted widespread interest among
companies in Europe, Asia and the US.
The Korean consortium only won the
UAE contract after stiff competition
from the US, France and Japan, and other
Arab states have been negotiating with
Argentina, China and Russia as well as
these three main players. Egypt reached
a consultancy agreement last year with
the Australian firm Worley-Parsons.
On a recent visit to South Korea’s most
advanced nuclear installations near
the city of Busan, His Highness Sheikh
Mohammed bin Zayed, Crown Prince of
Abu Dhabi and Deputy Supreme Com-
mander of the Armed Forces, said the
project was needed to support the pro-
jected growth in population and urban
development in the Emirates.
“The Emirates will continue, as part
of its development vision, the building
of its peaceful nuclear programme for
its pragmatic and promising prospects
that will support the wheel of sustain-
able development,” he said.
Korea’s Shin Kori nuclear power plant
construction site includes the Generation
3 APR 1400 reactors, which will be at the
heart of the UAE programme. Kepco has
agreed to provide reactors that are sub-
stantially the same at those at Shin Kori,
but with adaptations and developments
to meet the Gulf’s climactic conditions.
In particular, buildings and structures at
Ruwais will be designed to fulfil the lat-
est requirements for resistance to earth-
quakes and aircraft impact.
US President Barack Obama gave the
project his personal backing last year,
when he signed the bi-lateral nuclear
co-operation agreement signed between
Washington and the UAE in the last
days of George W Bush’s presidency.
The agreement, a prerequisite for the
provision of nuclear-related materials
and technology by the US, effectively
gave the UAE’s plans Washington’s of-
ficial seal of approval – in marked con-
TOP LEVEL EXPERTS
ENDORSE THE UAE MODEL
O fficials from the International
Atomic Energy Agency (IAEA)
said that the UAE’s approach to its
nuclear programme was “exemplary”.
Dr Dorel Popescu, an expert on
nuclear security at the IAEA and a
former nuclear inspector, stressed
that safeguarding the UAE’s power
plants was a matter of concern for
its neighbours and the international
community, towards the goal of a
nuclear weapons-free Middle East.
However, the UAE had
demonstrated that it is committed to
non-proliferation, he said, adding that
the UAE regularly gives the nuclear
watchdog access to its plans and is
co-operative with the organisation.
Dr Popescu was speaking at a five-
day conference on nuclear security,
held in Abu Dhabi last month.
The conference was organised by
the UAE’s nuclear authorities and
regulators, which include the CNIA,
ENEC and the Federal Authority for
Nuclear Regulation.
trast to the continuing controversy over
Iran’s Bushehr programme. Although
Iranian government spokesmen at the
United Nations have said that their
nuclear programme is exclusively for
civilian purposes, Tehran has repeat-
edly refused to agree to international
inspections, and is believed to have
amassed large quantities of material
that could be used to build weapons.
So far, Bahrain and Saudi Arabia
have made similar commitments to the
UAE about sensitive technologies and
the transparency of their nuclear pro-
grammes, but Jordan – widely expected
to be next in line to complete a nuclear
power generating scheme – has so far
been unwilling to guarantee that it will
never employ uranium enrichment or
plutonium reprocessing technologies.
Non-proliferation officials are hopeful
that the success of the UAE project will
encourage the Jordanian government
to change its mind. gb@motivate.ae
July 2010 gulfbusiness.com 63
THE PEOPLE FRANK KHOIE

Rebuilding reputations
Frank Khoie is out of jail and back at work, trying to reassure investors and
promising to get the huge La Hoya Bay project off the ground. In a wide-ranging
interview – amid a flatlining property scene and a host of unresolved issues relating
to construction, land ownership, financing and his own legal status, Gulf Business
asks the CEO of Khoie Properties how on earth he expects to get his stalled
project back on track.

A
self-made property tycoon
who is far more at home
in Dubai’s Capital Club
than a cramped cell in Ras
Al Khaimah, Frank Khoie is one of
the more ebullient businessmen
in a country that has no shortage
of contenders. He has one central
message he wants to get across
over our lunch. He’s not a crook.
He is maybe naïve, definitely overly
trusting, but dishonest? No way.
Indeed, fresh from serving just over
one year of a three-year sentence for
cheque fraud he is getting on with
the task of convincing the 800 or so
current investors in his ambitious La
Hoya Bay project that, not only is it
business as usual, but he fully expects
new investors to pile in on the back of
a fresh sales drive.
Given the current climate, it’s
tempting to ask if he’s mad, but the
Iranian-born businessman, who made
his first fortune in Los Angeles when,
at age 27, he bought, sub-divided and
sold Charlie Chaplin’s former mansion
in Hollywood for a healthy profit, isn’t
one for received wisdom. In a huge PR
push, both from behind bars and on
the outside, he has even managed to
bring round some of his more sceptical
investors – flying them out to Dubai
to show them his busy offices in Al
Quoz, and taking them on a tour of the
construction site in Ras Al Khaimah.
They might not be 100 per cent
convinced, but a number of optimistic
testimonials are now in place on the
company’s website.
Since his initial success in Los
Angeles in the 1970s, his CV reads as
that of a serial entrepreneur: 90 villas
in Bel Air followed the Chaplin success;
in the late 1980s he cashed in on the PC
clone business with IMI Computers –
at one point it was one of the top three
computer builders in Singapore, with
global sales of $120 million – before
the PC market suffered in the late
No true entrepreneur will leave his
company, his projects, his staff and his clients
and run away for fear of possible challenges
every time a battlefield turns ugly.
1990s through wafer thin margins and
increased competition.
In 2005, right in the middle of the
property boom, he launched Khoie
Properties, with $10 million of his own
money. By the time La Hoya Bay was
launched, his firm claimed a paper
value of $1 billion.
But that was 2008, just before the
bottom fell out of the property market,
leaving Khoie struggling for cash and
with a number of huge cheques
issued in his name. A dispute over
the provision of infrastructure to
the project lead to construction
woes, and, along the way a cheque
for Dhs 57 million bounced. The
intricacies and vagaries of the
much-criticised cheque law in the
UAE aside, Khoie suddenly found
himself at the start of a three-year
jail sentence, with a stalled project
and a raft of furious investors.
Released in May, he now wants to
set the record state, and explained
to Gulf Business how he intends to
get La Hoya Bay up and running.
Dozens of developers in your
position would have simply run away
– many did, after all. Why didn’t you?
Running away from one’s
responsibilities, obligations and
commitments is a reflection of
one’s character. No honest, upright,
honourable man will run away. In my
opinion, true entrepreneurs are no
different than warriors in a given war.
No true fighter in a just war will leave

64 gulfbusiness.com July 2010

July 2010 gulfbusiness.com 65
THE PEOPLE FRANK KHOIE
Just because of the changes in the
economic landscape we are not going to
change the rules of the game and ask our
clients to pay more than what was agreed.
his troops, comrades and those under
his protection and turn back and run.
And no true entrepreneur will leave
his company, his projects, his staff
and his clients and run away for fear
of possible challenges every time a
battlefield turns ugly. He will stay and
fight it out and find a solution to win
the battle. This is what I did and I was
sure of the outcome.
You served just over a year of your
three-year sentence. What’s your
legal status now?
From day one, this was a dispute
between Khoie Properties and RAKIA
[Ras AL Khaimah Investment Authority]
on a technicality of the cheque law.
The sentence was illegal because our
cheque was a guarantee check, which
meant that if there was any dispute
it was a civil matter and there was
no need to fight because RAKIA and
Khoie Properties were in the same boat.
Finally this was clarified and our four
cheques were dismissed and returned
66 gulfbusiness.com July 2010
to us, and we were given the one-year
extension that we had requested from
day one.
How did you feel on the first night of
your incarceration? What was your
regime thereafter?
I am not going to waste your reader’s
time talking about my personal
feelings. My focus is on developing
successfully our Dhs5 billion project,
delivering our apartments to our 800
clients and creating economic activities
in RAK and the UAE, and to move on
with other projects and ventures.
Regarding La Hoya Bay … what
next? Are you scaling it back?
No, we are as bullish now as we were
in 2008, and we are confident that
this entire half-panic, half-economic
slowdown will end after Ramadan
in August, and our sales will take off
from September onwards. We are not
reducing or scaling back any part of
our project. La Hoya Bay will have
3,000 waterfront apartments and that
is nothing for the 240,000 Britons
living in the UAE who would love to
have a unit in La Hoya Bay, not to
mention the European and West Asian
markets who find the UAE the ideal
place to work and live.
Let us not forget that the UAE is
the only country in West Asia that has
an equal or better quality of life to
Western Europe and North America
with a surrounding population of
one billion, and if anyone thinks that
we will have a problem selling the
remaining 2,300 of our apartments to
this market they just don’t have enough
knowledge about our business.
How do you intend to get the
Dhs2 billion in financing to complete
the work?
The total cost for the entire five phases
of La Hoya Bay is about Dhs2.7 billion
over the next three-and-half years. We
have already secured Dhs750 million
which is sufficient to build phase one,
La Hoya Bay Residence, and phase
two, La Hoya Bay Business Village, and
one of our three marinas. With part of
that fund we shall pay the remaining
Dhs230 million land payment to
get our titles and use the titles as
collateral for another trench of Dhs500
million to kick-start the construction
of phase three, La Hoya Bay Regency.
And by December 2011 phases one
and two will be delivered, which
will generate about Dhs1 billion in
receivables and the same will be used
to kick-start construction of phase
four, the Bermuda Hotel Apartments
and Yacht Club, and phase five, the
Autumn Leaves, which is a very unique
semi-retirement luxury complex to be
completed by December 2014.
What about “self-financing”?
Investors currently have to pay 70
per cent of balance on delivery …
can’t you ask them for funds earlier?
Our company culture is based on
honouring our contracts, words and
commitments. Our agreements with
our current 800 clients are based on
30 per cent down payment and 70 per

cent upon completion and 10-year
mortgage financing. So just because of
the changes in the economic landscape
we are not going to change the rules
of the game and ask our clients to
pay more than what was agreed,
even if we needed funds – which we
don’t. Devotion to principle is the very
foundation we have built our company
upon and we will never compromise
those principles. We honour our
contracts and honour our clients.
Your own ex-CFO has said the
company is insolvent. How do you
respond to that?
The formula to determine if a company
is insolvent or not is a very simple one.
On any company’s balance sheet there
are two columns: assets and liabilities.
If the company’s liabilities are greater
than its assets, that company is
technically insolvent, and if assets are
greater than liabilities, that company
is solvent. Our balance sheet, which
is audited by the world’s number one
audit firm, namely Ernst & Young,
shows that our assets are Dhs966
million and our liabilities are Dhs241
million. Thus, we are not insolvent.
Adding that a company can be asset
rich but still lack cash liquidity and
lack sufficient cash to pay, for example,
your Dhs57 million land-payment is
not a sign of insolvency but merely a
lack of liquidity. To give you a simple
example: if you own a Dhs700,000
Aston Martin but happen to have no
cash at a given moment for gas, that
does not mean you are insolvent.
Now, why did our ex-CFO say we
were insolvent? Because he made a
mistake and at the time what he meant
was that we had a cash liquidity
problem, but he failed to put it in a
proper form.
You’ve promised full refunds to
unhappy investors: of the 800 or
so investors, how many are seeking
a refund?
Very few are asking for refunds
and we are confident that as soon
as construction starts next month
even those few will withdraw their
THE PEOPLE FRANK KHOIE
CURRICULUM VITAE
Name: Frank Khoie
Born: April 7, 1949
Place of birth: Tehran, Iran
Education: Vocational
Career:
1973: Launched IPC Engineering
1975: Migrated to the US
1978: Purchased Charlie Chaplin’s
former mansion on Sunset
Boulevard, Los Angeles, and
transformed it into villas
1978: Developed 90-villa complex
on the hills of Bel Air,
west Los Angeles.
1989: Established IMI Computers
Worldwide in Los Angeles
1990: Relocated IMI Computers
Worldwide to Singapore
1997: Returned to Iran to introduce
an innovative in-car air
conditioning system
2000: Migrated to Dubai
2005: Established Khoie Properties
2009: Sentenced to 3 years in prison
for bouncing 2 cheques
for Dhs57m each
2010: Released
refund requests, however, credit notes
are available for those who wish to
proceed and we will honour them
without hesitation.
There have been huge concerns
over infrastructure in the northern
emirates. What progress is being
made regarding power supply,
sewage and other essentials?
Infrastructure shortages are not
exclusive to the northern emirates. All
seven emirates, in different degrees,
are facing this great challenge simply
because building infrastructure takes
money and time. This is handled by the
FEWA (Federal Electricity and Water
Authority) and they are under huge
pressure to meet the requirements
for Sharjah, Ajman and Ras Al
Khaimah. There are huge plants under
construction and it is only a matter of
time before the issue is resolved, and it
will be resolved without question. For
La Hoya Bay, we have been promised
by Rakeen, the engineering arm of
RAKIA, that a 50-Megawatt extension
is underway from RAK’s Al Ghail
Industrial Park where they have a 250-
Megawatt power plant – the largest
plant yet built by FEWA.
You’ve admitted to being overly
trusting in regard to some
recruitment and partnership
decisions. Do you really have what it
takes to be a businessman?
I sincerely believe that you don’t need
to have a “ruthless streak” to succeed
in business and even if you do succeed
by being “ruthless” you will lose
something far more important in life,
and that is the love and respect of your
fellow man, your community, your staff
and even your family and that would
make you a very unhappy person
even though you may have millions.
Success in business is not measured
by your net worth, but by the number
of lives you have touched and made
a difference to in the process, by the
friends you make and keep, and by
the level of genuine respect and love
you receive from your community,
your clients and suppliers, your staff
and your family. I can safely say that I
have never been ruthless to anyone in
my life and I have been, and still am,
reasonably successful in business.
What lessons have you learned
from your dealings in RAK, and your
recent experience?
I had the opportunity to read over
200 good books, read and re-read the
biographies of many great business and
political leaders, and I spent a great
deal of time in prayer and spiritual
fellowship with the Lord whose love
and sustaining power kept me going.
I wrote two books, and one of them is
about my own life called Dare To Be An
Entrepreneur, in which I have tried my
best to encourage young entrepreneurs
by reminding them that the road to
success is paved by pitfalls, dangers
and challenges and that they should not
think that building an empire is for the
faint of heart. ■ gb@motivate.ae
July 2010 gulfbusiness.com 67
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THE PEOPLE EXECUTIVE MOVES
HSBC has announced the
appointment of Mohammad The board of directors of
Al Tuwaijri as head of global Etihad Atheeb Telecom
banking and markets, MENA. Co. GO has appointed Raed
Al Tuwaijri joins from Abdulrouf Kayal as acting
JPMorgan where he was chief executive officer,
employed as managing director replacing Dr Ahmed Sindi.
and head of Saudi Arabian Kayal will be responsible
operations. Prior to this, he for developing a new
spent 12 years as treasurer at strategy for GO. His Royal
the Saudi British Bank (SABB). Highness, Prince Abdulaziz
Al Tuwaijri has over 17 years bin Ahmed bin Abdulaziz,
senior banking experience, chairman of GO said: “The
including 12 in Saudi Arabia. appointment… reflects the
board of directors’ intention
to better support the requirements of each operational
Brocade has announced that it has appointed long-time stage, as this decision will serve the long-term strategic
networking executive, Alberto Soto, to lead the sales objectives of the company and will carry a positive
organisation in Europe, Middle East and Africa (EMEA). impact on both the shareholders and customers.”
Soto will replace Ulrich Plechschmidt, who will be moving Kayal possesses over 15 years of experience
to Brocade’s corporate headquarters in San Jose to lead in business development and management in
the Global Sales Enablement and the OEM Marketing Telecommunication and Information Technology as he
departments. Previous to Brocade, Soto was vice president worked with various major multinational companies
and general manager of HP ProCurve EMEA, a position he (such as Siemens, AT&T, Lucent Technologies, GlobTel)
assumed in late 2006. At Brocade, Soto will report to Ian in Germany, the Netherlands and Saudi Arabia.
Whiting, senior vice president of Worldwide Sales, while
Plechschmidt will report to John McHugh, vice president
and chief marketing officer. Al Mazaya Holding has announced the appointment of
Naif Ahmed Al Awadi as CEO of its Dubai operations.
The appointment is part of the company’s restructuring
Rolls-Royce Motor Cars strategy, in a bid to further stimulate operations and
has announced that James projects in the emirate of Dubai.
Crichton has joined the Al Awadi brings 17 years of experience in feasibility
company as regional director, studies, contracting, real estate development, project
Middle East. In his previous management, engineering consultancy and real estate
role he was sales and investment, both at the local and international levels.
marketing director for the
BMW Group in the Middle
East and based in Dubai.
Crichton has many years of The Board of Art Dubai
experience in the BMW Group has announced the
and has worked in a number appointment of Antonia
of roles in the sales and Carver to succeed John
marketing environment. Prior to his current role in Dubai, he Martin as Fair Director
was head of dealer development in the Asia Pacific, Eastern of Art Dubai. Carver
Europe, Middle East, Africa and Caribbean, having previously is a writer and arts
been general manager of customer relationship management administrator, and has
and national sales manager at BMW Group South Africa. been widely recognised
as a leading advocate of
Deutsche Bank has announced the appointment of contemporary Middle
Nasim Ahmad as regional head for Global South Asia, Eastern art. She has been
for the Middle East and Pakistan in its Private Wealth working in the arts for the
Management division. He will be based in Dubai and past 16 years, and brings to
will report to Salman Mahdi, head of Private Wealth Art Dubai a broad base of experience across both the
Management, Global South Asia. commercial and not-for-profit sectors.

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.

70 gulfbusiness.com July 2010


WIN
L
ocated in Deira, ‘The Heart of
Dubai’, the Dusit Princess
City Centre hotel is next to the
shopping and entertainment
complex Deira City Centre, just five
minutes from Dubai International
Airport, Sheikh Zayed Road, and the
city’s convention centres. Within a
short walk of the Dubai Metro
station at Deira City Centre, the hotel
is truly ‘central’.
The hotel’s 120 spacious, elegantly
appointed rooms and suites offer
king-size beds and are equipped
with modern conveniences designed
to meet the needs of leisure and
business guests – including iPod
docking station, tea and coffee
making facilities, iron and board and
flat screen TV.
Hotel facilities provide an
excellent selection of recreational
and business services.
THE LIFESTYLE COMPETITION
AN OVERNIGHT STAY AT THE DUSIT
PRINCESS HOTEL IN DUBAI
The Business Centre incorporates
two meeting rooms and a break-out
area for receptions of up to 50, and
T HE P R I Z E
An overnight stay for two people
at the Dusit Princess Hotel, Dubai,
including breakfast
H OW T O W I N:
The Question
The traditional Middle Eastern pipe is
known in the Gulf as:
a) Hookah b) Hubbly Bubbly c) Shisha
Terms and conditions:
t
5IF
WPVDIFS
DBOOPU
CF
SFEFFNFE
JO
DBTI


PS
XJUI
BOZ
PUIFS
QSPNPUJPO
PS
EJTDPVOU
t
3FTFSWBUJPOT
BSF
SFRVJSFE
BOE
TVCKFDU

UP
BWBJMBCJMJUZ
1MFBTF
QSFTFOU
UIF
PSJHJOBM

DFSUJmDBUF
VQPO
BSSJWBM
To enter, log onto www.motivatepublishing.com/
competitions and answer the question.
theatre-style meetings of up to 30,
complete with secretarial services and
broadband connectivity. The rooftop
Fitness Centre features state-of-the-art
exercise equipment and breathtaking
360 degree panoramic views of the
city. The rooftop swimming pool is
the ideal place to relax, with a sunken
juice bar to refresh the palate after a
work-out or swim.
The Chill is the hotel’s Thai
influenced restaurant offering
buffet and à la carte selections for
breakfast, lunch and dinner with
light snacks and refreshments
available throughout the day at
JoyBean Café.
The alfresco Shisha Zone invites
those seeking to enjoy the centuries-
old tradition of the shisha pipe
with flavoured tobacco to relax with
friends and business associates
during the cooler months.
July 2010 gulfbusiness.com 71
F
THE LIFESTYLE TRAVEL
Portugal’s
best-kept
secret
Unwinding execs can
explore the Algarve’s
most beautiful beaches
from a stylish new hotel
on the doorstep of a
national park.
T
here is a dramatic sweep of wild
sandy beach that hints at South
Africa, New Zealand or Southern
Australia. But these frothy Atlantic
rollers wash on to the Western Algarve
coast where, in a prime location within
the Costa Vicentina National Park,
the brand-new Martinhal Resort and
Hotel has opened its doors above the
eponymous Martinhal Bay.
A stone’s throw from the former
pilgrimage site of Cabo de Sao
Vicente (Cape St Vincent) and Europe’s
most westerly point, this protected
area encompasses a vast reserve of
forests and wetlands characterised
SLEEPS&EATS
Yas Hotel
DO NOT Yas Island, Abu Dhabi
DISTURB!
Surely styled on Star Wars, the
Yas Hotel is all curved white walls and
modern lighting, not to mention its
location, which is crazily close to the
race circuit. It’s also home to some
world-class restaurants such as Kazu,
which is catering to the capital’s sushi
cravings. Throughout the summer the
hotel is hosting murder mystery nights
if you like to play detective while dining.
72 gulfbusiness.com July 2010
by sheer rocky cliffs and wild, often
dune-flanked beaches. Martinhal’s
simple, low-rise buildings blend fairly
seamlessly into the rugged landscape.
Excavated rock has been re-used and
local materials including recycled
cork, natural timber, cane and stone
feature throughout, while artisan
skills are rekindled in the cork tables
and stools and locally commissioned
cane-woven lamps.
For now, a timber-clad Beach Room,
part of the boutique Hotel Martinhal,
featuring a decked, bay-facing
balcony and a generous bathroom
with separate shower and large tub,
is the choice accommodation, but a
phased opening across the 25-hectare
site will soon add 142 Ocean, Bay,
Garden and Pinewoods Houses; 45
luxury garden villas with private
Boulevard Café
The Boulevard,
Old Town, Dubai
This new Parisian-style pavement café
serves up French fare from 7am until
midnight. While you’ll find soups and
sandwiches on the menu, the undisputed
stars are the breakfast dishes, from
healthy granola to a croque monsieur
(served with crisps) designed to make
your arteries shudder. There’s no better
way to start your weekend.
pools and 23 two and three-bedroom
houses serviced by a Clubhouse.
This is one of those places where you
can do as much, or as little, as you like.
The pretty fishing port of Sagres is a
15-minute cycle ride away and the
entire Vila do Bispo coastline is
scalloped by sandy coves. Martinhal
Bay is popular with windsurfers,
walkers and joggers and a footpath near
the hotel’s pool meanders along the
wildflower-strewn headland to empty
pockets of sand. Gourmet picnics,
surfing lessons, blo-karting, horse
riding and wreck diving are on the
agenda and guests can take advantage
of preferential rates and tee times at the
Parque da Floresta, Boavista, Palmares,
CS Morgado and Penina golf courses.
Dominating the entire peninsula
is the Fortaleza de Sagres, a hugely
Okku
Monarch Hotel,
Sheikh Zayed Road, Dubai
This sultry spot is a haven for cocktail
lovers and Japanese junkies alike, with
a sunken dining area and cool bar,
complete with jellyfish tank. The new
summer menu is packed with fresh
flavours, including an Asian twist on
salmon tartare. Book ahead for a table on
Sundays when the beautiful people flock
there to forget their back to work woes.

symbolic fortress dating back to
the 15th century. The fort was the
haunt of Prince Henry the Navigator
who, with a keen eye on the Saharan
trade routes, set up a school here
for navigators, shipbuilders and
mapmakers – sparking the Voyages
of Discovery and thus shaping the
course of history. Back at Martinhal,
the low-key ambience coupled with a
generous smattering of comfy, snooze-
on-me furniture causes relaxation by
osmosis. Wrap-around views from
the hotel’s main lounge terrace are
somewhat hypnotic.
After a hand-harvested seaweed
wrap at the spa, why not flop into one
of the poolside bean-beds, the ideal
preparation, as it happens, for an
indulgent six-course tasting menu.
Getting there
Martinhal Beach Resort & Hotel
(Martinhal Beach Resort and Hotel,
Apartado 54, Sagres, 8650-908,
Portugal. (351) 282 620026. www.
martinhal.com, res@martinhal.
com) is accessible via Faro or Lisbon
airports. Hire car is advisable or the
hotel can organise a private transfer
(90 minutes from Faro). Terrace Room
doubles from Dhs 581 with breakfast.
Two-bedroom Ocean Houses start
from Dhs 843 based on four sharing
with a two-night minimum stay.
Mango Tree Bistro
Mirdif City Centre, Mirdif,
Dubai
If a manic foodcourt (packed with the
usual big name suspects) puts you off your
lukewarm fries, then read on. Mango Tree
Bistro, the quicker cousin of the Souk al
Bahar restaurant, has a vast choice of Thai
dishes to help you refuel for the shops. With
sharing platters, soups and a duck curry
worth travelling for, you’ll never pick up a
plastic tray again.
THE LIFESTYLE ART
CHARLES POCOCK CANVAS OPINION
Islam and the
renaissance of art
The influence of Islamic art on medieval Europe, particularly Northern
Italy, the home of Western Christianity at that time, is rarely looked at.
This is a vast topic that includes both Coptic Christian and Islamic Cairo,
Constantinople and the Orthodox Church, the Catholic Church of Western
Europe and the Islamic spheres of influence in Spain and Arab-Norman
Sicily. The focus of this piece is the painting and sculpture of Northern Italy,
mediums which are not widespread in medieval Islamic culture but reign
heavily in Western Europe. While the influence of Islamic architecture on the
European school is well documented, Islamic cultural influence on painting
and sculpture is not often explored.
From the foundation of the Renaissance in Western European art, one
can see the pervasive impact Islamic culture had on the arts. For example,
Giotto’s masterpiece of the frescoes in the Arena Chapel in Padua (1304/12
AD), Crucifixion, displays Mongol elements in the rendering of the soldiers’
tunics and Arabic elements in Christ’s robe; while in Simone Martini’s
Annunciation (1333 AD), pseudo-Arabic elements are visible on the cuffs
of Gabriel’s robe. This continues into the 15th century, with the use of
pseudo-Arabic, and more specifically pseudo-Kufic, script. The Arabic letters
rendered in such works do not comprise legible words or phrases but are
used as a design element, reducing the letter to a purely aesthetic form.
Paintings including illegible Arabic script continued into the 19th century
with the ‘Orientaliste’ European school of art. Indeed, utilising letters as a
visual form is also visible in the work of contemporary artists in the Middle
East, such as the Tunisian Nja Mahdaoui, who constructs his compositions
through the aesthetic formation of Arabic letters as opposed to legible script.
Why pseudo-Arabic script was employed by European Christian artists
is not totally clear, but there have been a number of explanations. The use of
pseudo-Kufic script was originally used in Byzantine art in the 11th and 12th
centuries. Later, Western European artists mistakenly believed 13th and 14th
century Middle Eastern script to be the same as the scripts current during
the lifetime of Christ. There have also been suggestions that artists wished
to express the cultural universality of the Christian faith by combining
together various written languages at a time when the Church had strong
international ambitions. This can be seen in Fra Angelico’s Marriage of
the Virgin, which utilises both pseudo-Kufic and pseudo-Hebrew script.
The works of Giotto, Simone Martini, Gentile da Fabriano, Veneziano, Fra
Angelico, Fra’Filippo Lippi, Andrea Mantegna, Massacio and Donatello all
display the use of pseudo-Arabic script in their art, a feature which appears
in a number of their seminal works.
The influence of Islamic culture on the paintings of Gentile Bellini, Andrea
Prevital, Lorenzo di Credi, Antonello da Messina, Carlo Crivelli, Verrochio
and Sebastiano del Piombo, is also apparent in the depiction of a number of
luxury objects traded at that time, from the East to the West: glass, ceramics,
metalwork, carpets and bookbinding. Such cross-cultural encounters, through
trade and art – Florence and Venice, both centres of trade, also became hubs
of cultural creativity – is reflected in the art of the early Renaissance. To gain
a more thorough understanding of the influence of Islamic art on Renaissance
Italy, I highly recommend Bazaar to Piazza by Rosamond Mack. In relation
to Islamic art objects incorporated into Christian collections, I would
suggest Islam Christianized: Islamic Portable Objects in the Medieval Church
Treasuries of the Latin West by Avinoam Shalem. ■
July 2010 gulfbusiness.com 73
F THE LIFESTYLE LEISURE
A walk on
the mild side
ZARINA KHAN tries on
newly-reinvented Cadillac
SRX and finds something for
soccer-moms to envy.
G
ulf Business’ motoring
section is not all supercars
and diamond-encrusted
towncars. Sometimes we’re
practical. Which is why the offer
to try out Cadillac’s 2010 SRX was
taken up so readily. Plus, my Jag
(um, Corolla) was in the shop.
On to the car. On first sight, it’s
not bad. The SRX is a compact
crossover with none of the
overgrown hatchback effect that
many of the breed fall victim to.
Cadillac’s reincarnated SRX has
the angles, gleam and breadth one
wants when upsizing from a sedan.
And the hallmark Cadillac grill and
standard 18-inch alloy rims help
it stand out from the generic Far
Eastern offerings.
The inside has its moments as
well. The ‘Ultra-View’ sun roof
ROBBIE GREENFIELD IN THE SWING
Unlikely hero ends Europe’s US Open drought
N
icklaus, Watson, Kite, Woods…
and McDowell? I guess Pebble
was due’. This is a Tweet posted
by legendary Golf Digest writer Dan
Jenkins in the wake of a day’s golfing
carnage that was X-rated, even for
the US Open. It’s the kind of tongue-
in-cheek summation that has earned
Jenkins a huge following on Twitter,
but the implication that Graeme
McDowell is undeserving of his place
alongside this illustrious club of
Pebble Beach champions nevertheless
seems a little harsh.
He may not possess a CV to match
those former winners, and in some
quarters he’s been portrayed as the
beneficiary of the US Open that no
one wanted to win. Yet McDowell
74 gulfbusiness.com July 2010
is massive, about double the size
a sedan would have, giving it a
near convertible effect when fully
opened, while the Sapele Pommele
wood accents gleam and the leather
upholstery is comfortable. The
dash stood out – with a retractable
touch display screen (for when you
don’t want the distractions of…
radio station options?). The push-
button brake-primed ignition was
a bit annoying – what’s so hard
about turning a key? And sometimes
finding a button in the high-tech
mix was a challenge – AC controls
and door locking switches were
particularly elusive.
The drive was as you’d expect.
Driving most manner of SUVs and
their compact cousins nearly always
feels like you’re zooming down the
highway on a wheeled-recliner. With
has achieved what none of his more
decorated European rivals have so far
managed (Padraig Harrington aside)
and he did it the hard way.
McDowell did not come surging
from behind; he led from the front, and
he did so with a front row seat to the
most spectacular major championship
disintegration since Retief Goosen’s
calamitous 80 at Pinehurst in 2005.
Somehow, he was able to maintain a
focus on his own game while 54-hole
leader Dustin Johnson took the scenic
route around Pebble Beach.
Tiger Woods, Phil Mickelson and
Ernie Els all struggled for form,
but their looming presence on the
leaderboard can’t have made Graeme
McDowell’s job any easier. The man
that much ride height you don’t
get much of a feel of the road. And
consequently, with the SRX’s 3.0 V6
engine, it’s rather a bit too easy to
push the speed to the point where
the LED display stops showing
numbers and just says “Caution!
Over-speeding!” But that can be a
compliment – Cadillac’s crossover
handles so well and its engine
is so quiet, that you can speed
unintentionally.
The verdict? For those practical
days when you have to do a school
run or transport a Labrador, it
shouldn’t be too much of a blow to
your cool to drive the Cadillac SRX.
If you’re feeling too soccer-mom-
like, just switch to sport-mode,
crank up the eight-speaker Bose
sound system, and enjoy the wind in
your perm. ■
from Royal Portrush proved he can
close out a major championship on a
brutally demanding layout, under the
most unrelenting pressure.
European golf is on the brink of
a golden era to match the heydays
of Seve, Faldo, Langer and Lyle, but
up until last week all the focus had
been on Lee Westwood, Ian Poulter,
Paul Casey and Rory McIlroy.
Graeme McDowell has typically been
considered a streaky performer who
had yet to deliver on the promise he
showed as an amateur. Now he is
the first British player to win the US
Open in 40 years and at the age of 30,
his belief that ‘careers are defined
by majors and mine is now up and
running’ seems entirely plausible. ■
 THE LIFESTYLE TECHNOLOGY
Hot stuff
Rotary Aquaspeed
$555
Sport isn’t all about running
and pedaling, you know.
Sometimes there’s shouting at
the TV. And then there’s yacht
racing, where timing is key.
Nothing will signal your intent
to achieve perfection better
than wearing this precision
chronograph on your tiller
hand. www.rotarywatches.com
Bell & Ross BR01-97
$4,300
Perhaps best described as
‘military chic’, but there’s no
doubt that B&R’s iconic square
case is now a fashion accessory.
The 42mm carbon fibre shell takes
it into the haute couture side of
horology, while the power reserve
display gives it practicality.
www.bellross.com
Jaquet Droz
Grande Date
$25,000
Jaquet Droz has a knack for
creating quirky time-tellers,
and this is certainly one of
them. This subtle watch has
a striking white face that’s
delectably minimalist, with a
case available in a variety of
metallic finishes.
www.jaquet-droz.com
THOMAS SHAMBLER GEEK SPEAK
Advertising, in 140
characters or less
Everyone’s favourite micro-blogging
platform has been testing a new type of
advertising this month, dubbed ‘promoted
trends’. In this new system, advertisers can
shell out for space below ‘trending topics’ or
the most talked-about items on Twitter at
any given time.
For those of you still doubting Twitter’s
often infuriating reach, listen to this:
right now there are over 105,779,710
registered users telling the world what
they had for lunch, with more than
300,000 new would-be tweeters signing
up each day (presumably to find better
sandwich options).
Of course, with every Tom, Dick and
Ahmed now in on the Twitter action, it’s no
surprise that the advertising world has lit
up quicker than a bonfire-night campaign
launch. But in the real world (that removed
from Wi-Fi, iPads and Google) advertising
is all about toleration. Offline ads are an
unwelcome interference, with commercials
popping up every two minutes during your
Friday night Lost marathon or garishly-
designed pages interrupting the features in
your favourite magazine.
But the net, is a different place
altogether. If a huge banner ad drops from
my browser’s ceiling, I can simply close the
page. If my favourite website is adorned
with annoying flashy boxes selling this, that
and the other, I can employ an ad-blocker to
remove all trace. Twitter knows how fickle
net-followers can be, and its new ‘promoted
trends’ idea seems to work.
Look up ‘Toy Story 3’ for example, and @
DisneyPixar is the top Tweet. Search ‘fizzy
caffeinated deliciousness’ and it might be
from @CocaCola. It’s advertising that’s far
less interruptive and might even help users
find relevant information, for a change. A
novel idea, but only time and Twitter-users
will tell if it works.
Still, this column isn’t online just yet, and
you’ve no choice but to go on reading. So
while I have you, BuzzCo Blankets are the
best bed-warmers out there. No really, they
are. Trust me. ■
Thomas Shambler is the editor of Stuff
Magazine Middle East. thomas@motivate.ae
July 2010 gulfbusiness.com 75
THE ESSENTIALS BOOKS
Some waving,
some drowning
U ltimately the key to business
acumen is good judgment –
knowing when you push
and when to back off.
The anecdotal evidence in
Sink or Swim,, by former
Gulf Business scribe and
stalwart of the Dubai media
scene Richard Dean, proves
that assertion very clearly.
The anecdotes, from
such notables as HSBC’S
Mukhtar Hussain, Ryan and
Linda Mahoney of Better
Homes, Mishal Kanoo and
others, are interesting and
the reader is drawn in to empathise
with some of the success and hard
luck stories – although it is difficult
to feel too much sympathy for a real
estate agent that went bust on his
way to helping create one of the most
artificially inflated real estate markets
in the world.
The lessons learnt in this collection
of stories are distinctly localised,
which is both a boon and a hindrance
to readers. It could be questioned
whether some the guidelines on offer
would stand up in a more sophisticated
business climate, given that some of
the case studies met their successes –
and failures – through a combination of
right (or wrong) place and time, blind
luck and because they were operating
in an inexperienced and largely
unregulated business environment.
The central message of the book is
“don’t speculate or you’re going to get
burned”, and the core of the book is
probably the contrast between the fate
of real estate giants Better Homes (still
very much swimming) and barrow-boy
real estate speculator Mike Revson,
the king of the property flippers whose
billion-dirham business sank along
76 gulfbusiness.com July 2010
with Lehman Bros. Still, Dubai would
be a very different, and far duller place,
if it wasn’t for the crazy, rampant
speculation that defined most of the
2000s. A more sophisticated tale is out
there somewhere on how to exploit a
boom and cash in without necessarily
joining in the high stakes
game of musical chairs that
was the Dubai property
market, and hopefully these
case studies can be used as a
bed rock for that or serve as
fodder for Dean’s next work.
Still, this is an often
funny, always interesting
and, perhaps surprisingly,
frequently nostalgic look
back on the Dubai boom,
and as such is a great read
for businessmen, expats and
students of booms and bust alike.
Winning formula?
I n reading Winning In Emerging
Markets, A Road Map for
Strategy and Execution, a few
things immediately jump to mind.
Firstly, is the impression Harvard
Business Press can, despite what the
blurb says about a radical rethink,
make a lot of money out of stating the
obvious – in this case, that regardless
of geography, emerging markets
lack business tools such as market
research, effective supply chains or
comprehensive legal regulations.
That, the cynic in you might say, is
exactly why they’re emerging
markets. Not only that,
the authors, Tarun Khanna
and Krishna G Palepu, in
advancing their theory of
“institutional voids”, are
stating an even more obvious
notion: first fill these voids.
Forgive the increasing
cynicism here, but exactly
what is revolutionary about
this premise? Remembering the
days of fast food empire McDonald’s
launching in Moscow, part of the PR
coup wasn’t just in opening a symbol
of US hegemony right by Red Square,
but in explaining that in order to do
so required the establishment of a
sophisticated supply chain that simply
didn’t exist in the country. The same
goes for anything from mobile phone
companies, who, in a model of complete
integration, are keen to control
everything from infrastructure to retail
to the handsets themselves in any
market they hope to exploit, and all the
way back to the East India Company,
who saw voids in, well, everything from
shipping to construction to roads to
banking to plantation management to,
well, everything. And filled them.
Yet another example of stating the
obvious is a mantra throughout the
book that business models may need
to be adapted, and companies should
be flexible when approaching alien
ways of doing business. Who would
have thought it?
Once you’re over that, though, there
is some useful advice. The authors
go a long way to providing the
intrepid frontier entrepreneur with a
sophisticated set of tools to find these
voids, and tailor a regional business
plan accordingly. Of course, anyone
who has ever stepped into a genuine
frontier knows that a rule book will
only get you so far and any set of hard
and fast rules are more likely to be
hindrance rather than help.
Still, the book is nothing if not
exhaustive, and for the
MBA student looking for
some meat for their thesis
on emerging markets, or
a business development
manager eying
opportunities in a far off
place, there’s plenty of
examples of hindsight,
sorry, case studies, to sink
their teeth into.
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

Alshaam For Organizing Exhibitions &
Dubai Summer Surprises Jun 17-Aug 7 Dubai DSF Festivals, LLC on tel: +968 24797800/
+968 24791502.
Photography Art Exhibition Jul 3-22 The Majlis Gallery, Bastakia Dubai Majlis Gallery
DSF (Dubai Shopping Festival) on tel:
Corporate Forecasting, Budgeting +9714 600545555.
Jul 4-5 Hyatt Regency, Dubai Marcus Evans
and Cost Control
ECS (Expo Centre Sharjah) on tel:
Certificate in Strategic Finance for +9716 5770000, fax: +9716 5770111.
Jul 4-7 JW Marriott Hotel, Dubai IIR
Non-Finance Managers
KIF (Kuwait Int’l Fair) on tel: +965
Certificate in Financial Analysis Jul 4-7 Dusit Thani Hotel, Dubai IIR 5387100, fax: +965 5393872.
Senior Executive Finance Jul 4-7 Dusit Thani Hotel, Dubai IIR IIR Middle East on tel: +9714
3365161, fax: +9714 3352682.
IT Leadership Jul 4-7 JW Marriott Hotel, Dubai IIR
Apollo Co. for International
Project Management for Special Events Jul 4-7 Dusit Thani Hotel, Dubai IIR Exhibitions on tel: +9671 441000,
Aligning Project Management with fax: +9671 448086.
Jul 4-8 Villa Rotana Hotel, Dubai IIR
Organisational Strategy Majlis Gallery on tel: +9714 3536233.
Certificate in Advanced Data Analysis Jul 5-8 JW Marriott Hotel, Dubai IIR Marcus Evans Kuala Lumpur on tel:
+603 27236604, fax: +603 27236699.
JITCOM 2010 Jul 5-11 Sana'a Expo Centre Apollo Co
Essential Business and
Jul 11-14 Dusit Thani Hotel, Dubai IIR
Management Skills Programme
Advanced Public Relations Masterclass Jul 11-14 Dusit Thani Hotel, Dubai IIR
Training Needs Analysis and Evaluation Jul 11-15 Dusit Thani Hotel, Dubai IIR
Nationalisation Masterclass Jul 18-21 JW Marriott Hotel, Dubai IIR
IFRS – Int’l Financing Reporting Standards Jul 18-21 JW Marriott Hotel, Dubai IIR
Muscat Sweet & Food Exhibition Jul 20-24 Oman International Exhibition Centre Alshaam
Optimising Your Balance
Jul 25-28 JW Marriott Hotel, Dubai IIR
Scorecard Implementation
Family Expo Jul 29-Aug 10 Kuwait International Fair, Kuwait KIF
Gulf Business and Motivate Publishing
Ramadan Food Exhibition Jul 29-Aug 10 Kuwait International Fair, Kuwait KIF accept no responsibility for errors and
omissions, date and location changes or
Kuwait Household Exhibition Jul 29-Aug 13 Kuwait International Fair, Kuwait KIF cancellations.
Please contact the organisers directly for
Homes Middle East Aug 19-Sep 4 Expo Centre Sharjah ECS 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, PO Box 2331, Dubai, United Arab Emirates,
or fax to +9714 2827593, or email gb@motivate.ae.

Homes Middle East Implementing your BSC Strategic Finance course

Homes Middle East is a
comprehensive consumer fair that
offers exhibitors a cost-effective
platform to promote their furniture
and furnishing products, kitchen and
bathroom designs and fittings to
prospective customers.
Homes Middle East is a reliable
platform for distributors, dealers,
manufacturers, retailers, importers
and exporters to showcase their
products and services.
Training in the implementation of a
Balanced Scorecard (BSC) can increase
its effectiveness.
The data provided by the BSC helps
you review your business strategy,
based on a realistic assessment of your
organisation’s performance.
BSC can help focus your business
resources and human potential on
the delivery and achievement of your
strategy, thus helping to maintain a
competitive advantage.
Training in Strategic Finance is ideal for
experienced managers and directors with
a limited formal financial background, as
well as managers moving into roles with
financial accountability.
Non-finance managers will benefit
and be able to understand the full
financial vocabulary and how financing
decisions are made, learn the drivers
of good financial performance and
discover how to make more profitable
business decisions.

78 gulfbusiness.com July 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

July 2010 gulfbusiness.com 79

THE ESSENTIALS STATS & FACTS

MERGERMARKET TOP DEALS OF THE MONTH

Deal Value ($m) Bidder Target Deal Description
464 Jindal Steel & Power Ltd Shadeed Iron & Steel LLC Jindal Steel & Power Ltd (JSPL), the India-based steel and power company, has agreed to acquire
Shadeed Iron & Steel LLC, the Oman-based steel making company, from Al Ghaith Holding PJSC, the
UAE-based holding company having interests in the steel sector, for a consideration of $ 464m.
100 Abu Dhabi Commercial Bank Royal Bank of Scotland (UAE) Abu Dhabi Commercial Bank (ADCB), the United Arab Emirates-based bank, has agreed to acquire
(Retail Banking business) the retail banking business of Royal Bank of Scotland (UAE, the United Arab Emirates-based bank
engaged in consumer banking, commercial banking and international banking, for a consideration
of $ 100m.
31 Abdullah bin Nasser Al-Thani Malaga Club de Futbol SAD Abdullah bin Nasser Al-Thani, the Qatar-based private investor with interest in telecommunication,
(private investor) sports and the entertainment industry, has acquired Malaga Club de Futbol SAD, the Spain-based
football club from Fernando Sanz, the Spain-based private investor with interest in sports and
the entertainment industry, the son of Lorenzo Sanz and president of the club, for a minimum
consideration of EUR 25m.
25 Six of October Development Palmyra Real Estate Six of October Development and Investment Company (SODIC), the listed Egypt-based real estate
and Investment Company Development Company developer and investor, has agreed to acquire 40 per cent stake in Palmyra Real Estate Development
(40 per cent stake) Company, the Syria-based real estate developer, from MAS Economic Group, the Syria-based
economic group, for a consideration of $ 25.3m.
7 Hightech Payment Systems SA ACP Qualife Hightech Payment Systems SA, the listed Morocco-based company which designs and provides
comprehensive, modular and integrated solutions that manage electronic payment business, has
agreed to acquire ACP Qualife, the France-based consulting company which specialises in training
and engineering TEST Information Systems, for cash and stock consideration of EUR 5.6m.
- National Scientific Company Greif Inc (Flexible Product National Scientific Company Limited (NSCL), the Saudi Arabia-based company which supplies
Limited Business and Multiwall Bag industrial and scientific chemicals, laboratory equipment, scientific instruments and research and
Business) training services to the scientific community and a subsidiary of Dabbagh Group Holding Company
Ltd, the Saudi Arabia-based conglomerate and Greif Inc, the listed US-based manufacturer of steel,
plastic, fibre, corrugated and multiwall containers and protective packaging products, has agreed to
form a 50:50 joint venture, for an undisclosed consideration.
- Check Point Software Liquid Machines Inc Check Point Software Technologies Ltd, the listed US-based Internet security company specialising
Technologies Ltd in the VPN and firewall markets, has acquired Liquid Machines Inc, the US-based provider of data
security software, from Atlas Venture, New Atlantic Ventures, Draper Fisher Jurvetson, Masthead
Venture Partners, RRE Ventures, the US-based private equity firms, and Goldman Sachs, the
US-based investment bank, for an undisclosed consideration.
Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between May 20, 2010 and June 17, 2010. Based on announced deals, including lapsed and withdrawn
bids. Where deal value is not disclosed, the deal has been entered based on turnover of target exceeding $10 million. Activities excluded from the table include property transactions and restructurings where the
ultimate shareholders’ interests are not changed.

MIDDLE EAST QUARTERLY M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010 – VALUE
FROM 2004 TO JUNE 17, 2010
50 Industrials and Financial Services
14,000 TMT 10% Chemicals 17% 16% Consumer
Number of deals
Value ($m)

12,000 Value 1%
Volume 40
10,000 Business
30 Defence Services
8,000 1% 1%
6,000 20
4,000 Agriculture Energy/
10 1% Mining/
2,000 Utilities
0 0 6%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Pharma/Medical/ Transport Leisure Real Estate
2004 2005 2006 2007 2008 2009 2010 Biotech 3% 17% 8% 19%

MIDDLE EAST ANNUAL M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010 – VOLUME
FROM 2004 TO JUNE 17 , 2010
Real Estate Leisure Transport Pharma/Medical/ Construction
30,000 200 3% 3% Biotech 3% 1%
Value 7%
25,000 Volume Energy/ Agriculture
150 Mining/ 1%
20,000 Utilities
Number of deals

7% Defence
15,000 100
Value ($m)

1%
Business
10,000 Services
50 7%
5,000
TMT
Consumer Financial Services Industrials and 23%
0 0 10% 14% Chemicals 20%
2004 2005 2006 2007 2008 2009 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.

80 gulfbusiness.com July 2010

OUT TO LUNCH NEIL BACKHOUSE
Airline meals
MICHAEL GORDON discovers the ups and downs of the private jet industry over
lunch at Bistro Madeleine, in Dubai’s InterContinental Hotel.
D
espite being a penchant of the
über-wealthy, the private jet market
has also taken a nose-dive since
the global recession hit, according
to Neil Backhouse, director of sales and
marketing, Dana Jets.
Over lunch at Bistro Madeleine in the
InterContinental Hotel in Festival City, Dubai,
Neil took us on a veritable journey through the
history of private aviation.
Neil is, as you would expect from a sales
and marketing man, very enthusiastic about
his business. And well he should be, having
worked in aviation for many years – albeit in
some wildly different guises.
He says his passion for travel began as
a small boy in a family car journey to visit
a relative. “I had my head hanging out of
the window as we drove along, oblivious to
anything going on in the car. I was enthralled
and encapsulated by the white lines in the
road that seemed to run on indefinitely. A
little while later I was shown my first map
and I could see that towns and cities were
linked by all these lines – or roads as they
turned out to be. I was amazed at how you
could get from one place to another so
easily, then when I got to see a world map
everywhere seemed accessible.”
Neil’s first journey began at the age of 16
when, frustrated by a supermarket check out
job, he packed a bag and set off alone to trek
around Egypt. Bitten by the travel bug, Neil
then took up a job as a flight attendant.
He has gone up in the world today, quite
literally, to work for a private jet firm owned
by the Ras Al Khaimah royal family.
Although enthralled by the tale, I pause Neil
so we can order our food in this rustic French
café. I opt for the goats’ cheese and beaf bacon
salad, which is deliciously toasted and placed
on a bed of crisp green salad, while Neil gave a
resounding thumbs up to his meat paté.
Mains follow, as does the chatter, and I
opt for steak and frites, which is cooked to
perfection, while Neil has a posh cottage pie.
Neil goes on to tell me how he joined Dana
Jets in December 2009, after working for two
other private airlines.
82 gulfbusiness.com July 2010
Dana has a moderate fleet of six aircraft,
capable of carrying between eight and 14
passengers, with a maximum reach of New
York without refuelling.
The company boasts a global portfolio of
around 2,500 customers, varying from brokers, to
direct clients to operators. However, in January
2009, which would ordinarily be the busiest
month, Neil noticed a big hit in the market.
“By May it was picking up again, whereas
Europe and the US were showing no signs of
recovery and Asia was only slightly improving.
“However, our improvement was nowhere
near as high as the hit we took. Furthermore,
operators began to panic sell and prices were
slashed by around 35 per cent.
“Everyone began to watch their spend and
our clients returned to business class travel
on commercial airlines.”
We pause again to order dessert, crêpe
suzette and a chocolate mousse, both of which
were beautifully presented and packed with
flavour, while light and airy. Coffee follows, as
does the chat.
Neil continues: “In terms of demand and prices
it will take a few years to return to normality.”
Prior to that crash, the market grew by 10 to
15 per cent over a six-year period up until 2009.
In light of the downturn, Neil believes that
airline operators should work together to
overcome some of the hurdles – like the grey
charter market.
The grey charter market refers to when
a client uses a privately registered aircraft
which is not registered to the GCCA or holds
an Alpha 6 certificate. “These operators are
not bound by the policy procedures and
restrictions of the GCCA – therefore their crew
may not have the same level of training and
maintenance checks may not be of the same
standard. Those clients are putting themselves
at risk to save money.
“Furthermore, this competition is destabilising
the market as it forces us to drop our prices
further, otherwise we could not compete.
“Right now it is a buyer’s market and they
are in a strong position to dictate terms, and
operators are prepared to bend the rules if it
means selling something.”