SPECIAL REPORT: GROWING QATAR'S INSURANCE SECTOR
Vol. 6 No. 3 - Issue 53 - March 2014
QATAR: THE NEW TALENT REALITIES
Managing recruitment challenges ahead of the 2022 World Cup
The Ikea effect
Shaking up Qatar’s furniture retail sector
Ahli Bank’s retail head Andy McKechnie
Are multi-manager funds on the rise in Qatar? Qatar to establish real estate regulator Qatar's diabetes cost dilemma Can legislation help combat cyber crime?
contents March 2014
w w w.t h e e d ge. m e
TheEdge53 Front Cover.pdf
SPECIAL REPORT: GROWING QATAR'S INSURANCE SECTOR
Vol. 6 No. 3 - Issue 53 - March 2014
- QATAR’S BUSINESS MAGAZINE - Vol. 6 No. 3 - Issue 53 - March 2014
QATAR: THE NEW TALENT REALITIES
Managing recruitment challenges ahead of the 2022 World Cup
The Ikea effect
Shaking up Qatar’s furniture retail sector
Banking philosophy Ahli Bank’s retail head Andy McKechnie
Are multi-manager funds on the rise in Qatar? Qatar to establish real estate regulator Qatar's diabetes cost dilemma Can legislation help combat cyber crime?
As Qatar prepares to host the 2022 World Cup, one of the major challenges for organisations will be attracting and retaining both Qatari and expatriate talent. David Jones and Radhika Punshi of The Talent Enterprise, look forward to the prospects of future talent trends in Qatar and the wider GCC.
52 The Ikea store in Qatar has more than 7500 products, 59 room settings, three homes, a 550-seat restaurant and a play area, located across 32,000 square metres. How has its presence affected retail in Qatar? The Edge investigates on page 52 (Image Getty Images)
Business Interview: Towards better healthcare 48 Dr. Mariam Ali Abdulmalik, managing director, Primary Health Care Corporation, discusses the corporation’s operational independence and its service capability compared to private healthcare players, among other topics.
Feature story: The Ikea effect 52
Did Ikea’s entry into the Qatari furniture retail market disrupt the status quo? The Edge explores how the giant retailer has impacted Qatar’s furniture retail sector.
Business Interview: Ahli Bank’s retail philosophy
Customer experience, customer-oriented staff and a good technology platform are the main success factors for a retail bank, in the opinion of Andy McKechnie, deputy CEO and the head of the retail banking division at Ahli Bank.
Special report: Qatar’s insurance sector
The insurance industry in the Gulf Cooperation Council is expected to grow at a compound annual growth rate of 18 percent in the five years leading up to 2017. The Edge takes a look at how Qatar’s insurance sector will benefit from these regional trends.
62 Ali Saleh Al Fadala, senior deputy group CEO of Qatar Insurance Company, says they are choosing to focus on customer service instead of competitive pricing that many insurers in the market engage in.
The Edge | 3
Finance & Markets 23
Increasing evidence suggests that multi-manager fund management is becoming an increasingly popular model the retail investment climate of the Middle East.
Energy & Sustainability 27
Produced water, a by-product of oil and gas extraction, could provide huge market opportunities to service providers in Qatar, according to new research.
Real Estate & Construction 31
With real estate experts foreseeing a rise in property prices and eventually rents in Qatar, can a regulatory body protect tenants and buyers from rental inflation?
Tech & Communications 35
A draft of the cyber crime law approved by the Cabinet last month will include laws concerning vital technology infrastructure.
Healthcare & Education
How can Qatar manage the cost challenge of diabetes, a disease that affects a large part of its population?
Business Insight 71
In conversation with The Edge, Patrick Heuze, CEO of Souq Waqif Boutique Hotels talks about what sets boutique hotels apart from the traditional ones. Ahmed Zeidan, general manager, Mackeen Technology, discusses their business model and focuses on how they match international technology to the local market demands.
Patrick Heuze, CEO of Souq Waqif Boutique Hotels says their focus in 2014 would be growing the brand in the GCC market.
regulars From the Editor 8 Photo of the Month 12 Business News 14 Qatar Perspectives 20 Reviews 77 4 | The Edge
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6 | The Edge
WHEN WARRANTY BECOMES INSURANCE There has been a trend lately in the Qatar retail market that manufacturers and/ or retailers sell, along with the purchased product and the product warranty, an extended warranty that may cover accidental damage. Due to recent changes in the applicable regulatory framework of insurance activities in Qatar as a result of the issuance of the new Qatar Central Bank Law No. 13 of 2012 (the “QCB Law”), it is important to highlight the regulatory issues that may arise from selling additional promises awarded with a product. Many manufacturers and suppliers are unaware if their product warranties comply with the laws in particular jurisdictions i.e. Qatar. It is important for the purchaser to identify whether or not the product warranty includes ”insurance coverage” provisions. This can typically be assessed if the product warranty includes “accidental damages cover”. A normal product warranty is an obligation on the seller of a product. The seller typically provides warranty against factory defects. The law allows the contracting parties to increase the product warranty. As such, a product warranty or extended warranty provided by the manufacturer of a product covering breakdown and replacement protection is a contractual obligation that would not fall under the Qatar Central Bank’s (“QCB”) definition of “insurance activities”. The Consumer Protection Law has similar provisions on the provision of warranties by suppliers of products or services in Qatar. However, the regulatory issues are triggered when the warranty involves a promise to cover risks other than factory defects i.e. fire, theft etc. as same may be deemed more of an insurance cover, extension of liability rather than a contractual obligation.
reinsurance companies are required to obtain the approval of the QCB on the forms of insurance policies to be issued to customers. This would entail that any form of product warranty which also covers accidental damage must be submitted to the QCB for approval. An agent or a retail shop may offer product warranty, including accidental damage cover only through a local insurance company licenced by the QCB. Conclusion Manufacturers and suppliers who offer product warranties to their customers in Qatar should observe the types of cover of such warranties. Each warranty cover must comply with the prevailing laws and the manufacturer should comply with the licencing requirements of the QCB in relation to product warranties that extend to cover accidental damage as addressed above.
The following are the types of insurance operations regulated by the QCB Law: • Individuals and money collection operations, including the following: (i) all types of life insurance; (ii) personal accidents including insurance of damages resulting from personal accidents, vocational risks, occupational accidents, theft, mistrust, and individual civil liability; (iii) long term medical treatment insurance; and (iv) money collection operations insurance. • Property and liability insurance, including the following: (i) fire and fire related damage insurance; (ii) land, sea, and air transport insurance and related liability insurance; (iii) insurance of ships, airplanes, devices and missions thereof and all that is related to ships and airplanes, including risks related to the construction, manufacturing, use, repair, or anchoring thereof and damages befalling third parties; (iv) insurance of goods and shipments of all types and shipment fees; (v) insurance of vehicles, mechanical vehicles, and related liabilities; (vi) engineering insurance and related liabilities; (vii) insurance of industrial and construction projects and related liabilities; and (viii) insurance of oil, gas, and derivatives thereof and related industries. Therefore, accidental damage cover sold with product warranties amongst the risks outlined above, could strictly speaking fall under the definition of “insurance” under the QCB Law. The activity of providing protection against accidental damage as a stand alone activity, would constitute a regulated activity under the QCB Law. Hence, a QCB license would be required in order to provide this product. Furthermore, Article 103 of the QCB Law provides that insurance and
Sarah El SErafy Senior Associate Al Tamimi & Company firstname.lastname@example.org
editor’s letter It is common knowledge that in Qatar and much of the Gulf Cooperation Council (GCC), attracting and retaining a talented and engaged workforce is a major challenge, particularly for many highly skilled positions. Some vacancies can often ostensibly remain open for long periods. The result is that the burden is placed on others in the organisation to perform the tasks necessary, or these roles are filled by persons not necessarily qualified or experienced enough to do them with much success. This situation is clearly highly inefficient, and no doubt a drain on the bottom line of the organisations it affects, at least temporarily. When human resources (HR) requirements or departments themselves are poorly managed or not at all, the problem is exacerbated. And when it is a C-Suite or management role that is not filled or poorly performed, this negative effect is further compounded, as entire companies, departments or teams struggle to advance their aims without an effective leader. Low engagement, employee churn, wastage, breaks in supply chains, missed deadlines, botched projects and non-payment of staff or creditors are but a few of the repercussions of poor or non-existent HR management. In giving this further thought, it does seem ironic to me that this would be the case for Qatar and the GCC. As an expatriate worker myself, I am all too aware that being prepared to take the life-changing step away from one’s home country is a massive decision. However, in most cases in the modern world, with so many economies in decline or at best stagnant, the Middle East and especially the Gulf region is an attractive option to furthering one’s career and earning a good wage. So the fact is that there are legions of qualified, capable professionals around the world
willing and ready to work in Qatar or in one of its neighbours. This region needs talent and it is out there, from Australia to Zanzibar. So why do recruiters here face so many challenges and potential employees seem to struggle to find jobs that suit their skills quickly? Why do so many positions remain vacant and the resultant HR challenges persist in this otherwise resource- and cash-flush region? This topic is outlined in our cover story The New Talent Reality, by Gulf-based HR experts David B. Jones and Radhika Punshi on page 42, which focuses on these and other related issues through the filter of Qatar’s preparation for the 2022 World Cup. Factors such as workforce nationalisation, employment systems and related public policy, demographic urgencies and improving recruitment, and other HR standards in Qatar and GCC are looked at by the article’s authors, who incidentally recently released an engaging book on the subject entitled The Paradox of Plenty. The Gulf comprises six countries that are unique in their own ways, so generalisations, even between Qatar and the United Arab Emirates, cannot be made. But these two countries in particular share many commonalities and challenges surrounding this topic. And they are also in competition for the same talent resources, a fact recently made even more pertinent by Dubai being awarded the 2020 World Expo, increasing the need for talent in the region exponentially. Two elements in the lead up to these events will be key: how public policy evolves and how the private sector’s HR segment improve their standards and processes. As our authors express, the repercussions of failure, both in the lead up to these two events and beyond, are immense. Will competent candidates fill all the emerging vacancies? How will nationalisation quotas within the public and private sectors affect the macroeconomic dynamic? Will the emerging youth bulge be sufficiently engaged? These are just some of the questions that need to be more widely acknowledged and addressed immediately, in order to ensure that Qatar and its neighbours’ upcoming HR challenges are effectively dealt with sooner rather than later.
Missed deadlines, botched projects, and non-payment of staff or creditors are but some repercussions of poor or non- Miles Masterson existent HR management. Managing Editor 8 | The Edge
12 | The Edge
photo of the month
Digital dominoes Samsung phones ripple like falling dominoes in a display at the recent Mobile World Congress held in Barcelona, Spain. The event attracted thousands of delegates from the technology world and included speakers such as Facebookâ€™s Mark Zuckerberg. Of the hundreds of global firms showing off their products and services, Qatarâ€™s own international mobile and telecommunications brand Ooredoo was also present to showcase its range of applications and services in its home country, as well as its subsidiaries from Algeria to Indonesia. (Image Corbis) The Edge | 13
Qatar proposes welfare reforms for migrant workers in a new report
Qatar 2022 Supreme Committee responded to international criticism with a 50-page report offering welfare reforms for migrant workers involved in 2022 World Cup projects. by Farwa Zahra International Trade Union Confederation (ITUC) has warned that from India and Nepal alone, 400 migrant workers die every year in Qatar, which could increase up to 600. “More than 4000 workers risk losing their life over the next seven years as construction for World Cup facilities gets underway if no action is taken to give migrant workers’ rights,” said Sharan Burrow, general secretary of ITUC. Responding to the calls of ITUC among other human rights organisations, Qatar had until February 12 to report its plans for worker reforms to the football governing body FIFA. The organising committee for the 2022 World Cup recently released a 50-page report, which aims at ensuring the welfare of migrant workers involved in the projects related to 2022 World Cup. Labourers working at a Speaking with The Edge about this construction site in Doha. document, Nicholas McGeehan, the The worker welfare charter, released by Qatar 2022 Bahrain, Qatar, and United Arab Emirates Supreme Committee in researcher at Human Rights Watch, said, February, proposes reforms for migrant workers over a “The standards are detailed and thorough 50-page document. (Image Reuters/Arabian Eye) and the Supreme Committee deserves credit for its efforts to improve standards on the projects within its control.” However, the welfare standards set in this document, according to The Guardian, are only restricted to migrants
“Where liability is found to rest with employers...authorities will pursue these cases through legal channels.” – Qatar’s Ministry of Labour and Social Affairs. 14 | The Edge
working on football stadiums under construction. The report, hence, does not cover wider infrastructure projects otherwise linked to the tournament. Pointing out another issue with the report, McGeehan mentioned the problem of efficacy. “These standards provide theoretical protection to a small fraction of Qatar’s migrant workers since it has yet to be established that they will be effective in practice,” he said. While the document focuses on areas such as wages and accommodation, it does not address the kafala scheme, which according to McGeehan is a key issue in Qatar. “They are not legally binding, they do not guarantee workers’ rights to change employer, or their right to leave the country or their right to bargain collectively for decent pay and conditions if things go wrong,” he said, adding that the government should apply these standards to the whole migrant worker population; back them up with sanctions, and unveil plans on how it intends to reform the kafala system. After the accounts of Nepalese workers dying in Qatar, the international media recently reported more than 500 Indian workers dying in Qatar since January 2012. Responding to the news reports, Qatar’s Ministry of Labour and Social Affairs told The Guardian that they have increased the current base of labour inspectors by 25 percent and that the ministry is working on investigating the causes of concerned deaths. “Where any liability is found to rest with employers, the Ministry of Labour and Social Affairs, and Qatari law authorities will pursue these cases through the relevant legal channels,” the ministry has stated.
Qatar Tourism Authority announces new strategy for the country
Qatar Tourism Authority’s chairman Issa Al Mohannadi, at Tourism in Tomorrow’s World, said that Qatar aims to develop ecological tourism as part of its overall tourism strategy.
The Qatar Tourism Authority (QTA) recently announced the launch of its Tourism Strategy, a document that outlines its plans to grow the sector in an attempt to increase its contribution to the overall gross domestic product of the nation. by Shehan Mashood Speaking at the Tourism in Tomorrow’s World conference held in Doha recently, chairman of the QTA, Issa Al Mohannadi, announced the plan would be to grow the number of visitors from
the 1.2 million a year it is today, to between 6.7 million and 7.4 million by 2030. In developing the plan, “we applied best practices and successful lessons from other countries and cities,” said Al Mohannadi. The plan also aims to flip the demographic of those travelling to Qatar by 2030. Currently, 73 percent of visitors are those coming for business and the rest for leisure. By 2030, leisure is expected to contribute to 64 percent of all travel. Professor Robert Coelen, dean at Stenden University Qatar, told The Edge that the strategy was very insightful and indicated that the whole of Qatar would be turned into a memorable experience for visitors. Also speaking at the event, United Nations World Trade Organization’s secretary general, Dr. Taleb Rifai said, “Qatar is a good example of how you take tourism and make it the national priority. Without a national policy, tourism cannot progress. Tourism is the oil that never runs out.”
Entrepreneurship stakeholders assess their role in economic development In a two-day forum organised by Qatar University in collaboration with Interactive Business Network, stakeholders and entrepreneurs discussed the role played by self-driven individuals in fostering economic development. Aparajita Mukherjee reports. In his opening speech at the forum, the Minister of Energy and Industry HE Dr. Mohamed bin Saleh Al Sada, said, “Entrepreneurship plays a very important role in Qatar and other Gulf states in activity and the role of the private sector, as well as increasing its dynamism and expanding the economic base.” The Minister said Qatar offered a set of entrepreneurship incubators to revive and encourage projects in various domains. “Qatar has set up several business incubators which are working to support modern projects in various areas,” he said. In the keynote address on the second day of the forum, Dr Abdulaziz Al Horr, CEO, Qatar Finance and Business Academy, said that there are four sub-sets in the overall entrepreneurial climate in any country and elaborated that these sub-sets are the economic, political, legal and social milieus. He added, “It is essential for entrepreneurs to be thinkers, to aim to grow, operate and design expansions.” Dr Horr added that entrepreneurs need to think differently in order to succeed. “It is a myth that someone cannot start a business if he or she is above the age of 40.” Answering questions from the panel on whether a business plan is an absolute necessity, Dr Horr said, “This varies from
Dr. Abdulaziz Al Horr, CEO, Qatar Finance and Business Academy, said that an imperative for all entrepreneurs is to communicate with others. “Communication creates a sense of belonging to the community,” Dr Al Horr added.
case to case and I have come across entrepreneurs who have it written in their minds, and have the capacity of executing it without any difficulty.” The Edge | 15
business in brief Words & Numbers
QIC celebrates its golden jubilee
Silatech convenes civic engagement discussion
199,000 The approximate number of shareholders of Mesaieed Petrochemical Holding Company (MPHC), with its shares first listed on February 26, 2014. “We want to make people in Britain proud of what we (Harrods) do.” Ahmad Al Sayed, chief executive officer of the Qatar Investment Authority (QIA), revealing for the first time that QIA had invested GBP250 million (QAR1.5 billion) into Harrods over the last four years.
Position of Qatar based on the amount of proven gas reserves, which, according to British Petroleum’s 2013 Statistical Review Of World Energy, are 885.1 trillion cubic feet. “In general, Qatari media are avoiding critical questions, not only regarding the policies of the government but also when reporting on business news. There is a lack of real investigative reporting.” Jan Keulen, erstwhile director of Doha Center for Media Freedom told The Edge. The French media advocacy organisation Reporters Without Borders reported that Qatar dropped to 113th from 110th last year, out of 180 countries in international press freedom index.
16 | The Edge
A scene from QIC’s gala dinner on the occasion of its golden anniversary.
Qatar Insurance Company has marked its 50th anniversary. The day was celebrated with a gala dinner, acknowledging the organisation’s achievements. Founded in 1964, QIC was the first domestic insurance company in the State of Qatar. QIC operates in Qatar, United Arab Emirates (Dubai and Abu Dhabi), Oman, Kuwait and Malta.
QITCOM to unveil opportunities in Qatar
QITCOM will attract progressive businesses, innovators and industry leaders as well as ICT professionals, consumers, entrepreneurs, students and enthusiasts.
The third edition of QITCOM will be held at the Qatar National Convention Centre from May 26 to 28. Organised by fischerAppelt, Qatar, in collaboration with the Ministry of Information and Communications Technology (ictQATAR), opportunities for investment in and to capitalise on the rapidly developing Qatar market will be the focus of QITCOM 2014.
A panel addressed the audience at the event that gathered Arab university leaders to discuss civic engagement.
Over 40 university presidents and senior administrators from the Arab world gathered in the Jordanian capital of Amman on February 9 and 10 to share experiences and discuss how to better integrate concepts of civic engagement and citizenship within the universities in their countries. The event was convened by Silatech in partnership with Innovations for Civic Participation.
Qatar’s first online gold and silver trading platform unveiled Gold Holding, an investment holding company based in Dubai International Financial Centre, has announced the opening of its latest subsidiary, QGold, Qatar’s first corporate entity dedicated to online trading of gold and silver. QGold has been launched with the aim of focusing on the fast-growing e-commerce sector, enabling investors to trade in physical bullion via its web-based trading system.
Ikea launches mobile application
ictQATAR to empower and train Qatari youth
Considering the fact that almost 30 percent of Ikea’s website visits in 2012 came from mobiles and tablets, the giant furniture store has launched a mobile phone application and a mobile-friendly version of its Qatar website for customers who interact with the brand on their mobile devices. While Apple and Android users can find this free-to-download application on the App Store and Google Play, those on other operating systems can visit Ikea’s mobile-optimised site.
The Ministry of Information and Communications Technology, and Community College of Qatar (CCQ) have signed a Memorandum of Understanding (MoU) to collaborate in order to empower and train Qatari youth to use technologies effectively. The MoU will provide a foundation for both parties to benefit from each other’s expertise, resources and initiatives to introduce Qatari students to the benefits of latest technologies and opportunities in the sector.
events business Qatar, March 2014
events of the month 9 - 11 March Multaqa
Multaqa, now in its eighth year, focuses on the insurance industry in the Middle East North Africa region. Hosted by the Qatar Central Bank and Qatar Financial Centre, this yearâ€™s event will feature discussions on profitability challenges, the demand for talent within the insurance and reinsurance industry in Qatar and risk management. It will also allow opportunities for senior executives in the industry to network.
March UPCOMING EVENTS 11-12 March GCC Future Rail Summit
17-19 March Qatar Projects
World Exchange Congress
Maritime Defense Exhibition and Conference
Abdulrahman Ahmad Al Shaibi, board member of the Qatar Financial Centre speaks at last yearâ€™s Multaqa event. This is the eighth year the event will be held.
7 - 8 April
Arab Future Cities Summit
The third Arab Future Cities Summit will focus on knowledge-sharing and showcase city development, best practice strategies by experts on innovative solutions that will integrate citizens, systems and services. Discussions on how future cities will solve key challenges such as water and energy security, transport, sustainable development and the use of technology, will also be addressed.
OTHER UPCOMING EVENTS 22-24 April
Gulf Water Conference
12-15 May Project Qatar
26-28 May Qitcom
2-4 June Cityscape Qatar
18 | The Edge
qatar perspectives Qatar increases support to SMEs A drive aimed at encouraging Qatar’s citizens to set up in business is gaining pace, as the government moves to increase the private sector’s contribution to the national economy through regulatory changes and stronger support for entrepreneurs, writes Oliver Cornock, regional editor for the Middle East at Oxford Business Group. At present, most Qatari workers hold jobs in the public sector. Figures from the Ministry of Development Planning and Statistics showed that 84 percent of the almost 83,000 economically active Qataris were employed by the government, or one of its companies, in 2012. Around 7700 nationals were based in the private sector, compared to nearly one million foreign workers. The construction industry provided employment for the majority of the international workforce.
Support for entrepreneurs
The country’s leadership has begun pushing forward several initiatives in its efforts to encourage local entrepreneurship in the longer term, especially among the younger generation. Business development, in particular, has been targeted for investment, with training and related forms of support given a priority. The focus on encouraging entrepreneurial growth will reach an important milestone this year with the opening of the Qatar Business Incubation Centre, which will have the capacity to accommodate around 300 workshops once operational. The facility is a joint venture between the Qatar Development Bank (QDB), a key pillar of support for small- and medium-sized enterprise (SME) initiatives, and the Social Development Centre, part of the Qatar Foundation for Education, Science and Community Development. QDB has also strengthened the financial services being made available to 20 | The Edge
“A 2012 report by Gallup, in conjunction with Silatech, indicates entrepreneurial motivation among Qatar’s younger generation is growing.” smaller businesses. Under its Al Dhameen programme, the bank guarantees up to 85 percent of commercial loans, limited to QAR15 million for SME projects. Other banks have followed suit, including Qatar National Bank, which launched its Business Banking platform in October 2013. Enterprise Qatar (EQ), another major player on the SME landscape, is set to offer additional support for businesses in the often-challenging early phase of operations through its Jadwa programme. The organisation also subsidises consultancy services for audits and accounts, while covering 70 percent of feasibility study costs. [Editors note: EQ also recently announced that a QAR364 million investment fund would be set up to aid start-ups.]
motivation among Qatar’s younger generation is growing. In the poll, conducted in 2011, Qataris were found to have the highest business drive in the Arab world, with one-third aged between 15 and 29 saying they planned to start a business within 12 months. The number sits well above the Arab League median of nine percent.
Focus on youth
Several of the government’s programmes aimed at driving SME growth have a focus on encouraging entrepreneurship among younger Qataris. The Bedaya Centre, a joint venture between QDB and Silatech, an international organisation that supports the development of SMEs, aims to help young people identify their career path or guide them towards entrepreneurship resources. INJAZ, a private NGO operating in Qatar, also targets youth work placement with an emphasis on business start-ups. Qatar reaffirmed its commitment to increasing SME growth in November 2013 when it hosted the 2013 Global Entrepreneurship Week, an international conference attended by representatives from 115 countries. A 2012 report by Gallup, in conjunction with Silatech, indicates that entrepreneurial
Oliver Cornock is regional editor for the Middle East at Oxford Business Group.
This section is brought to you by Qatar Financial Centre Contents: Are multi-manager funds on the rise in Qatar? 23. Renewed optimism due to strength of economy 24. Q-Re’s strong 2014 renewals 26.
finance & markets Are multi-manager funds on the rise in Qatar? There is increasing evidence that multi-manager funds are becoming an increasingly popular model in the retail investment climate of the Middle East. A case in point is the recently launched openended shiraa funds that will be distributed to private and wholesale clients of QIB and QInvest, writes Simon Watkins, examining how such trends match global offerings.
oha-based QInvest and Qatar Islamic Bank (QIB) have jointly launched a range of multimanager funds, which are perfectly attuned to the changing nature of global asset markets, both in terms of risk correlations and returns, highlighted Ataf Ahmed, head of asset management at QInvest. “There are three versions, each offering a different return profile with different levels of risk, which is reflected through the asset allocation,” Ahmed said, adding that the open-ended shiraa funds will be distributed to private and wholesale clients of QIB, Qatar’s largest Islamic lender by assets, which holds a 47 percent stake in QInvest. Indeed, even before the latest mini ‘blow up’ in the emerging and frontier markets at the beginning of this year, there was increasing evidence that multimanager fund management was becoming a popular model among the Middle East’s retail investment sector.
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For both QIB and QInvest, a tie-up looks highly advantageous from every perspective. For QIB, through such funds, it will be able to offer the sort of asset management structure that has been favoured in the developed markets.
The Edge | 23
sectors | finance & markets
to make an investor’s life easier by bringing together a range of specialist managers into a single fund. One of these fund types invests in a range of other funds controlled by different asset managers (funds of funds). The other appears to be the type that QIB is looking for with QInvest, that is, the manager of manager (MoM) fund in which external managers are appointed with specific expertise to invest separate tranches of the provider’s portfolio.
Tamim Hamad Al Kawari, CEO, QInvest, said that the first funds have been off to a strong start and are already among the best funds within their peer groups.
“The ongoing effects of the global financial crisis – lower economic growth, contraction in the corporate sector, and near-zero interest rates in many countries, both within the emerging markets and developed markets world – have prompted many investors to re-assess their risk/ reward parameters,” said Marc Chandler, global head of strategy for Brown Brothers Harriman in New York.
In this vein, the three new QInvest-QIB shari’ah-compliant funds are part of broader plans to launch as many as 30 funds over the next three years, on a managed account platform introduced last year by QInvest, which has around USD750 million (QAR2.7 billion) in capital, and are designed to cater to investors whose risk appetite may change over time, added Ahmed. For both entities, such a tie-up looks highly advantageous from every perspective. For QInvest, it accords with its strategy of streamlining its operations and focusing on its investment banking and asset management business lines, while also creating a deeper and broader relationship with QIB. On the other hand, QIB will be able to offer the sort of asset management structure that has been favoured in the developed markets. Marketed as an investment one-stop shop, multi-manager funds first appeared in the 1980s in developed markets, but became more prominent as an investment model in the 1990s, designed as they are 24 | The Edge
This would certainly appear to be the aim of the new QInvest-QIB tie-up, with a notable adjunct benefit to this objective being that it is occurring concomitant to the recent launch of the QInvest Managed Account Platform (QMAP). QMAP is the world’s first open architecture shari’ah-compliant managed account platform and provides investors with the opportunity to select from a range of high-quality funds that are managed by top-tier professional teams. Indeed, it is already working with Eagle Capital Management, Edgewood Management, and GAM, and has built the platform’s operational processes in conjunction with Nomura International. “The platform will allow shareholders and investors to invest in asset structures not only of the multi-manager variety but also in a wider structural architecture, such as mutual funds and hedge funds, managed by globally recognised investment managers,” underlined Tamim Hamad Al Kawari, QInvest’s CEO, in Doha. He added, “QMAP is a pioneering solution managed by a professional team of experts and associated with world class groups, in which fund managers, for instance, have to pass strict selection criteria covering investment processes, operational and risk controls. The first funds have been off to a strong start and are already amongst the best funds within their peer groups.” “The aim of these funds is to add an extra layer of diversification, either through holding funds that have already gone through a process of diversification themselves, or by segmenting a portfolio and outsourcing its management to individuals who have been identified as having proven experience in a particular area,” said Chandler.
The capital that QInvest has on a managed account platform. Certainly in this context, the QIB link should add another strength to the MoM mix for QInvest’s operation, given the likely boost in its distribution capabilities over and above its non-Qatar offices in Riyadh and Istanbul. It should also help tackle a lack of scale that is common across Islamic fund managers. Such scale would undoubtedly assist in keeping the total expense ratio - including legal and administrative charges – of the QInvest-QIB funds within the typical range of two percent to 2.5 percent, although no formal announcement on this has yet been made.
Renewed optimism due to strength of economy In the Q1 2014 Business Optimism Index (BOI), with the composite index at 49, the business sentiment in Qatar’s non-hydrocarbon sector stands at the second highest level in three years. by Aparajita Mukherjee
Renewed business optimism, according to Yousef M. Al Jaida, chief strategic development officer, Qatar Financial Centre Authority, is the strength of Qatar’s economy and the expectation that it will continue to display solid growth in 2014 on the back of implementation of large infrastructure projects and a fast-growing population which will bolster domestic
sectors | finance & markets
demand. “The country’s economic growth accelerated to 6.2 percent year on year in Q3 from six percent in Q2,” added Al Jaida. “This performance owed much to the rapid expansion of different sectors. The non-hydrocarbon sector as a whole grew 9.5 percent year on year in Q3 of 2013,” said Al Jaida, adding that trade, restaurants and hotels, construction, transport and communication, financial, real estate, business services, and domestic services enjoyed double-digit growth. “The transport and communication sector grew at 13.9 percent year on year, driven by the Ramadan festival, which boosted travel and tourism, as well as a higher number of mobile phone subscribers. The financial, real estate, and business services sector grew 10.5 percent year on year, as real estate services were
boosted by the growing population, while the construction sector, grew at 13 percent as Qatar’s infrastructure development gathered momentum.” In addition, more expatriate workers are coming to Qatar to meet higher labour demand for infrastructure projects. The influx will fuel economic growth by boosting domestic demand for services and investment in housing and other infrastructure projects. Reflecting the general strength of optimism, 68 percent of non-hydrocarbon sector respondents foresee an increase in sales volumes in Q1 2014 as they expect market conditions to improve and expanding demand to bring more business opportunities. Of the non-hydrocarbon sector respondents, 48 percent do not anticipate
any negative factors impacting business operations in Q1 2014 compared to 72 percent in Q4 2013. Analysing this pattern, Al Jaida told The Edge that the main cause of this change in sentiment is that the intensity of key challenges affecting business operations in Qatar has increased in the current quarter. Rising competition is a leading challenge identified by 12 percent of the sector respondents – marginally higher than the previous quarter’s tally of 10 percent. Slow demand is another challenge facing 10 percent of the businesses, up from three percent last quarter. Delays in receiving payments are an important concern for eight percent of respondents, while five percent are concerned with government regulations, and three percent each are affected by availability of finance, skilled labour and inflation.
Q-Re’s strong 2014 renewals
Growth and Composition of Insurance Industry in Qatar 1.5
Gunther Saacke, CEO, Q-Re, said, “Annual business plans are developed according to capital base, risk appetite, underwriters’ views on accessibility and profitability of business lines and regions.”
In an exclusive interview with The Edge, Gunther Saacke, CEO Q-Re speaks about their business model on property, casualty and speciality lines premiums.
Media reports have said that Q-Re, a wholly-owned subsidiary of Qatar Insurance Company, expects to write around USD269 million (QAR979 million) of property, casualty and speciality lines premiums from the January 1 renewals. 26 | The Edge
Life Source: Swiss Re, Alpen Capital
Talking to The Edge on how the premium lines have been chosen, Saacke said, “QRe writes all reinsurance business, if it is insurable (by standard definitions). There are only a few lines where we have not yet developed the necessary skill set. The importance of a certain business line evolves through the offered return on equity and our mid-term view on the development of these lines.” Saacke pegged property renewals at 160 percent, speciality at 45 percent,
aviation at 125 percent, agriculture at 30 percent, and casualty at 15 percent. As the only reinsurance company based here in Qatar, what advantage does it give Q-Re? Saacke’s take on the local advantages were, “Whilst it is always helpful not to encounter too much competition, the local markets are only a minor part of our portfolio. This may slightly change going forward as the business potential in these regions outpaces other regions of the world.”
Contents: Produced water: a ‘high growth sector’ in Qatar 27. Qatar and Japan: The next step 28 . Qatargas breaks new ground with ship-to-ship LNG transfer 30 .
energy & sustainability
Produced water: a ‘high growth sector’ in Qatar Produced water, a by-product of oil and gas extraction, could provide “huge market opportunities” to service providers in Qatar, according to new research, writes Jamie Stewart, the editor of our energy and sustainability sector.
ccording to the firm, the Gulf Cooperation Council (GCC)wide market earned revenues in excess of QAR1.2 billion last year, and this number is expected to approach QAR1.8 billion in 2017 – a growth projection of 60 percent in just four years. And if current trends bear out, a large proportion of this growth will happen in Qatar. During the oil extraction process, water is pumped into
Qatar Petroleum’s Halul produced water treatment plant, northeast of Doha (Image Qatar Design Consortium)
underground reservoirs to push oil to the top of production wells and help achieve maximum recovery. In the later stages of this process, the pumped water also reaches the wells, and so makes up a larger proportion of total production. Water is as precious a commodity in itself in Qatar, hence the rise of the produced water industry. “To address the mammoth task of safely handling produced water and The Edge | 27
sectors | energy & sustainability
The amount of investment to upgrade water treatment plant in Halul, Qatar. extracting maximum oil before disposal, various governments are investing in research and development through joint efforts and grants,” Frost & Sullivan environmental technologies programme manager Kshitij Nilkanth says. Nilkanth highlights the Qatar National Research Fund, which has loaned QAR2.5 million
Qatar and Japan: The next step
to US-headquartered energy giant ConocoPhilips for the development of produced water-related technologies, as an example. One ongoing project to benefit from recent investment is a QAR219 million upgrade to a produced water treatment plant in Halul, northeast of Doha, operated by Qatar Petroleum. The upgrade work is being carried out by the Doha Petroleum Construction Company (DOPET) alongside Total E&P Qatar. Completion is expected by the end of next year, according to DOPET. But despite signs of progress in Qatar, elsewhere in the region, advances are either sluggish or non-existent. Markets in countries including the United Arab Emirates, Kuwait and Saudi Arabia have a lower water cut, meaning produced water occupies a smaller proportion of total production than it does in Qatar, and therefore, these countries barely invest in produced water management,
the Frost & Sullivan report says. “Suppliers in these countries are not given a clear idea about current or future management strategies, hindering them from knowing and addressing requirements,” the report says. “In fact, many oil and gas companies do not even monitor water produced from the fields and are unaware of the various options to manage produced water.” According to the study, while the equipment market is already seen as “competitive” in the region, the services segment is new in the GCC and will be a “high-growth sector in the long run”. “One of the most effective ways to enter the GCC produced water management market is through joint research collaboration to utilise the technology developed within the region,” says Nilkanth. “This will help capture the domestic market, increase technology know-how, and develop relationships with customers to ensure more projects.”
In 2013, Japan imported over 87 million tonnes of LNG, the vast majority of it for power generation at a cost of QAR250 billion, the most it had ever spent in a single year. (Image Corbis)
Japan’s renegotiation of its troubled relationship with nuclear power will have a bearing on Qatar’s natural gas exports, but whichever path Tokyo chooses to tread, its relationship with Doha will continue.
n February, state-owned Qatargas signed a new long-term liquefied natural gas (LNG) sale and purchase contract with Japan’s Tokyo Electric, under which Qatar will supply Japan with gas for 15 years beginning 2016. A plateau volume of 0.18 million tonnes per annum (MTPA) will be hit in 2019 and sustained from that point onwards, which at today’s prices would mean an income for Doha of around QAR550 million per year under the deal. Yet, the deal comes at an important crossroads for Japan as it considers its future relationship with another energy source: nuclear. Japan’s tough decision to switch off its nuclear power plants in the wake of the partial
28 | The Edge
meltdown at the Fukushima Daiichi plant in 2011 has hit its economy hard, while it has struggled to rebuild following the tsunami of the same year. The Far East nation imported just over 87 million tonnes of LNG last year, figures released by the country’s finance ministry in February showed, the vast majority of which was for power generation. Roughly 15 percent of this came from Qatar. This made it the largest LNG importing
nation in the world by volume, while the amount spent – a huge JPY7 trillion (QAR250 billion) – was the most Japan has spent on fuel in a single year in its history. While volume only crept up from 2012, spending shot up (see table over). When compared to the amount spent on coal, which fell despite growth in volume, the amount being ploughed into imports is stark. The complex moral and economic
sectors | energy & sustainability
questions surrounding the nuclear power industry, that not just Japan, but the world continues to grapple with, almost three years on from Fukushima, could have a huge bearing on the health of Qatar’s LNG export industry over the next few years, and potentially for decades into the future.
Across the planet, governments are battling with what is widely known as the energy ‘trilemma’ – a three-pronged problem common to the energy sectors of virtually all nations, whether emerging economies or industrialised countries – how to cut man-made global-warming-causing carbon emissions while ensuring a secure supply of energy at an affordable price. Nuclear power has for a number of years, appeared to occupy a niche within the three sides of the argument: although initially expensive, its running costs are relatively low; although slow to respond, its supply is generally secure and reliable; and in comparison to burning fossil-fuels, its carbon emissions are very low indeed. Now compare the characteristics of nuclear power with those of gas-burning power stations. Gas plants are cheap to build, but running costs, with a constant need for fuel, are high. Supply, although costly, is both responsive and reliable. And carbon emissions, while substantially higher than nuclear, are less than those from coal-burning power stations. In a post-Fukushima world that shies away from the political risk inherent in nuclear power, the gas-fuelled sector, which is cleaner than coal and more reliable than renewable energy, could win out.
Japan’s energy consumption Fuel
Volume (million tonnes)
Year-onValue Year-onyear change (trillion yen) year change (%) (%)
Source: Ministry of Finance Japan
Japanese Prime Minister Shinzo Abe, who would back nuclear power in the country’s energy mix, addresses the United Nations last year. (Image Getty Images)
Qatargas breaks new ground with ship-to-ship LNG transfer
Qatargas carried out the first ship-to-ship transfer of liquefied natural gas (LNG) between two of its giant Q-Flex tankers while the ships stood at anchor in open waters in Singapore at the end of January.
The six-day operation saw 211,000 cubic metres transferred from one ship to the 30 | The Edge
other at an average rate of more than 26 cubic metres per minute. The transfer came following “an incident involving one of the ships while transiting the Singapore straits”, Qatargas said in a statement released in February, without going into specific details. However, the company did add: “Whilst there were no reported injuries to personnel or impact on
Yet Japan’s uncertain and fractious relationship with nuclear power is a long way from being broken permanently. The country’s prime minister, Shinzo Abe, took power for the second time a little over a year ago, backed by an economic pledge to return the country to growth following a two-decade long economic malaise. And part of this plan involved the development of a diversified energy strategy, the blueprint for which, known as the Basic Energy Plan, is expected to be published in March. Abe has already signalled that nuclear is likely to play a role in Japan’s energy future, meaning a cut in the nation’s LNG consumption will follow. Moreover, on 10 February, a former cabinet minister Yoichi Masuzoe – a pro-nuclear candidate – won the election for Tokyo governor by a landslide, edging the country closer to a new deal with, and potentially a new acceptance of, nuclear power. However for Qatar, another new deal, signed with Tokyo Electric, is testament to the fact that LNG will still play an important role in Japan’s future energy mix, regardless of how the nation resolves its troubled relationship with nuclear power.
the environment, the incident did result in minor damage to the vessel.” Qatargas said “rigorous planning, including formal risk assessment, was completed and approved by all concerned parties prior to the start of the ship-to-ship operations”. The company’s Q-Flex ships have a cargo capacity of between 210,000 and 217,000 cubic metres, meaning they are up to 38 percent larger than the more traditional Q-Fleet ships. Nineteen such vessels have been built, all at shipyards in South Korea.
Contents: Government to monitor Qatar’s real estate sector dealings 31 . Report: Qatar’s construction unsatisfactory in 2013 32 . Rising property prices in Doha 33.
real estate & construction
Pictured here is a view of The Pearl-Qatar, featuring Qatar’s high-end residential units on rent and for sale. One of the key responsibilities of Qatar’s regulatory body would be monitoring real estate dealings such as rent contracts.
Government to monitor Qatar’s real estate sector dealings With real estate experts foreseeing a rise in property prices and eventually rents in Qatar, can a regulatory body protect tenants and buyers from rental inflation? Farwa Zahra explores.
ollowing Qatar’s rental inflation in 2008, the country introduced a two-year cap of 10 percent for all residential properties the same year. Since the law’s expiry in February 2010, landlords have been free to escalate rates. With increasing influx of expatriates, the rising demand for accommodation has further exacerbated the situation for tenants and buyers. According to Zawya report Construction Boom Puts Qatar in Spotlight, the country’s population is expected
to reach around 2.8 million in the next six years. Commenting on the trend, Monsi Rabah, country manager of PropertyFinder.com for its Qatar operations, said, “Over the last few years, there is a demand for new residential properties due to the continuous increase of population. With the new Doha International Airport due to open in second quarter, new residential properties will need to be built around that area.” Mark Proudley, head of research and
evaluation at DTZ, also foresees residential rents going up. “DTZ anticipates high potential for rental growth over the next two years for residential stock targeting middleto upper-income expatriates,” he said. It is against this backdrop that a dedicated authority to regulate Qatar’s real estate sector in being established, reported Arabic daily Al Sharq. Speaking with The Edge, Susan B. Bastress, managing partner of a US lawfirm Patton Boggs LLP, highlighted the The Edge | 31
sectors | real estate & construction
Susan B. Bastress, managing partner of a US law firm Patton Boggs LLP, says the regulatory measures in Qatar’s real estate sector must be carefully designed and implemented to avoid imposing burdens on investors.
importance of a regulatory body when she said, “Consumer protection measures which are customary in the real estate industry, such as licensing of real estate brokers and adopting rent controls to preserve affordable housing stock, could serve to protect buyers and tenants from unscrupulous actions in the industry.” “The focus of a proposed real estate regulatory body should be to establish international standards and regulations to help stabilise market conditions and bring confidence to investors, tenants, landlords, developers and real estate agents by creating and implementing systems and controls that would place everyone on an even playing field,” said Rabah. However, in carrying out these tasks, Bastress warns that the regulator should aim at striking a balance that stimulates further growth. “These measures must be carefully designed and implemented to avoid imposing burdens, including increased costs, on owners and developers that make new projects unprofitable. An overregulated market will only serve to slow down future investment and growth,” she said. While the country is equipped with control bodies in various sectors, what measures can be taken to ensure efficacy of the upcoming regulator? Rabah has some suggestions. “The senior management of such a government agency should try and 32 | The Edge
focus on insuring that a robust and effective system is introduced so that there is transparency in the market, which would give comfort to existing and potential investors in this fast-growing and evolving market,” she said. While monitoring real estate dealings effectively will benefit the sector at large, Bastress suggests some other measures that can further ameliorate the industry, “Other measures might include land use planning measures, such as zoning, to encourage appropriate and needed growth in designated areas. New development which addresses future demand, based on properly conducted feasibility studies, will also prevent an oversupply of some types of real estate development which fail to achieve sustainable occupancy levels.” These measures may or may not fall under the scope of the said regulator. However, about planning stage of future developments, Bastress said these objectives can only be achieved if “Qatar’s private sector, including developers, investors, financiers, and other real estate professionals, would lend their invaluable insights and experience to ensure that any new regulations would be closely aligned to provide both needed protections and incentives for new growth in Qatar’s real estate market.”
“The focus of a proposed real estate regulatory body should be to establish international standards and regulations to help stabilise market conditions.” – Monsi Rabah, PropertyFinder. com
Report: Qatar’s construction unsatisfactory in 2013
Industry players in Qatar’s construction sector believe the transport sector will bring the highest number of opportunities in 2014. (Image Corbis)
Despite the ongoing construction boom in Qatar, recent survey results suggest that the country disappointed respondents from leading construction companies, writes Farwa Zahra
Pinsent Masons has released findings from their sixth annual GCC Construction Survey, conducted with the region’s leading contractors, developers, consultants and other stakeholders. Results from the survey revealed that 70 percent of the respondents showed disappointed from the pace of Qatar’s construction market growth in 2013. Speaking with The Edge, Jonathan Collier, senior associate for Pinsent Masons LLP explained the possible reasons behind
real estate & construction | sectors
this market sentiment, “It is likely due to the fact that the public procurement process has not been moving at a pace that the market expected. 2014 is probably going to see activity at levels closer to the market’s expectations.” As a whole, the survey identifies financial concerns that if not tackled properly can negatively affect the GCC construction market. When asked about them in the context of Qatar, Collier said that ondemand bonds are widely in Qatar, as they provided security for the employer and supply chain, including main contractors. “It is vital that the banking sector supports their use in order to give confidence to the construction market in line with internationally recognised standards. We are aware of occasions in the region where there have been issues in respect of the confidence in such instruments which has had an adverse impact on particular projects and the construction sector as a whole.” Associate in the construction and engineering department at an international law firm Eversheds LLP, Nick Pinder, sees payment issues as one of the reasons behind respondents’ disappointment. “The complexity and sheer scale of many projects being undertaken in Qatar can mean that the determination of a contractual entitlement to payment can be especially challenging,” he said, adding, “It is particularly important that the parties ensure that their contracts accurately and
Jonathan Collier, senior associate for Pinsent Masons LLP says it is vital that the banking sector supports the use of bonds in order to give confidence to the construction market.
“The Property investment ambitious Rising nature of many property of Qatar’s prices in Doha projects mean only a month into the new that they require After year, a Qatari real estate portal rising property prices, careful planning shows thus proving many sector right. and integration. forecasts Between December 2013 and January 2014, prices of residential real estate have This inevitably increased by five percent, reported Qatar’s property portal propertyfinder.qa risks delay Based on visitor count and number in the early of enquiries, the online portal had earlier recognised The Pearl-Qatar as one of the stages.” – Nick most sought-after locations by investors tenants alike. As of February, a QAR3.8Pinder, associate, and million apartment at The Pearl-Qatar has shown a price hike of QAR 100,000, Eversheds. leading to the total property price of QAR3.9 clearly describe the risk profile for a project and how issues relating to payment will be resolved.” Another factor that could have discouraged market players in 2013 could be delays in project process, something evident in the case of Hamad International Airport. Speaking about such issues, Pinder said, “The ambitious nature of many of Qatar’s projects mean that out of prudence, they require careful planning and integration. This inevitably risks delay in the early stages.” That said, Pinder also points out that issues related to payment arise on construction projects throughout the world and are not particular to Qatar’s market. Despite low perceived market growth in 2013, the survey reports respondents are optimistic about 2014, during which they anticipate most opportunities in the transport sector followed by the real estate. “Qatar is working towards immovable deadlines so while the pace of growth may be slower than expected at present, we have to anticipate that in order to achieve these deadlines, this will be met with growth in the market in due course which exceeds expectations,” concluded Pinder.
million. A similar increase was also noticed in West Bay apartments. The upward trend aligns with QNB’s weekly report released in February, reporting an increase in land prices in December 2013 and January 2014. Another factor driving the rates up could also be increasing construction costs of these apartments. Speaking about these costs, Aziz Shariff, partner of Qatar’s online property Mannzili said, “Land and construction costs are main contributing factor to the cost of properties and ultimately, rent,” adding that, “What is concerning is a phenomenon known as ‘crowding out’. As the private market will be competing with government mega projects for materials and labour, the cost of construction will increase accordingly.” While the rise is certainly backed by increasing land prices, another catalyst behind increasing price is the increasing demand of residential units by expatriates coming to Qatar, leading to greater investor interest.
The average increase in residential properties’ prices in The Pearl-Qatar and West Bay. The Edge | 33
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Contents: Is legislation the way to combat cyber crime in Qatar? 35 . Disruptive technologies for 2014 38 . Fixing the bandwidth blockage 38 .
tech & communications Is legislation the way to combat cyber crime in Qatar? A draft of the cyber crime law approved by the Cabinet last month will include laws concerning vital technology infrastructure. The new cyber crime law comes at a time when organisations and governments are facing increased threat levels in the region.
r. Hessa Al Jaber, Minister of Information and Communication Technology in Qatar, speaking at the 1st GCC Digital Security Summit held in Qatar last month, told the audience that a national-level committee focused on fostering cooperation among both the public and private sectors had been set up, coordinating a national level cyber security strategy, developing national policies and regulations, and conducting information security assessments. It is expected that a nationally mandated plan will go a long way in increasing the overall level of cyber security in Qatar. Terry Thompson the vice president for Booz Allen Hamilton in the Middle East and North Africa (MENA) told The Edge that in the financial sector, for example, banks are acutely aware of cyber crime as they look to expand their mobile service offerings, â€œEveryone wants to be able to do everything with their [mobile devices] so the banks and other industries are putting more and more services into electronic means. But they are also recognising that there are vulnerabilities
One of the potential directives of the new cyber crime law approved by the Cabinet could be that government organisations are mandated to store their data on local servers. (Image photosbymilo)
The Edge | 35
sectors | technology & communications
“A conversation around threats and vulnerabilities is useful and we need to see more of it in the region.” – Terry Thompson, vice president, Booz Allen Hamilton MENA. associated with that. So, some of the projects that we have worked on, focus on overall risk assessments which include; the supply chain; the application development and software development through the use by both the banks and their users.”
of mandates of the new law would be that vital sectors especially governmental and semi-governmental organisations would be required to manage and store information within the borders of Qatar.
Cyber crime today has moved on from individual hackers and organised crime rings to state actors, which has drastically increased both the rate and complexities of attacks around the world. Security firm Kaspersky Labs only recently discovered a threat codenamed The Mask, which they say is one of the most complex advanced persistent threats (APT) designed, which has been involved in cyber-espionage since 2007. “I think there are two factors that come to mind that are causing a lot of focus on the APT groups,” said Sleiman, “One is maybe the lower maturity of adoption of information security within the region and in Qatar. As these are emerging countries in the technology field, it has made APT groups and activist groups focus on the financial sector for financial gains. The other element is the political unrest within the region that is causing a lot of the APT groups to focus their efforts on the GCC and Qatar in particular.” In fact, the Syrian Electronic Army targeted Qatari institutions numerous times over the past year because of the country’s support of the Syrian revolution. Thompson is of the belief that there needs to be more collaboration between stakeholders in the fight against cyber crime. “The best way to ensure that you have a comprehensive defence is to share information around
Thompson explained that regulators would have a key role to play in increasing awareness and setting standards for the operators to conduct information security risk assessments, and to hold them accountable for any problems that develop. Firas Sleiman, a senior associate at Booz Allen Hamilton in Qatar, said that due to the growing dependency on information technology and information utilisation within the country in many areas such as sport, tourism, financial and banking sectors, the speed of adoption of technology is outgrowing the ability to deliver services locally. “A lot of the local organisations, be it government or commercial, are starting or having to rely on external vendors for information management,” said Sleiman. “A lot of them are hosting their services outside of Qatar, in the Gulf Cooperation Council (GCC) or maybe even in the United States or Europe. This dependency is because of the shortage of vendors or service providers within the region,” he added. This means much of the hosting is happening externally, which poses a big information security risk. “The dependency on a third party that is unknown to the government or commercial companies here, and in itself, just outsourcing your IT outside of your firewalls or outside of your country is always a big risk that requires careful planning to safeguard information,” added Sleiman. This, however, might change soon. While the approved draft cyber crime law has not been made public yet, many local experts The Edge spoke with at the GCC Digital Security Summit believed that one 36 | The Edge
50% The percentage by which the average cost per victim has risen in the past year, according to a Norton report.
threats and vulnerabilities,” said Thompson. “You don’t have to share what you are doing to protect your network, nobody would really expect that, but having a conversation around the threats and vulnerabilities and what generally can be done in terms of strategy policy, governance, standards, controls and implementation, is all very useful and something we need to see more of within the region.”
Terry Thompson, the vice president for Booz Allen Hamilton in the Middle East and North Africa, told The Edge that regulators would have a key role to play in increasing awareness and setting standards for operators to conduct information security risk assessments.
sectors | technology & communications
Disruptive technologies for 2014
A Cisco study looks at key trends set to make an impact this year. Internet of Things
The biggest innovations this year are likely to come from the Internet of Things – interconnections of people, processes, data, and things – which Cisco believes represents a USD19 trillion (QAR69 trillion) opportunity, globally. Qatar’s plans for smart cities such as Lusail City will include smart electrical grids and transportation management systems, communicating with each other. “What we are now seeing is the emergence of an application economy
Fixing the bandwidth blockage
where the focus will no longer be simply on the hardware, but also on supporting a larger number of applications on all connected devices,” said Tarek Ghoul, general manager for Cisco in the Gulf, Levant and Pakistan. Speaking with reports via teleconference from Dubai, he explained that the Middle East is already well-poised to reap the benefits of this shift, with the region’s IT spend projected to grow to USD32 billion (QAR116 billion) in 2014.
It will change the way we interact with devices. “We’re seeing a change from any content for any people at anytime and anywhere, to the right information to the right person at the right time, at the right place and in the right way,” said Ghoul.
Connections driving value
The rise of cheap, tiny sensors embedded in roads, jet-engine parts, shoes,
refrigerators, soil, and supermarket shelves will generate terabytes of data will be used to develop insights.
Video mega trends
With the introduction of ultra HD video such as 4K televisions, enhancing the viewing experience This will have a significant impact on areas such as healthcare, education, office connectivity and security, said Ghoul.
Redefining the network
In order to cope with the explosion of connections, technology labs are now developing new Internet architectures to replace the current IP-based Internet. Named Data Networking, would allow information to be communicated by names rather than host addresses, which according to Cisco has the most potential to disrupt. “2014 and beyond will bring a hugely influential and constructive technology explosion.” Ghoul concluded.
Over two billion devices in the new standard by 2015 802.11ac WiFi chipset forecast (in millions)
As the use of mobile devices and the demand for Internet-based services on them increases, wireless networks in the country are running out of capacity, says an industry expert. Qatar’s telecom providers currently have some of the most expensive pricing structures in the world according to the International Telecommunication Union. The average pre-paid and post-paid plans in Qatar constitute small data allowances, even with the recent increases in data-caps from both Ooredoo and Vodafone in the postpaid plans. The increase in consumption of multimedia through mobile devices has meant that WiFi has become the primary means of access for most mobile users. However, the most widely used wireless enterprise network (802.11n) today, will not be capable of meeting user demands in the near future, said Ammar Enaya, the regional director at Aruba Networks for the Middle East and Turkey. The new standard 38 | The Edge
Source: ABI Research
(802.11ac), which was officially approved in January 2014, he explained, would provide signal strength that is equivalent to the performance of wired Ethernet and coverage at lower costs for organisations. Enaya explained that even with its advantages, uptake in Qatar has lagged behind the global average due to the fact that features offered by the new standard will appear in multiple waves. According to Enaya, the second wave of products will not start arriving until 2015, and in the meantime, the current wave of devices
offer solutions to many of the bandwidth problems organisations face today. “Delaying the rollout will mean increased downtime for employees as they spend more time waiting for file transfers,” he said. Many devices are already compatible with the new standard. Samsung has shipped more than 40 million units of its Galaxy S4 smartphone, all new Apple computers are equipped with it and PC manufacturers are not far behind. “The sooner businesses in Qatar embrace 802.11ac, the greater will be their rewards,” said Enaya.
Contents: Qatarâ€™s diabetes cost dilemma 39 . Half of regionâ€™s children are failing to learn adequately 40.
healthcare & education
According to a report by the International Diabetes Foundation, by 2035, Qatar and the Middle East and North Africa, will have experienced a 96-percent increase in the rate of diabetes occurrence in their populations. Much of this can be attributed to fast food culture in the region, say experts. (Image Corbis)
Qatarâ€™s diabetes cost dilemma A recent breakthrough by researchers at the Qatar Biomedical Research Institute (QBRI) could lead to the creation of a new line of treatment for diabetes through the use of stem cells. But how far is the new line of treatment from implementation? Can the healthcare sector, especially in Qatar, which has an extremely high incidence rate of diabetes, better manage outcomes and save costs? by Shehan Mashood
atar has one of the highest percentages of diabetes prevalence in the world, according to the International Diabetes Foundation (IDF). 2013 figures show as many as 23 percent of people between the ages of 20 and 79 have diabetes, making it the 10th most prevalent in the world. In the Gulf, only Saudi Arabia and Kuwait are marginally higher on the list. Research by the Boston Consulting Group suggests that a cure for diabetes
might not be achieved until the year 2030. IDF data also suggests that between 2013 and 2035, the rate of diabetes in the Middle East and North Africa will increase by 96 percent, an alarming statistic. According to media reports, the QBRI is expecting to conduct the first clinical trial for diabetes later this year at the Hamad General Hospital. The idea is to replace the need for insulin injections for diabetes patients with stem cell treatment. However, according to Dr. Nagy Habib,
the scientific director of the Stem Cell and Regenerative Medicine Research Centre at QBRI, currently the stem cells last only for six months. The centre aims to try and make them last longer than a year or more. The costs associated with the current treatment of diabetes are very high. Kapil Bhatia, a principal at BCG said the average annual cost of treatment for a patient with no complications is around QAR18,200 and three times as much for patients who encounter complications. The Edge | 39
sectors | healthcare & education
However, governments can play a role in generating better outcomes by removing certain costs from the healthcare system. Integrated care offers the possibility to cut costs and offer care along the whole value chain, according to BCG research, since one entity is fully responsible for the care of the diabetic patient. This is a particularly critical lever for Qatar, as government entities often control a majority of the provision.
Governmental involvement to support the private sector to diagnose and treat basic forms of diabetes is also highly beneficial, states the BCG report. The National Health Strategy being implemented in Qatar by the Supreme Council of Health includes proposals to ensure healthcare providers have clinical guidelines, patient pathways and specific strategies for diseases such as diabetes. In fact, the Executive Summary
Update 2013 shows the Supreme Council of Health Executive Committee has approved a Diabetes Service Design to develop a diseases-specific strategy. “With diabetes prevalence continuing to rise in the Gulf Cooperation Council and no cure on the horizon, now is the time to act. Given that populations are still young, the dim projections of the future impact of diabetes can be altered if governments act now,” adds Bhatia.
Half of region’s children are failing to learn adequately
EDUCATION IN QATAR
98% Enrolment and survival rate from primary to lower secondary school
According to the Brookings Institute, Qatar has around 98 percent enrolment and survival rate from primary to lower secondary school, an increase of 12 percent over the past decade.
A new report, published by the Center for Universal Education at Brookings, highlighted significant challenges to education in the Arab world. While Qatar has made some marked improvements, it still has a way to go in developing its education sector.
The Arab World Learning Barometer provides an overview of the ability of children and young people to access and finish school. The new report shows that as many as 8.5 million children remain excluded from accessing education, and in some cases the quality of education has deteriorated over the past decade. Many countries in the Arab world have seen higher dropouts from lower secondary school compared to that of a decade ago. Qatar, however, has around 98 percent enrolment and survival rate from primary to lower secondary school, which has increased 12 percent over the past decade. There are also other positives, according 40 | The Edge
to the report. Fewer children are out of school (3.1 million) since 2002 and more children are completing primary school than before. The learning performance of children in Arab countries is below expectations given the countries’ income levels, states the Brookings report. According to the data, 42 percent of schoolchildren in Qatar’s primary schools are not learning. While this number is high, it is a marked improvement compared to the 82 percent a decade ago, suggesting an unfinished agenda. Secondary schools experienced the same with a drop from 73 percent to 52 percent over the same period. This, however, is not due to a lack of spending from the government with education as part of total public expenditure increasing from nine percent in the 2000s to 13 percent in 2010. In 2012, government initiatives were spending as much as QAR31,333 a year per student on pre-university education, not including infrastructure development costs.
42% Primary school children are not learning in comparison
82% were not learning a decade ago
52% Secondary school children are not learning in comparison
73% were not learning a decade ago
Realities What the 2022 World Cup means for talent in Qatar
cover story | human resources
As Qatar prepares to host the 2022 World Cup, one of the major challenges for organisations will be attracting and retaining both Qatari and expatriate talent. David Jones and Radhika Punshi of The Talent Enterprise look forward to the prospects of the future talent trends in Qatar and the wider Gulf Cooperation Council (GCC) for 2022.
he labour practices which have developed Qatar rapidly over the last decade, will ostensibly not be the same ones that take it to 2022 and beyond. With heightened competition for labour in the region, we can expect Qatar to increasingly become the regionâ€™s, and indeed the worldâ€™s, laboratory for labour market reform over the next eight years and beyond. The main focus will be on phasing the recruitment of talent in such a way that it can sustain productivity over the period of preparation for the World Cup and beyond. The risks of hiring the wrong talent, national or expatriate, will increase, as delivery deadlines loom closer. A more strategic workforce planning will be crucial to ensure that organisations are not ramping up talent too soon, or too late. This will mean innovative approaches to attraction and new talent pools will become increasingly important for local firms. Global labour markets are likely to get tighter over the period leading up to the 2022 World Cup, as the world slowly recovers from the worst recession in a generation and demographic change means that global talent pools gradually become smaller. The IMF recently forecast that by 2020, the world as a whole would have more people over 65 than under 25 for the first time in recorded human history. This will make securing key talent increasingly challenging, especially in preparation for an event that will likely last for just six weeks. Managing and predicting attrition risk will become key in order to ensure expatriates in particular are fully productive during key delivery milestones for Qatar.
Innovation across all aspects of talent deployment will become more prevalent, but particularly so for Qatari workers. The growth in employment opportunities from 2022 will accelerate job creation in the private sector, in many cases in those industries that have not traditionally been attractive to Qatari job seekers. The visibility of Qataris in the hospitality and transportation sectors will be another key objective of the 2022 World Cup, and the Qatari talent pool will be one of the few anywhere in the world that will actually be growing by 2022. The private sector will have to innovate its employment practices to make themselves more attractive to young Qataris in particular, and young Qataris will have to in turn demonstrate their productive capabilities. If you consider that the median age of a Qatari citizen is 23 years (compared with 46 for the United Kingdom), organisations need to question their approach to talent attraction in particular, and HR management in general, and ask if they are really addressing the key demographic of the future? The rise of automation in service delivery and construction will be a critical component as traditional sources of labourers and service staff (Asia â€“ Indian Subcontinent and the Philippines in particular) experience slowing rates of
Using a more psychometric and predictive approach to employee engagement will become increasingly important in retaining qualified staff, say the authors. (Image Corbis)
44 | The Edge
The private sector will have to innovate its employment practices to make themselves more attractive to young Qataris.
human resources | cover story
population growth and increasing rates of economic growth. Alternative talent pools, such as other Arab, African and even Latin American workers, will expand over the same period as the only regions in the world with strong demographic growth of working age populations from 2020 to 2050.
Engagement, reward and recognition
In the lead up to the 2022 World Cup, one method of attracting more Qataris into the private sector could be through the introduction of government subsidised earnings for nationals, at least temporarily. While the government has not yet made any statements on the matter, some form of subsidy may become increasingly likely. With Dubai winning the recent bid to host the 2020 Expo, and other neighbouring countries all embarking on ambitious infrastructure and other developmental plans, the risk of attrition will climb steadily as the 2022 World Cup draws near. Therefore, good HR practice and strong employer brands will grow in importance over the next eight years as the battle for talent increases. Loyalty bonuses, and even possible differential resident status, may become more important for key talent going forward. The State of Qatar and the GCC as a whole, currently has some of the lowest levels of labour productivity, employee engagement and wellbeing metrics anywhere in the world. A more psychometric and predictive approach to employee engagement will become increasingly important, as firms will be able to understand and encourage successful qualities in qualified staff. A people focused analytics approach will enable smart companies to forecast the periods of greatest attrition risk and seek to take targeted preventive and contingent action.
People practice and policy reform
Qatar today has one of the widest ranging standards of HR professionalism anywhere in the world. Some of the employing organisations are simply world class in terms of their people practices and some are far below global standards, where the â€˜HRâ€™ interventions required are human rights in nature, rather than human resources, as reports by Human Rights
TALENT IN THE MIDDLE EAST
6 out of 10
Employees are engaged in the Middle East Approximately only
1 out of 2
Employees engaged in the GCC
However, among the best employers across the Middle East
Across the Middle East are thinking of leaving their organisation
Highest attrition risk is among front line employees who have worked for 2 years or more
Key factors that could contribute to improving engagement: Improving brand alignment Creating an environment of recognition Creating career opportunities Source: Engagement trends in the Middle East 2013, Qudarat by Aon Hewitt
The Edge | 45
Qatar has one of the widest ranging standards of HR anywhere in the world. Some organisations are world class and some are not. The recent worker’s charter released by the Qatar’s 2022 Supreme Committee addresses issues such as late payment of wages and illegal fees paid during the recruitment process. (Image Corbis)
Watch and Amnesty International have proven in the recent past. The differential experience of work across Qatar, and indeed our region in general, is reflective of our highly segmented labour markets. Interestingly, hosting the World Cup has already demonstrated several instances of solidarity between those who are amongst the higher echelons of global labour markets with those at the very bottom, already playing out within Qatar itself. In addition, FIFA and the Professional Football Player’s Association (the top player’s union), have also been putting increasing pressure on the Qatari government to ensure that worker’s rights and employment conditions are protected and extended. Those who work on the construction and infrastructure projects that will need to be implemented as part of the preparation for the 2022 World Cup often suffer from dreadful treatment. It is refreshing to see that this solidarity, which cuts across some of the widest geographical and compensation boundaries in the world, is increasing the demand for consistent, quality people practices across the region. Further scrutiny will only continue in the run-up to the event and can serve as a positive means for ethical employers to differentiate themselves from poor practice, and ensure the health and safety of their workers. The recent Worker’s Charter drawn up by Qatar’s 2022 Supreme Committee that 46 | The Edge
addresses issues such as late payment of wages and illegal fees paid during the recruitment process, is one recent example of how Qatar and indeed the region would need to set forward a clear statement of intent in terms of labour standards.
Education reform will continue apace within Qatar as the government seeks to enhance the employability of the local population, especially in vocational and applied education. Local labour visibility in the development and delivery of the 2022 World Cup will be a top priority. Much of the increase in hiring will come from the private sector, and therefore increasing the attractiveness of private sector employment for Qatari nationals, and vice versa, will continue to be important. 2022 will only seek to
accelerate the growth in focus on promoting Qatari employment in the private sector, in particular within transportation, hospitality and construction and infrastructure development, currently all industries where Qataris are under represented. In the longer term, wage inflation for Qatari nationals will start to moderate, at least in terms of the payment from private sector employers to their Qatari staff. Qatar’s population is projected to triple by 2050 and there will be increasing pressure on government budgets in general and lending in particular, to fund wage subsidies in the private sector as the local population increases. Volunteers and interns from Qatar’s growing student population will augment the limited local talent pool, experience some accelerated career development and support the visibility of local talent during the peak periods of the event in 2022.
The median age of a Qatari citizen.
Can the peak of economic activity and private sector employment be sustained beyond 2022, or will the World Cup represent a fleeting high watermark for Doha? Our research at The Talent Enterprise into what drives successful Qataris in the private sector today suggests that national pride will be a major motivator for attracting and retaining local talent within the private sector. Moreover, FIFA’s focus on promoting wellbeing and the greater inclusion of women and young people in sport and
human resources | business management
National pride will be a major motivator for attracting and retaining local talent in the private sector.
The visibility of Qataris in the labour market, especially in areas of hospitality and transportation in the delivery of the 2022 World Cup, will be a top priority.
society in general will also be likely to prove an iconic watershed in Qatar well beyond 2022. By focusing on enhancing psychological strengths in employment practices and adopting more inclusive (and not just diverse) ways of working, the World Cup offers a fantastic opportunity for Qatar to reboot its labour practices.
A bleak alternative
An alternative scenario where some forms of wage subsidies persist in the private sector will have long-term detrimental effects on the employment of Qatari nationals, unless they are substantively and progressively reformed after the World Cup has finished. Like all subsidies, the potential problem with subsidising wages is that it can lead to systemic
inefficiencies. Local talent could become increasingly overpaid and undervalued within the private sector over time. Sustainable, enduring talent development will require a strong foundation of promoting greater employability, productivity and employee engagement amongst the Qatari workforce, both national and expatriate. Currently, all of these factors are amongst the lowest average levels in the world within the GCC. So far the impact analysis and preparation priorities for 2022 have focused on building the physical infrastructure required for delivery. Building the human capital and physical infrastructure is arguably more important for the long-term development of Qatar. Implementing policies and approaches to
talent management to address all of these aspects could be the 2022 World Cupâ€™s greatest legacy for Qatar for the rest of the 21st century.
David Jones and Radhika Punshi of The Talent Enterprise are human resource consultants and authors of a recently released book about the talent landscape in the GCC titled Unlocking the Paradox of Plenty. The Edge | 47
The PHCC will certainly face increasing competition from the private healthcare system especially in Doha, but the corporation is also conscious of its responsibility to provide access to good primary healthcare services across the whole country, especially in areas where private healthcare players are less likely to provide localised services. Health centres such as Al Dayeen Health Centre (pictured above) located in the northern part of Qatar is one such health centre which is less likely to face private sector competition.
48 | The Edge
medical facilities | business interview
Primary Health Care Corporation:
Towards being the first point of access for
With the launch of the Primary Health Care Strategy in 2013 on the back of the Emiri Decree No. 15 in February 2012, which created the Primary Health Care Corporation (PHCC), the entity is taking a series of initiatives to be the first contact point for healthcare services in the country. In an exclusive interview with The Edge, Dr. Mariam Ali Abdulmalik, managing director, PHCC, talks about a wide range of subjects, tackling issues such as the corporation’s operational independence, its service capability in relation to the private healthcare players, and how the PHCC plans to retain quality manpower. by Aparajita Mukherjee Tell us about the vision behind the PHCC in Qatar
Citing the achievements of the PHCC, Dr. Mariam Ali Abdulmalik, managing director, PHCC, says that among other initiatives, the corporation has begun the process of licensing and validating its doctors; introduced a new customer service – Hayaak – to all its health centres,, and the implementation plan for electronic medical records is well underway.
The vision of primary healthcare in Qatar is to advance health and wellbeing through services which are comprehensive, integrated, person-centered and affordable. Primary healthcare in Qatar has suffered in the past from not being seen as the foundation and first point of access of healthcare for the country’s population. The launch of the Primary Health Care Strategy in 2013 has renewed the focus on the importance of primary healthcare at the start of the patient’s journey. Subsequently, PHCC’s business The Edge | 49
Primary health centres such as the Rayyan Health Center, according to Dr. Mariam Ali Abdulmalik, managing director, PHCC, should serve as the primary access point for Qatarâ€™s population who can look forward to healthcare that is not only of high quality, but also people-centric, safe and effective.
plan has detailed our expansion of health centres from 21 in 2012 to 34 in 2017, and also the improvement of existing health centres with new services. We can now stress that the population of Qatar can look forward to primary healthcare that is not only of high quality, but also people-centric, safe and effective.
Being state-owned, what impact does it have on the operational independence of the PHCC in terms of setting policies, redefining health priorities and deciding on targets?
PHCC has benefitted from a rich heritage when it was part of Hamad Medical Corporation (HMC) and, now that it is an independent corporation, it will continue to have a rich partnership with the Supreme Council of Health (SCH), HMC and other health providers. The Emiri Decree No. 15 that created the PHCC is, I believe, a rich gift from HH Emir the Father Sheikh Hamad bin Khalifa Al Thani to the people of Qatar, as it provides focus and resources to ensure that all people have access to quality primary healthcare services. With its new stature, PHCC can now set its key corporate priorities that can ensure the best use of its resources and deliver world-class primary healthcare
The projected number of health centres in 2017. 50 | The Edge
services that the people of Qatar need and want. PHCC can also assess its performance in meeting its key strategic goals and provide its stakeholders with the assurance that it can deliver the right type of treatment at the right place and the right time.
What role does the SCH play in your operations?
The SCH provides a regulatory governance role in ensuring that all the PHCC pledges and promises are met and that it is delivering on its goals as expressed through the primary healthcare strategy and the PHCC business plan. The corporation works in partnership with the SCH to deliver its annual report and provides extensive documentation to the SCH on its service improvements and expansion of its services.
How does the PHCC cope with the volume of patients that is increasing with the influx of people into the country?
PHCC has already included in our strategy the increasing numbers of patients expected in the coming years. One key initiative is to expand the already existing health centres, which have the space to add more clinics to enhance the capacity of the service coverage to customers. Another is the opening new 17 health centres over the coming couple of years. In addition, PHCC has developed a continuous training and development programme for their staff to upgrade their capability and be more effective so that they can deliver better patient care on time. The corporation has developed new systems for serving customers and
Primary health centres, according to Dr. Mariam Ali Abdulmalik, are strengthening the clinical and customer services, and listening to patients in an endeavour to improve quality of services.
medical facilities | business interview
accommodate the increasing numbers by setting an appointment system aimed at reducing the waiting time and better utilise the available resources in all specialty clinics.
How does PHCC recruit quality manpower? Is staff retention an issue with PHCC?
PHCC strictly follows the Professional Qualification Requirements (PQR) issued by the SCH to recruit staff for any clinical roles. Another priority is the recruitment of highly-qualified physicians, especially from countries such as Canada, Australia, the United States (US) and the United Kingdom (UK) to support providing quality health service by the corporation. PHCC has had relatively low staff turnover in the last two years, 2.6 percent in 2012 and 3.14 percent in 2013. This is mainly due to the measures that the management has taken in order to address every concern that the employees have had and has implemented various staff retention activities such as exit interviews (which aims to understand the concerns of the employee leading to the resignation); internal recruitment (whereby the existing staff is given career opportunities to develop and upgrade to a higher-level opportunity); increments linked to performance evaluation; employee satisfaction survey; and retention bonuses.
What is your take on the competition that the PHCC faces from the private healthcare players here?
We are happy to be a key player in primary care in an evolving market here. We are strengthening our clinical services, customer services, listening to patients and acting on their feedback so that we continuously improve the quality of our services. We will certainly face increasing competition from the private healthcare system especially in Doha, but we are also conscious of our responsibility to provide access to good primary healthcare services across the whole country, especially in areas where private healthcare players are less likely to provide localised services.
With lifestyle-related diseases one of the most major challenges that the Qatari population faces, what would you, at the helm of PHCC, recommend as a
daily activity schedule?
We are working through our smoking cessation service in raising awareness about the danger of smoking through the school health programme. We also celebrate the World No Tobacco Day on May 31 every year and have an ongoing counselling service in the smoking cessation clinic to help people quit smoking. Generally physical activity should be part of every individual’s daily routine and the recommendation is 150 minutes of moderate-intensity aerobic activity (such as brisk walking) every week, or 75 minutes of vigorous-intensity aerobic activity (such as jogging or running) every week.
What are the targets for PHCC in the next five years? What global benchmarks do you follow when you set these targets?
The plans for key services such as urgent care, maternity and newborn care have all been benchmarked against international best practice and these are set out in detail in the primary care strategy which was positively reviewed by leading international primary care doctors from the US, Australia and the UK. On the quality issue, we are currently preparing all our services to undergo assessment by Accreditation Canada, one of the internationally recognised accreditation bodies for healthcare. On the issue of money and manpower, investment in primary care will more than doubling over the next 10 years and an additional 1900 doctors and nurses will be employed over the next five years. This level of growth is both about PHCC trying to catch up after years of underinvestment and about ensuring we have the resources available to deliver quality services that patients are entitled to expect.
What impact will the insurance scheme of the Qatar government have on the PHCC?
In simple terms, it means we, along with all other healthcare providers, have to be disciplined about recording patient activity, deriving income for that activity through the social health insurance scheme and, where our services are covered by social health insurance, making sure that our costs are in line with the payments available from the National Health Insurance Company. Our implementation of an electronic medical record will support this work.
How far is the PHCC in achieving the goals of the National Health Strategy?
We have developed a primary care strategy for the country – the first key deliverable – this was signed by Executive Council of the SCH – last year. Among other initiatives, we have begun the process of licensing and validating our doctors. We have introduced a new customer service – Hayaak – to all our health centres. The PHCC is well underway with the implementation plan for electronic medical records, which will have a positive impact on the quality of service and patient experience. We have made improvements in our referral times to hospitals for patients with suspected cancer. Later this year, we will begin piloting and rolling out new and improved services in areas such as urgent care, non-communicable diseases and maternal health.
Healthcare under the PHCC
in 2017 Yearly budget increases over the previous year
Doctors employed by the PHCC currently
per 100,000 target
The Edge | 51
How has the arrival of the multinational impacted Qatarâ€™s furniture retail sector, one year on? The Edge investigates
feature story | furniture retail
Did Ikea’s entry into the Qatari furniture retail market disrupt the status quo? The widespread hype surrounding its arrival in Qatar is not a new phenomenon, as the furniture store received a similar response in many other countries. And as the brand marks its first year in Doha this month, The Edge’s Farwa Zahra explores how the giant retailer has impacted Qatar’s furniture retail sector.
e don’t believe the world needs another retailer; we need a better world,” Thomas Lundgren, founder of furniture retailer THE One, tells The Edge. In 1996, when he launched THE One, Lundgren had a very clear vision – “to save the world from Ikea and everything big box corporations stand for”. Once an employee of Ikea, he says he saw an angel in his dream entrusting him with this responsibility. And it did not end there. About 18 years down the road, Lundgren still wants to recreate the dreams and dramas everyday at THE One, that has 16 theatres in Bahrain, Jordan, Kuwait, Lebanon, Qatar, Tunisia and the United Arab Emirates (UAE), with a current workforce of 650 employees. “We see our stores as theatres where dramas take place and dreams unfold,” says Lundgren. With its arrival in Qatar last year, as Ikea aims to expand its Gulf region presence further into Oman, the obvious question is how what Lundgren calls the “big box corporation”, has affected the local markets. In the words of John Kersten, managing director for Ikea UAE, Qatar, Egypt and Oman, it is the Ikea experience. The hype surrounding Ikea’s entry into Qatar is not a new phenomenon. According to Ole Dahlsen, Danish store BoConcept’s master franchisee for the Middle East and North Africa region, Ikea had a similar impact in many other countries.
Ikea – a family affair
The sheer amount of space and the building’s design engage visitors, frequently lost to explore over 7500 products, 59 room settings, three homes, a 550-seat restaurant and a play area sprawling across 32,000 square metres. “The Ikea experience goes beyond shopping to create a day out for the whole family,” Kersten explains. The very idea, however, may lead to overspending, points out a respondent of an online survey The Edge conducted on the topic. “I believe it influenced people to buy unnecessary items. Ikea showrooms
are even designed in a way so that people get lost, and buy items, which they never normally would. A lot of people now use ‘Lets go to Ikea’ as a weekend activity,” says a respondent. Speaking about the notion of experiencing Ikea, managing director of brand consultancy Grow, Anthony Ryman says, “The idea of going to Ikea as an experience is novel for Qatar…it’s a day out, which is always a family affair.” Ostensibly, it is this family-friendly nature of Ikea that has earned it a high level of visibility over a span of less than a year. According to The Edge survey, based on customer visits, Ikea and Home Centre showed the same level of visibility – both visited by 92 percent of respondents. When asked about preferred furniture outlets, 84 percent of these respondents chose Ikea followed by Home Centre.
While Ikea’s furniture reflects Swedish designs – simple, yet aesthetic. The conventional Arab furniture is embellished with fancy fabric and detailed carving. Add to this the number of non-Arab nationalities residing in Doha and the task or catering to the Qatari market seems more challenging for Ikea. “In Qatar, customer demand varies a lot. The expatriate community is big with a multinational taste in design,” says BoConcept’s Dahlsen. “Qatar came with its unique challenges,” accepts Kersten, revealing Ikea’s extensive research on the local market, before the brand made its debut in Doha. “We created a majlis set-up using Ikea products to demonstrate how Ikea is relevant to local needs. We have worked on adapting our brand and our offering to our customers here and have been very successful,” he adds. But Ryman has a different perspective, “Ikea appeals to a broad audience from a range of backgrounds and cultures. This can be seen when visiting the store in Qatar. Ikea is already popular among Europeans, who love the minimalist style that is the
“Ikea has brought choice and a theatre of experience to the Qatari retail scene.” – Anthony Ryman, managing director, Grow. 54 | The Edge
furniture retail | feature story
32,000 The total amount in square metres of Ikea’s store in Qatar.
Ikea brand, reflecting its Swedish DNA.” For the Arab nationals, he says, “Qataris and Arab expatriates are becoming more inclined towards Ikea because it offers something different which hasn’t previously been available in Qatar.” The inclination of non-Europeans towards Ikea shows the pace of changing consumer tastes and hence the changing nature of Qatar’s furniture market. Speaking about customer traits, general manager of Homes R Us, a furniture retailer with 14 stores across UAE, Qatar, Bahrain and Oman and a workforce of over 1500 employees, Ramesh Bulchandani says, “Consumer trends in the Gulf Cooperation Council (GCC) and Qatar tend to follow Western ones, in terms of designs and brands…The customer expectations are very modern, and the buying trends change very often.” Catering to everybody’s tastes, however, is not on THE One’s agenda. “While Ikea targets the masses, our fans want unique, high quality furniture at value-for-money prices…We offer our fans truly unique home fashion pieces at affordable prices. You shop at THE One because you want to be an individual, not one of the masses, and you want that exclusivity without paying a fortune,” says Lundgren. This, perhaps, explains why the brand does not customise its products to any specific market.
A lounge setting offered by Homes R Us, a furniture retail store with a staff base of 1500.
John Kersten, country manager of Ikea in Qatar, tells The Edge that due to the overwhelming response that the furniture store received in Qatar during the opening period, some articles ran lower than expected.
The Edge | 55
feature story | furniture retail
“While Ikea targets the masses, our fans want unique, highquality furniture at value-formoney prices.” – Thomas Lundgren, founder, THE One. However, within Qatar, and the Middle East, it is the furniture for masses that has proved to be more popular, explains Bulchandani. “While exclusive and luxury products are [popular] among top sellers, the market for traditional, classical products remains highly lucrative as a result of the tastes of different national populations,” he says. According to The Edge’s online survey, many customers find furniture in Qatar overpriced. Ryman agrees saying that the key focus to build better customer relationship is by “reviewing prices to make them more competitive may also make some retailers more attractive”.
But is price the only factor governing customer preferences in Qatar? 84 percent of the survey respondents said they buy furniture only when there is a genuine need for it, as opposed to coming across better products to replace the existing items. An understanding of the prevailing mindset in Qatar suggests that most customers here see a furniture purchase as a combination of product and services provided by the retailer. When asked about the kind of services, home delivery showed highest demand, required by 92 percent of the respondents. 60 percent of the respondents said they required assembling services as a part of the purchase. Contrary to these expectations, Ikea Qatar offers free home delivery and assembling services only for purchases above QAR2500. On a purchase of less than QAR2500, the customers are required to pay QAR100 for home delivery and QAR300 for assembling. “Do it yourself (DIY)”, according to one of the survey respondents, “is what Ikea has brought to Qatar. Customers, including myself, have been habituated to doorstep delivery and assembling. Ikea changed that.” But is it true for all? Arranging transport for large furniture items and 56 | The Edge
later assembling them is easier said than done. That Ikea has moved all customers to DIY would be an overstatement as many still require these services, spurring a hidden economy. Strolling around the store’s warehouse and parking spaces are opportunists offering their assembling services for a fee. Explaining the rationale behind DIY, Ikea’s Kersten says, “As part of the Ikea concept of “you do your part, we do our part and together we save money”, we encourage our customers to take home their products and assemble the furniture themselves for that feeling of instant gratification. This allows us to keep our costs low and offer customers low price, value-for-money products throughout our range.”
General manager of Homes R Us in Qatar, Ramesh Bulchandani says that the retail business in Qatar is expected to continue growth in value and variety with a focus on high-value retail items, leaving growth expectations high in coming months.
“We don’t have a catalogue and don’t believe in mass production,” says THE One’s founder Thomas Lundgren.
furniture retail | feature story
Pictured here is a lounge setting by THE One, a furniture retailer which according to its founder, provides affordable luxury furniture.
For Ryman, the concept of services attached to a furniture item starts even before a purchase has been made. Speaking about some features that can win better customer relationships for retailers in Qatar, he believes that retailers need to invest “in better training for staff, inspiring them to be more knowledgeable about their products to help inform customers make the right decisions in a friendly, natural way. This is a challenge for all retailers in Qatar and not just the furniture ones”. The knowledge, he says, should go beyond the prices and visible features of the products to include information about provenance of the furniture, who made it and where the materials are sourced from, etcetera. Speaking about this aspect of pre-sales services, Dahlsen says, “All BoConcept staff has gone through detailed training in BoConcept University, in order to offer the optimum service to the customers.” Customer assistance was also pointed out in the survey as one of the top three areas of improvement for furniture retailers in Qatar. The highest number of respondents (75 percent) identified furniture quality as an element of concern followed by variety (mentioned by 67 percent of the respondents). “There is a general lack of quality and customer service when buying furniture in Qatar, especially compared to buying pieces in
the UAE,” says a respondent. Other areas of improvement included delivery services, assembling services, furniture designs and price. The overall services provided by furniture retailers, according to Ryman, should aim at “moving from transaction to relationship as a concept to retain customers and influence them”.
The customer expectations are very modern, and the buying trends are changing often.” - Ramesh Bulchandani, general manager, Homes R Us. Strong, but not so strong
Speaking about the difference in quality of furniture materials such as wood and fabric, Dahlsen does not see Ikea as a rival, “Ikea is a strong brand but not our competitor.” Within Qatar, he says, “The consumer behaviour was not affected since we are trading on a different level and type of Continued on page 76
Ikea, which completed 70 years of retailing in 2013, has 300-plus stores in 43 countries.
The Edge | 57
business interview | financial services
customer integration as a
retail bank philosophy
58 | The Edge
financial services | business interview
“We will follow a middle ground – a blend of physicality as well as a technology interface.” - Andy McKechnie, deputy CEO and head of the retail banking division of Ahli Bank.
Customer experience within the bank branch, to a large extent, reflects the way a bank does business. This, along with energetic, customeroriented staff and a good technology platform are the main success factors for a retail bank, in the opinion of Andy McKechnie, deputy CEO and the head of the Retail Banking Division of Ahli Bank in Qatar. by Aparajita Mukherjee
or a 100 percent Qatar-owned bank (with the buyout of 37.37 million shares held by Bahrain-based Ahli United Bank by Qatar Foundation – QF – in January 2013 pushing the bank’s capital to QAR1.27 billion), Ahli Bank has its priorities and aspirations firmly in place. The bank is as clear about its future distribution strategy, according to Andy McKechnie, deputy CEO and head of the retail banking division, Ahli Bank, as it is about the role technology can play in its retail operation. McKechnie feels even in the modern world where a substantial part of any retail banking customers transactions are done through self-service platforms, such as a internet applications and ATMs, there still is a role that only a branch presence can fulfil and nowhere is it more relevant than in customer acquisition. Citing the example of what Wells Fargo in the United States did with the advent of digital banking, McKechnie says that there are really three options for a bank. “One can either downsize the branch network and go with a predominant direct banking model, which is a big bet on technology to be the one single thing to be able to compete in the future, which I do not think is going to happen. The other extreme is that banks will go for a zero or a lower rate of technology adoption and invest in physical branches, which is a costly platform and is no longer sustainable with consumer take-up of new technologies. It is thus a middle ground, or a blend of physicality as well as a technology interface, that will be the way to go.” On the location of branches McKechnie says, “We have mapped the north and the south of Qatar, along with the main hub of Doha and the distance between branches, looked at key locations and development locations such as The Pearl-Qatar, Festival City, and are planning realistically, looking at where we want to serve our customers and what kind of footprint can achieve the strategy we desire. It is also about the branch opening hours – in malls, for instance, we definitely need to be open longer, where you can close the bulk of the office at the end of the day but then open a part of it for the evenings with a kiosk-type technology, and a smaller customer service presence, and ATMs.” Clarifying his position on the branch strategy, McKechnie says that Ahli Bank has 17 branches at present and 49 ATMs. “But, if you look at the competition, some of the larger banks such as Qatar National Bank, Commercial Bank or Doha Bank have many more. QNB, for instance, has got nearly 60 branches.” McKechnie says that the bank’s focus clearly is to be present “where customers can get to one of our branches within a reasonable The Edge | 59
business interview | financial services
amount of time within Qatar”, adding “but we don’t believe that we need 40+ branches. For us, it is somewhere around 25 branches.” According to McKechnie, the strategy to decide the number of branches will look at a blend of the right locations and technology. Technology, he says, is primarily dictated by the direction in which the retail market is going, adding, “If we do not invest in a digital or mobile platform, competition will overtake us in acquiring customers who will simply expect banks to offer this, almost as a hygiene factor. But, we will be using technology a lot more integrated into the future distribution offer. I prefer to call it ‘omni touch’ rather than omni-channel.” Defining ‘omni touch’, McKechnie says that it means three things from the point of view of customers and the way they carry out their banking today and tomorrow: they want a cheque-book or a card (which falls under the realm of service from the bank); secondly customers want to buy a product (this could be a loan, a mortgage); or finally they have payments to make (pay a bill, or make a transfer). In his opinion, customers are disgruntled with a bank when they do not update customers on the status of their needs (be it a cheque book or a loan application) similar to the way Amazon updates them on their current orders and history. “It is precisely here that we will fill in the gap. For instance, we could remind customers about their cards expiring or loans expiring, which are small irritants for customers, but will be a big help if we can aid them,” says McKechnie, adding, “It is our way of integrating ourselves with the life of the customer and giving a better experience.” Commenting on the positive changes in the bank, after the change of their ownership structure, McKechnie says that, as an institution, the bank would be much clearer on how they deliver the service. “Translating it in terms of customer experience, we really want to transform that customer experience.”
Achievements of banks, according the McKechnie, relate to their performance in three broad areas: the level of stakeholder confidence; financial performance; and the quality of the underlying business, independently measured against the market. “Stakeholder confidence, in our case, does not need a new definition. A testimony of the level of stakeholder confidence in our institution is the fact that QF bought shares of the bank, making it a wholly Qatar-owned bank.” Performance-wise, the bank reported a net profit of QAR525.7 million in 2013, compared with QR465.2 million for 2012, recording a growth of 13 percent. The financial results are a measure of the investor confidence “On the quality question, independent rating agencies such as Capital Intelligence has raised Ahli Bank Qatar’s long term foreign currency rating (FCR) to ‘A’ from ‘A-’, while affirming the short-term FCR at ‘A2’.”
Distinct identity and branding
For one of the bigger banks in the country, the measure of segregation from other banks is a key differentiator. But what exactly is it that can segregate – price of products, the spread of products offered or is it relationships with corporate and retail or innovation? In McKechnie’s opinion, “All of those clearly matter to customers when choosing a bank and I think what also matters is that in our 30-year history, we have embedded customer relationships over this entire period of time which is largely attributable to the consistency of the delivery of service, but banks will need to do more.” On the occasion of their 30-year anniversary, the bank is going through a rebranding exercise, mostly to indicate to customers that it is now a standalone bank in Qatar (and no
Banks in Qatar by number of branches Masraf Al Rayan International 11 Islamic 15 Ahli Bank 17
Qatar National Bank 62
Commercial Bank 30
Doha Bank 31
Qatar Islamic Bank 32
Source: Data according to corporate websites
60 | The Edge
Clarifying his position on the branching strategy, McKechnie says that Ahli Bank has 17 branches at present. He says that for Ahli Bank, it is somewhere between 20 and 25 branches that are optimum.
financial services | business interview
“You can have up-todate technology, but it is the people in our branches who have to carry the brand through every customer transaction.” longer part of Ahli United Bank of Bahrain). Explaining the logic behind rebranding, McKechnie says, “We will go through a rebranding exercise later this year; we are currently going through that registration process with the Qatar Chamber of Commerce and Industry. We have also been working with a brand agency to work on how the brand will look and feel. More importantly, we are internally discussing what the brand stands for going forward and where do we position our brand versus the competition in the Qatar market.”
Factors of success
With a 27.8 percent contribution of retail banking to the overall business of Ahli Bank, McKechnie is, looking at the history of the evolution of internet banking in Europe, confident that there cannot be anything that can determine the success or failure of a bank. “If you look back in history and when internet banking in Europe started, if you go back almost 20 years, they had said that internet banking would mean the end of branches. Today, we well know that branches will still play a significant part of any bank strategy and will going forward,” says McKechnie. In his opinion, banking regulation is here to stay but is going evolve and keeping pace with regulation; innovating products and speed of delivery, as well as service quality are what will keep banks more occupied in the days to come. “I think products will evolve and customers are always going to demand services such as cards and loans. Some
of the products can be delivered even if banks choose to be ‘contact less’. But banks need to keep in mind that people want fast convenience since they have no time or patience to wait endlessly.” To win over customers, banks, according to McKechnie, need to have technology that allows customers design their own products and choose the way they want to interact with the bank – direct or face to face. Will Ahli Bank allow that for a customer who has a very small wallet size? “I think one could still do that, provided that you have the capability to do that,” McKechnie says, adding, “Look at some South American markets where people need small instalment loans on products such as cards, that can be done. Tailor-making for even small customers can be done, provided one have a fairly efficient operating platform that is parameterised to offer the products to customers.” Citing the example of a range of options within credit cards, McKechnie says that today there are a range of credit cards – whether one is a transactor, a points collector, an overseas traveller – that serve different purposes. “It is important that banks explain to customers what the products can do for them and make sure that we are selling absolutely the right product to the right customer need,” he adds. One of the most important contributors to a bank’s success is its people, says McKechnie. “You can have glossy branches, up-to-date technology but ultimately it is the people who deliver the products to customers who really matter. The people in our branches have to be able to carry the brand every day, through every customer transaction or touch.” On the attributes that McKechnie wants his staff to have, he says, “I want people to approach customers, I want them to be empathetic with customers, I want them to be energetic.” Citing the case of HBOS PLC, a bank in the United Kingdom, and one of McKechnie’s previous employers, he says that the company never went to other banks to recruit. “They had a methodology of going down the high
27.8% Retail banking contribution to Ahli Bank’s bottom line.
One of the most important contributors to a bank’s success is its people, says MeKechnie. Even with glossy branches and up-to-date technology, it is the people manning the branches who can deliver the right experiences to the customer.
street and going to great retailers and saying, ‘You have great customer service skills, do you want to join a ban?’ because actually banking is not that complicated. It is largely systemised nowadays so what we actually need are people with great customer service skills, come and join us.”
Banking industry in Qatar
There are certain challenges in Qatar’s banking sector, according to McKechnie. “One is the Islamic-conventional split which is different from most local markets.” The number of banks is also more, relative to the population, which McKechnie categorises as “well penetrated”. But, he adds, “If you look at the growth potential in terms of asset and liability growth, it is reasonably underpenetrated. Thus, one would seriously have to consider, further down the line, some form of consolidation, not necessarily the big taking the small, it may be the reverse.” Categorising the market as still evolving and exciting, McKechnie says that when one looks at products, there is scope for growth. “Banks can look at channels such as bank assurance; there is still room to grow in terms of technology adoption. One area that needs serious consideration is the question of how many branches versus technology platforms that can enable banks to reach out to customers.” The Edge | 61
expanding Qatarâ€™s insurance sector
feature story | insurance overview
The insurance industry in the Gulf Cooperation Council (GCC) is expected to grow at a compound annual growth rate of 18 percent in the five years leading up to 2017. The Edge takes a look at how Qatar’s insurance sector will benefit from these regional trends. by Shehan Mashood
ided by legislation, ambitious national plans that include huge investments in infrastructure and a general increase in the awareness of risk management, the insurance sector is expected to grow both in Qatar and the region, according to experts. Insurance penetration in the GCC is expected to grow from 1.1 percent in 2012, to 2 percent in 2017, according to Alpen Capital’s GCC Insurance Industry Report 2013. Qatar’s insurance industry was worth USD1.3 billion (QAR4.7 billion) in 2012, much of it being driven by non-life, a general trend in the Middle East and North Africa (MENA) region. The economic growth, increase in population and insurance regulation is further expected to grow the non-life sector in Qatar. It is, however, not without its challenges.
Ali Saleh Al Fadala, the senior deputy group CEO of Qatar Insurance Company, says they are choosing to focus on customer service instead of competitive pricing that many insurers in the market engage in.
64 | The Edge
In the MENA region as a whole, the largest perceived weakness of the market has been the excess capacity that has created fierce competition and, in some cases, led to unsustainable levels of pricing. However, this might not apply to countries such as Qatar even though it is a small country with many insurers operating within it. Bassam Hussein, the chief executive officer of Doha Insurance Company tells The Edge that a better gauge of the market, is the size of the projects in the pipeline for Qatar, which creates the capacity for growth. MEED Projects in 2013 reported that over a USD100 billion (QAR364 billion) worth of projects were underway in Qatar, and this number is expected to vastly increase in the lead up to the 2022 World Cup. “So no matter how many companies are here, as long as you have the premium income base and as long as you have projects in the pipeline, it is always going to be a very interesting market for insurance carriers,” says Hussein. The chief operating officer at SEIB Insurance, Elias Chedid, agrees, telling The Edge that despite tough market conditions, the company has managed to perform well last year, increasing their new business by over 31 percent. Hussein points out that profitability is always a challenge, and that smaller accounts provide for the highest profit margins. Big accounts, because of competition and the premiums involved, usually have lower profit yields. When
“It seems that in this market (Qatar), price is the number one factor in most of the cases.” - Bassam Hussein, CEO, Doha Insurance Company.
insurance overview | feature story
Cession rates of insurers in Qatar are declining. Much of this has been attributed to the above-average growth in personal lines such as motor insurance, which is considered less volatile than commercial segments of business. (Image Corbis)
asked how Doha Insurance Company seeks to differentiate themselves in the market, Hussein says candidly, “We would like to think that our customers get better service, they get better day-to-day attention. But, overall it seems that in this market, price is the number one factor in most of the cases.” Ali Saleh Al Fadala, the senior deputy group CEO of Qatar Insurance Company which holds 50 percent of the local market share, says they are instead choosing to focus on customer service which is reflected in their higher prices, “we are not going into price battles with other insurance companies who try to cut prices,“ he says. The higher prices are part of a long-term strategy of investing in technology to streamline their claims and better interaction with customers.
Opportunities and challenges
In QFC’s MENA Reinsurance Barometer from 2013, most of those interviewed identified the low penetration of insurance
Qatar’s cession rate among insurers, much higher than global averages.
in the MENA markets as the biggest opportunity. The region’s premiums, which account for 1.3 percent of gross domestic product (GDP) is a fifth of the global average, even though the MENA GDP per capita matches the global average, states the report, making it the number one market opportunity, replacing infrastructure projects. “This penetration gap is believed to be a major long-term and structural driver of insurance and reinsurance market growth in the region,” further states the report. When looking at short-term growth in penetration, SEIB’s Chedid is of the opinion that looking at growth by line of business is a better measure of the market. In Qatar, Chedid expects the overall shortterm growth to be moderately positive. He adds that, “[this] can only achieve visible levels by applying mandatory insurance of certain lines such as fire and liability. Those are essential to both improve premium penetration and protect the economy.” An ignored area when discussing insurance penetration in Qatar, according to Hussein, is the level of penetration along personal lines, “This is where the market here lacks. So in our opinion the local penetration will always grow but at the same time I don’t see it becoming a major issue.” Hussein also brings up an interesting point about measuring the ‘real’ growth of insurance in the country, “It’s not just that we need higher penetration [in the] market. The most important thing for me is how much of that penetration is
actually retained within the country?” He further explains this idea by saying that if the insurance penetration was to grow by a number of percentage points, it is important to look at where that growth has come from. If it is going to markets outside Qatar and not retained by insurance companies in Qatar, “then it is a false penetration in my opinion,” says Hussein. “We need to focus on how much of the premiums are actually retained in Qatar and not how much penetration is in the insurance market.” Among the most serious threats to the market according to the reinsurance barometer is the further erosion of market discipline through competition. “This longstanding concern is further exacerbated by a continued influx of frequently ‘naïve’ capacity in search of instant diversification benefits,” the QFC report states.
While there are significant differences in reinsurance purchasing behaviour in the region, cession rates in the GCC countries are among the highest, at an average of 40 percent. Qatar is slightly above this average with 44 percent. Another problem identified by some in the industry is domestic insurers engaging in what is known as facultative inward reinsurance. This is where insurers purchase cover for risks to individual policies that are not covered by their reinsurance treaties, either for amounts that are more than the limits of their reinsurance treaties or for unusual risks. Mahmoed Akoob the managing director of Hannover Re Takaful, was quoted in the QFC reinsurance barometer as saying, “Inward facultative reinsurance among ceding companies is a major risk to market stability and discipline.” The QFC report also states the practice has reduced the market’s transparency and heightened its vulnerability to accumulation risk. Hussein, however explains that the issue is not so simple. The type of accounts available in Qatar by their nature do not allow local insurers to have a bigger retention, forcing them to go into the facultative market. “We definitely are endeavouring and trying our best to retain as much in the country,” he says. “But how much can we retain out of a massive gas project? Or how much can we retain out of Qatar Airways? We don’t have The Edge | 65
feature story | insurance overview
Premiums ceded to renisurers ( 2011, in percent) 63
Total MENA reinsurance cessions are estimated at about USD12 billion.
Source: AXCO, ISIS, QFC MENA Reinsurance Barometer 2013
very specialised aviation insurance in the country, and it is difficult to see how you can have a specialised aviation capacity with only one account. Usually you have to have 10 to 20 major airlines to have a proper balance of the portfolio, to retain a little bit more.” Chedid from SEIB says that the risk is in uncalculated accumulation that can harm reinsurers the market needs. Hussein also concedes that many companies in Qatar are not retaining as much as they should. “because we are not seeing proper underwriting being done,” says Hussein, adding that, “the premium is very competitive, so we are not very keen to retain the risk because the premium that we get for it is not in the same line.” Therefore, local insurers prefer to sell on facultative basis abroad and get commission on it, passing on the risk. Overall, cession rates – the percentage of premium transferred to a reinsurer – in the GCC have been declining but remain at much higher rates than around the world. The QFC reinsurance barometer puts GCC cession rates at around 40 percent while the European Union, was for example, around 12 percent. In the barometer, the declining cession rates are attributed to the above-average growth in personal lines such as medical and motor insurance, which are considered less volatile than commercial segments of business. 66 | The Edge
Growing personal lines
In an attempt to grow personal lines, Al Fadala of QIC says they are in the process of implementing e-machines similar to a bank ATM machine, that would allow customers to purchase policies immediately. Around
50 e-machines are expected to be installed in public areas such as malls. However, the private sector, as it currently stands, will not benefit from one large section of personal line growth, medical insurance. It was predicted to
Dr. Faleh Mohamed Hussain Ali, the acting CEO of the National Health Insurance company told The Edge last year that private health insurance companies will be able to address the expanded healthcare market for specific services, including services outside the basic package offered by the National Health Insurance Scheme.
feature story | insurance overview
Bassam Hussein, CEO of Doha Insurance Company tells The Edge that an ignored area when discussing insurance penetration in Qatar is the level of penetration along personal lines.
“Mandatory insurance of certain lines such as fire and liability are essential to improve premium penetration and protect the economy.” - Elias Chedid, COO, SEIB Insurance. 68 | The Edge
be among the fastest-growing lines of business in the region, pushed on by government–mandated programmes to cover everyone under healthcare. Qatar is in the midst of rolling out its social health insurance scheme, and while it will expand the medical insurance market significantly, private companies are not expected to benefit. For now, the basic cover for insurance will have to be purchased through the government set-up National Health Insurance Company (NHIC). Chedid opines that depriving private insurers from writing and servicing the health insurance market would deteriorate service standards in the medium- to long-run. “It may result in shutting down operations of insurers that depend on health insurance income,” he says. “It may lead to rate thinning in companies that write general lines in order to compensate for loss of revenue generated by this isolation, resulting in increased market loss ratio in the short- to medium-term.” Malcolm Wright, is the executive director of Aetna International for Middle East and Africa, an insurer that focusses on health coverage. He is of the opinion that it is still too early to tell what the full coverage of the NHIC will include, and that overall increase in awareness will generate more supply and demand. “Clarification is yet to be made clear regarding the role of private insurers,” he told The Edge. The acting-CEO of NHIC, Dr. Faleh Mohamed Hussain Ali, told The Edge last
year, “Private health insurance companies will be able to address this expanded market for specific services, including services outside the basic package offered by the NHIS – and also coverage outside Qatar.” Wright says that as a health only insurer and with an international capacity, they will be able to meet the changing landscape with innovative products and offers. It is, however, clear that many insurers who relied on medical insurance as a significant line of their business are not happy about their new role in the scheme. “We will abide by whatever the government decides,” says Hussein. “Now, are we very happy with the way things are going or not? That is a different question. The only way that we can deal with it is by trying to discuss in a broader way through our key board members with government officials to find a compromise where we can both benefit.” “If the law is not going to allow us to write medical insurance, it is very simple,” he continues, “We have to seek for other ways and means to boost our premium and we will just have to abide by the laws of Qatar.”
In Alpen Capital’s GCC Insurance Industry Report 2013, takaful (shari’ah compliant insurance) is identified as among one of the key growth drivers in the region. Positive changes are expected in the regulatory framework and operation parameters of the takaful market which should affect the market positively, states the report. Hussein expects the Doha Insurance Company’s takaful branch to have a much higher growth rate than in conventional insurance. He is of the opinion that takaful should focus on personal lines, “If you look at the personal lines you will see that their (takaful) penetration is much higher than ours (conventional insurance).” The large infrastructure projects in the pipeline, increasing corporate governance and risk management standards and a relatively low penetration in the market will continue to attract business. Overall, a combination of factors is expected to fuel strong growth and a positive outlook in the insurance sector of not just Qatar, but the wider GCC.
Inside the minds of leading business figures
business insight Localisation, personalisation and sense of belonging are the selling points >72 In an exclusive conversation with The Edge, Patrick Heuze, CEO of Souq Waqif Boutique Hotels talks about what sets these hotels apart from traditional hotels.
also in this section
Adapting international technical platforms for local needs Ahmed Zeidan, general manager, Mackeen Technology, focuses on their security solutions with products targeted at a wide range of sectors, and discusses their business model.
72 Part of a six-hotel Souq Waqif Boutique Hotel chain, Arumaila Boutique Hotel (pictured above) has two designer suites and 17 rooms that have been given traditional Arabic names in alphabetical order creating a unique and culturally relevant design touch.
The Edge | 71
business insight | hospitality sector
Localisation, personalisation and sense of belonging are the selling points In an exclusive conversation with The Edge, Patrick Heuze, chief executive officer of Souq Waqif Boutique Hotels (SWBH) talks about what sets these hotels apart from traditional hotels, and what their plan is to meet competition, explaining that pricing in their hotels is competitive with the five-star facilities. Please explain the concept of a boutique hotel. How do you differentiate from any other hotels in Doha? Boutique hotels are typically designed in a residential, stylish and/or aspirational manner. Boutique hotels are small-sized properties focused on offering tailormade services in a residential, private, and personalised setting. Our key points of differentiation are the localisation of our collection of hotels in one destination – Souq Waqif – the versatile yet complementing architecture and design of the hotels, the limited inventory of each property that provides the platform for personalised engagement and a sense of belonging. How do you distinguish your offering across the boutique hotels that SWBH has? Each hotel has a particular design and feel, while the personalised, individual engagement is consistently offered throughout the properties. The guests have the opportunity to experience different products, each one of them being distinctive in its facilities, designs, ambience while unique standards are extended consistently throughout. The 72 | The Edge
accent is on the level of engagement and recognition extended to the guests. Does the location within Souq Waqif prove to be an advantage? The Souq is a key destination and it complements the hotel offerings. There are strong synergies between the souq and the hotels. The location is a strong leverage for the hotels in terms of promotion and sales as Souq Waqif is a destination for visitors and locals alike who want to experience the true Qatari heritage and culture. The hotels perfectly blend into this environment as they are an inherent part of the Souq’s structure and culture. Are your hotels priced above, below or at par with any five-star hotel in Doha? Our hotels are competitively priced and rates are set below our direct fivestar competitors, compensating for the lack of brand awareness and lack of global distribution. The market is highly competitive for both leisure and corporate markets and our price strategy allows achieving occupancies above 80 percent. Aside from pricing, what is it that gets guests and diners to your hotels?
Pricing is certainly a factor but the leisure guests are motivated by the ‘Heart of the Souq’ location and also its proximity to the Corniche and Qatar Museum. An additional unique selling point is the ‘dry’ element that is preferred by GCC families. As for the government and corporate market, the services and ambience are the key motivators for our guests to patronise our hotels as they appreciate the personalised recognition extended and the ‘small is beautiful’ ambience of each of the properties. Authentically Arabic or Qatari is what many local hotels claim they offer their guests. How do you place yourself in any difference with this claim? Design, symbiosis with Souq Waqif, dhow trips offered to hotel guests, understanding of the Arabic and Qatari culture and expectations, and Arabic and Qatari associates in guest engagement positions are giving relevance to this statement. SWBH are in the heart of the most recognised and genuine Qatari heritage and our protocols start from the time the guests enter the hotel, welcomed with traditional coffee and sweets to the time they depart, designed to reflect that authenticity.
hospitality sector | business insight
“Each hotel has a particular design and feel, while the personalised, individual engagement is consistently offered throughout.” Patrick Heuze, CEO of SWBH says their focus in 2014 would be growing the brand in the GCC market.
Given the level of competition, what are your strategies to meet them? The uniqueness of our properties and their localisation are attributes that position us in the white space which is not encumbered with competitors. Our strategies will be to elevate our level of services and the quality of our food and beverage outlets to compensate for brand equity deficiency. In addition, we shall build marketing partnerships with airlines, banks and other local and international brands. Increasing brand penetration in the local and GCC markets will also be a deployed strategy to further increase occupancies. Last but not least, building loyalty through customer services and loyalty programme shall also be an articulated strategy. The meetings, incentives, conferences and exhibitions (MICE) industry is a major contributor to the hospitality business in Qatar. How well do you gain from this trend? Unfortunately, our present facilities and concept would not cater to the substantial MICE market. SWBH are geared for highend, small events with specific requirements being board meetings, theme dinners, reception and dinner on a cruising dhow. With a new year, is there any difference in the way you would approach your business? Our emphasis in 2014 will be to grow our business from the corporate market and continuing in building SWBH brand in the GCC market. Further synergies and opportunities with Souq Waqif will be developed to increase footfall in the souq and subsequently in the hotels and its restaurants. Value justification
will be a priority considering its importance compared to a further rate reduction. Touch points will be developed through increasing use of social media. What sets the hospitality business apart in Qatar, compared to the region? The region’s hospitality business is quite inconsistent if we are to compare inventories and performances, as well as infrastructures, attractions and activities. The actual extent of the various infrastructure and development projects in Qatar, the opening of the new airport with expected growing passenger traffic – transit and stop-over – the increasing number of events, and the proximity to Saudi Arabia would be the determining factors influencing the growing hospitality business in Qatar. The country is strongly positioned as a sports and business destination, and is gradually affirming itself as an attractive leisure destination. Efforts are being deployed for increasing Qatar’s tourism offer. Qatar Foundation, Souq Waqif, Cultural Village and Qatar Museum Authority are local entities, which work actively towards establishing Qatar as regional cultural hub. The Edge | 73
business insight | consulting
Adapting international technical platforms for the Qatari enviroment In an exclusive interview with The Edge, Ahmed Zeidan, general manager, Mackeen Technology, a local market leader in security solutions with products targeted at a wide range of sectors, discusses their business model and dwells on how they match international technology to the local market demands. Tell us about the business focus of Mackeen Technology. Mackeen Technology is a relatively new company and like all young organisations, we have been fortunate to have talented manpower. We are particular about our product offerings and have taken it as our mission to identify and respond to the needs of the Qatari market that will enable the country to develop into a world-class destination by 2022. Some of our clients are from government organisations as well as technology and telecom firms. We have tied up with vendors across the world in order to bring the best solutions to Qatar for the benefit of a number of sectors in the country. As a homegrown company, what are the values that you bring to the customer? Well, when you are offering a product, you have to meet the minimum requirements of that particular market. In Qatar, there are many elements affecting product performance, such as the weather, language and the ability of the local population to understand a concept and adopt it. We use international technology since they match the local market needs but try to add Qatari flavour to our solutions. Our approach differs from segment to segment as we try to identify needs and match product requirements to the country of origin. At the same time, we add 74 | The Edge
Mackeenâ€™s special touch to the solution in terms of usability, specifications and warranty. Does the company believe in developing new and original products or adapting those that are already available in the international markets? I would like to explain the whole picture of product development through an example. We have a product that can detect smoke that is considered the number one selling product in the world. However, when we introduced it in Qatar, it did not function well. The high temperatures produced smoke that triggered false alarms and negatively affected the functioning of the product. We adjusted the specifications of the machine, developed new software that can distinguish smoke that is caused by climatic heat, and made the unit more sensitive to the detection of real fire. What does Mackeen Technology do to keep ahead of IT trends? At present, a new mobile, tablet, television or camera is being launched almost every week. At a time when technology is changing fast, one has to establish a clear minimum requirement when choosing a product or technology in order to sustain effectiveness for at least the coming three to four years. Mackeen
Technology plays a pivotal role on this front and advises the client wisely after studying their requirements. The personal camera market, for instance, is flooded with 10- to 12-megapixel versions but at the same time, 18-megapixel cameras are being launched as well. If you buy a 10-megapixel unit now, it may become outdated within a year. We always try to emphasise to our clients that at least 2- to 3-megapixel resolution is required to get good pictures. In the CCTV business, 2 megapixels is considered enough so anything beyond this number is fine. Similarly, televisions with varying screen sizes are available but we recommend our clients not to get less than 25 inches because it is outdated. We very well understand what direction the growth in technology will take and recommend to our clients accordingly so that they get the best products and solutions in the market as per their requirements and avoid overrated or underrated offerings. What are the special features of the specialised ATM solutions that your company developed? Banks have to always stay updated in the technology front to protect their data and money. ATMs are one of the major technologies that the banking sector is
consulting | business insight
“We use international technology since they match the local market needs but try to add Qatari flavour to our solutions.” proud of. Unfortunately, ATMs are also the target of serious threats and attacks. In order to reduce and avoid these incidents, we offer specialised solutions that involve installing highly sensitive cameras capable of identifying any threat or attack to the machine. What is your view on the regulations that the government has imposed on hotels in terms of their security and safety standards? The safety and security of hotels and resorts is gaining worldwide importance. The Qatari government has implemented strict regulations regarding hotel security. This is good from the point of view of the safety of tourists but it has increased the cost for investors as a result. Mackeen Technology recently launched Mackeen Security, its safety division, as we want to offer the best security solutions at the most affordable prices. We rank among the key players who develop state-of-the-art technologies as per government rules and regulations and implement them in hotels. How do you deal with competition? In recent times, Qatar has seen many examples of projects done poorly or left incomplete. Lowering prices is definitely not a good option to deal with competition as it can harm the business and lead to delays or incomplete projects. We provide customised solutions to our clients suitable for the local market. Qatar is a growing yet sensitive market where we have built our name and reputation by providing reliable, affordable and world-class solutions along with prompt customer service.
Ahmed Zeidan, general manager, Mackeen Technology, says, “At a time when technology is changing fast, one has to establish a clear minimum requirement when choosing a product or technology in order to sustain effectiveness for at least the coming three to four years.”
What is it that you look at when you are hiring a new recruit? How different is the philosophy when you are hiring an experienced person? Recruiting people is GCC is not easy, particularly where expatriates are involved. You have to choose the right candidate as it costs a lot of resources to get one to fill a vacancy within an organisation. Mackeen Technology has a policy to offer opportunities to students and new graduates to harness their fresh knowledge and nourish them with handson training to turn them into productive professionals. We believe students possess remarkable energy to take on challenges and learn new ideas; if their enthusiasm is channelled properly then we can expect highly rewarding growth for an organisation. At the same time, we also have team of seasoned professionals who know our
products and services in and out and can offer outstanding consultation services to our clients. We have an intensive training programme for our new hires, whether experienced or fresh graduate, to enable them to evolve into industry experts. What is Mackeen Technology’s growth plan for the next two years? We have been in this business for two years. We started with the security division such as closed-circuit televisions before eventually moving on to document archiving and workflow management, and then into ATM machines management and health assurance systems. We now also offer telecom solutions and satellite service to industries such as construction and car rental companies, to which we provide vehicle-tracking systems. We also distribute products such as cables and optic fibres to the telecom sector. The Edge | 75
Spillover Continued from page 57
The Ikea store in Qatar has over 7500 products, 59 room settings, three homes, a 550-seat restaurant and a play area sprawling across 32,000 square metres.
clientele.” In fact, based on his experience of Ikea’s entry in other countries, Dahlsen says the giant retailer has positively affected BoConcept’s sales in many of the 61 countries in which the brand operates with its 264 stores. “Being a Swedish brand, Ikea’s design is somewhat Scandinavianinspired, as is ours.” Because of the hype created with the arrival of Ikea in many countries, Dahlsen says the brand often results in the taste of the consumers being more tuned towards this type of design. He admits that in some cases, Ikea did affect BoConcept’s sales negatively, but only in the short term. “In general, we often see Ikea’s entry in a market, where we are already operating, as an advantage…In the medium and long term, Ikea’s presence has almost always been an advantage for BoConcept,” concludes Dahlsen. The statement is seemingly true for other furniture retailers in Qatar as well. The entry of Ikea into Qatar has triggered interest among customers. Drawing attention towards service quality and product range, the brand has ostensibly brought healthy competition to the market, as Ryman concludes, “Ikea has brought choice and a theatre of experience to the Qatari retail scene.”
76 | The Edge
automotive | product reviews
Ford Fusion 2014
ord Middle East along with Almana Motors, the local dealer, recently launched the 2014 Ford Fusion, a mid-size sedan. In Qatar, the 2014 Ford Fusion is available in the S and SE series in front-wheel drive only, with the option of a 2.5 or a two-litre engine with six-speed transmission. It comes with a five-year or 100,000km manufacturerâ€™s warranty, as well as a comprehensive three-year or 60,000km free service and maintenance package. The new Fusion has a variety of integrated driver
assistance and convenience technologies based on sensors, cameras and radar. The car is equipped with a lane-keeping system to maintain proper position on the road, adaptive cruise control and one of Fordâ€™s biggest selling points, the parking assist feature which does the steering when parking. The car is also enabled with voicecontrol technology to interact with the communications and entertainment system. Inside, the new Fusion, thinner and lighter frames support the seats trimmed with fabric using recycled sustainable yarns.
The interior has acoustic underbody shields and weight-saving sound-absorption material; both of which minimise noise while boosting aerodynamic efficiency to help save fuel. High-strength steels such as boron, are used in the body to increase strength by 10 percent. Adaptive front airbags that vent and tether to conform to a specific occupantâ€™s size, position and seatbelt usage were also added. According to Ford, the new body design will also lower the cost that results from low-speed rear-impact repairs. The Edge | 77
product reviews | books & gadgets
Women, Work and the Will to Lead Lean in than sit back is the gist of this 183-page read, written by chief operating officer of Facebook, Sheryl Sandberg. Lean In: Women, Work and the Will to Lead begins with the author questioning why only four percent women are among the Fortune 500; why they are less likely to hold top leadership positions despite better academic performance, and why they are less successful in their careers. All these questions have already been addressed in feminist literature. What, then, Lean In brings to the readers is a fresh approach of dealing with the issue, hence hoping the book “inspires men as much as it inspires women”. Written in first-person narrative, Sandberg has stories to tell…from home to workplace, childhood to pregnancy and then post-pregnancy. It is these bits and pieces from various life events from which the author draws her points, thus making Lean In an interesting read. By leaning in, Sandberg means being ambitious in any pursuit. However, she does not make a case for career as a preferred choice for women. Instead, she inspires them to have success and happiness, as the author puts it, “Not all women want careers. Not all women want children. Not all women want both.” For women who do pursue a professional career, Sandberg offers advice based on her experiences. A very important trait which most women lack in their professional lives is confidence, writes Sandberg, claiming that she herself is still far from mastering it fully. When confidence does not come naturally, she suggests faking it until one begins to feel it. So is the case with happiness. When there is a big opportunity, there is no space to waste time thinking whether it perfectly fits the academic or professional background or not. Instead, a woman in her career must have enough confidence to grab it, making the opportunity fit for herself. But in achieving these ambitions, Sandberg also stresses the importance of a partner who is willing to share household responsibilities. She acknowledges the social pressures, and advocates the ability to speak the truth, being honest without a fear of earning a bad position in a career. Despite all the ups and downs women’s professional lives that this book mentions, Lean In can be a feel-good read for women, while inspiring men to encourage them.
Canon PowerShot N100
Roger Dubuis Velvet
Canon Middle East has recently unveiled the PowerShot N100, Canon’s first compact camera to feature both front- and rear-facing cameras. The device records your expression as you shoot, either as a movie or still image, and combines it with the scene you have captured. All settings can be accessed and adjusted via the 7.5cm tilt-up touchscreen. The camera features HS System for superior lowlight results and a 5x zoom lens.
Roger Dubuis, the Swiss watch manufacturer, will be showcasing a range of their timepieces at the upcoming Doha Jewellery and Watches Exhibition, from February 24 to March 2. Among the exhibits will be the brand’s diamondencrusted Velvet in rose gold. With a 36mm case, the watch’s bezel features diamonds. Its dial comes with a silver background. The timepiece’s 150mm-long bracelet also contains pink gold with diamonds.
Uber, a mobile app based car-booking service, recently launched in Qatar. It allows customers to book a ride by pinning their location on a map and pay using their credit card. Features include being able to see how far away the driver is and splitting the bill with friends through the app. Uber is currently operating on ‘promotional pricing’ according to a representative and prices are likely to increase slightly soon.
78 | The Edge
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The Edge is a business magazine targeting ambitious professionals operating within Qatar’s multi-sector business landscape. The Edge is read...
Published on Mar 6, 2014
The Edge is a business magazine targeting ambitious professionals operating within Qatar’s multi-sector business landscape. The Edge is read...