Issuu on Google+


editor’s letter

FROM THE

EDITOR

THE AGE OF RESPONSIBILITY

The global economic crisis has forced companies to move away from ‘business as usual’ social models in an effort to appear and behave more responsibly. But how has corporate social responsibility (CSR) changed in the wake of the downturn? The economic crisis, coupled with mounting public pressure and scrutiny, and the increasing emphasis laid on sustainable development of CSR, have fashioned a path where CSR has shifted from being predominantly philanthropic (which met the needs of the company), to being more strategic. In today’s market, it is absolutely essential for businesses to look beyond their competitors and their competitive environment, and look profoundly at their social, political and environmental context to fully understand the degree of CSR that is required on their part. So why has CSR become important to organisations and why will companies all eventually have to respond to the trend? There have been increased demands from employees, customers and government bodies for businesses to be more transparent about their activities, and for them to reach and maintain acceptable standards in their business practices. For employers, CSR is now seen as an important way to increase competitive advantage, protect and raise brand awareness and build trust with customers and employees. Employers are now having to ask themselves: Are job seekers actively looking to work for a company that makes corporate responsibility an inherent part of their company culture? And if so, what factors help workers make that decision? While CSR remains a voluntary act, it is an act that needs to be strongly embedded into corporate practice and strategy, and the current crisis provides the perfect opportunity for businesses to reassess their goals and behaviour. The choice for the private sector is whether to carry on business as usual based on short-termism, or to adopt a new business concept – one that promotes long-term sustainability. Companies must improve their business models by bringing CSR and sustainability into their strategy. One way of achieving this is by adhering to the United Nations Global Compact (UNGC). This UN initiative is the largest international framework for CSR and promotes the development of business models and behaviour that are based on universal values. In effect, it calls on businesses to incorporate universal principles in the areas of human rights, labour, environment and anti-corruption into their operations and strategies. But what about the role of governments in the CSR landscape? In the wake of the financial turmoil and the uncovering of the extent of poor regulation, and supervision of global capital markets, some say the danger is that governments may yield to over-regulation. While there remains a need for adequate legislative safeguards, heavily regulated markets can only be counter-productive in the long-term. However, a more fitting framework, which could also act to promote sustainable business, would come in the form of a combination of adequate legislation, effective supervision and a diversity of measures to support CSR. These measures could include raising awareness, encouraging voluntary standards, building capacity, partnering with the private sector, endorsing responsible practices undertaken through initiatives like the UNGC, encouraging CSR reporting and providing incentives to stimulate greater social responsibility. It is your time to act…

Kelly Lewis

Managing Editor Do you have something to say? It is not all about us and we realise that often our readers are in the right place at the right time resulting in great stories. Is there a story that you want TheEDGE to cover? Are we delivering our readership with the content it demands? Are there new sections that you would like to see implemented in the magazine? Or do you simply want to make a comment? If so, send your letters to the editor at:

letters@theedge-me.com JULY 2010

1


WHO WE ARE

WHO WE

ARE Managing editor Kelly Lewis k.lewis@firefly-me.com +974 5067574

Acting editor Miles Masterson m.masterson@firefly-me.com +974 4340360 FREELANCERS Megan Masterson Nathalie Gueris REGIONAL SALES, MARKETING AND PR DIRECTOR Julia Toon j.toon@firefly-me.com +974 6880228 SENIOR SALES manager Emma Land e.land@firefly-me.com +974 3197446 SALES EXECUTIVE Laura Bridges l.bridges@firefly-me.com +974 5573324

About TheEDGE: TheEDGE is an ambitious business magazine targeting professionals operating within Qatar’s multi-sector business landscape. Printed monthly, TheEDGE was launched in July 2009 to fill the market void and to provide the business community with insight into the latest business trends and market developments. TheEDGE is distributed 12 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important audience. TheEDGE is an authoritative business resource serving both large and small business operators.

Creative director Roula Zinati Ayoub Art AND DESIGN Lara Nakhlé Rena Chehayber Rana Cheikha Charbel Najem Finaliser Michael Logaring Photographer Herbert Villadelrey

I

E

ZIN GA

IN

UT YOU R

CT PA

TH

O AB

M

printed by Ali Bin Ali Printing Press, Doha, Qatar

SE PLEA

Dan Louie Javier +974 6975087 d.javier@firefly-me.com

K

DISTRIBUTION and SUBSCRIPTION Michael Javier +974 5262089 m.javier@firefly-me.com

RE MA CYC LE TH IS

Firefly Communications PO Box 11596, Doha , Qatar Tel: +974 4340360 Fax: +974 4340359 www.firefly-me.com

TheEDGE is printed monthly © 2010 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by TheEDGE or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in TheEDGE. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Getty Images and/or iStock Photo.

2

JULY 2010


CONTENTS

CONTENTS 16

BUSINESS INSIGHT – SPECIAL COVERAGE

BUSINESS INSIGHT – SPECIAL COVERAGE

A PERILOUS THIRST FOR WATER

- Margaret Catley-Carlson a member of the WEF’s Global Agenda Council on Water Security. -

During the WEF you raised a very important point concerning the growth of the energy industry and its demands on water consumption. You asked: where will the water come from to support new energy growth? Can you discuss some of the implications? If we look back 50 years ago, there was so much water and so little of us. We have managed to reverse that equation to where there is now a lot more of us and our demands in many places of the world are greater than supply, and the more you put stress on supply, the more inventive uses we need for that water. We are still managing water with the mentality of 50 years ago, which is that, it is a resource of which there is lots and that it should be more or less free. 16

.8.

As the world grows thirstier for water, stocks are depleting fast. Experts warn that increasing shortages of water in the coming years are likely to threaten national and regional security, economic growth, global trade, and energy and food production, which will have devastating effects, both environmentally and economically. At the conclusion of the World Economic Forum’s (WEF) Global Redesign Summit in Doha last month, Kelly Lewis spoke one-onone with Margaret Catley-Carlson, chair of the Executive Board for the Global Crop Diversity Trust and a member of the WEF’s Global Agenda Council on Water Security, to discuss the growing issue of water stress and waterintensive businesses.

The energy sector has plans for the future the world over, but often when you listen to those plans, such as for new nuclear installations, new tar sands, new petroleum and petroleum production facilities, you realise that they’re talking about using amazing amounts of water and often there is really not a lot of thinking being done about where that water is going to come from. At the same time, you will find that the plan is to increase agricultural production by 40 or 50 percent, and intrinsically you are talking about the same bodies of water where these are happening in the same space. It is definitely time to start questioning the assumptions about which water and where, but these are questions that most people are not equipped to answer because we have not really thought

about that. If you live beside a river and you get all your water from that river, it becomes really straightforward; is there going to be enough water in that river for all of the users of it? There are about 70 rivers, big ones, around the world that are now closing – no more water can be drawn from them – because water has been pulled out for various uses. Qatar does not have a river, as far as I know, so its water comes from desalination and, therefore, whatever you are going to do, it is going to be more desalination, more greenhouse gases, etcetera. My comments [during the WEF’s summit] were designed to say: “Look at the relationships that existed between our water needs and our potential needs” – they have changed remarkably in the past 50 years. And in the next 50 years,

it’s going to move vertically because there is already a shortage in a number of areas for the water that is needed to produce food. Additionally, when people start having good ideas about biofuel production, which is going to take X times that amount of water – because one calorie equals one litre – to produce each calorie, you are going to need a litre of water. Therefore, if you are going to produce biofuels, which are more intensely caloric than food, you are going to need even more water. The main message is: “Are you really thinking about where that water is going to come from?” Do you think businesses fully recognise the wider strategic risks posed by water scarcity, the impact of climate change and the implications for energy production and availability? I think there are some businesses that are starting to get very interested in this. This started about five or six years ago. A couple of the rating houses that rate the viability of company activities as part of their advice on evaluation of shares and stocks, started asking questions about whether the future water supplies of X, Y or Z industry were actually stable, and who was actually secure, and that was part of a wake-up call that had obviously been going on for some time within some companies. Big global companies became very aware quite early that their continued operations are vulnerable – there may be political constraints or there may be pollution problems. Usually their pollution problems are on the incoming. In other words, the continuing decline in the quality of water, which, if you are using it to make food and beverages, etcetera, becomes a real problem because you have to excessively clean it just to use it for your purposes. So, the answer to your question is a real mosaic. There are some companies that are aware and there are some financial houses that are very aware that this is a possible constraint. I would say that those who are aware tend to be more in the agriculture, foodstuff sector than the entire energy sector. However, that is not to say that the energy sector is oblivious, or that we have not really started having talks yet within the energy sector about the coming water constraints. Many oil companies are producing greater quantities of oil from

unconventional sources and observers and industry players predict that unconventionals will play an increasingly key role in meeting the future demand for energy. However, the extraction and processing of these resources often requires significant volumes of water. Can you discuss the impact associated with this? Well, it is the particularly acute use of water, because you are taking water out of the international water supply of fresh water. It depends on the technique, but if you are stuffing water down a well, which is going to stay there, this exerts pressure on the existing untapped resource, then that amount of water is probably going to stay there and so you are taking that water out of the overall water supply. Now, does the amount of water matter, or where you are extracting the water from matter? You have to remember that water is local. You can discuss the phenomena globally, but you cannot ever say “this is a good use of water” or “that is a bad use of water” because it entirely depends on the local situation, the availability of water, the geology and the agronomy – it depends on all of these things. Whether it seems

oil-producing countries, and not just those in the Middle East, water is already a scarce resource. Oil companies are beginning to recognise that water availability will be a key constraint on their ability to exploit certain reserves and are at an early stage of understanding how best to address the issue. What are your thoughts on the way forward and the technologies/methods that can be employed? Well, the first method that has to be employed is a unique device; it is called a table [laughing]. People have to sit down around it and they have to talk about water. They have to get the major users of water in a certain area, sitting around talking about their future plans, their future drawdown of water, where they think water is going to come from, and it has to be in the company of other future users of water. Additionally, there has to be an established knowledge of how much the potential future drawdown will be and what the sources of water are going to be. Do not forget that we need water for the environment as well, otherwise we’ll really be in trouble and

“It is definitely time to start questioning the assumptions about which water and where, but these are questions that most people are not equipped to answer because we have not really thought about that. If you live beside a river and you get all your water from that river, it, therefore, becomes really straightforward; is there going to be enough water in that river for all of the users of it?” - Margaret Catley-Carlson to be a reasonable use of water or not, that is something that nobody can stand up and say is good or bad. It has got to be discussed and decided on the ground by the people who have vested interests in that water community – we have had so much water in the past and a lesser population that we are not used to discussing where water should be used. However, the challenge related to water and oil is not just an issue for so-called unconventional fuel sources, either. For a number of

.14. ON THE EDGE

Miles Masterson reports on recent breakthroughs in genome DNA sequencing.

.16. BUSINESS INSIGHT

TheEDGE speaks with key professionals from in and around the region to uncover the latest news on the business front.

.24. OPINION

Energy advisor David Maul looks at how Qatar LNG can benefit from energy shortfalls in the United States, particularly California.

the environmental services that we get from rivers, from deltas and all the rest of it, will be even more damaged – the environment has to be sitting at the table too in the form of people that have studied such needs. Then you have to start working out an agenda and the agenda may be for changing crops, changing subsidies, changing technology or cascading water use. However, there is absolutely no one answer to your question. But it starts at the table and the real problem in most countries is that the table does not exist.

JULY 2010

JULY 2010

JULY 2010

17

Contributors

24

OPINION

OPINION

A brief introduction to the specialised team of contributors who lend their expertise and insight to TheEDGE. By David Maul

I

.10. NEWS IN BRIEF

A snapshot of the latest business developments affecting the business landscape within Qatar and the GCC region.

.13. NEWS IN QUOTES & NUMBERS

Powerful statements and important statistics that made an impact.

n the April edition of TheEDGE, Edward Jameson’s On The Pulse section, entitled Look East, raised many good points, however, there are some misperceptions. Jameson’s column correctly points out the critically important role that Qatar plays as a supplier in the international trade. He also highlights the very important role that Asia, especially China, plays as a buyer of Qatari natural gas. However, Jameson misreads the short- and long-term trends that drive the United States (US) natural gas market, and the unique and significant role it plays as a buyer of world natural gas. The US and California natural gas demand is currently lower than previous forecasts based almost entirety on the global economic downturn. The global recession hit the US much more significantly than Asia and China, and has hit the US industrial sector especially hard. Since liquefied natural gas (LNG) imports to the US are the marginal supply source, as the demand drops, LNG imports, therefore, drop off dramatically. Furthermore, US natural gas prices are also down from a couple of years ago. Coupled with lower demand, LNG suppliers, including Qatar, can currently get more for their cargos from Asia than the US. This same effect will happen in reverse as the US economy recovers, and economic recovery has begun. Industrial demand is quickly starting to pick up. The US economy is now adding jobs at a fast pace. A rapid ramp up in industrial production capacity and the resulting increase in demand for natural gas fuel is now likely since inventories in the entire supply chain were heavily harvested during the recession. Additionally, a moderate uptick in consumer demand will trigger a greatly amplified increase in industrial production as manufacturers play catch up and restock the supply chain. As a result, the US will likely see natural gas demand and prices restored back to the levels of previous years within the coming few years. Since US natural gas production cannot increase so rapidly, LNG imports will again be an important part of the US natural gas supply portfolio. California is in a unique position even in relation to the entire US. The state currently imports more than 85 percent of its natural gas supply.

California is not only heavily dependent on others for its supply, but it is at the end of several very long natural gas pipelines also needed to gain access to these supplies. Unfortunately, other areas also have access to these same supply sources. For example, a sudden increase in demand with its attendant price spikes in Chicago or New York, due to an unexpected cold snap, can divert supplies intended for California, and therefore directly affect both prices and supply availability in California. It is this unique position that led California to encourage the importation of LNG to help diversify its supply portfolio. California has many large underground natural gas storage facilities, which enable the state to receive periodic supplies such as LNG and store them for later use. While readers of this publication might wonder why California consumers have interest in Qatari natural gas, they need to understand that California is closer to Qatar by shipping distance than it is to Texas where LNG from Qatar is already received.

It makes more economic and environmental sense for LNG to come directly to California than for the state to buy from Texas LNG import terminals and pay extra to ship natural gas an additional 2400 kilometres across the US. Therefore, California energy policy encourages the import of LNG if it can be done in an environmentally responsible manner, using import terminals with a minimal environmental footprint. The long-term drivers are even more dramatic. The US currently relies heavily on the development of shale gas for much of its future supplies, especially since imports from Canada are expected to drop as it diverts its natural gas to fuel the country’s tar sands industry. Shale gas is relatively new (from a large scale commercial perspective) and this potential supply source is very large. However, technical issues are now emerging that may temper how much shale gas is actually developed and used. Recently completed wells have a decline rate higher than conventional gas wells. We are now witnessing 50 percent, or more, of the lifetime resources being produced in the first six months of well life. While there are many places to drill, this increased decline rate means more wells need to be drilled in order to maintain a constant field production level. Furthermore, shale gas wells are more expensive to both drill and maintain than conventional wells. This results in higher per unit production costs. LNG imports from cheaper production cost areas can under price US shale gas. Whether LNG from these areas, including Qatar, comes to the US depends primarily on the relative price between the US and Asia, especially China, and how aggressively the LNG supplier wants to target the US market. LNG also plays an important role in helping advance renewables in the US and elsewhere. California has very aggressively promoted renewable energy resources to reduce its

carbon footprint. However, these resources, primarily the frontrunners of wind and solar, are intermittent electricity providers. As the US shifts from the use of baseload coal to intermittent renewables, natural gas power plants will be the cost-effective backstop when the wind stops blowing and the sun does not shine. These power plants are also needed because they can be located close to demand centres to balance the transmission system as more renewables are developed in very remote locations. Finally, let me clarify the issue raised regarding the future role of coal in the US and the prospects of carbon capture and sequestration (CCS). Existing coal plants are expected to run at a high capacity since they are the cheapest supply source of electricity. However, for new power plants, natural gas is currently cheaper than coal by a slim margin given the price increases in construction materials and labour required for coal. Long-term coal will be much more expensive as CCS costs are rolled in. Therefore, the new fossil fuelled power plant of choice has been natural gas and will continue to be natural gas in the near term. Natural gas fired power plants with CCS are less expensive than coal with CCS since gas can produce more kilowatts of electricity per metric tonne of carbon output, and will likely be the future power plant of choice. Natural gas helps the US get to a lower carbon future. LNG imports have a bright future in the US.

David Maul has 35 years experience in the energy industry and is the president of Maul Energy Advisors. For more information contact: dave@maulenergyadvisors.com Locally, Maul is working in association with Chuck Griffin and David Trevena of Distinction Group Qatar. For more information contact: www.distinctiongroupqatar.com JULY 2010

26

IN THE SPOTLIGHT

IN THE SPOTLIGHT

.26. In the spotlight

In the Age of YouTube, Leen Qablawi discusses how the social media channel has become a global influencer of public opinion and affects world event outcomes.

THE AGE OF YOUTUBE

.30. MARKET WATCH - Catching up with the news through video clips on YouTube has become a daily habit of millions of people around the world, one that has both positive and negative effects. -

The scene was horrifying. Barrel after barrel of crude oil bursting into the open sea with the staggering vehemence of an Icelandic volcano. Human errors unleashing an inhuman disaster. I was staring into the abyss and the abyss was staring back. The screen goes black. Stop. Reload. The feed returns. This is life in the Age of YouTube. By Leen Qablawi BETTER THE SPILL YOU SEE

Thousands of miles away in the United Kingdom (UK), almost a month after the Deepwater Horizon wellhead had started oozing out oil a mile below the Gulf of Mexico, I watched the live feed setup by BP. For the company and the public, this raw footage served a number of purposes. Initially, it was a reaction to criticisms levelled against them that they had failed to provide adequate and accurate information regarding the scope of the unfolding disaster. In an attempt to focus the spotlight on their efforts to deal with the spill, rather than its size, the company had talked down figures related to the number of barrels of oil gushing out per day. As the crisis unfolded and public anger began to deepen over what has since become the worst oil spill in the history of the United States (US), pressure mounted on BP from politicians and residents of the worst affected Gulf Coast communities to come clean with the facts. In an effort to replace the public’s perception of its reticence to be open with one of transparent ‘honesty’, the company turned to remotely operated vehicles and high-resolution streaming video.

Overnight, the feed became an important component of the rolling media coverage of the situation, omnipresent at the bottom of the screen during press conferences, presidential addresses, or shots of wildlife drenched in thick crude. BP’s narrative on the spill was immediately dispelled as it became clear to anyone watching that the situation was much more dire than previously thought. Experts and commentators appearing on numerous national and international media outlets quickly dismissed BP’s early estimates, using the feed as evidence for their positions. In fact, mounting video proof helped maintain the political pressure on BP from the Obama administration, which began to strike an increasingly litigious posture in its dealings with the company and called for the establishment of an escrow account reserving billions of US dollars to compensate affected businesses and individuals (modelled on the fund established for victims of the September 11 attacks). Yet the feed is only one element of a whole host of realtime data gathered by BP and other companies working on the rig prior to and after the deadly explosion on April 20. Not only is that data being used by investigators into the

- A mock cemetery in Grand Isle, Louisiana, protesting the BP tragedy, highlights what has been lost for the beach communities of the Gulf of Mexico following the oil spill on June 16, 2010. -

spill, it is also being pored over by lawyers for victims of the explosion for evidence in any future civil proceedings. However, for BP the feed provided the necessary images it needed to convince the US government and a weary public it was facing a defiant well that was very hard to deal with, and that it was doing all it could given the prevailing circumstances. In effect, releasing the feed was a form of public self-flagellation intended, on some levels, to gain sympathy and understanding. The company wanted to show the immensity of the situation in order to shift the debate on the mishaps that led to the explosion to what needs to

be done to deal with it. It continued to provide the live feed during a procedure called ‘top kill’ that was intended to plug the leaking wellhead with a combination of drilling mud, cement and golf balls. More importantly, though, the streaming video met the requirements of a global community, driven by instant messaging and cyber connectivity, that demands constant information. By tuning into the feed, people were able to fulfil a voyeuristic desire and follow the unfolding drama with all its ebbs and flows, even if it had a minimal impact on their own daily lives. In the feed, submarines with names such as Explorer 1 and Explorer 2 are occasionally seen working on a large metal structure. That is the infamous blowout preventer that attached the rig to the wellhead, and which failed the day of the accident, causing the explosion and subsequent leak. Amateur geologists, petroleum engineers, and explorers have been able to monitor the feed and blogs about the situation, drawing upon their technical know-how to inform a public searching for answers and clues as to when and how the spill could be brought under control.

THE TALE OF TWO FLOTILLAS

- Thanks in part to public pressure arguably strengthened by literally thousands of clips on YouTube, US President Barack Obama, seen here at a clean up facility in Theodore, Alabama, has become increasingly critical of BP. -

Nearly a month after the Deepwater Horizon explosion, another major international event took place on the high seas, and video clips once again came to play a leading role. On Sunday May 30, a flotilla of six ships headed for the JULY 2010

4

JULY 2010

25 67

27

Kelly Lewis speaks to Rick Samans, the managing director of the World Economic Forum, about its recent summit in Doha.

.33. INSIDE EDGE

Rajesh Mirchandani reports on the currency crisis in the eurozone and how the decline of the Greek drachma may have set a bad precedent.


CONTENTS

www.theedge-me.com

36

COVER STORY

COVER STORY

CSR AND THE ECONOMIC

.52. GREEN BUSINESS

Who is really leading the drive to reduce greenhouse emissions, governments or the private sector? Sam Pickering investigates.

DOWNTURN During the global downturn it was expected that businesses would cut down on their Corporate Social Responsibility (CSR) expenditures, retrench their CSR managers, close down their CSR departments and focus their efforts on generating income to satisfy their shareholders and keep their employees. This is because CSR was mainly perceived as a luxury, concerned with either saving the planet or performing the jobs that governments should be doing in the first place. But with consumers increasingly favouring brands with ethical practices, modern corporations must embrace CSR or miss out on profits and be left behind. By Wafa’ Tarnowska

CSR PAYS OFF

The McKinsey United Nations (UN) Global Compact Chief Executive Officer Participant Survey in 2007, of 400 business executives in 116 countries, found that 84 percent no longer believed that Milton Friedman’s infamous statement “The social responsibility of business is to increase its profits” describes the reality of a company’s role in society. The same year, a study by Goldman Sachs also concluded that companies that are considered leaders in environmental, social and governance policies (ESG) outperformed the market by an average of 25 percent.

.55. ENTREPRENEUR

Qatariat’s Buthaina Hassan Al Ansari is gaining a good reputation in the Doha business community and beyond. Miles Masterson spoke to her recently.

“More than 90 percent of corporate leaders are doing more than they did five years ago to incorporate environmental, social, and political issues into their core strategies.” -Wafa’ Tarnowska It seems these figures are not going unnoticed. Although many executives still see the necessity for CSR as burdensome, more than 90 percent of corporate leaders are doing more than they did five years ago to incorporate environmental, social, and political issues into their core strategies. Moreover, the McKinsey research shows that some visionary chief executive officers are recognising CSR as an opportunity to apply their creativity and resources to gain competitive advantage, while also helping to address some of the world’s biggest challenges. Indeed, growing pressure on companies to account for the social and ecological consequences of their activities is pushing senior managers to increase transparency about their products and processes, develop internal CSR policies and engage their stakeholders in open dialogue. The McKinsey 2007 survey states that: “Companies that can meet [these] challenges will be positioned to succeed in the years ahead, especially in markets that require new business models and untraditional partnerships.”

36

JULY 2010

JULY 2010

.58. BUSINESS VIEW – REAL ESTATE

Edd Brookes take a look at how the growth of the retail and hotel sectors in Qatar will expand the greater economy.

37

.36. COVER STORY

52

GREEN BUSINESS

As companies increasingly favour brands with ethical practices, Wafa’ Tornowska investigates why and how companies must embrace corporate social responsibility.

GREEN BUSINESS

REDUCING

GREENHOUSE GASES: WHO SHOULD BE MOST RESPONSIBLE? Countering climate change is something we should all ultimately be responsible for. But who is really leading the drive to reduce greenhouse gas emissions: Governments or the Private Sector? Sam Pickering investigates

.46. ECONOMIC BAROMETER

R

With the Euro having declined sharply in recent months, Karim Nakhle looks at whether the currency can survive and whether a similar currency could work in the GCC.

.49. ON THE PULSE

Edward Jameson examines Qatar’s capacity to host the 2022 FIFA World Cup and what this could mean for the country and the region.

It seems that wherever you look right now, everyone hates the euro. The news on television, radio, newspapers, websites, as well as investors and many hedge fund managers say the European common currency is doomed. Their arguments are very convincing, but is this the end of a beautiful era of prosperity and growth? Karim Nakhle investigates

JULY 2010

53

.61. SPECIAL REPORT – OBG

T

THE COST OF RECOVERY

JULY 2010

JULY 2010

ECONOMIC BAROMETER

he outlook is grim and the Euro has certainly lost its charm as evidenced by the hard selling this year, especially since May. However, as any seasoned investor knows, even when a prevailing view dominates, there is more than one side to an investment. Take for example the fact that only six months ago, the dollar was hated and the euro was revered. At the time the United States (US) government’s massive stimulus programmes were working in the short-term, but all the paper printing was killing the US currency. With the Euro at 1.50 to the dollar – the highest it had been in about a year and a half – some swore that this was the end of the greenback. However, since then, the Euro has been in a decline to levels not seen since late 2008. Prognosticating the future of the Euro is a difficult task, especially since the financial meltdown of 2008. The currency has slumped 19 percent against the dollar in the past six months as the fiscal crisis that started in Greece made money managers wary that some debt-swamped nations might default, or even revert to old currencies to devalue their way to salvation. With investors selling sovereign paper from Athens to Dublin and buying safer German bonds, yield spreads ballooned in May and June, rendering the European Central Bank’s (ECB) one-size-fits-all monetary policy ineffective and threatening to tear the currency union apart. Meanwhile Spanish, Greek, Portuguese and Irish government bonds were plunging, sending shudders through world markets and fuelling speculation that Europe’s 11-year-old monetary union could collapse. The ECB’s president Jean Claude Trichet travelled to an emergency Brussels summit of heads of government armed with graphs to dramatise how bad things were and convince European leaders that the Euro was in grave danger. While addressing the crowd, Trichet’s main message for the governments was loud and clear. “Some of you have behaved very improperly,” he said, “and have created an element of vulnerability for your own country, and by way of consequence for Europe. Now the situation calls for taking up responsibilities.”

European leaders knew that the price of that responsibility was not cheap: it came to an unprecedented EUR750 billion (QR3.3 trillion) aid package to prevent a debt spiral, backed by a credibility-testing pledge from the ECB to purchase the bonds of distressed governments – all to keep the 16-nation economic and monetary union afloat. Indeed, the ECB’s chief had to make a huge gamble, agreeing to buy government debt in order to halt the surge in yields, all in the hope politicians will respond by fixing their budgets and therefore allow the ECB to return to fighting inflation. However, the risk is that profligate nations will renege on the deal and expect stronger eurozone neighbours such as Germany and France to save them just as they rescued Greece. 46

the carbon emissions associated with a product. In the EU, this is about to be regulated, but for several years leading supermarkets have had their own rating systems in place. As consumers are increasingly educated about the effects of GHG emissions, producers need to provide them with information. It is commercially sensible to give the consumer what they want and to do so is proving an inexpensive change. This is an encouraging sign that is likely to permeate throughout the world and different industries. Companies with foresight are also keeping ahead of the game as they predict future GHG legislation. Indeed, there is a realisation that a worldwide agreement will be reached with targets for reductions in GHG. Companies, aware that they will soon be forced to reduce their GHG emissions or suffer the consequences of green taxes, are making capital investments that will benefit them in the near future. Reducing carbon footprint does not have to be sunken capital expense. Another motivating factor influencing the private sector is the actual costeffectiveness of making changes to their practices. The approach that many have taken is not necessarily a quick fix solution but one that will involve a year-on-year reduction in carbon dioxide (CO2) emissions. Many companies have found that educating staff to change their habits has led to a significant reduction of emissions and effects

46

ECONOMIC BAROMETER

CURRENCY FOR SALE

- Sam Pickering, managing director of BG2 Global Solutions Limited. -

52

educing our impact on climate change has become a central factor in all our lives, but what really influences our desire to reduce greenhouse gases? Apart from, perhaps, our own consciences as private individuals, there are two sources of motivation. Governments across the world are looking to legislate for reductions across all industries and change our consumption patterns, and the private sector, which is responding to market forces, namely competition and cost management. The failure of Copenhagen 2009 to bring about a deal to combat climate change in a globally coordinated manner is unlikely to be wholly resolved at the next climate summit in Mexico 2010. The frustrations of politics and bureaucracy have proved impossible barriers to cross in the quest to reach a lasting agreement. Only with a strong alliance and leadership of the largest countries, such as the United States (US), India, China and the European Union (EU) can a worldwide system of greenhouse gas (GHG) reduction be put in place. Rather than having sole reliance on government legislation, the principal factor in the reduction of our carbon footprint is being led instead by the market. Through ordinary rules of demand and supply, namely competition and a drive for cost effectiveness, the world is slowly but surely seeing the benefits of reducing GHG. There are encouraging signs that the private sector is beginning to lead the way in achieving the GHG emission reductions necessary to make a real impact. As the private sector realises the benefits of being ahead of the competition in their ‘green’ ratings and reviewing the cost effectiveness of certain carbon reduction initiatives, more and more companies are taking a lead in the drive to improve climate change. As companies seek to stay ahead of the competition in their industry sector, being the ‘greenest’ brand has become a key ‘unique selling point’ (USP). Indeed, supermarket chains are rushing to stay ahead of the field with labelling that indicates

With the acquisition of British department store Harrods, Qatar’s retail is on a roll, reports Oliver Cornock.

.63. BRAND BEAT Critics say the ECB has abandoned a founding principle to not bail out cash-strapped governments and may have to buy more debt, which could ultimately undermine its primary price-stability mandate. According to the ECB, eurozone banks face another EUR195 billion (QR823 trillion) in potential write-downs towards the end of 2011 in a second wave of losses from the financial crisis. In its latest financial stability report, the ECB said public finances posed the biggest threat to the region’s financial steadiness as high debt and deficits continue to unsettle investors, and floods of new government bonds could hamper access to market funding. The ECB estimates banks will need to make provision for further losses in 2010 of EUR 90 billion (QR402 trillion) and EUR105 billion (QR469 trillion) in 2011. This is the first time where the ECB has given an estimate for next year, probably to show that it is in control of the forecast. This comes on top of the estimated EUR238 billion (QR1000 trillion) already written down to cover bad loans by the end of 2009. Overall, the ECB said total write-downs from bad loans and securities between 2007 and the end of 2010 were likely to be lower than earlier expected, at EUR 515 billion(QR2300 trillion) from EUR553 billion (QR2400 trillion) forecasted in December. Risks to the growth outlook appeared broadly balanced but the ECB warned a shortfall could be damaging. In reality, the Euro, inspired by the German mark, is now starting to look more like the Greek drachma. Europe now blames its governments for what went wrong. Greece’s budget deficit was 13.6 percent of output last year; Ireland’s shortfall was 14.3 percent and Spain’s 11.2 percent. Germany’s deficit was 3.3 percent. JULY 2010

47

Charlotte Stubbs reports on the concept of countries as brands, as seen at the Shanghai World Expo 2010.

.66. LEGAL INSIGHT

David Salt and Fouad El Haddad shed some light on voluntary liquidation in Qatar. JULY 2010

5


CONTENTS

74

BEHIND THE WHEEL

BEHIND THE WHEEL

ROAD TO RICHES

OR ROAD TO RUIN? Sole auto distributors in Qatar have found themselves in the line of fire recently, accused of “monopolistic malpractices”, but questions have been raised within the industry concerning the guilt – or innocence – of the distributors. TheEDGE slipped into gear to discover whether Doha’s dealers really have been inflating more than just tyres. By Jamie stewart

T

he Qatari car dealer: Abuser of monopolistic position or businessman making an honest living? Artificial inflator of prices, or fair-trade advocate fighting soaring costs and tough competition? Such questions have recently been raised as the country’s sole distributors within the auto trade have found themselves under government pressure in relation to the alleged artificial inflation of prices. In May, the Qatari Ministry of Business and Trade flexed its muscles with regard to complaints it was reported to have received from members of the public concerning an alleged premium on car prices across the country, in comparison with other Gulf Cooperation Council (GCC) states. The Ministry requested that dealers review their prices and keep them within “acceptable limits”. The request followed the establishment by the ministry, under its Consumer Protection Department, of a team tasked with studying fluctuations within the prices of services and commodities in diverse Qatari markets, including the auto sector. The team said it visited neighbouring countries in order to make price comparisons, reportedly coming to the conclusion that the complaints were not without cause and that “corrective measures” were required. The first of these measures was laid bare at the fourth annual consultative meeting between members of the Qatar Chamber of Commerce and Industry (QCCI), and a number of senior government figures. At the meeting the government unveiled the findings of its task force, which claimed that some vehicles were being sold at a substantial premium to the cost of vehicles in neighbouring countries. According to a statement issued by the QCCI, Prime Minister and Foreign Minister Sheikh Hamad bin Jassim bin Jabor Al-Thani warned sole distributors against what he termed “monopolistic malpractices”. He added that the government would not “stand idle” while such practices were

“misused” and would not hesitate to administer tough penalties on distributors whose prices were not either reasonable or cheaper than those in other countries.

Controversy

The Prime Minister continued, “I have clear instructions from The Emir that residents should be provided with commodities at reasonable prices. We are working with automobile distributors to review their prices since we have found out that some of the vehicles are being sold at about QR40,000 more than their prices in neighbouring countries.” He added: “When the Euro appreciated against other currencies, car prices in the local market went up; the Euro has weakened considerably now, but there has been no revision of prices”. The report has stirred some controversy among Qatari dealers. Mohamed Jaidah is chief development officer of the Jaidah Group, a division of which, Jaidah Automotive, owns the sole distributor rights for Chevrolet in Qatar. Jaidah raises some issues with regard to the Consumer Protection Department’s report. He is yet to see a copy of the report, which has not been published or made available to members of the public in any way. “Most of the talk, and the study itself, has been based on a comparison between Qatar and Saudi Arabia, excluding the other GCC countries,” Jaidah says. Both English and Arabic language versions of the Ministry of Business and Trade website, where such reports are made available for public access, were ‘under construction’ as TheEDGE went to press.

DemographiCs

Among the reasons cited by the car dealership network in Qatar for possible fluctuations in prices between neighbouring countries are those related to economics of

scale: as the scale of a business is increased, related factors cause production costs to fall. Therefore, if your business is the importation and sale of cars, then the more cars you sell, the more cars you import. And the more cars you import, the less the importation cost per unit. According to Jaidah’s estimates, the annual car sales of a Qatari dealer would be roughly equivalent – discounting any economic vagaries – to the number of cars sold by a Saudi Arabian dealer in a single month. “The volume of the sales justifies having lower margins than the ones in the neighbouring countries,” Jaidah says.

inDepenDent investigation

As a result of the controversy concerning the study and its as-yet-unpublished findings, TheEDGE conducted a study of its own into the price of a particular imported model of car in each of the six GCC countries. Interestingly the results appear to fall into both the court of the government and that of the Qatari dealers – they neither agree with, nor do they disagree with, the Consumer Protection Department study. They do, however, add an additional – well – edge to the issue, and may go some way to clearing up any disagreement. The car selected, which will remain unnamed on advertising grounds, was a mid-market model, sales of which are relatively healthy in all six GCC countries. Pricing information was, for the most part, forthcoming. The only country that has been excluded is Oman, due to the relevant price information not being readily available. All prices are approximate and have been converted into their US dollar equivalent for ease of comparison. A standard 2010 model of the mid-market car in question can be driven out of a GCC showroom for: Bahrain – US$26,500; Kuwait – US$27,800; Qatar – US$28,000; Saudi Arabia – US$20,500; and the UAE – US$29,000. The results, therefore, depict not only a marked discount in Saudi Arabia compared with Qatar, but a marked discount in Saudi Arabia compared with all four other GCC markets, all of which trade within a relatively stable US$2500 range of one another. This falls tidily in line with the defence of demographics and economics of scale as cited by the Qatari sole distributors. Compared with Qatar’s population of 1.6 million people, Bahrain is home to just 800,000 people; Kuwait, 2.7 million people; and the UAE, 5.6 million people. Saudi Arabia, as stated, supports a population of 25 million – comfortably more than double the rest of the GCC combined. The single result that falls outside of the economics-of-scale argument is that of the UAE: A higher price than Bahrain, Kuwait or Qatar, but with a larger population. This UAE discrepancy could be explained by a number of internal factors, for example: the high expatriate population may be less inclined to own a car, relying instead on the state’s burgeoning public transport network; the high number of young expatriates, many of whom may not yet have accrued sufficient savings to afford a 2010-model car; the gap between the ‘haves’ and the ‘have-nots’, which may exclude midmarket cars on the grounds that such models fall in between the two demographics. Any of, or a combination of, these

- Saudi Arabia supports an auto market twice as large as the rest of the GCC combined. -

factors could explain the larger UAE population, yet less salesper-head of the car in question.

growth

The rapid rate of growth within the GCC states in recent years, both economic and physical, inevitably comes with teething problems, not least that of the law and the necessity for it to develop at the same rate as the sectors of society that it governs. The obvious remedy available to the government, should it deem that monopolistic practices have indeed been abused by Qatari car dealers and sole distributors, would be to allow new entrants into the market. Yet such a practice may do more harm than good if not closely managed. Mohamed Jaidah describes the auto sector as “an already very competitive market”. Some established dealers may, therefore, be pushed out of business altogether should the gates be opened. The report Doha - A Business Centre of Choice in the Middle East, published by top law firm Clyde & Co, threw light on the ability of the legal system in Qatar to adapt to change, saying: “A progressive, business-minded approach is apparent in many sectors of the Qatari economy and in laws relating to business operations.” It is vital that such a view is retained. In light of Qatar’s seemingly boundless growth, rules and regulations must indeed be allowed to develop to ensure that all are treated as equal – a truth that must apply to the nation’s car dealers, as well as its car buyers.

JULY 2010

75

.69. BUSINESS KNOW-HOW

Wassim Karkabi explores why new job search strategies such as networking are necessary for executive level leaders.

LUBRICANTS Smooth & Efficient A car engine needs oil to run smoothly and efficiently, just as a company needs clear goals and motivated employees to be successful. That’s why Jaidah ISD’s Lubricants Department takes pride in its smooth workflows and seamless operations - just like its products.

.72. SPEAK EASY

Brian Shrowder explains why companies should be prepared for effective corporate crisis management.

.74. BEHIND THE WHEEL

Jamie Stewart investigates sole auto distributorships in Qatar, recently accused of “monopolistic malpractices”.

.76. INDUSTRY FOCUS – QATAR 2022 BID

Economic correspondent Christine Toner takes a broad look at how Qatar might benefit from the 2022 bid.

76

INDUSTRY FOCUS

Jaidah Industrial Supply is a division of Jaidah Group that is committed to providing the finest equipment and services to Qatar’s industrial sector.

INDUSTRY FOCUS

QATAR’S WORLD CUP BID Qatar is bidding to host the 2022 World Cup and is already planning to build stadiums, hotels and infrastructure, should it be successful. This will all be great for football lovers, but what will this mean for the rest of the country? Christine Toner, economic correspondent, investigates

- Qatar’s crown prince Sheikh Tamim bin Hamad Al Thani and FIFA president Sepp Blatter attend the final match of the Crown Prince Cup football tournament between Qatari teams Al Arabi and Al Gharafa in Doha on April 24, 2010. Blatter has said that he strongly supports Qatar’s 2022 World Cup Bid. -

- Qataris are already football mad. Here Al Rayyan’s Brazilian captain Afonso Alves celebrates with his team mates and fans after they beat Umm Salal 1-0 in the domestic Emir of Qatar Cup final football match in Doha on May 15, 2010. -

Q

atar is no stranger to large bids and is becoming quite familiar with attracting major sporting and entertainment events. The Qatar Motorcycle Grand Prix (MotoGP) is already a long-established event at Losail International Circuit in Doha and two years ago the track held the first night event in MotoGP history. Not content with hosting motorcycle events, this year Qatar also announced its intention to host a Formula One (F1) Grand Prix race. Work has already begun on the Losail International Circuit in an attempt to bring it up to F1 standards. The country’s bid for the race comes as Bernie Ecclestone, president of Formula One, confirmed plans for a Rome Grand Prix, as he increases the F1 calendar to 20 races. Of course, there have been disappointments for the country too. The biggest of these was in 2007 when Qatar’s capital, Doha, launched a bid to host the 2016 Summer Olympic Games, but was eliminated early in the decision process. Nevertheless, the Arab country shook itself off and focused its attention

instead on bidding for the biggest football event in the world. Qatar’s focus on football should not come as much of a surprise. In recent years the oil-rich country has attracted several world-class footballers to its domestic teams to play out their careers. In 2004 Dutchman Frank de Boer signed for Al Rayyan and the same year French striker Christophe Dugarry joined Qatar soccer club (SC). The country also hosted the 2006 Asian Games, in which they won gold in the football event when the beat Iraq, much to the joy of the local fans. According to the Asian Football Federation (AFC) Cup Organising Committee: “Like other neighbouring Gulf countries, no sport comes close to challenging football’s popularity in Qatar. The oil-rich nation ... has the highest gross domestic product (GDP) per capita in the world [and] also hosted the 1988 AFC Asian Cup.” Indeed – in what could be seen as a warm up for the ‘main event’ – Qatar is set to host the AFC Asian Cup in 2011. Sixteen teams will take part in the event including the likes of Iraq, Saudi Arabia, Korea, Japan, Australia, Iran, Uzbekistan, Vietnam and China.

Qatar’s attempts to host the World Cup are made all the more significant because, if successful, it would be the first Middle Eastern country to host the event. This forms a key part of its proposal, as its organisers point out: “Qatar is truly in the Middle, neither in the East nor the West.” The nation’s bid claims “history and the future will come together in a historic choice of host nation in a global age with media and technology bringing continents closer together”. While Qatar’s wealth is undisputed and its success at hosting the Motocyle Grand Prix is clear, there are still hurdles the country will have to overcome. Climate is one issue, with temperatures soaring regularly to more than 40 degrees celcius. However, the biggest obstacle facing Qatar is infrastructure. At present the country has just one airport – Doha International. This is a relatively small airport deemed unsatisfactory for a country hoping to host one of the biggest sporting events in the world. But organisers are quick to point out that this is a matter soon to be rectified. Just east of the airport, construction has already commenced on the new Doha International Airport, which is expected to be one of the biggest in the world when it is completed in 2015. There are also plans to build a metro system in Doha and upgrades are taking place on many of Qatar’s roads with a US$43 billion (QR156.5 billion) investment in infrastructure. However the biggest overhaul in Qatar will be the stadiums. Of the six largest stadiums in the country, four are located in Doha and only one of these has a capacity of more than 25,000. The Khalifa International Stadium can house 50,000 spectators, but with an estimated 500,000 World Cup fans set to descend on the country, should the bid be successful, organisers are aware of the need for serious expansion. Al Gharafa Stadium in Al Gharafa and Ahmed bin Ali Stadium (Umm Affai) in Al Rayyan have both only have a capacity of 25,000, but plans are underway to build much

bigger stadiums along with the world’s first underground stadium. It is hoped this air-conditioned stadium will help combat the heat issue. But Qatar’s biggest selling point comes in the form of flatpack stadiums. Qatar has promised a number of stadiums erected for the event will be taken down at the end of the tournament and exported to countries with poorer resources. The initiative combats the issue of unused stadiums after the World Cup ends. Following the 2002 World Cup in Japan and Korea, many of the newly built stadia were left unused as they were too large to stage domestic sporting events. If Qatar succeeds in removing and transporting the multimillion dollar stadiums following the tournament, community sports centres will replace them. Whether or not this can be achieved remains to be seen. Organisers of London’s 2012 Olympics had originally planned to implement a similar scheme but plans to turn the larger ‘flat pack’ stadiums into smaller venues after the event have now been scrapped. Construction is also underway on a super-stadium which would host the World Cup final in Doha. This innovative new arena would include a temperature cooling system and would be powered by sustainable energy, making it environmentally friendly. Keeping up with technological advances, organisers say the stadium would have a 3D system which will “bring the images of the football game one hand’s distance from your seat”. But the country knows hosting an international event as big as the World Cup takes more than just fancy stadiums. Indeed, Qatar’s bid has received massive assistance in the form of a US$20 billion (QR73 billion) cash injection in tourism. The Qatar Tourism Authority (QTA) has committed to building 40 new hotels with around 7000 rooms. The move is an attempt to make Qatar a tourist destination as opposed to being known primarily for its oil and gas. JULY 2010

77

.79. HOW-TO GUIDE

Keith Rosen offers time management strategies to get things done without losing control of your life.

.83. TECH TOOLS

TheEDGE looks at the latest gadgets hitting the shelves this month.

Industrial Area St. No: 24 P.O.Box: 150, Doha, Qatar Tel: +974 46 387 77 Fax: +974 46 042 86 Email: isd@jaidah.com.qa

www.jaidah.com.qa

.84. LIFE & STYLE

TheEDGE goes go-kart racing at Villaggio and takes a post-World Cup trip to South Africa.

.90. EVENTS & CONFERENCES

Key industry events taking place in June.

.91. QATAR PROJECTS

An update on projects taking shape in Qatar.

6

JULY 2010


CONTRIBUTORS

CONTRIBUTORS LEEN QABLAWI TRAINEE SOLICITOR London, United Kingdom

Edward Jameson

>p.26

Senior business journalist Middle East North Africa region

p.49< Rajesh Mirchandani CEO Dun and Bradstreet South Asia Middle East Dubai, UAE

>p.33

SAM PICKERING Managing director BG2 Global Solutions London, United Kingdom

p.52< Karim Nakhle Senior business strategist Doha, Qatar

Edd Brookes

>p.46

Director DTZ Middle East Operations Doha, Qatar

p.58< 8

JULY 2010


CONTRIBUTORS

Oliver Cornock Regional Editor, GCC Oxford Business Group

>p.61 Wassim Karkabi Managing partner Stanton Chase International Qatar and UAE, and regional practice leader Industrial, EMEA

CHARLOTTE STUBBS CLIENT SERVICES CREATIVE ACTION DESIGN Doha, Qatar

p.69<

>p.63 BRIAN SHROWDER DIRECTOR OF CRISIS AND TRAINING HILL & KNOWLTON MIDDLE EAST

David Salt Partner Corporate and Commercial Clyde & Co Doha, Qatar

p.72>

>p.66 JAMIE STEWART INTERNATIONAL CORRESPONDENT LONDON, UNITED KINGDOM

FOUAD EL HADDAD

p.74<

SENIOR ASSOCIATE CORPORATE AND COMMERCIAL CLYDE & CO DOHA, QATAR

> p.66 JULY 2010

9


News in Brief – LOCAL

NEWS IN BRIEF – Local

NEW SHOPPING MALL FOR DOHA A major new shopping centre, set to include a 13-screen cinema, a children’s play area, food courts and basement parking for about 1600 cars, is earmarked to be built in Doha. With a retail space of more than 160,000 square metres, The Gulf Mall will be one of the largest in Qatar and is being built by the owners and developers of the Landmark and Villaggio malls. QATAR-BAHRAIN CAUSEWAY ON HOLD Work on the Qatar-Bahrain Causeway has been put on hold and the project team scaled back. The latest official cost estimate for the project stands at US$3 billion (QR10.9 billion), with Jassim Ali, a member of the economic committee of Bahrain’s parliament, confirming “the project has been on hold for some time, but it is not cancelled”, adding that cost increases and financing issues had played a role. The 40-kilometre bridge, when complete, will be the world’s longest bridge. INFLATION DOWN, FOOD, MEDICAL, TRANSPORT UP Although data released by the Qatar Statistics Authority in May 2010 show that the overall cost of living in the country has declined, the prices of most basic commodities and services have risen. Among the most expensive 10

JULY 2010

are furniture, textiles and home appliances (up by 6.4 percent since May 2009), followed by transport and communications (up by 4 percent). Medical care and services increased by 3.6 percent, as did food, which became 2.3 percent costlier. AL SHAHEEN JOINS FORCES WITH GE Oil & Gas Qatar Petroleum-owned Al Shaheen Energy Services signed two deals totalling QR1.1 billion with GE Oil and Gas, effectively consolidating their partnership. The first, Al Shaheen GE Services Company, is a joint venture established to perform aftermarket services for GE’s installed fleet in Qatar and the region. The second deal, PII Pipeline Solutions, will provide pipeline inspection and integrity services worldwide. BOOM IN PRIVATE HEALTHCARE The number of private healthcare facilities in Qatar has increased by 15 to 20 percent in the last two years, and the upward trend is expected to continue given the high number of applications for licences pending with the Supreme Council of Health. At least two new private hospitals and a number of specialist clinics are expected to open in 2010. Currently, only 15 percent of the population relies on the 850 private healthcare facilities, but this is expected to change

when all residents are covered by health insurance, says Dr Jamal Rashid Al Khanji, director of the Medical Licensing Department. A NEW LAW TO TACKLE E-WASTE A draft law that proposes to engage Qatar’s two mobile phone operators in turning electronic-waste (e-waste) management into a beneficial recycling market, is expected to be endorsed by the Ministry of Environment by the end of 2010. The Ministry is in talks with Qatar Telecom (Qtel) and Vodafone to provide free services or minutes to those who want to dispose of their phones in an environmentally friendly manner. ROYAL DUTCH SHELL MEETS IN DOHA The Board of Directors of Royal Dutch Shell, which meets around eight times a year and usually at Shell’s headquarters in The Hague, has met for the first time in Doha, underlining the importance of Qatar for the company. The Board visited the Pearl Gas to Liquids (Pearl GTL) and Qatargas 4 construction sites in Ras Laffan Industrial City. Pearl GTL, which Shell is building with Qatar Petroleum, is Shell’s largest single investment worldwide. More than 50,000 workers are employed on the site, which is the largest in the oil and gas industry.


News in Brief – international

NEWS IN Brief – International

QATARI INVESTORS EYE CHINESE BANK IPO Doha-based sovereign wealth fund, the Qatar Investment Authority, will invest US$2.8 billion (QR10 billion) in Agricultural Bank of China’s initial public offering (IPO), according to news agencies, Reuters and Dow Jones. Kuwait Investment Authority is said to be investing up to US$1 billion (QR3.6 billion). Agricultural Bank, China’s largest bank by number of customers, plans to sell a 14 percent stake on the Hong Kong and Shanghai stock exchanges, and is seeking to raise US$15 billion (QR54 billion) from corporate investors in the Hong Kong part of its IPO. AUSTRALIA’S FIRST FEMALE PRIME MINISTER In a historic move, Australia’s ruling Labour Party has installed Julia Gillard as the country’s first female prime minister, after removing an increasingly unpopular Kevin Rudd. Forty-eightyear-old Gillard, who was born in Wales in the United Kingdom (UK), has already vowed to end division over a controversial mining tax, resurrect a carbon trade scheme and call a general election within months. QATAR’S LNG REDUCES UK CARBON EMISSIONS Centrica, the largest energy utility in the UK, published figures confirming that Qatar’s liquefied natural gas 12

JULY 2010

(LNG) deliveries to the country have reduced carbon emissions from UK power stations by 5.2 percent. Gasgenerated power is significantly cleaner for the environment than traditional coal power, and the UK is the world’s third largest and fastest growing import market for natural gas. According to Simon Bonini, director of LNG for Centrica, Qatargas has committed to meeting up to 20 percent of the country’s gas supply needs. FOXCONN TO DOUBLE CHINESE WAGES Many economists are predicting that the cost of doing business with China will rise after Foxconn Technology, one of the world’s largest contract electronics manufacturer and maker of well-known products which include Apple iPhones, announced its plan to double the salaries of many of its 800,000 workers in China. The announcement follows a spate of suicides at two Foxconn campuses and criticism of the company’s unfair labour practices. Japanese automaker, Honda, has also agreed to give its workers in southern China raises of 24 to 32 percent, while Beijing will raise the city’s minimum monthly wage by 20 percent. BURJ KHALIFA RENTS START AT AED140,000 Several real estate companies have advertised annual rentals for Dubai’s

Burj Khalifa studio apartments starting at AED140,000 (QR138,688). Prices for rentals in the world’s tallest tower increase to between AED180,000 (QR178,314) and AED260,000 (QR257,564) for one-bedroom apartments and from AED300,000 (QR297,190) for two-bedroom units. A total of 60 units are available for rental. QP INKS DEAL WITH BANGLADESH Qatar Petroleum (QP) has agreed to sell liquefied natural gas (LNG) worth between US$1 billion (QR3.6 billion) and US$1.5 billion (QR5.4 billion) to help Bangladesh meet its fast-growing energy demand. Initially the country would require the LNG equivalent to a daily gas supply of 14 million cubic metres. Bangladesh moved to import LNG as the country’s gas crisis has become acute. QATARI BUYS SPANISH FOOTBALL CLUB Qatari businessman, Sheikh Abdullah bin Nasser Al Thani, has reportedly agreed to purchase a majority stakeholding in Malaga football club for US$48 million (QR174 million), making him the first foreign owner of a Primera Liga football club. Spain has no rules preventing foreign citizens from owning clubs. The modest club narrowly avoided relegation with a draw against Real Madrid last season.


NEWS IN QUOTES & NUMBERS

news in quotes

news in numbers

“Only education will make the redesign a truly global initiative.”

440

Queen Rania Al Abdullah of the Hashemite Kingdom of Jordan, member of the Foundation Board of the World Economic Forum (WEF): Global Agenda Council of Education Systems, said during her speech at the WEF’s Global Redesign Summit in Doha.

450

400

500

“We ask all stakeholders to cooperate and unite their efforts to translate their efforts into reality. We want a global design that would give equal opportunities to all.” The Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, said during the WEF’s Global Redesign Summit in Doha.

“Because we are living in a very complicated world, we need to bring into full play not just the efforts of governments but also those of nongovernmental organisations(NGOs).” He Yafei, ambassador and permanent representative of the People’s Republic of China to the United Nations, Geneva, told the audience present at the WEF summit.

“We can address issues of the environment, inequality and poverty if we have the political will to compromise.” Espinosa Cantellano, Secretary of Foreign Affairs, secretariat of Foreign Relations of Mexico, stated during the Global Redesign Summit.

“Bold decisions will have to be taken at the central European level between monetary policy and monitoring economic policy.”

Wim Kok, Prime Minister of The Netherlands (19942002); President, Club de Madrid, Netherlands, said in one of the talks at the Global Redesign Summit in Doha.

“The models we are taking are too international. The models of governance [we need] will have to come from within our societies themselves. In development work you have to go down and live with the people.”

British real estate development company, CPC Group, will seek damages from Qatari Diar Real Estate Investment after a court ruled that Qatari Diar breached its contract with CPC to redevelop London’s Chelsea Barracks when the Prince of Wales voiced his disapproval of the plans. Charles, the heir to the British throne and a longtime critic of modern architecture, intervened to complain about the development’s “brutalist” contemporary design. In a 98-page ruling, Judge Geoffrey Vos said that Prince Charles’ intervention was “unexpected and unwelcome” and that Qatari Diar “was between a rock and hard place”, with the Prince’s comments leaving both sides “in a very difficult position.” The judge ruled in favour of Qatari Diar on several other issues and said it did not have to pay CPC the QR374 million outlined in their contract in case planning for the development was refused. However CPC is entitled to unspecified damages, a figure that could be as high as QR440 million, the amount CPC says it would have received, had the development gone ahead.

Pic Of the month

Sadako Ogata, president of the Japan International Cooperation Agency, and a member of the Global Agenda Council on Humanitarian Assistance, told the panel and audience during the summit.

“The G-20 is fragmented as it transitions out of its role as a crisis-fighting committee. While G-20 leaders agree on the need for stronger financial regulation, actual details continue to be vague and lacking a solid deadline.” Tom Bernes, vice-president of the Center for International Governance, on the G-20 Summit Toronto.

- Policemen hold back demonstrators protesting the Group of 20 (G-20) Summit on June 26, 2010, where violent protests in the financial district of Toronto, Canada, led to more than 600 arrests. Demonstrators targeted the windows of banks, spraypainted obscenities on walls and set at least four police vehicles on fire. Multinational chains such as Starbucks and Burger King were also vandalised. The security cost for the G-20 meeting alone has been estimated at more than QR3.5 billion. -

JULY 2010

13


ON THE EDGE

Is the body louse the key to disease prevention? In June 2010 a global team of researchers, lead by scientists from the J. Craig Venter Institute (JVCI) in the United States published a study describing the sequencing and analysis of the body louse genome. They put forward that comparative studies of the body louse with other species have revealed features that will enhance human understanding and the relationships between diseasecarrying insects and their human hosts. Miles Masterson reports

I

f that sounds complex to you, the whole science of ‘genomics’ – in many aspects pioneered by controversial United States (US) scientist J. Craig Venter – is beyond the comprehension of normal folk. Yet simply put, it is the study of an organism’s hereditary information, in order to determine the deoxyribonucleic acid (DNA) sequence and genetic mapping of cells. According to the JCVI website, the most important reason for this science is to create “synthetic genomics” to “allow scientists and engineers to construct genetic material that would [have] … many potential positive applications including new pharmaceuticals, biologically produced (‘green’) fuels, and the possibility of rapidly generating vaccines against emerging microbial diseases” – which is where studies on organisms such as the humble body louse come in. The importance of this incredibly expensive field of scientific research seems obvious, if still perplexing, even to non-biologists. But this combination of confusion and cost is also why it is such a contentious subject on both ethical and scientific levels. In many parts of the world, ‘for’ or ‘against’ debates, similar to those around genetically modified crops or the cloning of animals, have surrounded genomics since the Human Genome Project (to identify and map the 25,000-odd genes of the human genome) was started at the US National Institute of Health in 1990. The controversy resurfaced 10 years later when Dr. Venter, collaborating with the above, succeeded in breaking the human genome code though his Celera Corporation. Though lauded as a huge scientific breakthrough, it also fuelled further moral debate among fears that it might lead to cloning of human

14

JULY 2010

beings, and what might happen if synthetic genomics fell into the ‘wrong’ hands, such as megalomaniacs or ‘bioterrorists’. In May 2010, these debates reopened when JCVI announced they had successfully constructed “the first self-replicating, synthetic bacterial cell”, made from the synthesized chromosomes of modified bacteria, Mycoplasma mycoides. “[This] is the proof of principle that genomes can be designed in the computer, chemically made in the laboratory and transplanted into a recipient cell to produce a new self-replicating cell controlled only by the synthetic genome,” JCVI stated. Venter has been labelled by some as a selfaggrandizing opportunist and his institute challenged for ostensibly alleging they have created new life – as opposed, some say, to merely duplicating it – and even ‘playing God’. Indeed, their breakthroughs have prompted US President Barack Obama to request a sixmonth investigative study, through a special ‘bioethics commission’, into the field. Yet it seems that scientists such as Venter, who calls genomics “one of the most powerful technologies and industrial drivers for societal good”, are open to scrutiny and, as he says, “look forward to continued review and dialogue about the important applications of this work to ensure that it is used for the benefit of all.” Through the likes of the body louse, they will continue to try and unlock solutions to disease and, through additional related research, look for solutions in creating new foodstuffs, replacements for fossil fuels, or even generating ‘oil eating’ microbes which could help to clean up spills such as the BP Gulf disaster, for example. Only time will tell, though, if genomics is in fact mad science fiction or a real panacea to mankind’s woes.


BUSINESS INSIGHT – SPECIAL COVERAGE

A PERILOUS THIRST FOR WATER

- Margaret Catley-Carlson a member of the WEF’s Global Agenda Council on Water Security. -

During the WEF you raised a very important point concerning the growth of the energy industry and its demands on water consumption. You asked: where will the water come from to support new energy growth? Can you discuss some of the implications? If we look back 50 years ago, there was so much water and so little of us. We have managed to reverse that equation to where there is now a lot more of us and our demands in many places of the world are greater than supply, and the more you put stress on supply, the more inventive uses we need for that water. We are still managing water with the mentality of 50 years ago, which is that, it is a resource of which there is lots and that it should be more or less free. 16

JULY 2010

As the world grows thirstier for water, stocks are depleting fast. Experts warn that increasing shortages of water in the coming years are likely to threaten national and regional security, economic growth, global trade, and energy and food production, which will have devastating effects, both environmentally and economically. At the conclusion of the World Economic Forum’s (WEF) Global Redesign Summit in Doha last month, Kelly Lewis spoke one-onone with Margaret Catley-Carlson, chair of the Executive Board for the Global Crop Diversity Trust and a member of the WEF’s Global Agenda Council on Water Security, to discuss the growing issue of water stress and waterintensive businesses.

The energy sector has plans for the future the world over, but often when you listen to those plans, such as for new nuclear installations, new tar sands, new petroleum and petroleum production facilities, you realise that they’re talking about using amazing amounts of water and often there is really not a lot of thinking being done about where that water is going to come from. At the same time, you will find that the plan is to increase agricultural production by 40 or 50 percent, and intrinsically you are talking about the same bodies of water where these are happening in the same space. It is definitely time to start questioning the assumptions about which water and where, but these are questions that most people are not equipped to answer because we have not really thought

about that. If you live beside a river and you get all your water from that river, it becomes really straightforward; is there going to be enough water in that river for all of the users of it? There are about 70 rivers, big ones, around the world that are now closing – no more water can be drawn from them – because water has been pulled out for various uses. Qatar does not have a river, as far as I know, so its water comes from desalination and, therefore, whatever you are going to do, it is going to be more desalination, more greenhouse gases, etcetera. My comments [during the WEF’s summit] were designed to say: “Look at the relationships that existed between our water needs and our potential needs” – they have changed remarkably in the past 50 years. And in the next 50 years,


BUSINESS INSIGHT – SPECIAL COVERAGE

it’s going to move vertically because there is already a shortage in a number of areas for the water that is needed to produce food. Additionally, when people start having good ideas about biofuel production, which is going to take X times that amount of water – because one calorie equals one litre – to produce each calorie, you are going to need a litre of water. Therefore, if you are going to produce biofuels, which are more intensely caloric than food, you are going to need even more water. The main message is: “Are you really thinking about where that water is going to come from?” Do you think businesses fully recognise the wider strategic risks posed by water scarcity, the impact of climate change and the implications for energy production and availability? I think there are some businesses that are starting to get very interested in this. This started about five or six years ago. A couple of the rating houses that rate the viability of company activities as part of their advice on evaluation of shares and stocks, started asking questions about whether the future water supplies of X, Y or Z industry were actually stable, and who was actually secure, and that was part of a wake-up call that had obviously been going on for some time within some companies. Big global companies became very aware quite early that their continued operations are vulnerable – there may be political constraints or there may be pollution problems. Usually their pollution problems are on the incoming. In other words, the continuing decline in the quality of water, which, if you are using it to make food and beverages, etcetera, becomes a real problem because you have to excessively clean it just to use it for your purposes. So, the answer to your question is a real mosaic. There are some companies that are aware and there are some financial houses that are very aware that this is a possible constraint. I would say that those who are aware tend to be more in the agriculture, foodstuff sector than the entire energy sector. However, that is not to say that the energy sector is oblivious, or that we have not really started having talks yet within the energy sector about the coming water constraints. Many oil companies are producing greater quantities of oil from

unconventional sources and observers and industry players predict that unconventionals will play an increasingly key role in meeting the future demand for energy. However, the extraction and processing of these resources often requires significant volumes of water. Can you discuss the impact associated with this? Well, it is the particularly acute use of water, because you are taking water out of the international water supply of fresh water. It depends on the technique, but if you are stuffing water down a well, which is going to stay there, this exerts pressure on the existing untapped resource, then that amount of water is probably going to stay there and so you are taking that water out of the overall water supply. Now, does the amount of water matter, or where you are extracting the water from matter? You have to remember that water is local. You can discuss the phenomena globally, but you cannot ever say “this is a good use of water” or “that is a bad use of water” because it entirely depends on the local situation, the availability of water, the geology and the agronomy – it depends on all of these things. Whether it seems

oil-producing countries, and not just those in the Middle East, water is already a scarce resource. Oil companies are beginning to recognise that water availability will be a key constraint on their ability to exploit certain reserves and are at an early stage of understanding how best to address the issue. What are your thoughts on the way forward and the technologies/methods that can be employed? Well, the first method that has to be employed is a unique device; it is called a table [laughing]. People have to sit down around it and they have to talk about water. They have to get the major users of water in a certain area, sitting around talking about their future plans, their future drawdown of water, where they think water is going to come from, and it has to be in the company of other future users of water. Additionally, there has to be an established knowledge of how much the potential future drawdown will be and what the sources of water are going to be. Do not forget that we need water for the environment as well, otherwise we’ll really be in trouble and

“It is definitely time to start questioning the assumptions about which water and where, but these are questions that most people are not equipped to answer because we have not really thought about that. If you live beside a river and you get all your water from that river, it, therefore, becomes really straightforward; is there going to be enough water in that river for all of the users of it?” - Margaret Catley-Carlson to be a reasonable use of water or not, that is something that nobody can stand up and say is good or bad. It has got to be discussed and decided on the ground by the people who have vested interests in that water community – we have had so much water in the past and a lesser population that we are not used to discussing where water should be used. However, the challenge related to water and oil is not just an issue for so-called unconventional fuel sources, either. For a number of

the environmental services that we get from rivers, from deltas and all the rest of it, will be even more damaged – the environment has to be sitting at the table too in the form of people that have studied such needs. Then you have to start working out an agenda and the agenda may be for changing crops, changing subsidies, changing technology or cascading water use. However, there is absolutely no one answer to your question. But it starts at the table and the real problem in most countries is that the table does not exist.

JULY 2010

17


BUSINESS INSIGHT – SPECIAL COVERAGE People do not sit around and construct realistic assessments of what water drawdowns there are going to be; what the quality issues are; what the quality of water coming out of an agricultural area is going to be; coming out of a field; coming out of a petrol area; what is the quantity; what is the quality; what is the gap and how they will fill that gap. Qatar is one of the world’s largest producers of oil and gas, but now has ambitions to also be a major player in the biofuel market. Can you discuss the link between advanced biofuels and the water requirement for the biofuel production process, as well as the risk that advanced biofuel production could become unsustainable if it competes with food crops for available land? Many political jurisdictions in the north and a few in the south, set targets for biofuel substitution of fossil fuel for transportation and for energy production generally. Almost none of them factored water into the equation and since it can take up to 25 times the amount of water to produce that biofuel target and then all the water that is used for food in that particular area – you are obviously talking about something which is probably unrealistic in terms of water. Water used in agriculture is consumed, water used in hydro is abstracted, but only about three to four percent of it is consumed because the rest of it goes back into that water system. You have to count the amount that is evaporated – very little is actually consumed. There is evapotranspiration and, therefore, the water that the plants evaporate is picked up in clouds and it goes around and comes down in rain, it is part of the cycle, but it is consumed in terms of that time, that place, those people and those users. When you use water in biofuels, it comes out of the water budget available in that area. Biofuels are very thirsty processors, and for the calories that are needed to make biofuel production worthwhile, it takes so many plants to actually create energy. Additionally, water bills from biofuels can be really high, unless it is all totally rain fed and is not being substituting for anything else. In the Middle East a popular solution to water scarcity is desalination; however this, too, is an energyintensive process. The combination of a greater demand for water, increasing standards for drinking water quality and demand for sanitation, will mean that water utilities will become more significant energy users, thereby perpetuating 18

JULY 2010

a vicious cycle. More and cleaner water needed, increasing energy demand, more power stations using more water, creating greater water demand and more water stress. What alternative methods could be implemented as opposed to desalination plants and what can industry and individuals do to decrease their water consumption? In terms of alternatives, I can’t see any. People could certainly make better use of the wastewater that comes out of houses, apartments, shopping malls, etcetera, and re-use that water at least once, if not more, so that you have less of a bill for creating water. In another word, desalination is quite expensive and it takes 3.24-kilowatt hours of power to create a litre of desalination water. Therefore, if you can use that water again and if the energy required to transform it to its next use is less than that amount, then you have got a saving of both energy and a saving of water. The first thing I would say is that the Gulf region should be taking a hard look at the actual re-use of the water that has already been desalinated and that has already been used. There are techniques that are available now where water can be cleaned for the next use – many of the Gulf states clean used water right up to drinking water quality again and if you are going to be putting it right back in the river or in the ocean, well that is a bit questionable. One thing that can be done is to look at all of the water that is being produced by desalination and then examine the mathematics of it – where does that water go? Cities only consume around 70 percent of the water filtered into them, the rest of the water that comes out can be used for treatment, for industrial processes or for agricultural processes – it depends on the treatment and you have to treat it very appropriately for the next use. The second thing people can do is to look at the way they are using water – why are petunias and roses planted in the Gulf? People need to stop using all those imported flowers and start substituting them with native desert plants. Additionally, if the sheikhs and emirs actually started talking about this being crucial to our survival as a civilisation it would help to have an impact. People need to be water aware and turn off the tap or have a tap that turns off automatically. People need to look at their own water use, whether as an individual or as part of a company – people need to take an intelligent interest in the subject and try to start a dialogue about it because we do not want a panic

dialogue, we want a planning dialogue. In regard to sewage treatment, or domestic wastewater treatment including grey water recycling, there are many countries that already use this method of water reuse. However, in regard to the Middle East, how much water could be freed up for potential domestic and industrial water use? Israel has probably done as much as anyone to ensure that water is used efficiently. It boasts that every water molecule is used seven times, from the time that it enters Israel until the time it goes out again. It has worked very hard at cascading uses of water, so that when you have finished one use of water, you then use that water for something for which it is then fit for, and so there is really a very large amount of water saving. I can’t say to you it is 9.97 percent, because it doesn’t work that way. However, there is potentially a very large saving from re-used water. If you call it wastewater, everybody immediately thinks that you are talking about the contents of a toilet, but if you look at all the water that comes out of house, very little of it comes from toilets – wastewater largely comes out of washing machines, dishwashers, sinks and such things, which if utilised correctly can produce water that can be used for a variety of purposes. In many locations, the impact of water shortages is not decades away—the United Nations estimates that 50 million people will be displaced by water shortages in the next 10 years. This means addressing water issues is just as important as addressing climate change during the 21st century. However, many companies remain oblivious to the risks to their supply chain or their markets. How important is it that such companies do more to to protect and enhance their own performance and competitiveness, as well as maintain the needs and interests of key stakeholders? Water is the frontline of climate change and companies need to be part of that discussion table – whether individually or through industry representatives – they need to be sitting around that table, understanding the future uses of water, what that says about their own ability to get water, and to discuss the issues of water quality. They need to also ask themselves if they are contributing to good water quality and if they are suffering from that water quality.


BUSINESS INSIGHT – SPECIAL COVERAGE

THE CHANGING RULES OF THE GAME: THE NEED FOR NEW ENERGY GOVERNANCE In the 21st century, energy governance is one of the world’s most pressing global challenges. At both global and national levels, energy remains poorly governed. The Copenhagen Climate Summit debacle is just one, but a sturdy case in point of how far the world remains from being able to bring about the urgently needed transition to a system of sustainable and secure provision of energy services. Kelly Lewis spoke to Mark Ginsberg, a senior - Mark Ginsberg, a member of the World Economic Forum’s (WEF) Global Agenda Council for the Future of Sustainable Construction. executive for the United States (US) Department of Energy and a member of the World Economic Forum’s (WEF) Global Agenda Council for the Future of Sustainable Construction, about the need for global energy governance. JULY 2010

19


BUSINESS INSIGHT – SPECIAL COVERAGE

How can states, the private sector and civil society better address deficiencies in global governance? In a world of emerging multipolarity and deepening globalisation, how can the international community take effective collective action? I think there are a number of ways individual countries can address their own energy issues, both through governments and through the private sector. Additionally, there are obviously important savings to be had in their own operations as well as setting their policy tone for how their individual countries will be able to move towards greater efficiency and renewables. In terms of responsibilities for global governance on energy issues, there are a number of existing organisations; the International Energy Agency (IEA), the recently established International Renewable Energy Agency (IRENA), and there are several regional organisations such as the Asia-Pacific Economic Cooperation (APEC), among others, that really address energy efficiency and renewable energy in a global perspective. Coming out of Copenhagen, there was a renewed spirit of collaboration and important understanding that countries gained. Important items that individual countries need to address – if they are going to address climate and of course energy efficiency and renewables – are fundamental parts of the climate dialogue as well. So, in the context of existing governance, I think the word governance is perhaps too strong a word. There is cooperation and a coordination of activities, but there is no energy efficiency, renewable energy or international governance. Each country has responsibility to address its own energy efficiency and renewable energy targets and we are seeing a substantial increase in the level of interest in countries doing that. In regard to emerging multipolarity and deepening globalisation, I think the international community is working towards taking collective action. Additionally, I think with the existing bodies, which I previously mentioned, there is an increased level of interest in finding new ways to coordinate;

20

JULY 2010

to scale up and accelerate the pace of adoption of energy efficiency and renewable energy. Clearly the next round of the climate talks that will be held in Mexico grabs the attention of world leaders. The Foreign Minister from Mexico was at the WEF’s Global Redesign Summit in Doha last month and she was there both for the reason of importance of the Middle East, and in the Gulf states being part of those discussions, but to also signal Mexico’s commitment to trying to find ways to collaborate, particularly on the climate related activities. Obviously the talks during the United Nations (UN) Climate Change Conference in Copenhagen last December, failed to yield a hopedfor binding treaty to tackle carbon emissions. Copenhagen is one case in point of how far away the world remains from being able to settle on how countries seeking stronger curbs on greenhouse gas emissions should move forward. However, as we are now roughly six months on from Copenhagen and looking toward the November UN Climate Change Conference in Cancun (COP 16), is there optimism for a better outcome? I am not going to be able to talk about very specific climate negotiations and whether something can be signed, but with regards to the question of: “Am I optimistic about nations being able to collaborate on energy efficiency and renewable energy?” I am. I am seeing more examples of the kind of cooperation both through existing international organisations like IEA and regional organisations. I am hearing the spirit of collaboration among government leaders from around the world, who want to know how to scale up and accelerate the adoption of energy efficiency and renewable energy. What is Asia’s role in dealing with these issues? How can, and should, Asia translate its emerging economic clout into positive political influence that will strengthen global governance? It is clear that Asia, and particularly China with its new economic clout, recognises its very important role

in providing energy efficiency and addressing renewables. Throughout Asia, there has been an Asia-Pacific partnership on clean development and climate, which includes China, Japan, South Korea, India, Australia, the US and Canada. Those seven countries have been working on a variety of energy efficiency and renewable activities for the past three or four years, and again, that is where I have seen this growth of interest and sense of responsibility, in particularly China and India. I do not do as much work in so many other Asian countries, but I know that there is an interest in virtually every place to increase the efficiency and renewables. Numerous alliances and multistakeholder partnerships have emerged in response to the gaps in global energy governance. However, currently, such initiatives remain relatively small and will not, in the foreseeable future, operate on a scale that can foster a rapid transition away from fossil fuels or provide energy services to billions of new consumers. How challenging will it be to foster the capacity and willingness of key national governments to act collectively to combat this? I think it is a challenge for all governments. We are making an enormous transformation in the way we do things. In the US, for example, we have had the luxury of low cost, inexpensive, highly abundant, cheap energy for so long that we became complacent and, therefore, wasteful. So, even here we are recognising that it is a very long and difficult transition toward a fully efficient and renewable economy. However, I do see substantial progress both here and in other countries towards doing that – some of the examples are things like building codes that are being put into action and which include minimum energy efficient requirements. Builders, who are looking towards international guidelines like the US Green Building Council: LEED, which stands for Leadership and Energy and Environmental Design standards. Big developers want to adopt LEED and other related labelling programmes,


BUSINESS INSIGHT – SPECIAL COVERAGE

because they know that their buildings are better performing and that the people who work in them will also be more productive. On industrial energy, I am seeing great increases and this goes back a little bit to your Asia-related question; that so much of the new industrial production will be in newer plants. Newer plants, that make the investment into high efficiency to begin with, are able to leapfrog industrial processes from the onset as they utilise good technology of the highest efficiency,

potential alternatives are that may be on the horizon – we are getting more and more data points about wind, solar, geothermal, tidal power, other hydropower – and all of that would form the transition. We are going to be making enormous investments in new power plants, for electricity for example. But the questions remain: Are those power plants going to be business as usual, or are they going to be more renewable and sustainable? When a coal plant comes to the end of its useful life, will it be replaced by another

“Multilateral banks and regional banks have a very important role to play in helping to build the capacity, and in making good investment decisions for the transition toward a more renewable, sustainable and energy efficient future.” - Mark Ginsberg and, therefore, do not require an expensive re-fit. I think such examples are out there and I do think that it is not going to be an easy transition towards efficiency, but it is one that I am seeing great commitment towards. Currently, oil and gas stand firm as the primary sources of global energy. Estimates state oil will supply an estimated 33 percent of global energy as far into the future as 2030, while gas is forecast to supply 23 percent by 2030. There are a number of significant trends, including the rise of new consumers; increasing scarcity and rising exploration and production costs; the increasing role of state players on oil and gas markets, which are currently transforming the framework conditions for global energy governance. What responses are needed to tackle such challenges? Well, the transition requires very detailed understanding of the economics of current supply, and the economics and environmental consequences of the current supply. Additionally, what the

coal plant, or will it be replaced by enough renewables, which can be more sustainable and environmentally sensitive in the long run? Global warming has put nuclear power back on the global policy agenda. However, there remains debate as to the merits and perils of nuclear energy. What are the benefits and risks that can be expected from a resurgence of nuclear power? And, what are the implications of an expansion of nuclear power for global energy governance? Well, I am not a nuclear energy expert. But, let me just say, the US gets around 20 percent of its electricity from nuclear today. President Obama and his administration are looking at what the next generation of nuclear power might be here. Each country is determining its own future on nuclear energy, but I am not going to make comparisons between nuclear and non-nuclear power sources. Can you discuss the role that multilateral development banks play

in channelling international climate finance in emerging markets? Certainly, multilateral banks and regional banks have a very important role to play in helping to build the capacity, and in making good investment decisions for the transition toward a more renewable, sustainable and energy efficient future. I think you are seeing some increased capabilities by multilateral and regional banks in beginning to address that. The World Bank, the Asian Development Bank, the InterAmerican Development Bank, all have new interests. I apologise for not knowing more about the financing in the Gulf region, but those others are increasing their search for good investments in efficient and sustainable energy projects, as well as the policies and capacities that go along with it. Is there anything else that you would like to add in relation to climate or sustainability issues? I think there is very interesting work going on in sustainable cities, zeroenergy cities and eco-cities. Masdar (the Abu Dhabi Future Energy Company) is certainly one example of that. I think we are now seeing leadership, not only at the national level, but also at the subnational level for state governments, for provincial governments, for city governments, to take responsibility in their own settings for energy efficiency and renewable energy. The effort by Masdar is very ambitious and can help set some important experience levels on how that might shape cities of the future. In addition, since the population of the globe is moving more and more urban, we need to begin to shape cities that are much more environmentally sustainable than they have been in the past – that includes not only buildings for industrial energy, but for transportation systems as well. But let me also say, with regards to new growth areas, China and India are going to be building entirely new cities and they are working on making those much more sustainable from the onset – this is where they can also leapfrog developed countries such as Europe and the United States.

JULY 2010

21


BUSINESS INSIGHT – SPECIAL COVERAGE

WORKING TO SAVE THE WORLD’S OCEANS The ocean is one of earth’s most valuable natural resources, but the impact of humans and climate change is putting its fragility at risk. The ocean provides a vital source of food, it is used for transportation – both travel and shipping – it is mined for minerals and drilled for crude oil. It plays a crucial role in regulating the earth’s climate, removing carbon from the atmosphere and providing oxygen. Curbing climate change through deep cuts in greenhouse gas emissions, with adequate - Kristina Gjerde, a member of the World Economic Forum’s Global Agenda Council on Ocean Governance. financing to deploy adaptation measures is of utmost importance and, in many cases, a matter of survival. Kelly Lewis spoke one-on-one with Kristina Gjerde, High Seas Policy advisor for the International Union for Conservation of Nature (Poland) and a member of the World Economic Forum’s Global Agenda Council on Ocean Governance, to discuss the challenges facing oceans. There are formidable challenges facing sustainable governance of the oceans in the 21st century. The direct impact of the human imprint on the oceans, combined with the interdependent nexus of ocean and climate change calls for a new vision and a new direction in the sustainable governance of the ocean, its seas and resources. But what is the framework and criteria required to achieve such a target? For framework, we need to build on existing international legal obligations and commitments – 1982 United Nations Convention on the Law of the Sea (Law of the Sea Convention). The Law of Sea Convention calls on states to protect and preserve the marine environment and to conserve high seas resources. It calls on them to control the actions of their nationals and their vessels – citizens, corporations and the vessels that they register – it requires them to cooperate 22

JULY 2010

on a regional and global basis to elaborate new rules when they are required. The new imperative really has to be ecosystem health and resilience rather than just business as usual. Given the new stresses on the environment, the only way we are going to enable the oceans and the planet to survive, is by guiding and mandating the activities, and by ensuring they are conducted sustainably with respect to ecosystem health. What I would say is that we need an imperative of resilience – we need resilient ecosystems and we need resilient institutions. Although there have been no notable examples of success at either regional or national levels, the various international commitments and targets agreed to at the 2002 World Summit on Sustainable Development and in other related fora, have not

been met on a global basis. What hurdles have prevented the reaching of these targets? Namely political will and funding. People have not realised the importance of meeting these targets and they have not provided the financing mechanisms to enable developing countries to do so – we need to push this up the agenda line. I would like to go back to your previous question in terms of the new imperatives; they are largely resilience and accountability. And it is accountability that has really been lacking in the high seas governance frameworks – governments have not been held responsible for what they are not doing. That is what is lacking in the Law of Sea Convention, it contains lots of nice language, and lots of nice commitments, but nobody is held responsible for failing to implement them.


BUSINESS INSIGHT – SPECIAL COVERAGE

Is there enough being done at the national and global level to strengthen the Law of the Sea Convention and other such resolutions? There is certainly more that could be done in the shape of building accountability frameworks like they have for company audits. Corporations are audited for their financial and business performance; intergovernmental organisations and states need to be somehow audited where the results are made public, so that they can either be diplomatically challenged, or they can be assisted. We cannot afford any longer to have noncompliant states. While the awareness and visibility of oceans among decision makers and the public alike have increased considerably in the last decade, oceans have been largely absent in the climate negotiations – biodiversity loss continues to occur at an alarming rate and progress on implementing ecosystem-based management, and integrated and coastal management, is lagging. Is it a matter of red tape or a breakdown in international collaboration that is causing this lack of action? Well it is both. It is red tape inside of government, failure to coordinate and to cooperate between government agencies. In the United States (US), for example, the Department of Interior is responsible for licensing minerals – oil and gas development. The Environmental Protection Agency (EPA) should be having responsibility for overseeing the environmental impacts. These things need to be lined up; you should not have the same agency responsible for both promoting an activity and regulating it, and that is too much of where our bureaucratic infrastructure is today. At an international level, we have rules in place, which are focused on building consensus. However, what happens is that you end up getting the lowest common denominator that the least willing state is willing to accept – we need to create new rules that help to move the decision making along and to have a default when you cannot reach consensus. This would act, not to continue an activity that is harmful, but to actually go back and ratchet it down to a level where nobody is concerned about it. I am thinking about regional fisheries management, organisations where they cannot agree on a quota of a fish – the default should not be “business as usual” where others are free to go and increase that amount of fish they are

taking. There need to be firm rules in place in the absence of an ability to come to new measures. There is a core need to manage ocean resources and to implement an integrated ecosystem approach, while also building consensus on, and fostering equity in, the policy options among different countries, regions, and interests. What is the way forward on a global and national level? Well if we knew that, we would not still be debating [laughing]. Clearly you need to have restraints laid out, with a sort of a multi pronged approach that builds a higher level of commitment at the intergovernmental level. Additionally, you need new legal

as well as establishing cohesive processes related to mitigation, capacity development, and public awareness and understanding? Well, it is huge and it clearly needs to be stepped up manifold. In respect to industry, I think it is an untapped source. It too has a stake in the health of the ocean and in many ways I think it could be requested, called upon and invited to contribute. For example, the fisheries industry removes resources from the ocean – if a party takes minerals out of the land they have to pay a royalty. There is no royalty that is in place for the use of the ocean right now; for the use of the fish that benefits countries on an equitable basis, instead of just first come first served.

“The new imperative really has to be ecosystem health and resilience rather than just business as usual. Given the new stresses on the environment, the only way we are going to enable the oceans and the planet to survive, is by guiding and mandating the activities, and by ensuring they are conducted sustainably with respect to ecosystem health.” - Kristina Gjerde mechanisms and institutions that are able to look at the oceans as a whole. You need states and stakeholders, businesses and non-governmental organisations to keep moving things along – going with the coalition of the willing and the able – to demonstrate what best practice can do. Then you need indices to actually measure progress; that is your accountability frameworks, ocean health indices as concrete measurables that can be used as a standard to show where we are falling short and what can be done to help to drive improved performance. Maybe countries need to understand the economic consequences of not taking an integrated ecosystem approach. However, I am not really sure how you value every second breath, if the ocean supplies half of our oxygen. We need to realise we are messing with a very potent agent – it needs to be respected. What role does the private and public sector play in providing adequate financing to deploy adaptation measures to curb climate change,

In closing, is there anything that you would like to add? Yes, in our proposals we called for a review of the Law of Sea Convention and the Fish Stocks Agreement in terms of what can actually be done to improve their implementation, and to update them in a bid to face modern challenges. I think that this is an absolutely critical step. It does not mean overthrowing the entire foundation that the Law of Sea Convention provides, but simply looking at the way that international law has evolved to include many treaties and compliance mechanisms. This would aid in being able to review who is doing what, as well as to increase incentives for improved performance, to enhance developmental systems and to help build on the current system for the oceans. Currently, it is done on a very ad-hoc and very weak basis. Without this type of higher-level political attention, in regards to the state of the legal regime, it will slow down progress. And at the same time, we need a broader scientific understanding of what the consequences are for not acting.

JULY 2010

23


OPINION

By David Maul

I

n the April edition of TheEDGE, Edward Jamesonâ&#x20AC;&#x2122;s On The Pulse section, entitled Look East, raised many good points, however, there are some misperceptions. Jamesonâ&#x20AC;&#x2122;s column correctly points out the critically important role that Qatar plays as a supplier in the international trade. He also highlights the very important role that Asia, especially China, plays as a buyer of Qatari natural gas. However, Jameson misreads the short- and long-term trends that drive the United States (US) natural gas market, and the unique and significant role it plays as a buyer of world natural gas. The US and California natural gas demand is currently lower than previous forecasts based almost entirely on the global economic downturn. The global recession hit the US much more significantly than Asia and China, and has hit the US industrial sector especially hard. Since liquefied natural gas (LNG) imports to the US are the marginal supply source, as the demand drops, LNG imports, therefore, drop off dramatically. Furthermore, US natural gas prices are also down from a couple of years ago. Coupled with lower demand, LNG suppliers, including Qatar, can currently get more for their cargos from Asia than the US. This same effect will happen in reverse as the US economy recovers, and economic recovery has begun. Industrial demand is quickly starting to pick up. The US economy is now adding jobs at a fast pace. A rapid ramp up in industrial production capacity and the resulting increase in demand for natural gas fuel is now likely since inventories in the entire supply chain were heavily harvested during the recession. Additionally, a moderate uptick in consumer demand will trigger a greatly amplified increase in industrial production as manufacturers play catch up and restock the supply chain. As a result, the US will likely see natural gas demand and prices restored back to the levels of previous years within the coming few years. Since US natural gas production cannot increase so rapidly, LNG imports will again be an important part of the US natural gas supply portfolio. California is in a unique position even in relation to the entire US. The state currently imports more than 85 percent of its natural gas supply.

California is not only heavily dependent on others for its supply, but it is at the end of several very long natural gas pipelines also needed to gain access to these supplies. Unfortunately, other areas also have access to these same supply sources. For example, a sudden increase in demand with its attendant price spikes in Chicago or New York, due to an unexpected cold snap, can divert supplies intended for California, and therefore directly affect both prices and supply availability in California. It is this unique position that led California to encourage the importation of LNG to help diversify its supply portfolio. California has many large underground natural gas storage facilities, which enable the state to receive periodic supplies such as LNG and store them for later use. While readers of this publication might wonder why California consumers have interest in Qatari natural gas, they need to understand that California is closer to Qatar by shipping distance than it is to Texas where LNG from Qatar is already received.


OPINION

It makes more economic and environmental sense for LNG to come directly to California than for the state to buy from Texas LNG import terminals and pay extra to ship natural gas an additional 2400 kilometres across the US. Therefore, California energy policy encourages the import of LNG if it can be done in an environmentally responsible manner, using import terminals with a minimal environmental footprint. The long-term drivers are even more dramatic. The US currently relies heavily on the development of shale gas for much of its future supplies, especially since imports from Canada are expected to drop as it diverts its natural gas to fuel the countryâ&#x20AC;&#x2122;s tar sands industry. Shale gas is relatively new (from a large scale commercial perspective) and this potential supply source is very large. However, technical issues are now emerging that may temper how much shale gas is actually developed and used. Recently completed wells have a decline rate higher than conventional gas wells. We are now witnessing 50 percent, or more, of the lifetime resources being produced in the first six months of well life. While there are many places to drill, this increased decline rate means more wells need to be drilled in order to maintain a constant field production level. Furthermore, shale gas wells are more expensive to both drill and maintain than conventional wells. This results in higher per unit production costs. LNG imports from cheaper production cost areas can under price US shale gas. Whether LNG from these areas, including Qatar, comes to the US depends primarily on the relative price between the US and Asia, especially China, and how aggressively the LNG supplier wants to target the US market. LNG also plays an important role in helping advance renewables in the US and elsewhere. California has very aggressively promoted renewable energy resources to reduce its

carbon footprint. However, these resources, primarily the frontrunners of wind and solar, are intermittent electricity providers. As the US shifts from the use of baseload coal to intermittent renewables, natural gas power plants will be the cost-effective backstop when the wind stops blowing and the sun does not shine. These power plants are also needed because they can be located close to demand centres to balance the transmission system as more renewables are developed in very remote locations. Finally, let me clarify the issue raised regarding the future role of coal in the US and the prospects of carbon capture and sequestration (CCS). Existing coal plants are expected to run at a high capacity since they are the cheapest supply source of electricity. However, for new power plants, natural gas is currently cheaper than coal by a slim margin given the price increases in construction materials and labour required for coal. Long-term coal will be much more expensive as CCS costs are rolled in. Therefore, the new fossil fuelled power plant of choice has been natural gas and will continue to be natural gas in the near term. Natural gas fired power plants with CCS are less expensive than coal with CCS since gas can produce more kilowatts of electricity per metric tonne of carbon output, and will likely be the future power plant of choice. Natural gas helps the US get to a lower carbon future. LNG imports have a bright future in the US.

David Maul has 35 years experience in the energy industry and is the president of Maul Energy Advisors. For more information contact: dave@maulenergyadvisors.com Locally, Maul is working in association with Chuck Griffin and David Trevena of Distinction Group Qatar. For more information contact: www.distinctiongroupqatar.com JULY 2010

25


IN THE SPOTLIGHT

THE AGE OF YOUTUBE

- Catching up with the news through video clips on YouTube has become a daily habit of millions of people around the world, one that has both positive and negative effects. -

The scene was horrifying. Barrel after barrel of crude oil bursting into the open sea with the staggering vehemence of an Icelandic volcano. Human errors unleashing an inhuman disaster. I was staring into the abyss and the abyss was staring back. The screen goes black. Stop. Reload. The feed returns. This is life in the Age of YouTube. By Leen Qablawi BETTER THE SPILL YOU SEE

Thousands of miles away in the United Kingdom (UK), almost a month after the Deepwater Horizon wellhead had started oozing out oil a mile below the Gulf of Mexico, I watched the live feed setup by BP. For the company and the public, this raw footage served a number of purposes. Initially, it was a reaction to criticisms levelled against them that they had failed to provide adequate and accurate information regarding the scope of the unfolding disaster. In an attempt to focus the spotlight on their efforts to deal with the spill, rather than its size, the company had talked down figures related to the number of barrels of oil gushing out per day. As the crisis unfolded and public anger began to deepen over what has since become the worst oil spill in the history of the United States (US), pressure mounted on BP from politicians and residents of the worst affected Gulf Coast communities to come clean with the facts. In an effort to replace the public’s perception of its reticence to be open with one of transparent ‘honesty’, the company turned to remotely operated vehicles and high-resolution streaming video.

Overnight, the feed became an important component of the rolling media coverage of the situation, omnipresent at the bottom of the screen during press conferences, presidential addresses, or shots of wildlife drenched in thick crude. BP’s narrative on the spill was immediately dispelled as it became clear to anyone watching that the situation was much more dire than previously thought. Experts and commentators appearing on numerous national and international media outlets quickly dismissed BP’s early estimates, using the feed as evidence for their positions. In fact, mounting video proof helped maintain the political pressure on BP from the Obama administration, which began to strike an increasingly litigious posture in its dealings with the company and called for the establishment of an escrow account reserving billions of US dollars to compensate affected businesses and individuals (modelled on the fund established for victims of the September 11 attacks). Yet the feed is only one element of a whole host of realtime data gathered by BP and other companies working on the rig prior to and after the deadly explosion on April 20. Not only is that data being used by investigators into the


IN THE SPOTLIGHT

- A mock cemetery in Grand Isle, Louisiana, protesting the BP tragedy, highlights what has been lost for the beach communities of the Gulf of Mexico following the oil spill on June 16, 2010. -

spill, it is also being pored over by lawyers for victims of the explosion for evidence in any future civil proceedings. However, for BP the feed provided the necessary images it needed to convince the US government and a weary public it was facing a defiant well that was very hard to deal with, and that it was doing all it could given the prevailing circumstances. In effect, releasing the feed was a form of public self-flagellation intended, on some levels, to gain sympathy and understanding. The company wanted to show the immensity of the situation in order to shift the debate on the mishaps that led to the explosion to what needs to

be done to deal with it. It continued to provide the live feed during a procedure called â&#x20AC;&#x2DC;top killâ&#x20AC;&#x2122; that was intended to plug the leaking wellhead with a combination of drilling mud, cement and golf balls. More importantly, though, the streaming video met the requirements of a global community, driven by instant messaging and cyber connectivity, that demands constant information. By tuning into the feed, people were able to fulfil a voyeuristic desire and follow the unfolding drama with all its ebbs and flows, even if it had a minimal impact on their own daily lives. In the feed, submarines with names such as Explorer 1 and Explorer 2 are occasionally seen working on a large metal structure. That is the infamous blowout preventer that attached the rig to the wellhead, and which failed the day of the accident, causing the explosion and subsequent leak. Amateur geologists, petroleum engineers, and explorers have been able to monitor the feed and blogs about the situation, drawing upon their technical know-how to inform a public searching for answers and clues as to when and how the spill could be brought under control.

THE TALE OF TWO FLOTILLAS

- Thanks in part to public pressure arguably strengthened by literally thousands of clips on YouTube, US President Barack Obama, seen here at a clean up facility in Theodore, Alabama, has become increasingly critical of BP. -

Nearly a month after the Deepwater Horizon explosion, another major international event took place on the high seas, and video clips once again came to play a leading role. On Sunday May 30, a flotilla of six ships headed for the JULY 2010

27


IN THE SPOTLIGHT

- Individuals as far as Sydney, Australia protested to the Israeli raid of the Gazan flotilla; this photo exemplifying how no action, or indeed reaction, in the world today goes undocumented, most of it ending up in video form on YouTube. -

Gaza Strip, a 41-kilometre long, 11-kilometre wide patch of land effectively placed under quarantine by Israel since Hamas seized control of it in 2007. Leading international human rights groups and numerous governments across the world have denounced the blockade as collective punishment of a population ravaged by years of occupation, economic hardship and political infighting. The ships headed to Gaza on that day with the purpose of breaking the naval siege, and to deliver humanitarian aid to the Gazans. As the flotilla drew closer to Gaza Port, the Israeli navy dispatched teams to escort the vessels to the Israeli port of Ashdod. However, when the skippers ignored early calls to divert, Israeli commandos started boarding the ships. On one of the vessels, the Turkish-flagged Mavi Marmara, the commandos faced immediate resistance. In the ensuing clashes, Israeli forces killed nine activists. In a matter of minutes images taken at the scene burst into the public domain, as competing clips of the encounter between the Israeli Defence Forces (IDF) and humanitarian activists began to appear on YouTube, and other social media. From the beginning it seemed there were two completely different versions of the same ‘reality’ being offered in cyberspace. A pro-Israeli video depicts passengers on the ship in question violently attacking soldiers trying to board the ship. In this version of the ‘facts’ the soldiers do nothing to provoke the attack, but are beaten with metal poles, chairs, and one is even thrown overboard. The clip led to some accusing the people on board the ship of premeditated violence, and claiming that it was clear they were not activists, but rather ‘terrorists’. Meanwhile, a pro-Palestinian video creates the opposite impression. Footage shows panic on the ship as casualties are announced and injured 28

JULY 2010

people are seen lying on the ground. A reporter says, “We are being hit by tear gas, stun grenades… we are being attacked from every single side.” Both clips have been watched by tens of thousands of people thus far, and as indicated by comments made on YouTube, very strong viewpoints have been aired. Different groups used the various YouTube clips for their own agendas. The IDF used them to argue that its actions were justified, while the activists and (arguably) a majority across the world drew upon the opposing YouTube clips in order to pour scorn on the Israeli government and its armed forces for their actions against humanitarian activists. Both sides also relied on other social media sites such as Facebook and Twitter in their public relations campaigns. Nevertheless, it soon became clear that such technological tactics could only go so far in changing perceptions regarding an event that had been well-documented by both sets of participants. But the ‘clip wars’ did not stop there and have carried on well into the following weeks. Tellingly, several days after the incident, the IDF had to issue a retraction over an audio clip it released which it claimed was a conversation between Israeli naval officers and people on the Mavi Marmara, in which an activist purportedly told the soldier “Go back to Auschwitz”. The clip entered the debate and brought about fresh accusations from both sides. But then the IDF released a ‘clarification’ explaining it had edited the audio clip and it was not clear who had made the comment. It seemed the Israeli side was quickly losing this public relations battle, and a couple of days later it had to apologise for circulating a link to a clip, set to the tune of the 1985 charity single We Are the World, featuring


IN THE SPOTLIGHT

surrounding events has moved away from simple press releases and media conferences, and has entered into a shapeless domain with a global audience, with each upload and viewer bringing their own differing agendas and expectations. Being more informed about situations and the technical details of events may not necessarily translate into making wiser choices or drawing more accurate conclusions. In a way, - The Transocean Discoverer Enterprise drill ship collects oil from over the site of the BP Deepwater Horizon oil well as workers try to having greater raw material stem the flow of the oil spill in the Gulf of Mexico off the coast of Louisiana, June 12, 2010. to work with actually Israelis dressed as Arabs and activists, waving weapons while allows people to distort events more forcefully towards a singing: “We con the world, we con the people. We’ll make final outcome they may already have decided upon. More them all believe the IDF is Jack the Ripper.” It continues: troubling, it should be recognised that there is also greater “There’s no people dying, so the best that we can do is create utility for those who wish to exploit emotions and beliefs through the spread of specific clips. This calls for greater the biggest bluff of all.” Since more than three million viewers have watched the understanding regarding the impact of such clips and what video, it is safe to assume that the footage will inspire as steps can be taken in order to raise objective awareness as well as access. Living in the YouTube Age means increasingly much heated debate as the actual events themselves. more raw clips will shape the public debate on a whole host of issues, and armchair commentators all across the globe LIVING IN THE AGE OF YOUTUBE The BP spill and the different clips depicting what has will grow in numbers each time a major news event breaks. If Internet pioneers had hoped to usher in a truly free become the ‘Gaza flotilla incident’ once again confirm how the role and impact of raw feeds and video clips are changing medium then it could be suggested that this is no longer today’s fast-paced world, a world where the need for immediate the case. In other words, to infer that all footage online is and unlimited access to information has become paramount. ‘raw’ does not mean it is unedited. Indeed, editing is more Technology has finally lived up to its promise as far as socio- than a process of merely cropping and appending – it is also political commentary is concerned. We have entered an age the purpose with which any given material is dispensed to where a lot of information is available that does not necessarily the world. The BP and Gaza examples show how powerful add perspective, but instead allows people to draw their own this ‘other’ medium – an outlet that has superseded the constraints of television tenfold – has become; how pervasive conclusions, however distorted these may be. Being able to see the oil spill in a way palliates the sense and ubiquitous its reach is, and how much further its scope of loss people might feel regarding its environmental and for informing and persuasion can go. If BP, the Israelis and the Gazans could agree on only economic impact. Moreover, as it allows them to participate as a spectator, satisfying a certain voyeuristic appetite. one thing, it would be the power of social media. Each of Another aspect is the instant democracy created by social them has shown to a greater or lesser extent their adeptness media, where the viewers are treated as a stakeholders with at tuning into the zeitgeist. This new mood resonates with media ‘rights’, and therefore ‘entitled’ to on-the-spot, from- the viewer much more than the wholesale approach of the-scene access to images and data that might have been traditional media and news. However, more importantly, it is less about the ‘actual’ easily suppressible in earlier times. The competing clips regarding the Gaza flotilla show events themselves and more about how they are presented how the struggle for controlling and shaping the narrative and the reaction they receive. JULY 2010

29


MARKET WATCH

IMPROVING THE STATE OF THE WORLD

ONE PROPOSAL AT A TIME In the wake of the financial crisis one thing has become evidently clear – there cannot be a return to ‘business as usual’ and increased global cooperation is the key for both economic recovery and longevity. Kelly Lewis speaks one-on-one to Rick Samans, the managing director of the World Economic Forum, about its recent summit in Doha.

I

n a bid to provide a multifaceted platform where business, political and civil society leaders can come together to examine the disparity in international cooperation, and to develop tangible proposals to surmount such challenges, the World Economic Forum (WEF) established the Global Redesign Initiative (GRI). Borne out of the need for affirmative action, the WEF founded the GRI in April 2009. Since that time, more than 1500 experts and thought leaders from business, academia, civil society and government have worked in collaboration to develop proposals for strengthening international cooperation. A set of 58 concrete proposals were published at the start of the two-day GRI summit in Doha (May, 30 to 31) in a report entitled Everybody’s Business: Strengthening International Cooperation in a More Interdependent World. During the summit, more than 450 participants from 60 countries discussed the proposals in interactive sessions to establish how they can contribute to the redesign of existing institutions and mechanisms of global governance. One of the things I asked you pre-event was how the WEF proposed to use the summit as a platform to foster a cohesive climate agenda in light of the failed Copenhagen summit. Speaking post-event, did the WEF achieve the feat of transitioning rhetoric into policy? Well, of course no policy decisions have been taken in the few weeks proceeding of the summit. Strictly speaking, this has got to be reviewed as a process. I think what we have managed to do is to gain the attention of a variety of different policymakers about some new potential approaches for progress and that is the beginning of the effort.

- Rick Samans, the managing director of the World Economic Forum (photo courtesy of the World Economic Forum). -

What we will be doing from here is to communicate with the various authors of these proposals, the councils and other communities. We will be conducting outreach and educational efforts on a more targeted basis with various governments and decision makers of various stakeholders, to try to encourage them to embrace some of these ideas. A set of 58 proposals to strengthen international cooperation and governance was put forward during the summit, and then discussed by participants in interactive sessions. What has been the outcome of these discussions? And how does the WEF propose to make this dialogue tangible post-summit? I think you may have seen, for example, in the closing panel that one tangible aspect of this process has been specific


MARKET WATCH

interest registered by the Mexican government, who will be hosting the climate United Nations (UN) negotiations this year, to engage some of these ideas into the wider intergovernmental discussions. We have entered into a Memorandum of Understanding (MOU) with the Mexican government to cooperate on informal discussions between the private sector and non-governmental experts involved in our processes on the one end, and governments on the other. This will lead up to the Conference of the Parties (COP) meeting in Cancun in late November, so that is one tangible sign that some of these ideas have struck a chord. There are other examples in certain areas like migration or water, where we have seen an interest in the part of area players to get involved in understanding the ideas better, and maybe cooperating on some specific initiatives. So, I think that this is a good beginning to the process of gaining recognition of the significance of the ideas, which this very unusual community has spent the past year working on. From the four key tracks discussed at the summit – Development; Economic; Security and Sustainability – which track produced the most forward-thinking dialogue and proactive action? And were any snags hit in any of the tracks? Certainly the Sustainability track was one of the strongest. There was a major set of proposals on each of the climate issues, including oceans and water, all of which appear to have gained significant acceptance, and all of which are quite distinctive and represent very new and ambitious thinking. Therefore, I would say that is one of the strongest of the tracks. But I think it’s also fair to say that each of the other three tracks produced maybe not as large a set of ideas, but nonetheless produced a series of specific proposals that also had a good response. For example, in the Economic track – the trade proposals – there are set a of three very interesting trade proposals, which I think are recognised as making a strong contribution. One is for the creation of a new framework within the World Trade Organisation (WTO), which would authorise and maintain the quality of trade agreements among groups of countries, rather than the entire WTO membership. There is really no official framework for how to, basically, approve and lay the ground rules for how that could be done, despite the fact that you can see that countries want to proceed with trade liberalisation at different speeds. Another element of the trade output of this project, which is very interesting, is a proposal for a sustainable free energy trade area. This would be a voluntary undertaking by a plurilateral set of countries that wanted free trade. In other words, a zero tariff is out and there would be a harmonised set of standards for a certain class of products. This would actually stimulate a low carbon growth and that is a really interesting idea. It is not unprecedented, so there is a precedent for this – we did it with information technology products back in the mid ‘90s, but given the salience of climate change as an issue, this is a very interesting application of the trade regime. So that is one example in the Economic area. Another one is a proposal for the creation of a global energy forum. As yet, the world doesn’t have an inclusive

- Jordan’s Queen Rania addresses the opening session of the Global Redesign Summit in Doha on May 30. -

international organisation or even dialogue framework for both producer and consumer countries across the various different energy commodities, in which to come together and to try to identify some common agendas. There is a very specific proposal to create such a forum and there are several governments that have expressed interest in this, and I expect this proposal to move forward over time. In the Development area, there is a proposal for a global public-private partnership to fight corruption, thus far that corruption discussions have basically been about the behaviour of government officials, but this will be a wider effort. Also involved in this – we call it the supply side – will be the behaviour of the business community, which will work together with governments and international organisations to start to go into countries, which they have a desire to stamp out corruption in. In a broader and more multifaceted push, in regard to the education arena, there is a proposal for a formal review of the adequacy of the ‘Education for All’ effort and for the reassessment of the governance architecture within the ‘Education for All’ initiative. These are part of the millennium development goals that we have committed to, to put all children into at least primary school education. On the Security side, what is interesting is that there is a proposal for a way to advance the responsibility to protect framework. This is an important step the UN took a few years ago to try to create a legal framework, and also a behavioural framework for translating into action, the goal of ‘never again’ with respect to mass atrocities like genocide. The council that worked on this issue has proposed a set of ideas to strengthen the capacity of multinational organisations and national governments to translate that aspiration into action. JULY 2010

31


MARKET WATCH

- Arab League secretary-general Amr Mussa arrives to attend the opening session of the Global Redesign Summit. -

In the wake of the financial crisis, how has the role of public and private cooperation and adaption changed in regard to addressing key issues at national and global levels? I think you can see from the ideas that have come out the GRI process that there is a long way to go in publicprivate cooperation, as we indicated in the report. There has been a lot of innovation and experimentation with publicprivate forms of collaboration and this is good. This is one of the hallmarks, I think, of international governance and cooperation throughout the past 10 to 15 years. However, it is also safe to say that these really are principally pilots in experiments and we haven’t really changed the mindset, such that when we approach our global challenge, we are always thinking at the very beginning of not only what the inter-governmental cooperation should be, but how, and what kinds of multi-dimensional or multi-stakeholder efforts should be organised as part and parcel of the overall strategy. It is usually now kind of followed as a ‘well let us see if we can experiment with this or that’ rather than as part of the core strategy. Can you discuss the changing role of climate financing and the role that financial institutions (and multilateral development banks) play in channelling international climate finance in emerging markets? You have touched on maybe the crowning example of this particular area of opportunity. In Copenhagen last December, there was agreement that there ought to be a goal of raising about a US$100 billion (QR364 billion) a year in climate finance for the benefit of developing countries, and there is now a high-level advisory group that the secretary-general of the UN has appointed, who are working away this year on trying to figure out how that might be accomplished. The report is due to be issued, I think, in the fall as an input into the Cancun COP meeting. If you look at that problem, you quickly come to the conclusion that we are unlikely as an international community to be able to solve that problem purely with governmental funds. You know, with additional development aid, the only feasible way we are likely be able to come together as an international community in which to mobilise finances on that scale for developing countries, is if we blend public and private finance. And indeed, much of that money probably is going to have to be catalysed from the private sector. So, you quickly come to the point where you realise that the challenge, as much as anything, is ‘how do you use limited amounts of additional public resources in a smart way to crowd in 32

JULY 2010

- Israeli Industry and Trade Minister Binyamin Ben Eliezer (C) attends the second day of the Global Redesign Summit in Doha. -

money from financial markets from institutional investors?’ And that is one of the areas in which our processes have developed some specific proposals and we are continuing to work on that. As the world now looks to the United Nations Climate Change Conference in Cancun later this year, what is the WEF’s view on the progress being made toward the firming up a functioning architecture for global climate action? We are not a business representative organisation, so we do not really take formal positions on public policy matters. However, based on our report, what we are saying is that the way forward is not only to encourage progress in the intergovernmental negotiations and in UN negotiations, but also to open up a second front in the fight against climate change. And that second front really is to develop a set of practical mechanisms that can scale progress in the private sector on energy efficiency, on development of key new technologies, on mobilising finance both in developed and developing countries to stimulate the transition to low carbon energy systems, as well as in helping to develop a viable model of deforestation and land use. However to make improvements in developing countries and to strengthen the matrix that companies use – that financial analysts use and that consumers use in determining what their investment choices and their consumer choices are going to be – a practical and enabling environment is really going to be necessary, regardless of the outcome of the UN negotiations. So, the position that is taken on this process is that we should get on with this effort – do it now, don’t wait for the UN negotiations to conclude, but conduct them in parallel. In effect, if this is done well, there can be some progress on the ground that will probably serve to improve the political climate within the negotiations, and advance the date on which agreement could be reached. What does the coming 12 months hold for the Global Redesign Initiative? Well, we have just moved into a new stage of it, which is we just published the proposals and the ideas. The next stage between now and certainly our annual meeting in Davos in late January 2011, will be to begin to explain these ideas and encourage governments and other stakeholders to take them seriously. We are now planning a set of additional types of activities; potentially in partnership with think tanks and universities – maybe some governments or media as well – in a bid to begin to use these ideas to provoke a wider and deeper debate about the kinds of updates and upgrades to international cooperative structures that are needed.


INSIDE EDGE

THE EUROZONE CRISIS The recent eurozone debt crisis and in particular the situation in Greece has again brought to fore the fragile and uneven pace of global economic recovery. Just when the economic activity in most parts of the world had started to gain momentum, the European currencyâ&#x20AC;&#x2122;s predicament again poses challenges for the policymakers who have long been battling to contain the slowdown. Rajesh Mirchandani reports

T

he current situation in Greece is a classic example of sovereign debt crisis, where a country keeps adding more debt to its kitty to finance its large budget deficits, rather than addressing structural weaknesses in the economy. Going by the reaction of the financial markets, global investors seem to be preparing for troubled times ahead, which could have a pronounced effect on the world economy.

THE BLAME GAME

There are many theories circulating on the possible causes behind Greece reaching the brink of possible default on its sovereign debt. While it is difficult to pinpoint the exact reasons, a combination of domestic and international factors might have been what brought the country to near bankruptcy. Many argue that this was a crisis in the making since the country first joined the eurozone, as the adoption of a monetary union gives smaller countries less scope to manipulate their monetary policies. Conversely, Germany, the biggest economy of the 16 countries in the eurozone, has enjoyed significant trade surpluses

over the last decade. Neoliberal policies have kept the wage rate growth relatively low, which in turn has helped to contain inflation in the German economy. Germany has emerged as not only an export giant to the rest of the world, but also with closer integration of European Union (EU) economies through unfettered cross-border movement of goods and services, it has grown into a dominant position within the economic bloc as well. Such persistent trade surpluses of Germany have put the country in an advantageous position in comparison to smaller EU countries, which have been facing huge trade deficits. Greece depended heavily on government spending, which continued to grow throughout 20012008, but revenues of government grew at a comparatively modest rate, leading to budget deficits. Many also point towards inefficient public administration, costly pension and healthcare systems and tax evasion as major factors behind the countryâ&#x20AC;&#x2122;s ballooning deficits.

JULY 2010

33


INSIDE EDGE

Greece also kept borrowing from the international markets at favourable rates during the pre-crisis era to finance its budget shortfalls. Major international banks committed lending with strong confidence in the EU bloc due to perception of its stability with the presence of economic giants like Germany and France. This indirectly led to lack of fiscal prudence by the Greek government and encouraged authorities to neglect emerging structural weakness as the country chose to borrow at artificially low rates and accumulated a high level of sovereign debt. Until the first half of 2008, Greece was able to easily avail credit from the international markets, but the global financial crisis later changed the risk management practices of the banking industry. With low liquidity in the financial system, lack of risk appetite and higher credit standards, Greece found it increasingly difficult to finance its large deficits. During the

beginning of 2009, the Greek government had announced budget deficits of 3.7 percent for 2009. However, the same figure – which was sharply revised upwards to more than double by the newly elected government – spelled trouble early on, as it became clear that the country would soon be required to take some harsh measures to return to financial stability. With increasing concerns of default and the country’s devastated financial health, ratings agencies were compelled to downgrade the sovereign ratings of Greece, which added to the misery of the nation. The lack of enforcement of the EU’s Stability and Growth Pact is also seen as the contributing factor behind the current plight of Greece. This pact required the member nations to adhere to strict oversight of their public finances to ensure financial stability of the bloc. The pact also calls for government budget deficits to not exceed 3 percent of gross domestic product (GDP) and public debt not to exceed 60 percent of the GDP. Unfortunately in the case of Greece, the former had reached 13.6 percent and the latter was estimated at around 115 percent of the GDP in 2009.

THE PAINFUL RESCUE

INSUFFICIENT FUNDS

34

JULY 2010

The response of the EU and International Monetary Fund (IMF) to bail out Greece, highlights the severity of the situation. Although Greece might avoid default on its immediate maturing debts, with a EUR110 billion (QR492 billion) three-year rescue package by Germany and IMF, the pain of fiscal consolidation has the potential of creating stagnation in the country’s economy. Moreover, the fiscal austerity measures aimed at reducing Greece’s government deficit would require deep spending cuts and drastic changes to the public


INSIDE EDGE

GCC MONETARY UNION?

administrative system to increase the tax net. It is expected that the spending cuts will focus on a reduction or freezing of all civic service pensions, wages and bonuses. On the revenue side, the government has raised the average value added tax (VAT) rate and increased taxes on fuel and luxury products. Of course, such measures could lead to higher unemployment and deepen the ongoing recession. Therefore, policymakers are faced with two situations of prime importance, and both need to be addressed simultaneously. To bring back financial stability to the country, contractionary fiscal policy has to be adopted so that Greece is able to honour its debt payments in good time. However, the current global economic slowdown demands expansionary policies to stimulate growth. These measures do not go hand in hand, so whichever course Greece adopts, it has to be well planned to avoid public unrest – which in itself is a challenging task under the current circumstances. The European Union leaders have taken extraordinary measures to protect the currency from collapsing by announcing a EUR750 billion (QR3.3 trillion) Euro ring fencing mechanism, which would stymie the Greek contagion from spreading. Despite such measures, the financial markets have reacted strongly, putting stability of the European Union at stake. It is a testing time not only for Greece but also for countries such as Germany and France, who have to show their willingness to support smaller countries to maintain the stature of European Union and its common currency.

The Gulf Cooperation Council (GCC) introduced the concept of a single monetary currency, similar to that of eurozone, during the 2001 GCC Summit. The idea was to further enhance the economic integration of member nations and to rationalise the transaction costs associated with multiple exchange rates. The integration was deemed necessary to assist the union in fighting inflation collectively, which is mainly routed through external channels as the region relies heavily on the import of various basic commodities. However, recently the global economic landscape has gone through tremendous change and the new dynamics could impact the course for a GCC monetary bloc. The six member nations are now seriously reviewing if the currency union would work in their best interest, given the current status of the global economy. Though strong commitment was given in the beginning when the plan to integrate the economies of these six nations was brought forward, the vision has suffered quite a few serious challenges, casting doubts over the achievement of an EU-style economic model. First was Oman, which quit the plan in late 2006. Then later Kuwait decided to depeg its currency from the dollar to address spiralling inflationary pressure in mid 2007. The decision of the United Arab Emirates to withdraw from the union last year, citing its disagreement with Saudi Arabia in hosting the headquarters of the GCC Central Bank, is also further impediment for the proposed unified currency regime. In the backdrop of these happenings, the modality of currency unification has also come under structural challenges. The current debt crisis in the eurozone has pressed key decisionmakers to re-examine the model of such an economic union given its possible ramifications. The cost – which has to be borne by every member of the currency bloc in case a Greece scenario is repeated in the GCC monetary union – has to be factored in. The recent debt-restructuring plan of Dubai World has already raised quite a few concerns on the feasibility and the level of economic integration, which is required to address such issues if they arise in the future. In today’s dynamic world, where financial markets react more profoundly to any economic development, the demerits of such an economic bloc should be closely studied. As in the case of the EU, its currency is being severely hampered and has dipped to a four-year low against the greenback based on concerns about the eurozone’s stability. The illness of Greece has put other small nations on precautionary measures, however a depreciating Euro would put more pressure on net importing nations. The current situation has induced GCC authorities to modify their approach before any economic integration of the region is carried out. JULY 2010

35


COVER STORY

36

JULY 2010


COVER STORY

CSR AND THE ECONOMIC

DOWNTURN During the global downturn it was expected that businesses would cut down on their Corporate Social Responsibility (CSR) expenditures, retrench their CSR managers, close down their CSR departments and focus their efforts on generating income to satisfy their shareholders and keep their employees. This is because CSR was mainly perceived as a luxury, concerned with either saving the planet or performing the jobs that governments should be doing in the first place. But with consumers increasingly favouring brands with ethical practices, modern corporations must embrace CSR or miss out on profits and be left behind. By Wafa’ Tarnowska

CSR PAYS OFF

The McKinsey United Nations (UN) Global Compact Chief Executive Officer Participant Survey in 2007, of 400 business executives in 116 countries, found that 84 percent no longer believed that Milton Friedman’s infamous statement “The social responsibility of business is to increase its profits” describes the reality of a company’s role in society. The same year, a study by Goldman Sachs also concluded that companies that are considered leaders in environmental, social and governance policies (ESG) outperformed the market by an average of 25 percent.

“More than 90 percent of corporate leaders are doing more than they did five years ago to incorporate environmental, social, and political issues into their core strategies.” -Wafa’ Tarnowska It seems these figures are not going unnoticed. Although many executives still see the necessity for CSR as burdensome, more than 90 percent of corporate leaders are doing more than they did five years ago to incorporate environmental, social, and political issues into their core strategies. Moreover, the McKinsey research shows that some visionary chief executive officers are recognising CSR as an opportunity to apply their creativity and resources to gain competitive advantage, while also helping to address some of the world’s biggest challenges. Indeed, growing pressure on companies to account for the social and ecological consequences of their activities is pushing senior managers to increase transparency about their products and processes, develop internal CSR policies and engage their stakeholders in open dialogue. The McKinsey 2007 survey states that: “Companies that can meet [these] challenges will be positioned to succeed in the years ahead, especially in markets that require new business models and untraditional partnerships.” JULY 2010

37


COVER STORY

A 2008 Behavioural Cause Study by Cone/Duke University in the United States (US) of more than 1000 people found that 79 percent of consumers were willing to switch from one brand to another of similar price and quality because it was associated with a good cause. However, it is not just consumers who prefer socially responsible brands. A company’s environmental and social initiatives have become important focus points for potential investors as well – sometimes as much as its financial performance.

Chris Tuppen, head of sustainable development and corporate accountability at British Telecom (BT), says that BT’s own research over the last 30 years has shown that companies lose credibility whenever they drop their CSR principles. Also, by inviting greater scrutiny, he reveals, CSR helps companies with financial discipline as well as develop new markets for products.

A SHIFT IN EXPECTATION

There has been a major shift in sentiment globally about what a ‘good’ company is, how it should behave towards society and its shareholders, and this is feeling is growing even while markets are weakening. Indeed it is imperative that commitments to corporate responsibility – which can advantageously differentiate a company from its competitors – remain strong during testing times, even though this is clearly challenging. Speaking at a seminar at Singapore Management University, professor Peter Shergold, chair of the Centre for Social Impact (CSI) at the Macquarie Group Foundation in New South Wales, Australia, said that CSR represents a fundamental shift in the way a business looks at itself and how it interacts with society. Therefore, the real question to ask is not whether CSR is a good thing – it definitely is – but whether it is perceived as valuable enough to survive sharp declines in business profitability and shareholder value. The financial crisis has shown that the core values and activities of some financial companies did not reflect the CSR to which they were publicly committed. Good banking practices were compromised and short-term performance based on immediate profits were rewarded instead of sustainable operations. This encouraged excessive risktaking, which caused the financial meltdown of companies such as Lehman Brothers. This is where good CSR reporting can step in, away from corporate spin and flashy reports, towards honesty and integrity in reporting issues of concern to the company, its stakeholders and charting the progress made in addressing them.

THE ATTRIBUTES OF A GREAT CSR REPORT

According to a April 2010 study by the US-based Eco Strategy Group entitled Trends in Sustainability Reporting: a Close-Up Look at Bay Area Companies, there are five questions you need to ask when compiling a great CSR report. • Materiality: What issues are most significant and what issues are your competitors reporting on?

38

JULY 2010


COVER STORY

The BSP survey also found out that nine out of 10 students are “very likely” or “somewhat likely” to look for another job if they find their values in conflict with those of where they work. Although the most important factor in students’ decisions about where to work is how well a company treats its employees, the MBAs, especially the females, were also concerned about responsible corporate governance and the transparent business practices of a potential employer. The 2007 McKinsey survey also found that “in the increasingly intense competition for scarce workforce skills, a socially responsible company has an edge both in recruiting and retaining essential talent”. Therefore, communication with your employees has never been more crucial. Companies need to make them feel like they are part of a longer-term solution by fostering pride and motivation by means of an ongoing mechanism of internal CSR newsletters and news grams.

• Stakeholder inclusiveness: Do you have a process for engaging your stakeholders? Do you understand your stakeholders’ perspectives? • Target setting and tracking: Have you clearly established measurable reduction targets? Do you have a system in place to track things like greenhouse gas emissions and report progress? • Completeness: Have you considered the impact of your CSR policies on the supply chain? • Ease of use: How easy is it to find your sustainability report online? Can it be read without printing it out?

CSR AND YOUR EMPLOYEES

A 2008 survey of Master of Business Administration (MBA) student attitudes about business and society, published in April 2008 by the Aspen Institute of Business and Society Programme (BSP) in the US, questioned final year MBA students from 25 countries about what would influence their choice of job after graduating. Respondents rated job satisfaction and work/life balance first and second and corporate values and ethics third, well ahead of money and professional status.

“In the intense competition for scarce workforce skills, a socially responsible company has an edge in recruiting and retaining essential talent.” -Wafa’ Tarnowska

Moreover, every manager and employee should understand the importance of CSR to the business and to themselves. A properly designed CSR programme will have positive benefits for key business areas in your company. • Encourage your management to be open and accessible to your staff. More importantly, try and be transparent, even if it is bad news. • Make CSR a part of your company’s image by getting employees to play an active part in various CSR activities and by rewarding them when they volunteer.

JULY 2010

39


COVER STORY

“The appropriate community involvement can have major benefits for your company … If you project the wrong image, customers and investors will not back you for long.” -Wafa’ Tarnowska

• The appropriate community involvement can also have major business benefits for your company. It can reflect your brand values, improve employee motivation and help attract the best people. If you project the wrong image, customers and investors will not be keen to back you for long. • Have employees serve as CSR ambassadors by familiarising them with the company’s CSR reports, activities and plans. Form a CSR committee or steering group to benchmark progress and maintain momentum. To sum up, think of CSR as a process that will open up your vision to risks and opportunities that you were not aware of before. Through the start of this process and the eventual implementation of sound CSR strategies, you can begin to manage your company more efficiently and gain an advantage over your competitors.

HOW TO SELECT CSR INITIATIVES

A real CSR programme would need to begin within your organisation by first taking care of your staff and their immediate families, then of your supply chain, then by stretching out to the community you live in and of course caring for your environment. • Look at your employment practices. Does your company follow enlightened policies on recruitment, training, health, safety and welfare? • Look at your marketing practices. Is your company building enduring relationships with customers by meeting and exceeding customer expectations? • Look at environmental practices. Does your company follow practices that are sustainable and responsible in your use of energy and resources? Do you recycle all the cans,

40

JULY 2010

glass, paper, plastic produced by the staff in your office? Good environmental practices will drive down costs and improve business processes. • Look at involvement in your community. Is your company a good neighbour and does it play an active and constructive role? Ask yourself what the specific skills your company can offer, and how you can help society by devising a CSR programme using those skills. • Look at others in your industry and compare their performance with yours. Look for the best examples you can find and follow the best, in other words: benchmark and follow best practices.

THINGS YOU SHOULD NOT DO

• Make token gestures: CSR is not charity. Giving money once a year to a cause or a charitable organisation is a good thing but it is not CSR.


COVER STORY

• Hang on to the same programmes year after year. Be adaptable and learn from the pitfalls of past programmes. • Backtrack because of the credit crunch: CSR is more about sharing skills and time than about giving money. Find CSR programmes that use the skills and time of your employees and their good hearts, not their pockets.

need to become smarter by optimising the core skills of companies and using them in CSR initiatives. Vinod Mittal, managing director of ISPAT Industries stated in the IBM survey: “I see corporate responsibility going through three phases. People start to consider issues like the environment because they are compelled to do so. Then they realize that it actually makes business sense. Eventually they move beyond compulsion and selfish motives to become passionate because it is the right thing to do.” In conclusion, the recession is giving companies the opportunity to restructure their CSR objectives together with their business objectives. For that, they must ensure that their CSR initiatives are an integral part of business operations rather than superficial, symbolic gestures. They must make sure that CSR becomes part of the fabric of their company and not just part of its public relations.

• Forget to report your CSR initiatives to your stakeholders and your employees. • Forget to celebrate achievements, because everyone loves a good success story.

THE BOTTOM LINE

In February 2008, IBM surveyed 1100 business leaders in 40 different countries. Two-thirds of these executives viewed CSR as increasingly important. They also admitted, however, to finding it hard to put into practice. There is a gap between intentions and implementation. For example, in the 2007 McKinsey survey it was found that while 59 percent of the respondents believe their company should embed ESG issues into their supply chain management, only 27 percent actually do. Businesses need to believe that caring for employees, communities and the environment is not only politically and ethically correct, but makes good business sense. Shergold of the CSI believes that: “We need to see reputation and sustainability not only in external programmes but also in the way the business allocates its resources, manages risk, organises remuneration structure, and the leadership culture that it aspires to.” CSR will have to become much more strategic in the future if it is to be effective in meeting the emerging needs of the economic downturn. CSR activities will

JULY 2010

41


REDCO CONSTRUCTION-ALMANA GOES GREEN The Redco-Almana group leads the way to Corporate Social Responsibility by aiming to reduce its carbon footprint and achieve carbon neutral status. BG2 Global Qatar has recently been acquired by the Redco-Almana group to provide sustainability consultancy and implementation services within Qatar.

management reduction for the entire Redco-Almana group of companies. This will be carried out in three phases. The first will be to implement BG2’s partnership carbon management software package

“The Redco-Almana group is leading the way within Qatar for carbon reduction and with the acquisition of BG2 Global Qatar, the company will be at the forefront of Qatar’s desire to reduce the effects of climate change associated with this great country.” BG2 is a subsidiary of the well-established BG2 Global Solutions based in London, and offers the full remit of sustainability consultancy and implementation services. These include carbon management, offsetting, renewable energy feasibility, Qatar Sustainability Assessment System (QSAS), Building Research Establishment Environmental Assessment Method (BREEAM) and Leadership in Energy and Environmental Design (LEED) certifications, and sustainability management to reduce energy consumption of organisations. BG2 Global Qatar’s first instruction is provide carbon footprinting and carbon

42

JULY 2010

into the group, which will monitor energy usage, business travel, water and waste. The software package, Acco2unt, developed by Greenstone Carbon Management, provides an automated software solution that monitors the carbon emissions related to the main emission factors of the group. The implementation will require all the companies to monitor their operations and input the data into the software, either through automatic metering or Excel spreadsheets. Following implementation of Acco2unt, the second stage will be the formation of carbon reduction strategies by BG2 to reduce the group’s carbon footprint by 10 percent by the end of 2010, with an

aspiration for a further 25 percent reduction by the end of 2011. This illustrates RedcoAlmana group’s desire to be at the forefront of reducing their effects on climate change through their operations within Qatar, and to provide a model for other companies to utilise and useful lessons to be learnt through the processes they have implemented. The Acco2unt package is fully auditable and compliant with Greenhouse Gas Protocol and provides dashboards to compare different organisations and their emissions/financial expenditure. The end result will be to not only reduce the carbon emissions but also the operating costs of the companies, as each element is interlinked. The final element of the process is to offset the carbon emissions related to the Redco-Almana group of companies by the purchasing of carbon

credits. This mechanism allows the Redco-Almana group to achieve ‘carbon neutral’ status by purchasing the equivalent amount of carbon credits associated with their operations. These credits ultimately provide the finance for renewable energy projects around the world, with the Redco-Almana group concentrating on those projects within the Middle Eastern region. The Redco-Almana group is leading the way within Qatar for carbon reduction and with the acquisition of BG2 Global Qatar, the company will be at the forefront of Qatar’s desire to reduce the effects of climate change associated with this great country.


COMPANY OVERVIEW Redco Construction-Almana is one of the premier general engineering contractors in the state of Qatar. The company offers general contracting and construction management. It undertakes civil/commercial low-rise and high-rise buildings, hospitality and government projects. RC-Almana was founded in 1998. Since then the companyâ&#x20AC;&#x2122;s vision and mission is to be involved in modern construction and development of Qatar and to grant clients within the Qatari construction market with superior quality construction services. In its 13 years of operation, RC-Almana has completed several projects that included high-rise residential/commercial buildings, shopping malls and government facilities. Having been equipped with efficient team of experienced engineers, supported

by thousands of skilled and unskilled labours with advanced modern technology and equipment, RC-Almana is considered one of the biggest Grade-A construction companies in Qatar.

THE AFFILIATES Many of the following supporting affiliate companies were established by RC-Almana: Alumana, Al Madadd Al Qatariah Company, Qatar Electro Mechanical Group (QEMG), Al Jassra Ready Mix, The Maintainers, Amar Construction and Bluu Solutions all collaborate in RC-Almanaâ&#x20AC;&#x2122;s success.

AL JASSRA READYMIX Al Jassra Ready Mix is a Class-A ready mix supplier with two Liebher German specialised batching plants, which produce 3000 cubic meters of concrete mix per day. Founded in 2007 for the use of ready mix in the modern building and construction industry in Qatar, Al Jassra Ready Mix produces

concrete suitable for any purpose, using only the best materials at economic prices.

ALUMANA INDUSTRIES Alumana Industries offers a complete line of architectural aluminium products for the latest complex designs. Heavyduty aluminium windows, doors, storefronts, and curtain walls are all included in Alumana product portfolio, along with fully automated glass tempering and lamination lines.

QATAR ELECTRO MECHANICAL GROUP Qatar Electro Mechanical Group (QEMG) is a multidiscipline electromechanical and heating, ventilation and air conditioning (HVAC) engineering, procurement, construction and management company that combines the local expertise with the expertise of several Gulf Cooperation Council (GCC) countires, regional and international companies.

AL MADADD AL QATARIAH COMPANY Al Madadd Al Qatariah Company specialises in supplying Redco Construction projects and the market with electromechanical materials.

THE MAINTAINERS The Maintainers is an operation and maintenance company established in 2007 to respond the needs of the demanding Qatari maintenance market, by providing comprehensive preventive and corrective maintenance packages for facilities, ranging from single villas to compounds and highrise buildings.

JULY 2010

43


REDCO CONSTRUCTION-ALMANA GOES GREEN AMAR CONSTRUCTION Amar Construction, formed in 2007, specialise in constructing medium scale projects.

BLUU QATAR Bluu Qatar is a fully encompassing design and fit-out company specialising in the office sector. Bluu Qatar has built an enviable reputation of consistently exceeding client expectations. Whatever your business and whatever your environment Bluu Qatar have the skills, experience and knowledge to make your space work for your business.

EXPERTISE AND IMPROVEMENT APPLIED TO EVERY PROJECT RC-Almana continues to improve our contracting services by providing innovative tools to simplify and enhance the preconstruction and construction process. At the forefront of these innovative tools is the development of integrated project teams. RC-Almana is considered by many to be the expert in construction, applying building information technology to every project, providing benefits ranging from improved communication and estimating accuracy and constructability, to schedule and quality control.

QUALITY CONSTRUCTION For more than a decade, RCAlmana has been focusing on quality in the approach to construction projects.

44

JULY 2010

RC-Almana is actively defining how to effectively apply quality principles to the construction industry. RC-Almana is committed to continuous improvement and we understand that in today’s world, our customers want to add value and eliminate waste. In Redco Construction’s vocabulary, Value=Safety, Quality and Efficiency, delivering value by adhering to three key management philosophies, which make up the foundations of each project approach: Daily Improvement, Work Principles and Integrated Work Planning.

SUSTAINABLE CONSTRUCTION RC-Almana is committed to protecting and preserving the earth’s natural resources. Reducing our human footprint is a shared responsibility and RC-Almana will continue to be among the leaders of ecofriendly business practices. The commitment extends from our company headquarters and affiliate offices, to the jobsites and the personal practices of all team members.

A RELIABLE PARTNER The management of RCAlmana is keen to achieve the aspirations of His Highness Sheikh Hamad bin Khal¬ifa Al Thani, the Emir of Qatar and the Crown Prince HH Sheikh Tamim bin Hamad Al Thani. The company aims at establishing Qatar as an example of comprehensive development in various social, economic and urban fields.


A RELIABLE PARTNER TO QATAR’S GROWTH

REDCO Construction – Almana is growing regionally on a fast basis through bright strategic forms. Soaring achievements and high profile projects mark REDCO Construction – Alamana and affiliates as a leader in general contracting around the nation.

AFFILIATES

AMAR CONSTRUCTION WLL

P.O. Box: 23300 Doha, Qatar | T: (974) 469 0276 / 469 0639 | F: (974) 469 0734 | E: info@redcoalmana.com www.redcoalmana.com


ECONOMIC BAROMETER

CURRENCY FOR SALE

It seems that wherever you look right now, everyone hates the Euro. The news on television, radio, newspapers, websites, as well as investors and many hedge fund managers say the European common currency is doomed. Their arguments are very convincing, but is this the end of a beautiful era of prosperity and growth? Karim Nakhle investigates

46

JULY 2010


ECONOMIC BAROMETER

T

he outlook is grim and the Euro has certainly lost its charm as evidenced by the hard selling this year, especially since May. However, as any seasoned investor knows, even when a prevailing view dominates, there is more than one side to an investment. Take for example the fact that only six months ago, the dollar was hated and the Euro was revered. At the time the United States (US) government’s massive stimulus programmes were working in the short-term, but all the paper printing was killing the US currency. With the Euro at 1.50 to the dollar – the highest it had been in about a year and a half – some swore that this was the end of the greenback. However, since then, the Euro has been in a decline to levels not seen since late 2008. Prognosticating the future of the Euro is a difficult task, especially since the financial meltdown of 2008. The currency has slumped 19 percent against the dollar in the past six months as the fiscal crisis that started in Greece made money managers wary that some debt-swamped nations might default, or even revert to old currencies to devalue their way to salvation. With investors selling sovereign paper from Athens to Dublin and buying safer German bonds, yield spreads ballooned in May and June, rendering the European Central Bank’s (ECB) one-size-fits-all monetary policy ineffective and threatening to tear the currency union apart. Meanwhile Spanish, Greek, Portuguese and Irish government bonds were plunging, sending shudders through world markets and fuelling speculation that Europe’s 11-year-old monetary union could collapse. The ECB’s president Jean Claude Trichet travelled to an emergency Brussels summit of heads of government armed with graphs to dramatise how bad things were and convince European leaders that the Euro was in grave danger. While addressing the crowd, Trichet’s main message for the governments was loud and clear. “Some of you have behaved very improperly,” he said, “and have created an element of vulnerability for your own country, and by way of consequence for Europe. Now the situation calls for taking up responsibilities.”

THE COST OF RECOVERY

European leaders knew that the price of that responsibility was not cheap: it came to an unprecedented EUR750 billion (QR3.3 trillion) aid package to prevent a debt spiral, backed by a credibility-testing pledge from the ECB to purchase the bonds of distressed governments – all to keep the 16-nation economic and monetary union afloat. Indeed, the ECB’s chief had to make a huge gamble, agreeing to buy government debt in order to halt the surge in yields, all in the hope politicians will respond by fixing their budgets and therefore allow the ECB to return to fighting inflation. However, the risk is that profligate nations will renege on the deal and expect stronger eurozone neighbours such as Germany and France to save them just as they rescued Greece.

Critics say the ECB has abandoned a founding principle to not bail out cash-strapped governments and may have to buy more debt, which could ultimately undermine its primary price-stability mandate. According to the ECB, eurozone banks face another EUR195 billion (QR823 trillion) in potential write-downs towards the end of 2011 in a second wave of losses from the financial crisis. In its latest financial stability report, the ECB said public finances posed the biggest threat to the region’s financial steadiness as high debt and deficits continue to unsettle investors, and floods of new government bonds could hamper access to market funding. The ECB estimates banks will need to make provision for further losses in 2010 of EUR90 billion (QR402 trillion) and EUR105 billion (QR469 trillion) in 2011. This is the first time where the ECB has given an estimate for next year, probably to show that it is in control of the forecast. This comes on top of the estimated EUR238 billion (QR1000 trillion) already written down to cover bad loans by the end of 2009. Overall, the ECB said total write-downs from bad loans and securities between 2007 and the end of 2010 were likely to be lower than earlier expected, at EUR515 billion(QR2300 trillion) from EUR553 billion (QR2400 trillion) forecasted in December. Risks to the growth outlook appeared broadly balanced but the ECB warned a shortfall could be damaging. In reality, the Euro, inspired by the German mark, is now starting to look more like the Greek drachma. Europe now blames its governments for what went wrong. Greece’s budget deficit was 13.6 percent of output last year; Ireland’s shortfall was 14.3 percent and Spain’s 11.2 percent. Germany’s deficit was 3.3 percent. JULY 2010

47


ECONOMIC BAROMETER

48

JULY 2010


ON THE PULSE

QATARI PROMISE, MIDDLE EASTERN DREAM In the aftermath of the world’s biggest sporting event, the 2010 FIFA World Cup, Doha is bidding to host the mammoth tournament in 2022. Edward Jameson looks at Qatar’s capacity to play host to the globe, along with the economic benefits – and pitfalls – the greatest show on earth could bring to the Middle East.

- Should Qatar’s bid be successful, the Al Gharafa stadium will include a facade of ribbons representing the nations that qualify for the FIFA 2022 World Cup tournament. Image courtesy of Qatar 2022. -

A

t 4 pm on Friday June 11, beneath the vast skies of southern Africa, an event – larger than the Olympics and with a magnitude to surpass any that had gone before it across the entire continent – kicked off in Johannesburg South Africa: the 2010 Fédération Internationale de Football Association (FIFA) World Cup. The Republic of South Africa (RSA) worked long and hard to become the first African country to host the competition. Hosting the World Cup is seen as a symbol of progress, if not

the culmination of the country’s long journey from the shadows of apartheid to the modern, democratic world. However, as the battle for the right to host the tournament every four years testifies, the event can also be a huge money spinner. FIFA raked in a cool QR5.8 billion from the 2006 tournament in Germany and the organising committee of the host nation made EUR111 million (QR482 million). The latter sum, which upon closer reflection may not be a huge amount of money by macroeconomic standards, is still a healthy addition to any nation’s coffers.


ON THE PULSE

Yet this figure was spectacularly dwarfed by the estimates regarding the effect of the tournament on gross domestic product (GDP) prior to the first ball being kicked. United Kingdom (UK) chartered accountancy firm Grant Thornton worked closely with the RSA authorities on the 2010 World Cup bid. The firm estimated that the tournament would generate over QR25 billion, equivalent to 2.4 percent of the country’s (GDP), not to mention QR9 billion in tax revenue, boosting the total to a cool QR34 billion.

- South Africa estimated the construction bill for the 2010 World Cup, prior to the tournament, at a cool QR2.1 billion. -

A BLESSING IN DISGUISE?

Given the unquestionably lucrative potential to generate vast sums of cash via the influx of visitors that the World Cup attracts, it is no surprise to see Qatar – a small state in geographic terms, but one with a huge appetite for global recognition and an income to match – bidding to host the tournament in both 2018 and 2022. Moreover, there are further related benefits including economic stimulus to sectors such as construction and manufacturing in the build up to the tournament. However, alongside all of the nations bidding to host future tournaments, Qatar should also bear in mind that before the cash can be counted there will be considerable investment required. “There are few cast iron laws in economics but one seems to hold: the organisers of sporting mega-events always overestimate the economic benefits and underestimate the costs,” says knowledgable sports historian 50

JULY 2010

and author David Goldblatt. “Japan’s gigantic infrastructure programme for the 2002 World Cup barely shifted its sluggish economy,” he adds. “The 2000 Sydney Olympics, it was argued, would transform future visitor numbers to the city but they remained static; and four years later, the Athens games were going to be put on for QR5.5 billion – but ended up costing 10 times as much.” Furthermore, the World Cup is no less susceptible to the vagaries of the global economy than the industries to which it offers support. The government of South Africa for example estimated the total cost of hosting the event, including construction and upgrading of stadiums, infrastructure, airport and transport facilities, at QR2.1 billion, but reasoned that much of this would be recouped into the economy by a large influx of foreign visitors. However, German-based financial services giant Commerzbank released a detailed study of the macroeconomics of major sporting events, with a focus on the 2010 World Cup, and found estimates suggesting that South Africa’s calculations and expectations were misjudged. According to the report, predictions of visitor numbers to the country were cut down from 450,000 to 350,000 as a result of the financial crisis, and the extent of the boost to national GDP was also curtailed.

FINANCIAL CAPACITY

Such concerns are not likely to pose the same risk to the economy of Qatar though. Trading as it does on the necessities of oil and gas, Doha is far less exposed to the recessional forces that will restrain the income potential of a post-financial crisis World Cup, an event that can only be considered as a luxury. Therefore, the state would be in a viable position to fund everything, including the immense pre-tournament preparation and construction tab, without a reliance on credit. According to the respected Sovereign Wealth Fund Institute, the Qatar Investment Authority has more than enough capital. In theory, the state could bankroll the sport’s greatest event simply by skimming off the top of its savings: an enviable position to be in, which is, perhaps, the key to the unashamed grandeur of Doha’s official bid.

THE BID

Although Qatar is applying for both the 2018 and 2022 FIFA World Cups, it is focusing on the latter. Doha’s 2022 bid centres on five proposed stadiums, two of which exist and will be spectacularly upgraded. When construction is finally complete on the additional three new ones, the five stadiums will boast a combined capacity of 235,000.

- Qatar’s proposed Al Khor stadium, the exterior of which is based on a seashell, will offer fans views of the Gulf from their seats. Image courtesy Qatar 2022. -


ON THE PULSE

Al Gharafa stadium will include a facade of ribbons representing the qualifying nations. Al Khor stadium, the exterior of which is based on a seashell, will offer fans a view of the Gulf from their seats. The spectacular Al Rayyan Stadium will feature a giant membrane wrapped around its facade that will act as a screen for projecting news and matches. The Al Shamal stadium design will be based on the traditional dhow fishing boats of the Gulf. And finally, the Al Wakrah stadium will be at the centre of a giant complex that will include an aquatic centre, spa, sports facilities and a shopping mall. The stadiums were unveiled at the Sport Accord Convention in Dubai in April, along with an innovative technological solution that Doha hopes will offset the searing heat of the Middle East – which has become its biggest hurdle to winning over FIFA – a carbon-neutral air conditioning technology, powered by the sun. “Our stadiums will have zero carbon cooling equipment utilising solar technology to ensure the temperature is no higher than 27 degrees centigrade, ensuring optimum playing conditions and a comfortable environment for fans,” said the bid’s chairman Sheikh Mohammed bin Hamad Al Thani. If anybody doubted Qatar’s commitment to delivering an event with a long-term benefit, two further factors should bode well for the country’s bid. Firstly, added the chairman, Qatar will share the abovementioned groundbreaking technology with the rest of the world after the tournament. Secondly, each stadium features a modular design, whereby the upper tiers can be removed (allowing each facility to be downsized after the event to suit local football and community needs) and some of these components will be donated and transported to developing countries permanently. Which are just the sort of things the gentlemen at FIFA like to hear.

ECONOMIC IMpact

Alongside the stadiums themselves, the infrastructure necessary to cope with a vast influx of visitors from all over the world will also have to be constructed. However, any resultant programme

- Sheikh Mohammed bin Hamad Al Thani unveils a model of Qatar’s proposed Al Shamal stadium at Dubai’s Sport Accord show. -

would also have be borne out of a need to construct the physical framework within which a further economic boom could take place. Considering that, the potential for a successful bid to underpin economic growth – if managed properly – is immense.

a sign that countries are ready to increase their engagement with the global economy. And although the realisation of the dream may be a long way off, Doha is prepared to go all the way if necessary, despite the costs, and with a willingness to learn

“The magnitude of bringing the World Cup to the Middle East cannot be underestimated. To put a viable bid together and to have it seriously examined and considered by FIFA is itself a huge step in the right direction.” - Edward Jameson The magnitude of bringing the World Cup to the Middle East region for the first time cannot be underestimated either. Even the potential to host the World Cup – to be capable of putting a viable bid document together and to have it seriously examined and considered by FIFA – is itself a huge step in the direction of global integration for the region. According to the Commerzbank report, analysis suggests that bids to host major sporting events act as

from the past mistakes of other major sporting event hosts. The host nations for World Cups 2018 and 2022 will be selected by FIFA in Zurich, Switzerland, on December 2, this year. There is no question that the state of Qatar can afford to bankroll the event, but is it ready, and more importantly, if it is, can it convince FIFA? The nation, the Middle East and the rest of the world, wait in anticipation. JULY 2010

51


GREEN BUSINESS

REDUCING

- Sam Pickering, managing director of BG2 Global Solutions Limited. -

52

JULY 2010


GREEN BUSINESS

GREENHOUSE GASES: WHO SHOULD BE MOST RESPONSIBLE? Countering climate change is something we should all ultimately be responsible for. But who is really leading the drive to reduce greenhouse gas emissions: Governments or the Private Sector? Sam Pickering investigates

R

educing our impact on climate change has become a central factor in all our lives, but what really influences our desire to reduce greenhouse gases? Apart from, perhaps, our own consciences as private individuals, there are two sources of motivation. Governments across the world are looking to legislate for reductions across all industries and change our consumption patterns, and the private sector, which is responding to market forces, namely competition and cost management. The failure of Copenhagen 2009 to bring about a deal to combat climate change in a globally coordinated manner is unlikely to be wholly resolved at the next climate summit in Mexico 2010. The frustrations of politics and bureaucracy have proved impossible barriers to cross in the quest to reach a lasting agreement. Only with a strong alliance and leadership of the largest countries, such as the United States (US), India, China and the European Union (EU) can a worldwide system of greenhouse gas (GHG) reduction be put in place. Rather than having sole reliance on government legislation, the principal factor in the reduction of our carbon footprint is being led instead by the market. Through ordinary rules of demand and supply, namely competition and a drive for cost effectiveness, the world is slowly but surely seeing the benefits of reducing GHG. There are encouraging signs that the private sector is beginning to lead the way in achieving the GHG emission reductions necessary to make a real impact. As the private sector realises the benefits of being ahead of the competition in their ‘green’ ratings and reviewing the cost effectiveness of certain carbon reduction initiatives, more and more companies are taking a lead in the drive to improve climate change. As companies seek to stay ahead of the competition in their industry sector, being the ‘greenest’ brand has become a key ‘unique selling point’ (USP). Indeed, supermarket chains are rushing to stay ahead of the field with labelling that indicates

the carbon emissions associated with a product. In the EU, this is about to be regulated, but for several years leading supermarkets have had their own rating systems in place. As consumers are increasingly educated about the effects of GHG emissions, producers need to provide them with information. It is commercially sensible to give the consumer what they want and to do so is proving an inexpensive change. This is an encouraging sign that is likely to permeate throughout the world and different industries. Companies with foresight are also keeping ahead of the game as they predict future GHG legislation. Indeed, there is a realisation that a worldwide agreement will be reached with targets for reductions in GHG. Companies, aware that they will soon be forced to reduce their GHG emissions or suffer the consequences of green taxes, are making capital investments that will benefit them in the near future. Reducing carbon footprint does not have to be sunken capital expense. Another motivating factor influencing the private sector is the actual costeffectiveness of making changes to their practices. The approach that many have taken is not necessarily a quick fix solution but one that will involve a year-on-year reduction in carbon dioxide (CO2) emissions. Many companies have found that educating staff to change their habits has led to a significant reduction of emissions and effects

JULY 2010

53


GREEN BUSINESS

on the environment. Education is an efficient and cheap solution. It also has the additional benefit of ensuring that individuals take responsibility for their lives outside the workplace. Other companies are beginning to review the existing fixtures within their office/industrial space to aid in reducing their effects. These include light fittings, voltage optimisation, sanitary fittings, glazing and others that have minimal capital spend with significant savings both in terms of expenditure and CO2 emissions. The private sector is also leading the way in research and development of sustainable technologies. As consumer demand for more environmentally friendly alternatives increases, industry leaders have introduced new products that help reduce the carbon footprint. A very good example is in the packaging industry in the United Kingdom (UK). Packaging and its associated waste have recently reached epidemic proportions, as has the consciousness of the consumer. United Kingdom Office Solutions (UKOS) has developed a solution following pressure from their own clients. They now offer a reusable foldaway box as an alternative to the standard cardboard box used for the delivery of their products. The â&#x20AC;&#x2DC;Box4Lifeâ&#x20AC;&#x2122; is made from polypropylene and is used in 30 percent of deliveries, saving 4000 cardboard boxes and 1520

54

JULY 2010

kilograms of cardboard. UKOS now make a saving on their packaging, while keeping their consumer happy and all for minimal capital expenditure. The patterns are the same across the globe. The private sector is increasingly seeing the benefits of having a sustainable policy. Although Qatar has a harsher climate compared with the more temperate Europe and North America, the reduction of industry carbon footprints and the introduction of a more sustainable policy still have obvious economic benefits, but it does require a change in the thought process. Energy may be cheap but CO2 will increasingly become expensive as the world reaches an agreement effectively charging for emissions. Companies with foresight will also realise that foreign investors (consumers) increasingly want to know that their Qatari partners have a sound environmental policy. The drive to reduce our greenhouse gas emissions has been the focus of governmentâ&#x20AC;&#x2122;s attention for some time, but it appears that the main contributors to a more sustainable future are market forces. As competition dictates, companies are forced to seek the most carbon neutral choices and sustainable production methods. From construction to retail, industries are looking at ways to stay ahead of their competitors in their environmental policies, and, as consumers become educated about ways of reducing GHG, the private sector is adapting quickly. In contrast, the public sector is much slower at taking on environmental regulation and legislation. In Qatar, keeping track of the demands of most international investors means every single industry has to very seriously consider their CO2 footprint and sustainability in order to stay ahead of the competition.


ENTREPRENEUR

BUTHAINA HASSAN

AL ANSARI

Businesswoman Buthaina Hassan Al Ansari is fast becoming synonymous with promoting women in business, as well as entrepreneurship in general, in Qatar. The award-winning founder and chairperson of the Doha-based Qatariat Group is also gaining a good reputation in the GCC business world and beyond. MILES MASTERSON talks to Al Ansari about her initiatives, including her newly-formed corporate social responsibility company, Qatar CSR.


ENTREPRENEUR

A

part from being the head of strategic planning with Qatar Telecom, Buthaina Hassan Al Ansari is a member of Qatar Business Women Forum (QBWF) and Arab International Women’s Forum (AIWF). To add to her growning list of accolades Al Ansari was also one of only three Middle Eastern women invited to Washington DC in the United States (US), to attend the Presidential Summit on Entrepreneurship in April. “I had breakfast at the White House with President Barack Obama and

career and visibility. “It really added a lot to us, just in terms of choosing me [and how] it will enhance my profile.” Marketing one’s self and/or company, it quickly becomes clear, is central to Al Ansari’s business ethos and is what in part motivated her to start her monthly magazine Qatariat, the first of its kind in the country. “I found there is a big opportunity to target businesswomen, to educate them and enhance their knowledge in terms of how to start their business and how to highlight their achievements to the public,” she

“You are facing giants so you have to build your knowledge and your awareness of what you need to deliver.” - Buthaina Al Ansari Hillary Clinton and it was really inspiring,” says Al Ansari proudly, adding that being selected both raised the visibility of Middle Eastern businesswoman and was good for her

56

JULY 2010

explains. “I founded the magazine as a tool to make the connection.” Though, says Al Ansari, there are still a few archaic attitudes in the upper echelons of a minority of Qatari

companies, women entering the business world here are far luckier than those in many Arab countries (and, she agrees, the West, where women executives are still rare in large corporations). This is mainly, Al Ansari adds, thanks to the solid economic foundation of Qatar, and its good reputation internationally, as well as the forward-thinking policies in the education and social upliftment of both genders by the Emir Sheikh Hamad bin Khalifa Al Thani and Consort Sheikha Mozah bint Nasser Al Missned. The Consort has in particular encouraged women to be inventive and creative and therefore, says Al Ansari, “if you are of a high calibre and have experience, the opportunities are there.” Indeed, Al Ansari goes on to explain that is not necessarily being a woman that is the most difficult aspect of doing business in Qatar, but rather being trusted to do a good job as a local in a competitive market dominated by international franchises. “This is one of the most common challenges I face,” she says.


ENTREPRENEUR

Al Ansari suggests a threefold countermeasure strategy. Firstly, explains Al Ansari – who holds a Masters of Business Administration (MBA) and in Planning and Human Resources from Qatar University, as well as diplomas from universities and schools in London and Cairo – you need a solid education and must continuously add to your qualifications throughout your career, if possible overseas, to enhance to your world view. “You are facing giants so you have to build your knowledge and your awareness of exactly what you need to deliver,” she says. Qualifications, Al Ansari continues, are only the beginning. You also need to build up a good portfolio in order to sell your service or product. “I have worked with huge corporate names. This adds value to your service, once you mention that.” Thirdly, Al Ansari advises to point out that you are from Qatar and know the market like no one else. “I say I am a local, but with an international standard,” she explains. “I always say: I will give … my projects a local identity.”

DEVELOPMENT THROUGH QATARIAT Al Ansari’s experience and motivation is embodied in Qatariat’s three divisions: Qatariat Training and Development, which helps Qatari women to develop their skills; Qatariat Development Consultancy, which assists both women and men with their business plans; and Qatariat the magazine, which is also for men notes Al Ansari. “We do not want to be their competitors, we want to be their partners … the nation needs us both.” The inspiration for her training business was due the lack of skilled women in Qatar. While working in human resources at a Qatar bank a few years ago, Al Ansari was tasked with finding decent staff to fill vacancies,

which she found difficult. So she decided to do something about it, giving rise to Qatariat. “But lately I have found an increasing number of women in the banking sector,” she says. “This is because of the good programmes we have in the schools and universities.” Qatariat therefore aims to enhance the knowledge of female employees

is obvious. She hopes to continue to expand her business and through Qatariat and the women’s foundations she is involved in and to keep mentoring young girls, who Al Ansari says, can check out her website at www.qatariat.org or contact her any time for input on business matters, as she loves to consult and offer advice.

“I always say that I am a Qatari, but with an international standard and that I will give my projects a local identity.” to empower their rise through the ranks and help maintain a good brand reputation for companies. For example, they run courses and workshops aimed at improving customer service, for both VIP clients and call centres in the banking sector. Al Ansari’s aim, through the development consultancy, is to foster entrepreneurship in Qatar. Apart from helping clients with advertising, branding, logos and networking, the consultancy offers coaching and guidance to both genders as well as steering them through the intimidating process of obtaining a bank loan. However, Al Ansari says this has never been easier for Qataris thanks to the Enterprise Qatar forum for small and medium business enterprises (SMEs) and the Qatar Development Bank. Yet, entrepreneurs, she says, must add something to society and be more innovative when coming up with new ideas for businesses. “Let me give you an example,” smiles Al Ansari, “we do not need another abaya shop, we have enough of those.”

A PASSION FOR CSR

Throughout our interview Al Ansari’s zeal for her life’s ambition

“CSR should not just be part of a policy in a company. It is more than that, it should have its own department, like communication or public relations.”

Nevertheless, it is on the final topic of discussion, corporate social responsibility (CSR), that Al Ansari becomes most visibly passionate. She recently established a company called Qatar CSR, and says that her understanding of the concept is that it should encompass education, health, protecting the environment and be of benefit to society’s less privileged. However, although Al Ansari admits CSR is a powerful and necessary marketing tool for modern companies and this is part of the reason she has embarked on her latest venture. Yet she adds that the altruistic and social benefits are most important – especially when it comes to building awareness among the youth. Indeed, Al Ansari is working to get the basics of the topic taught at schools and universities. Qatar CSR aims to further enhance the young generation by, she hopes, working in collaboration with Qatari companies such as Qatar Airways or Doha Bank, for example, to create a CSR academy. This would be similar to those in London and Abu Dhabi and will produce individuals who specialise in the field. “CSR shouldn’t just be part of a policy in a company,” closes Al Ansari. “It is more than that, it should have its own department like a communication or public relations department, because we are at a time when the environment needs help, the earth needs help… we need to educate our children to practice this in their daily lives.” JULY 2010

57


BUSINESS VIEW – REAL ESTATE

es k edd broo IF YOU BUILD IT, THEY WILL COME Edd Brookes reports The retail and hotel industries are witnessing significant investment and growth as plans are undertaken to diversify and expand the local economy. THE GROWTH OF RETAIL

Qatar’s retail market has grown considerably in recent years, reflecting the change in demographics created by an expanding population with greater affluence and disposable income. The current offer is dominated by organised retail, comprising large scale retail mall developments, serving as one-stop shopping, recreational, leisure and entertainment hubs for visitors. Organised retail stock of this type extends to approximately 500,000 square metres of gross leasable area (GLA) distributed across eight main shopping malls dominated by Villaggio and City Centre, which account for over 60 percent of the total retail supply. That figure has remained constant since the opening of the extension at Landmark in early 2009. Within the malls, tenant mix is similar with a number of the international brands having a presence in at least two of the main malls. As an example; Landmark, City Centre and Villaggio are all anchored by Carrefour hypermarkets. Among recent developments, Villaggio has opened a 13-screen multiplex and an exclusive high-end luxury retail section within the mall, increasing its total GLA to 153,000 square metres. Average monthly footfall at Villaggio has increased to in excess of 1.2 million people per month. City Centre has been extended to incorporate five new luxury hotels – Marriott Courtyard and Marriott Renaissance Tower, Shangri-La, Rotana Tower and Merweb Hotel – which will provide a total of 1300 hotel rooms and serviced apartments, scheduled to open later this year. The retail component of Porto Arabia at The Pearl was opened to the public in late 2008 and continues to 58

JULY 2010


BUSINESS VIEW – REAL ESTATE

- Qatar’s changing demographics are reflected in the number and size of major retail malls currently in development. -

expand as new units open. The development is expected to be fully open by the end of 2010 and on completion Porto Arabia will offer 90,000 square metres of retail GLA. Another upcoming retail development expected to open in 2010 is Lagoona Mall set beneath the West Bay Lagoon Plaza which will offer 53,000 square metres of high-end luxury shopping. The Gate, situated in the Diplomatic District and providing approximately 24,000 square metres of luxury fashion, food and beverage and lifestyle retail, is also scheduled to open later this year and will be anchored by the existing Salam Department store. Most existing malls boast full occupancy with waiting lists of potential tenants. Landmark, City Centre and Villaggio shopping malls command the highest average rental rates, ranging from QR180 to QR225 per square metre per month for standard units, due to their location and popularity among the residents. There has been little change to these rental levels, with limited transactional evidence to benchmark rents, as no new space has been released to the market and existing units are rarely transferred between retailers. There is potentially an additional 230,000 square metres of organised retail stock coming onto the market before the end of 2011 if all planned developments are realised and delivered on time, equating to a 45 percent increase in supply. The GLA per capita is also estimated to increase from the current 0.6 to 1.0 square metres per capita by the end of 2010. The figure above highlights the major retail mall developments currently in the pipeline by location, size and expected completion date. Meanwhile, retail showroom space has seen new units released to the market over the last six months on Salwa Road, TV Roundabout and Airport Road. Typical retailers for this type of unit sell bulkier goods including cars, construction materials, household finishes and furniture, and they have seen demand for their products decrease. This has, in turn, decreased the demand for such showrooms, the impact of which has seen a fall in prime rentals from QR220 per square metre per month to between QR170 and QR190 per square metre per month.

EXPANSION FOR THE HOTEL INDUSTRY

The hotel industry has witnessed significant capital investment and growth recently, as tourism development strategies are implemented to diversify Qatar’s economy. Currently, the demand for hotel rooms in Doha is generated primarily by business and Meeting, Incentives, Conventions and Exhibitions (MICE) visitors, which account for 95 percent of the total tourist arrivals in Qatar. A mere 5 percent visit Qatar for other purposes. Although business and MICE visitors are expected to continue to represent the majority of travellers to Qatar, Qatar Tourism Authority (QTA) intends to encourage more leisure tourism and increase this segment of the tourist market to 30 percent, creating additional demand for hotel rooms in future. Some of the existing and planned major projects include: • The New Doha International Airport (NDIA) which is expected to begin operations by 2012 and handle an estimated 50 million visitors per annum. QTA’s target is to attract 5 percent or 2.5 million visitors to stay an extra 48 hours in the country for leisure activities under a new tourism scheme called Qatar 48. • Doha plays host to international sports events throughout the year such as the Tennis Open, Lusail Moto Grand Prix, Qatar Masters Golf Tournament and the upcoming Asian Football Confederation (AFC) Asian Cup in 2011. • The Museum of Islamic Art which is the world’s first museum dedicated exclusively to the collection and display of Islamic art. Within its initial two weeks of public opening in December 2008, the new tourist attraction had attracted over 30,000 visitors and currently registers an average footfall of about 1500 on weekdays and over 7000 on weekends and public holidays. • Souk Waqif has recently undergone restoration works to preserve its old world charm and is regarded as an important cultural and heritage destination in Doha. • Strategic plans are in place to grow the tourism sector and attract over 1.4 million international tourists to Qatar by 2012 for business, conferences, education, sports and culture. JULY 2010

59


BUSINESS VIEW – REAL ESTATE

- Doha’s skyline is set to be filled with more world-class hotels if the current push for further investment and growth is realised. -

- Increases in supply have curtailed key hotel economic indicators, such as revenue per room, average room rates and average occupancy rates . -

In contrast to the strategic plans to promote tourism, the recent announcement to withdraw the ability to purchase visit visas upon arrival for 33 countries has drawn concerns from a number of hotel operators. They believe this will have a detrimental effect on demand by creating an additional barrier for people planning to visit Qatar for either tourism or MICE. At this time the proposal to withdraw visa services on arrival has been postponed and it is not clear whether it will be reinstated. The number of hotels in Qatar has continued to expand despite the general downturn in global travel. QTA reported that 58 hotels were operating in Qatar by the end of 2009. An additional 70 hotels and 48 hotel apartments will have opened by the end of 2012 offering 12,981 hotel rooms and 8763 hotel apartment units. Twenty-three hotels are expected to open in 2010 alone, increasing the 60

JULY 2010

number of rooms offered by 55 percent. QTA forecasts that 90 percent of this future supply will provide four- and fivestar accommodation. Due to substantial increases in the level of supply there have been declines in a number of key hotel economic measures. Doha’s revenue per available room (revPAR) fell 17 percent to US$193 (QR702) in 2009 though Qatar has maintained the second highest revPAR in the GCC region after Abu Dhabi. Average Room Rates (ARR) fell 5 percent from US$312 (QR1136) in 2008 to US$296 (QR1078) in 2009, with average occupancy rates also in decline from 74 percent in 2008 to 65 percent in 2009. Overall, Qatar’s hotel industry has performed comparatively well despite the current economic climate which slowed down growth for the industry internationally.


SPECIAL REPORT

QATAR: RETAIL ON A ROLL

- Oliver Cornock, OBG, Qatar. -

While the acquisition of iconic British department store Harrods in May by Qatar Holding – one of the government’s investment vehicles – made international headlines, the country’s domestic retail sector is also very much on the move. Oliver Cornock reports


SPECIAL REPORT

W

ith an impressive price tag, the US$2.2 billion (QR8 billion) Harrods deal is more likely to capture the attention of global media than the the spate of new local retail developments. Nevertheless, Qatari shoppers are set to benefit from a major increase in retail options, some of which will rival the Knightsbridge emporium for opulence and range. In the coming years, a massive building surge is expected to add up to 400,000 square metres of retail space to the existing stock, almost doubling the gross leasable area (GLA) in Doha. According to the Gulf Cooperation Council (GCC) Retail Industry Alpen Report 2010, Qatar has among the highest retail rental rates in the Gulf region, due to the current gap between supply and demand, with new complexes quickly finding tenants as a result of the ready-made demand existing for retail space, “However,” the Alpen study said, “the current robust project pipeline – once completed – will bring some correction in demand/supply mismatch, thereby moderating the rental rates during the coming years.” The projected increase in retail GLA is already having an impact on the sector, with rental charges for shopping space falling by 13 to 23 percent in the first three months of the year, according to a recent report by international consultancy DTZ. Though the firm is forecasting a 45 percent increase in GLA by the end of next year, their report says that in the short- to medium-term, the organised retail market outlook remains fundamentally sound, with demand continuing to outstrip supply and the growing number of foreign visitors giving a boost to the retail market. As a result, the DTZ report also said, vacancy rates are expected to stay low even as retail stock increases and rental growth on new developments (which can add diversity, exclusivity and depth to the retail market), will remain strong. That strength was evident last year, with the Alpen report saying that Qatar had bucked the regional trend in

62

JULY 2010

2009, which saw a weakening in the retail spend due to the international financial crisis. With its high per capita gross domestic product (GDP) translating into high levels of disposable income and strong purchasing power for residents, the global economic downturn had little effect on the Qatari retail sector, the survey said. With the GDP expected to expand by 15 percent or more in 2010, disposable income levels will likely follow suit, giving Qataris more money in the pocket to spend and a wider range of outlets in which to do so. However, it is not just domestic custom that Qatar’s retailers are looking to serve. The government is working to increase the number of overseas visitors to the country and many of the new shopping projects are being developed with an eye on the tourism trade. Qatari officials have said they expect tourist arrivals to hit 1.4 million by 2011, though this could be affected by a re-emergence of economic woes in some of Qatar’s major source markets, particularly Europe. Even with the massive expansion currently underway, GLA in Qatar will remain smaller than in some of its near neighbours, most notably Dubai and Abu Dhabi. More than one million square metres of new retail space is scheduled to be added to Dubai’s existing stock by 2012, with Abu Dhabi in the process of building another 700,000 square metres of floor space. What this means for Qatar is even stiffer competition both for the tourist trade and for leading brand names. Though Qatar may not get as many overseas visitors as originally envisioned due to the global economic slowdown, local demand should keep the tills ringing at a more than satisfactory rate over the next few years and beyond. With the country’s economy shifting into top gear, and a wider range of retailing outlets lining up to set out their wares, fewer well-heeled Qataris will need to fly to London to experience Harrods-like shopping.


BRAND BEAT

- China is hoping the Shanghai Expo will boost the global image of the city. -

NATION BUILDING

Almost 200 countries, including Qatar, showcase their countries as ‘brands’ at the Shanghai World Expo 2010. By Creative Action Design

T

he 2010 Shanghai Expo is the latest in a series of World Expos that began in 1851 when Britain held the Great Exhibition in Hyde Park. This seminal first event was designed to demonstrate Britain’s industrial, military and economic superiority, not to mention its status as a superpower of the age. China is now hoping that its expo will give it a similar status. The fact that this is the first time the World Expo has been held in a ‘developing’ country could go a long way to revealing to the world China’s true potential. Chinese authorities are hoping that the expo will boost the global image of Shanghai as much as the 2008 Beijing Olympics did for that host city. Indeed, China has spent US$58 billion (QR211 billion) on the event – more than it spent on the Beijing Olympics (although much of this money went to improvements in Shanghai itself, including an overhaul of the subway system). World Expos are held every five years, with the last one in Japan in 2005. The Shanghai Expo commenced on May 1, and runs for 184 days, until October 31, and is hosting the finest examples of design countries from around the

world can muster, with the theme of ‘Better City, Better Life’. The expo serves as an arena for these nations to represent themselves and show their originality. An estimated 70 million visitors – four million of whom come from abroad – are expected to walk through Shanghai’s Expo, which features almost 200 nations, including Gulf Cooperation Council (GCC) countries such as Qatar, Saudi Arabia and United Arab Emirates (UAE).

COUNTRIES AS BRANDS

The idea of countries promoting their ‘brand’ solely through design is no doubt a fresh concept and, rather than showing their strength through sporting events, or indeed war, arguably the best way to promote a country is to create a sought-after pavillion for visitors to explore. One could even argue that the Shanghai Expo is acting as an all-new world stage, where design is the key performer. British Consul General Carma Elliot agrees: “One of the key objectives of the United Kingdom’s (UK) presence at the expo is to provide an opportunity to the Chinese to explore UK creativity and innovation,” she says. JULY 2010

63


BRAND BEAT

- The Seed Cathedral at the UK pavillion aims to dispel the perception of the country as outmoded and conservative. -

One person that understands the value of design, and has seen it firsthand at the Shanghai Expo, is Christine Losecaat, director of Little Dipper, a UK design consultancy that works with everyone from small businesses to governments, to harness their creative potential. “Seeing design as a key differentiator,” she says. “is as important for countries as it is for businesses hoping to compete in a fiercely competitive global landscape. The timing for the expo in China is impeccable. It comes at a time when the country has made a huge impression internationally as a result of the Beijing Olympics and just when it is trying to move its businesses up the value chain from ‘Made in China’ to ‘Designed in China’. For the Chinese population and businesses to see how countries leverage design as a differentiator on their home ground should also be hugely inspiring for Chinese brands that have international ambitions.” Expos like the Shanghai Expo show that the days of standard exhibition designs are over. The incredible designs of the country pavillions are of enough interest to engage people and to help them experience a country without the need to travel there. They generate excitement in a country as a ‘brand’ experience. However, though a pavillion may serve as a way of encouraging people to visit a country, it is about so much more than traditional tourism, and countries that think this way may lose out. If anything, the purpose of the pavillions is to build on a country’s brand value. Essentially it is this brand that will encourage people to invest in their companies, build partnerships in key industries, come together for major projects and perhaps visit as a result. 64

JULY 2010

It is also always fascinating to see examples of design being used on a global scale as a way for a country to promote itself and express its attributes to stand out in the international marketplace. The importance of design here is critical – design separates the innovative, forward-thinking nations (that put time and effort into their stands) from those nations who perhaps have not yet realised how design can work for them. One can even argue that even in times of economic hardship, there are areas where spending money can be justified, and countries such as the UK and Saudi Arabia who have made the effort to impress with their pavillions and are generating a huge amount of media coverage, create the perception that they are ready to push through these difficult economic times.

GCC PAVILlIONS AT THE SHANGHAI EXPO

GCC countries have realised that the design of their pavillions is an essential tool in representing the objectives of their nation at the expo. Saudi Arabia designed its pavillion in consultation with the Chinese and hopes that it will be one of five chosen to remain behind once the Expo closes. “The Shanghai World Expo will help the world know more about Saudi Arabia,” says Prince Abdul Aziz bin Abdullah. “And I hope that the Saudi Arabian pavillion will forever stay in the land of China as a witness to our friendship.” The UAE pavillion is based on the form of a sand dune and is a reference to this symbolic feature of the desert landscape shared by each of the seven emirates. It is about unity, solidarity


BRAND BEAT

- The Saudi Arabian pavillion has proven popular among visitors to the 2010 Expo. -

and changing the perception of the UAE as a whole entity, rather than Dubai plus the surrounding emirates.

QATAR PRESENTs ITS BRAND TO THE WORLD

Qatar’s pavillion cost around QR10 million and is a nod to tradition and a reassurance of Qatar’s values. The concrete walls of the Qatar pavillion showcase art patterns reminiscent of the Barzan Tower (which once served as an observatory of the lunar phases, as well as a signal tower for approaching ships and pearl divers), highlighting the heritage of Qatar, local markets and the future vision of the country. It also highlights the various major projects being undertaken in the country, and includes interactive videos that display how Qatar has taken advantage of green technologies to envisage a sustainable city in the future. With sustainability an emerging concept in Qatar, the country is keen to ensure this message is communicated to the world. Furthermore, the gallery inside the pavillion contains a range of exhibitions, including collections from the Museum of Islamic Art, Fabergé eggs, and stamps issued in Qatar. The pavillion also features an underwater scene of a pearl and oil, illustrating the two rich natural resources of the country, and a workshop that teaches Chinese children how to write Arabic. As the theme of the Shanghai Expo is ‘Better City, Better Life’, it is a prime opportunity for Qatar to illustrate the growth and innovation in the city of Doha. With Qatar making itself more visible to the world in recent years, its image at events like these is essential as people use it to form opinions about the country – not only about what it might be like to visit, but the pavillion also indicates what the country’s key values are and where its future lies. It should encourage people to want to trade, invest in and join with Qatar on an economic scale.

- The United Arab Emirates pavillion was also striking and aimed to show visitors that the UAE has far more to it than just Dubai. -

“An estimated 70 million visitors – four million of whom come from abroad – are expected to walk through the Shanghai Expo’s pavillions, which feature almost 200 countries, including GCC states such as Qatar, Saudi Arabia and the UAE.” - Charlotte Stubbs To become a global contender, especially ahead of its FIFA World Cup 2022 bid, Qatar needs to ensure that all its communications and every aspect of the ‘Qatar brand’ represent the country’s intended message. It must reflect the values set out in the 2030 vision around how the country wants to continue to implement important initiatives that will propel Qatar to a fully developed nationhood, and strengthen its role on the international stage.

JULY 2010

65


LEGAL INSIGHT

E D LY

o C &

ving pro nd p a y a tion solu compan dator) e R e A bly iqui sem of th (the L ocess. n s A l r r n a i p o o r e ti at o at Gen dissolu liquid idation the situ ome a u c the inting the liq laining the In has s ’ o o p p x ap xecute bic) e e from mpany ired dC n a c co qu a to e (in Ar learan e the are re d are d f r c y i e l ( t ) n t x s t e a C a r l t n e de y at ss a of ), and r artm arehol proce Registr nd e p e a e h n t D sh p . al part e (QFC iate in luntary Tax Qatari ding u merci Trade bly g d m n m i e n n n o i s c a w o C n As rcial ag e Offi assoc of vo ar. the ith the usiness al n e a r m o r t B s f r r m ent t a , o d w ry of ene he Com lly’ in u i . e t Q G l g w o n d t o a t a l e C is e in d ci lo t be the ed with is ‘offi becom e Min id S ancial ad, a s ins an osition t ou on th g v the nce l e al d l i y s i a o c n l d e in D to O ion is ompa bts w mmer d p efly brief h d F i t r e m l a e r t b c o o s d u ue a a ab e esol ry, the nd all y’s C re-iss n” vail culties y ar t out a R Qat ad El H , discus ctive c n a e n t fi a p n b if is se e. pa atio e com sitio al d so Reg dation, stat com should liquid ame. the will al ompo financi vency n is i Fou e office nd prot n C liqu e The (CR) “in any’s ill be ol io We ctive been n t fac an ins legislat (the p e. ng w a o i t u i m e h t d r o d t sam ation a t o r y a n c o b to ed tr Pro anies ead to e of d end egis the w er the iquida has ected i p l c , R m u r r a n m t L u a t co migh y so 2 as e liq af y. aff ltdow Qat w). with aring age, th ompan r hile ficantly l me opted that prima of 200 nies La t e s C p s p e i a e a hi or th sign globa s hav e past The No 5 Comp mt in h l ie Fro to act f t d d t a w e i e i e t r a t v c h i l f e n r t L o ov lim me isso e e able som dations a few vehicle Com e d rticles ous b i A m r i u to may its S mon al o nan t liq ect E P LLC a u h T lven . Subj ost com (person siness t f i o S s o w ths he m ners bu ion ay for An nce t uct mon g at a y w d b r o 12 ptions, orei to cond corpor any n f acc ciatio p o o exce able t ishing the in y Com LC’s Ass l t h w i i L g l e ALT ava orate) throu Liabi the v l o s ID S V corp atar is Limited that to dis A D teps llow in Q Qatari e s uld fo a h f T o o s sh C). (LL holder e shar

C

VO

Y LI R A T LU N

ATIO D I QU

Qatar in N

W

AD FOU

66

JULY 2010

AD ADD H EL


LEGAL INSIGHT

of settling all the shareholders’ share capital, the losses shall be distributed among the shareholders in accordance with the provisions relating to the distribution of losses as set out in the Articles of Association and/or the Shareholders Agreement (if any). At the end of the liquidation process, the Liquidator should present a final statement of accounts to the shareholders for approval by the General Assembly, and the liquidation will only be deemed closed when the General Assembly approves the final statement of accounts or statement of affairs. After the completion of the liquidation process, the Liquidator shall apply to deregister the company from the Commercial Register, in other words to dissolve it.

LIST OF LIQUIDATORS

THE LIQUIDATOR’S ROLES AND OBLIGATIONS

Once appointed, the Liquidator should: (1) inform the creditors of the status of the company by way of: - registered letters with proof of delivery; and - publication in two daily Arabic newspapers. The notice and/or the adverts should provide for a 75 day period for claims against the company to be made. Company creditors are required to prove their claims within this period. The Liquidator is required to repeat the publishing of adverts after one month. (2) carry out the following activities: - recover and/or sell the company’s rights; and - settle the company’s debts. Prior to settling the company’s debts, the Liquidator should first deduct any expenses incurred by the liquidation process including his own remuneration, and then settle the company’s debts in the following order: - amounts due to the company’s employees; - amounts due to the State of Qatar (if any); - the rent to any leased property; and - all other amounts by order of preference (if any).

The Liquidator has an obligation to preserve the company’s rights and assets (in any way he thinks fit) and may represent the company in courts and accept reconciliation payments and arbitration awards. In the event the liquidation persists for more than one year, the Liquidator should prepare a balance sheet, profit and loss account and a report on the activities of the liquidation. These should be submitted to the shareholders or the General Assembly for approval. The Liquidator should respond to any shareholders’ questions in relation to the status of the liquidation. The managers/directors of the company should present to the Liquidator the company’s books, and any documents or information he may require. The Liquidator should, after settling the company’s debts, return to the shareholders the value of their monetary shares in the share capital of the company and distribute the excess among them in accordance with the Articles of Association and the Shareholders Agreement (if any). If the net assets of the company fall short

There is no list of approved liquidators in Qatar and the Commercial Registry usually directs companies inquiring about liquidators to authorised accountants and accounting firms operating in Qatar.

LIMITATION

No claim against the Liquidator, the managers/directors, or the auditors based on the liquidation and the company’s activities could be heard after the expiry of the three years from the dissolution/ de-registration of the company

VOLUNTARY LIQUIDATION WITHOUT APPOINTING A LIQUIDATOR

For completeness, it should be mentioned, that a company, if solvent, may arrange its own affairs and produce a statement of affairs for submission to the Commercial Registry together with the unanimous General Assembly Resolution approving the dissolution of the company without appointing a liquidator. The Commercial Registry would likely register such a

JULY 2010

67


LEGAL INSIGHT

General Assembly Resolution without reference to, and irrespective of, any company creditors’ rights. In other words, a company may be dissolved whether or not a liquidator has been appointed, or whether any newspaper adverts have been published, etcetera. However, the benefit of complying with the process, as set out in the Commercial Companies Law, is that it affords some degree of protection from future actions against managers/ directors and/or shareholders where challenges to the procedure are made.

PROTECTIVE COMPOSITION

The process of Protective Composition as provided for in Chapter 5 of the Commercial Code may be available to companies which face financial difficulties that might lead to an insolvency state provided that they have not been in such state for more than 20 days, they have not committed any fraudulent act or gross fault, and they have been trading for the previous year. It is aimed at the conclusion of an agreement between the company and all of its creditors based on a proposal of settling not less than 50 percent of the company’s debts. 68

JULY 2010

The procedure is initiated on a voluntary basis by the legal representative of the company filing a request with the competent commercial court. A General Assembly Resolution would be required and many other documents must support the request, for example, the statement of accounts/balance sheet of the company; a list of creditors; a list of assets; personal expenses for the previous year, etcetera. The court has considerable investigative powers including the possibility to obtain credit and financial information so as to obtain a complete and accurate picture of the situation in which the company in question has found itself. The court can also appoint an expert to assist it in this information-gathering task, with a view to the drawing up of a report. If the court considers that the situation of the company and the proposal made by the directors of the company so permit, the court may formally open the composition’s proceedings and appoint a manager who should invite the creditors and arrange for a meeting to go through the proposal. The composition would require a majority of the creditors present provided

they hold two-thirds of the debts, and should be ratified by the court. Solvent liquidations are not common in Qatar; however, there have been a few over the past 12 months, while there are no recent Protective Compositions precedents and/or practical applications for the implementation of the Protective Composition rules in Qatar of which we are aware. It is therefore difficult to establish how the process of application of the Protective Composition would apply in practice. For the most part these provisions remain untested in the Qatari courts – the reasons for this may be the fact that the Commercial Code (Law No 27 of 2006) is a fairly recent law, which has only come into force on May 2007.

Note: This article is of a general nature only and is not legal advice and, therefore, should not be relied upon as such. Any person or entity requiring legal advice should consult a lawyer and obtain advice specific to their individual circumstances. For any further relevant information in respect of legal issues please contact Fouad El Haddad (fouad. haddad@clydeco.com.qa) or David Salt (david.salt@clydeco.com.qa).


BUSINESS KNOW-HOW

THE NEED TO

NETWORK Wassim Karkabi explores new job search strategies necessary for executive level leaders.

O

nce executives reach the upper levels of business, they no longer have the luxury of applying for a job through the traditional means such as newspaper advertisements, online job boards, or randomly approaching employers by mailing a resume. At these levels, individuals will need to reconsider the usual ‘push’ methods and employ a more subtle and longer-term ‘pull’ strategy to find gainful employment. There is a good reason for this. For example, can you imagine if a company such as General Electric, Procter and Gamble, Saudi Aramco, or Emaar announced suddenly they were looking for a new chief experience officer (CXO)? If such a vacancy were made public, it would more than likely cause stock values to plummet, as rattled investors would wonder about the company’s lack of leadership. In a private company, similar implications would affect the confidence of partners, clients and suppliers. Obviously, roles in the C-suite are highly sensitive and open positions are almost always confidential until a candidate is identified and the vacancy is filled, usually with a lot of carefully planned steps and announcements. Those in these positions understandably already know this, but for most senior managers and upcoming executives, this is both a switch in mindset and strategy that they need to get used to. How do you know you are at this crossroads? One gauge is salary. In and around the Middle East, for a senior executive position, this should begin at around US$180,000 (QR655,380) to US$2 million (QR7.3 million). Then, how do you go about obtaining such a position? According to

an executive search consultant with more than 14 years of experience in the Middle East region, the answer is pretty simple: the three ‘N’s: networking, networking, networking. Here are four essential networking steps designed to help executives like you get that next level and/or manage your career change.

UNCOVER YOUR BRAND

You already have a powerful brand, whether you are aware of it or not: yourself. You need to uncover this because it might not be greatly publicised. Moreover, it may not be the brand that you are aiming for or even the brand that you like. Therefore, you need to start by understanding that without a personal corporate branding strategy, it will be increasingly


BUSINESS KNOW-HOW

difficult to get your name shortlisted for that elusive, million-dollar-plus income. A successful personal branding programme is based on the ability to create in the mind of your prospective ‘customers’ (in this case, employers), the impression that there is no other ‘product’ (in this case, you) in the market of the same quality.

GET CONNECTED

There is no hiding your personal brand in today’s world. Google your name. If you have one like mine, it will be difficult to miss. This might not be the case for Suresh Kumar, or John Smith, which is another reason you need to emphasize your unique selling points. But do not confuse your brand with your name, they are connected, but they are two different things. If you are not already taking advantage of the burgeoning world of social media – business networks, blogs and other Internet tools – you should take a serious look at how you need to implement this. The likes of President Barack Obama, Sheikh Mohammad bin Rashed Al Maktoum and Al Gore are all on LinkedIn and Facebook. The availability and combination of online social media and search engines such as Google has given the individual the ability to promote their personal brand with almost no budget.

EMBRACE RELATIONSHIP NETWORKING

Online networking today has taken on a new and different form. It has become this vague concept that applies to everything from blogging and sending a message on Twitter to growing your connections on LinkedIn. For you to succeed at getting your personal brand recognised you need to employ targeted, relationship networking. 70

JULY 2010

Identify your market niche and network within it, get connected to people, add value to their lives and work on building sustainable relationships. It is crucial for senior and executive level people to be on LinkedIn. It is an extremely powerful and completely flexible tool for your personal brand development and promotion. However, unless you are a recruiter, there is really no point in being connected to 15,000 first level players here. It makes more sense to be connected with a handful of influential executives in your industry, and – equally relevant – executive search consultants. Those are the relationships to focus on that will have value when the time comes. Think of online social media as ‘recommender communities’ and build and grow your own relevant networks within these. A second kind of platform that you should look out for and explore is online executive job boards. They tend to advertise positions just below the highest roles, usually the most senior positions that can be publicised without causing the previously mentioned damage. Usually, these are director roles with some regional responsibilities and will tend to pay upwards of US$150,000 (QR546,225) per annum. The system works differently in the United States (US), where the executive will usually pay to be listed on that database to anonymously receive information about opportunities, but it differs on every platform. Look at some of the following: ExecuNet, Exec-Appointments, BlueSteps, and others like them. BlueSteps can only be accessed by executive search consultants registered with the Association of Executive Search Consultants, giving you immediate exposure to more than 200 firms worldwide. The final word on relationship networking is that you cannot ignore the tried and tested route of personal contact. A presence at social gatherings and networking events, especially those designed to connect executives together, is invaluable. If you were one of the 180 senior level executives that attended the Stanton Chase 20th Anniversary Executive Reception in Dubai, you would have met a lot of interesting people. The opportunity to meet new people at your level, in a casual environment, is just too good to pass up. But, do not hand out business cards to everyone. Take only a couple of dozen and make them count. Split them between search consultants and executives. Most importantly, after the event, follow up and build a relationship. Networking events are a means to an end.


BUSINESS KNOW-HOW

What you need to be doing more of is talking to the people you meet, determine which of them work for a relevant company; get to know them better, learn about their business and make a friend. One day, should the opportunity arise, this friendship will be fruitful.

BEFRIEND THE HEADHUNTERS

You will have realised by now that if you are using a ‘pull’ strategy, you need to bring prospective employers towards you, which will be in the form of either companies or search consultants. In rare cases a company will approach you directly, either formally or casually. However, any worthy, sizeable concern – at least one that will likely pay you the amount you are looking to earn in a top executive position – will usually engage a firm to help them identify the right individual. Most executives prefer to go through these executive search consultants, better known as ‘headhunters’, in order to enjoy confidentiality and not to jeopardise their current position. Despite the fact that headhunters understand the role of a passive candidate, using a ‘pull’ strategy, they appreciate being approached by executives. The best time for an executive or manager in a senior leadership position to do so is when you have just received an award, a huge bonus or promotion etcetera. In brief, you are visibly on the rise and building relationships for the future. The worse time to approach a headhunter is when you are made redundant or after you have resigned as it puts an undue amount of pressure on the headhunter. Executives must also understand that an executive search consultant’s ability to help in making a quick introduction to an employer is limited to the positions that they have currently open. Headhunters will not go around prospecting candidate profiles, even at the request of the executive. With some key clients, executive search consultants may be able to affect what we call ‘creative introductions’ and still remain within the terms and conditions, despite the fact that there is no open role, but only if such a clause is originally included in an ongoing frame agreement. These cases are very rare. Moreover, only with executive search consultants, can you continue to also use a ‘push’ strategy, and contact them directly to build a relationship and put

“You cannot ignore the tried and tested route of personal contact. A presence at social gatherings and networking events, especially those designed to connect executives together, is invaluable.” - Wassim Karkabi a face to your brand, be it over coffee or a simple meeting at the office. The key in getting the correct response with this approach is to understand how executive search companies are structured. There are generalist and specialist executive search firms. Specialists would obviously focus on a specific sector, such as financial services, oil and gas, etcetera. So if you are a CXO at a bank and you want to continue in that sector, you will most likely contact the headhunters that are specialised in financial services. Alternatively, these firms may focus on functional roles, such as chief financial officer (CFO) or chief marketing officer (CMO). On the other hand, generalist executive search firms tend to have consultants or partners who specialise in different sectors, such as oil and gas in the Middle East or consumer products in Europe. To identify the right consultant or partner log onto these companies’ websites, where all the relevant details and contacts are usually listed. Search and you shall find. As this new approach is a drawn-out ‘pull’ strategy – with proactive relationship building required for the best results – you should start immediately, especially if you are happily and gainfully employed. Now is the best time to connect. If you ever want to be considered for those million dollar opportunities, you need to be ready, branded, with the right level of exposure in the right channels and with the right people.

JULY 2010

71


SECTION SPEAK EASY

UNDER SIEGe

BP’s oil spill and Toyota’s mass vehicle recalls have highlighted the case for effective corporate crisis management. Should a similar scenario play out for your company, being prepared, advises Brian Shrowder, is the only strategy.

“W

hat would I do if I were sitting in Tony Hayward’s chair?” That’s a question many chief executive officers (CEOs) have been asking themselves lately while watching BP’s unfolding disaster in the Gulf of Mexico. It is a question worth thinking about. While unprecedented in its size and impact, the oil spill has demonstrated all the classic characteristics of a corporate crisis: events have escalated quickly, the company’s management is under heavy media scrutiny and public perception has frequently shaped reality.

VICTIMS VersuS VILLAINS

In a crisis, the stakes are high and, as we have seen for both BP and Toyota, there is no margin for error. Sales, jobs, share value and reputation – ultimately the entire company – are at risk. All the while, a news media narrative is played out in the form of a Shakespearian drama, complete with victims, villains and heroes. Any company can be cast in one or more of these roles. For example, an airline involved in a fatal plane crash might 72

JULY 2010

receive a measure of sympathy (as Air France initially did with Flight 447 last year), yet that goodwill will be quickly eroded if there is evidence to suggest that the company’s response was inadequate or that its negligence caused the accident – and they were not the victim of bad luck but actually an antagonist in the tragedy. At this point, managing reputation is no longer just about delivering information. Companies must decide their position and formulate specific messages to articulate their case. When cast as villain, the tone of response is critical. Few people know this better than Akio Toyoda, President and CEO of Toyota. Following the recall of millions of Toyota vehicles, Toyoda travelled to Washington to deliver a personal apology and pledge to remedy the defects. His act of public contrition was an essential first step towards stabilising that crisis. Simultaneously, Toyota also deployed digital tools such as Twitter, YouTube and a dedicated recall website to connect with its consumers, which BP has also recently done.


SPEAK SECTION EASY

Include a call-out system for a mobilizing your response. Provide steps for quick, effective decision-making and templates for preparing statements and reports. • Build a team: Select experienced personnel who can be relied on to exercise judgement under pressure. Choose a crisis team leader – who may not necessarily be the CEO – and decide who will be authorised to speak to the media, etcetera. Provide the team with a crisis management centre equipped with all types of communication hardware. Think of who will be needed to run your day-to-day business while the crisis team is activated. • Train and test: Make sure team members know their roles and can work together effectively. Test the crisis plan with an exercise in which team members practise their functions. Assess the results and amend the crisis plan wherever there are gaps. Conduct the entire process at least once a year.

WHEN A CRISIS STRIKES

the NEED FOR SPEED

This kind of communication needs to begin immediately. Consumers, employees and the public will want to hear an acknowledgment of the situation, how it might be resolved and how those affected will be taken care of. A ‘no comment’ response will only suggest that a company is unaware of its crisis or, even worse, it just does not care. While it is human nature to hold back and say nothing until all the facts are known, many organisations have found to their cost that by the time they do speak, it is too late as others have already stepped into the vacuum and taken control of the agenda.

PLANNING FOR THE WORST

Timely and effective response is only possible when an organisation is ready to manage a crisis. Here are some essential steps towards preparedness: • Identify risks and vulnerabilities: Think through the worstcase ‘what if?’ scenarios. These are not limited to spills or crashes and recalls, but also extend to litigation and corporate scandals. Indeed, a crisis is any extreme situation that could expose your company to business disruption, legal liability and widespread negative attention. • Conduct the scenarios: How would you respond? What expertise and resources would be needed for managing the situation? Do you have these resources and how would you deploy them? How would you coordinate with emergency services or other agencies? • Create a crisis response plan: Determine roles and responsibilities. Develop a procedure for guiding your crisis team through the stressful initial hours or days.

Your manufacturing plant has just caught fire. You do not know how many casualties there are, the extent of the damage or what impact there may be on the environment. Critically, you do not know what caused the fire or how long it will burn for. The media is on your doorstep. What do you tell them? This is a pivotal moment in any crisis response. A fumble in these initial stages may be remembered for months or years to come. Speculating about the cause of the fire or its potential business impact is highly dangerous. As per above, no response is just as lethal. The correct reaction is to convey what has happened to the extent of the information that you have. Express your concern for those affected and outline the steps that you are taking to handle the emergency. In the case of the above fire, this may include taking care of burn victims and assisting customers inconvenienced by the situation. As the crisis becomes clearer, the next step is to develop a strategic response. Your approach will depend on several factors. How bad is the incident? Who is to blame? What are the legal liabilities or penalties and/or regulatory issues? The answers to these questions will help decide your company’s profile over the course of the crisis and its aftermath. It is important to be realistic here. Effective and open communication will not make bad news go away, especially these days when bad news is amplified instantly through social media platforms. However, though you ultimately need to deal with and correct the underlying issue, effective, well prepared crisis communication will give your organisation a voice in the debate and build understanding for your position and help protect your brand and your company. JULY 2010

73


BEHIND THE WHEEL

ROAD TO RICHES

OR ROAD TO RUIN? Sole auto distributors in Qatar have found themselves in the line of fire recently, accused of “monopolistic malpractices”, but questions have been raised within the industry concerning the guilt – or innocence – of the distributors. TheEDGE slipped into gear to discover whether Doha’s dealers really have been inflating more than just tyres. By Jamie Stewart

T

he Qatari car dealer: Abuser of monopolistic position or businessman making an honest living? Artificial inflator of prices, or fair-trade advocate fighting soaring costs and tough competition? Such questions have recently been raised as the country’s sole distributors within the auto trade have found themselves under government pressure in relation to the alleged artificial inflation of prices. In May, the Qatari Ministry of Business and Trade flexed its muscles with regard to complaints it was reported to have received from members of the public concerning an alleged premium on car prices across the country, in comparison with other Gulf Cooperation Council (GCC) states. The Ministry requested that dealers review their prices and keep them within “acceptable limits”. The request followed the establishment by the ministry, under its Consumer Protection Department, of a team tasked with studying fluctuations within the prices of services and commodities in diverse Qatari markets, including the auto sector. The team said it visited neighbouring countries in order to make price comparisons, reportedly coming to the conclusion that the complaints were not without cause and that “corrective measures” were required. The first of these measures was laid bare at the fourth annual consultative meeting between members of the Qatar Chamber of Commerce and Industry (QCCI), and a number of senior government figures. At the meeting the government unveiled the findings of its task force, which claimed that some vehicles were being sold at a substantial premium to the cost of vehicles in neighbouring countries. According to a statement issued by the QCCI, Prime Minister and Foreign Minister Sheikh Hamad bin Jassim bin Jabor Al-Thani warned sole distributors against what he termed “monopolistic malpractices”. He added that the government would not “stand idle” while such practices were

“misused” and would not hesitate to administer tough penalties on distributors whose prices were not either reasonable or cheaper than those in other countries.

Controversy

The Prime Minister continued, “I have clear instructions from The Emir that residents should be provided with commodities at reasonable prices. We are working with automobile distributors to review their prices since we have found out that some of the vehicles are being sold at about QR40,000 more than their prices in neighbouring countries.” He added: “When the Euro appreciated against other currencies, car prices in the local market went up; the Euro has weakened considerably now, but there has been no revision of prices”. The report has stirred some controversy among Qatari dealers. Mohamed Jaidah is chief development officer of the Jaidah Group, a division of which, Jaidah Automotive, owns the sole distributor rights for Chevrolet in Qatar. Jaidah raises some issues with regard to the Consumer Protection Department’s report. He is yet to see a copy of the report, which has not been published or made available to members of the public in any way. “Most of the talk, and the study itself, has been based on a comparison between Qatar and Saudi Arabia, excluding the other GCC countries,” Jaidah says. Both English and Arabic language versions of the Ministry of Business and Trade website, where such reports are made available for public access, were ‘under construction’ as TheEDGE went to press.

Demographics

Among the reasons cited by the car dealership network in Qatar for possible fluctuations in prices between neighbouring countries are those related to economics of


BEHIND THE WHEEL

scale: as the scale of a business is increased, related factors cause production costs to fall. Therefore, if your business is the importation and sale of cars, then the more cars you sell, the more cars you import. And the more cars you import, the less the importation cost per unit. According to Jaidah’s estimates, the annual car sales of a Qatari dealer would be roughly equivalent – discounting any economic vagaries – to the number of cars sold by a Saudi Arabian dealer in a single month. “The volume of the sales justifies having lower margins than the ones in the neighbouring countries,” Jaidah says.

Independent investigation

As a result of the controversy concerning the study and its as-yet-unpublished findings, TheEDGE conducted a study of its own into the price of a particular imported model of car in each of the six GCC countries. Interestingly the results appear to fall into both the court of the government and that of the Qatari dealers – they neither agree with, nor do they disagree with, the Consumer Protection Department study. They do, however, add an additional – well – edge to the issue, and may go some way to clearing up any disagreement. The car selected, which will remain unnamed on advertising grounds, was a mid-market model, sales of which are relatively healthy in all six GCC countries. Pricing information was, for the most part, forthcoming. The only country that has been excluded is Oman, due to the relevant price information not being readily available. All prices are approximate and have been converted into their US dollar equivalent for ease of comparison. A standard 2010 model of the mid-market car in question can be driven out of a GCC showroom for: Bahrain – US$26,500; Kuwait – US$27,800; Qatar – US$28,000; Saudi Arabia – US$20,500; and the UAE – US$29,000. The results, therefore, depict not only a marked discount in Saudi Arabia compared with Qatar, but a marked discount in Saudi Arabia compared with all four other GCC markets, all of which trade within a relatively stable US$2500 range of one another. This falls tidily in line with the defence of demographics and economics of scale as cited by the Qatari sole distributors. Compared with Qatar’s population of 1.6 million people, Bahrain is home to just 800,000 people; Kuwait, 2.7 million people; and the UAE, 5.6 million people. Saudi Arabia, as stated, supports a population of 25 million – comfortably more than double the rest of the GCC combined. The single result that falls outside of the economics-of-scale argument is that of the UAE: A higher price than Bahrain, Kuwait or Qatar, but with a larger population. This UAE discrepancy could be explained by a number of internal factors, for example: the high expatriate population may be less inclined to own a car, relying instead on the state’s burgeoning public transport network; the high number of young expatriates, many of whom may not yet have accrued sufficient savings to afford a 2010-model car; the gap between the ‘haves’ and the ‘have-nots’, which may exclude midmarket cars on the grounds that such models fall in between the two demographics. Any of, or a combination of, these

- Saudi Arabia supports an auto market twice as large as the rest of the GCC combined. -

factors could explain the larger UAE population, yet less salesper-head of the car in question.

Growth

The rapid rate of growth within the GCC states in recent years, both economic and physical, inevitably comes with teething problems, not least that of the law and the necessity for it to develop at the same rate as the sectors of society that it governs. The obvious remedy available to the government, should it deem that monopolistic practices have indeed been abused by Qatari car dealers and sole distributors, would be to allow new entrants into the market. Yet such a practice may do more harm than good if not closely managed. Mohamed Jaidah describes the auto sector as “an already very competitive market”. Some established dealers may, therefore, be pushed out of business altogether should the gates be opened. The report Doha - A Business Centre of Choice in the Middle East, published by top law firm Clyde & Co, threw light on the ability of the legal system in Qatar to adapt to change, saying: “A progressive, business-minded approach is apparent in many sectors of the Qatari economy and in laws relating to business operations.” It is vital that such a view is retained. In light of Qatar’s seemingly boundless growth, rules and regulations must indeed be allowed to develop to ensure that all are treated as equal – a truth that must apply to the nation’s car dealers, as well as its car buyers.

JULY 2010

75


INDUSTRY FOCUS

QATAR’S WORLD CUP BID Qatar is bidding to host the 2022 World Cup and is already planning to build stadiums, hotels and infrastructure, should it be successful. This will all be great for football lovers, but what will this mean for the rest of the country? Christine Toner, economic correspondent, investigates

- Qataris are already football mad. Here Al Rayyan’s Brazilian captain Afonso Alves celebrates with his team mates and fans after they beat Umm Salal 1-0 in the domestic Emir of Qatar Cup final football match in Doha on May 15, 2010. -

Q

atar is no stranger to large bids and is becoming quite familiar with attracting major sporting and entertainment events. The Qatar Motorcycle Grand Prix (MotoGP) is already a long-established event at Losail International Circuit in Doha and two years ago the track held the first night event in MotoGP history. Not content with hosting motorcycle events, this year Qatar also announced its intention to host a Formula One (F1) Grand Prix race. Work has already begun on the Losail International Circuit in an attempt to bring it up to F1 standards. The country’s bid for the race comes as Bernie Ecclestone, president of Formula One, confirmed plans for a Rome Grand Prix, as he increases the F1 calendar to 20 races. Of course, there have been disappointments for the country too. The biggest of these was in 2007 when Qatar’s capital, Doha, launched a bid to host the 2016 Summer Olympic Games, but was eliminated early in the decision process. Nevertheless, the Arab country shook itself off and focused its attention

instead on bidding for the biggest football event in the world. Qatar’s focus on football should not come as much of a surprise. In recent years the oil-rich country has attracted several world-class footballers to its domestic teams to play out their careers. In 2004 Dutchman Frank de Boer signed for Al Rayyan and the same year French striker Christophe Dugarry joined Qatar soccer club (SC). The country also hosted the 2006 Asian Games, in which they won gold in the football event when the beat Iraq, much to the joy of the local fans. According to the Asian Football Federation (AFC) Cup Organising Committee: “Like other neighbouring Gulf countries, no sport comes close to challenging football’s popularity in Qatar. The oil-rich nation ... has the highest gross domestic product (GDP) per capita in the world [and] also hosted the 1988 AFC Asian Cup.” Indeed – in what could be seen as a warm up for the ‘main event’ – Qatar is set to host the AFC Asian Cup in 2011. Sixteen teams will take part in the event including the likes of Iraq, Saudi Arabia, Korea, Japan, Australia, Iran, Uzbekistan, Vietnam and China.


INDUSTRY FOCUS

- Qatar’s crown prince Sheikh Tamim bin Hamad Al Thani and FIFA president Sepp Blatter attend the final match of the Crown Prince Cup football tournament between Qatari teams Al Arabi and Al Gharafa in Doha on April 24, 2010. Blatter has said that he strongly supports Qatar’s 2022 World Cup Bid. -

Qatar’s attempts to host the World Cup are made all the more significant because, if successful, it would be the first Middle Eastern country to host the event. This forms a key part of its proposal, as its organisers point out: “Qatar is truly in the Middle, neither in the East nor the West.” The nation’s bid claims “history and the future will come together in a historic choice of host nation in a global age with media and technology bringing continents closer together”. While Qatar’s wealth is undisputed and its success at hosting the Motocyle Grand Prix is clear, there are still hurdles the country will have to overcome. Climate is one issue, with temperatures soaring regularly to more than 40 degrees celcius. However, the biggest obstacle facing Qatar is infrastructure. At present the country has just one airport – Doha International. This is a relatively small airport deemed unsatisfactory for a country hoping to host one of the biggest sporting events in the world. But organisers are quick to point out that this is a matter soon to be rectified. Just east of the airport, construction has already commenced on the new Doha International Airport, which is expected to be one of the biggest in the world when it is completed in 2015. There are also plans to build a metro system in Doha and upgrades are taking place on many of Qatar’s roads with a US$43 billion (QR156.5 billion) investment in infrastructure. However the biggest overhaul in Qatar will be the stadiums. Of the six largest stadiums in the country, four are located in Doha and only one of these has a capacity of more than 25,000. The Khalifa International Stadium can house 50,000 spectators, but with an estimated 500,000 World Cup fans set to descend on the country, should the bid be successful, organisers are aware of the need for serious expansion. Al Gharafa Stadium in Al Gharafa and Ahmed bin Ali Stadium (Umm Affai) in Al Rayyan have both only have a capacity of 25,000, but plans are underway to build much

bigger stadiums along with the world’s first underground stadium. It is hoped this air-conditioned stadium will help combat the heat issue. But Qatar’s biggest selling point comes in the form of flatpack stadiums. Qatar has promised a number of stadiums erected for the event will be taken down at the end of the tournament and exported to countries with poorer resources. The initiative combats the issue of unused stadiums after the World Cup ends. Following the 2002 World Cup in Japan and Korea, many of the newly built stadia were left unused as they were too large to stage domestic sporting events. If Qatar succeeds in removing and transporting the multimillion dollar stadiums following the tournament, community sports centres will replace them. Whether or not this can be achieved remains to be seen. Organisers of London’s 2012 Olympics had originally planned to implement a similar scheme but plans to turn the larger ‘flat pack’ stadiums into smaller venues after the event have now been scrapped. Construction is also underway on a super-stadium which would host the World Cup final in Doha. This innovative new arena would include a temperature cooling system and would be powered by sustainable energy, making it environmentally friendly. Keeping up with technological advances, organisers say the stadium would have a 3D system which will “bring the images of the football game one hand’s distance from your seat”. But the country knows hosting an international event as big as the World Cup takes more than just fancy stadiums. Indeed, Qatar’s bid has received massive assistance in the form of a US$20 billion (QR73 billion) cash injection in tourism. The Qatar Tourism Authority (QTA) has committed to building 40 new hotels with around 7000 rooms. The move is an attempt to make Qatar a tourist destination as opposed to being known primarily for its oil and gas. JULY 2010

77


INDUSTRY FOCUS

- GOOOOAAAAAL! Umm Salal’s GK Baba Malik looks for the ball inside the net in the Emir of Qatar Cup final football game in Doha on May 15, 2010. Qatar will see a lot more goals like this should they win the 2022 World Cup bid. -

Organisers for the 2010 host country South Africa had said they expected an increase in tourism following the tournament. It was hoped fans that travelled to watch the event might then take the time to explore other parts of the country. Like South Africa, Qatar’s bid has received the backing of Sepp Blatter, the Fédération Internationale de Football Association (FIFA) president. On a recent visit to Doha, Blatter said: “The Arab world deserves to host the World Cup. We are now nearing the end of the bidding process for the World Cups in 2018 and 2022 and Qatar is the only country bidding from the Middle East. I was an advocate of FIFA’s rotation policy. It was important to bring the World Cup to North America and Africa. Now I strongly feel that the World Cup should come to Qatar ... every time I land here I am impressed by all the development.” Blatter also assured Qatar that the country’s low world ranking in terms of its national team will not affect FIFA’s decision on who hosts both the 2018 and 2022 World Cups. “A country’s ranking in world football,” Blatter said, “is of no consequence in the bidding process. What matters are the guarantees the bidding country has to offer and, on that count, I have no doubt that Qatar will put on the table all that is needed to host the event.” Brazilian President Luiz Inacio Lula da Silva has also offered his country’s backing of the Qatar 2022 bid on a 78

JULY 2010

- The likes of Brazilian forward Kaka (C) walks into Doha airport with his AC Milan teammates Ukrainian Andriy Shevchenko (L) and Czech defender Marek Jankulovski (R) visited Qatar in 2009 when they played local team Al Sadd in a friendly match. Should Qatar win the 2022 World Cup bid, locals can expect scores more players of this calibre to arrive at the city’s new airport. -

recent visit to Doha. But the bid has had its share of criticism too, with some sceptics claiming the ferocious temperatures cannot be overcome. Some critics have also slammed the effort as a publicity stunt for Qatar to demonstrate what it is capable of, rather than a viable bid. FIFA’s decision will be announced in December 2010. Until then Qataris can do nothing but wait and hope the massive construction plans put forward will be realised and the rest of the world – and most importantly FIFA – will take the bid at face value. If they do, the people of Qatar can only benefit.


how-to guide

E D I U G O T -

HOW

THE TOP NINE TIME

MANAGEMENT STRATEGIES TO TAKE CHARGE OF YOUR DAY JULY 2010

79


how-to guide

The Top Nine Time

Management Strategies

to Take Charge of Your Day By Keith Rosen Do you struggle to maintain control of your day and wish that you could feel more in charge of your career and your life? Integrate these time management tips into your self-management strategy to keep the chaos at bay, help you stay true to your priorities, get your work done, and still have time to enjoy the finer things in life.

80

JULY 2010


how-to guide

1. Treat everything as an appointment

Bottom line: If it takes up time then consider it an appointment and schedule it. For example, getting ready in the morning, breakfast and your commute to work are just some of the activities that need to be part of your routine. Treating every activity as an appointment will allow you to plan better. It will also keep you honest about what you feel you can and cannot do, so that you can perform each task with a conscious intention.

2. Plan for the unplanned

There are essentially three reasons why we find it so challenging to adhere to our schedule or complete our to-do list: 1. Not being realistic with our timeline and as a result, have too many activities scheduled into our day. 2. Not engaging in the right activities that support our goals or objectives. 3. Not planning for the unplanned. Also known as ‘externalities’, these things that we do not necessarily plan for often go unnoticed and fly under our radar when we are attempting to map out our week. They have a tendency to eat up our days. These externalities can also take on the form of errands or household chores, the kids’ carpool, time on the phone, traffic, a doctor’s appointment, a project or proposal that you are now responsible for which has a rapidly approaching deadline, a conversation with a co-worker, television, web surfing, meetings, e-mails, etcetera. Many of these things come along and blindside us because they are outside of our direct line of vision. Then we wonder why we are often unable to finish everything that is on our plate for the day. Now, since we do not have a crystal ball to inform us about the little things that threaten to consume part of our day, we acknowledge that they will hit us and work them into our timemanagement strategy. Tip from the coach: Distractions are events that you are not planning for. Plan for them.

create designated blocks of time for and then position within your routine. You may encounter certain sporadic yet consistent activities that take up a portion of your day, such as personal errands, phone calls, e-mails, prospecting, managing employees, writing proposals, training, meetings or other work-related tasks. Consider allocating blocks of time for each activity during certain intervals throughout your day to handle them. For example, instead of being interrupted by incoming calls or e-mails throughout the day, try blocking out specific portions of your day to make and return calls or respond to e-mails.

4. Build buffer-time into each activity

The lesson here is to create your routine so it reflects a healthier and more respectful relationship with the time that you have gained by under-promising on personal and professional deadlines. The point of this exercise is to become hypersensitive to how you are utilising your time by becoming comfortable with the strategy of under-promising so that you can avoid overcommitting yourself. This will provide you with the additional cushion you need, just in case your best-laid plans get derailed.

5. Let the action be the reward

Rather than having the result be your reward, let the action be your reward. Once you have outlined a path and a success formula to follow (for example, if you are a salesperson: X number of calls produces X number of prospects, which produces X number of sales), allow the process to be the reward and where the pleasure resides, not just the end result. This way you can be responsible for your future goals without having to worry about them. If you continue your quest with your eyes focused on the finish line, you will miss out on the journey. Be careful not to hook yourself onto the future, so that you can enjoy the

3. Establish a timeline for each task

Time blocking is the art of creating blocks of designated time for specific activities or tasks throughout the day that are aligned with the realistic number of hours you have each day. However, before you can effectively block your time, you must prioritise your tasks and activities to be included in your routine and establish timelines for task. So, if you have a nine-hour workday, which includes one hour of planned externalities, (see number two, ‘Plan for the unplanned’) you realistically have eight hours to use for activities that you can

JULY 2010

81


how-to guide

process of reaching your goals today. Knowing when enough is enough each day and the specific activities you need to engage in provides you with the freedom to trust the process you have put in place. After all, there is always more to do. There is always more that can be done at the office, at your home, and in your life, another call can be made or another e-mail can be read. However, exceeding your monthly sales quota and maximising the potential of your team, will be the result of the cumulative efforts you make and the activities you engage in every day. When you are mindful of the process, you now have the opportunity to recognise and celebrate your accomplishments on a daily basis (even the little ones) rather than pushing for or waiting until the end, and when does that ever happen?

6. Get off the adrenaline train

Many people today are hooked on a commonly abused drug, the widespread use of which seems to be ignored. That drug is adrenaline. The classic symptoms? Saying “yes” when you mean “no.” Over-committing or overbooking your schedule, then finding it difficult to deliver on deadlines or completed tasks. Procrastinating until the last moment, believing you, work best under pressure. Being easily distracted. Consider that an adrenaline addiction may be creating many of the problems, employee challenges and obstacles to a sale that you want to avoid. Tolerating stress, chaos, disorganisation, poor planning, lacklustre team performance or undesirable customers create situations that provide the adrenaline rush associated when working on overdrive. Like any drug, adrenaline has its rewards. On the surface, it may appear that this legal, seductive drug provides a burst of energy to get something done, tackle a project or meet a deadline. Being superhuman enables you to accomplish more than a mere mortal is capable of producing. While we need adrenaline to help us handle a crisis, we do not want the drug to control us and dominate our lifestyle. Aside from making you feel drained, burnt out and exhausted, adrenaline lowers your productivity level and sets you up for failure. If you thrive on chaos, it is difficult to maintain your focus, concentration, peace of mind, or mental clarity. After all, if you are a salesperson, a congested mind does not allow for the space to create the best solutions for your customers.

7. Become process-driven

Like many professionals, you may often feel pressured to reach quotas or a certain level of acceptable performance. While having a monthly goal keeps your eye on the prize and your focus on the end result, it may actually do more harm than good. I often hear salespeople say: “Results are not showing up fast enough.” At the end of each selling month, frustration and stress run rampant as salespeople scramble to do their best to close sales and meet their numbers. The irony is, this constant push to reach sales numbers keeps you hooked on the goal, diverting your efforts away from refining the selling process needed to generate more business. The quandary then becomes, “I am too busy to work on my process. I have numbers to meet.” Consider this paradox: The result is the process. In other words, what if you shifted most of your attention away from your goal, or the end result, and onto the process? After all, you do not do the result; you execute the process, which produces the result as a natural by-product of your efforts. That is the paradox. By honouring the process, you can enjoy the benefit of knowing that you will attain your goals, since it is the process that will get you what you want. (Imagine building a house without a blueprint.) To continually exceed your goals and better manage your mindset, change your thinking to become process-driven rather than result-driven.

8. Plan for time to plan

Great runners may be born, but they have to learn how to walk first. The training and planning for the race will always take longer than the race itself. The same holds true for attaining the results and the level of productivity you are looking for. How much time do you invest each week to plan? Take the time to plan your week. Forecast what your week will look like. Whether that means putting aside 30 minutes Saturday night or Sunday morning, use this time to plan your routine or develop your task list of what needs to be accomplished during the week. Schedule this block of time into your routine. Just like runners train so they can finish their race in the shortest amount of time, planning in advance will save you valuable time and prevent countless headaches throughout your week.

9. Plan for the worst

We do our best to plan. Then, life gets in the way. So, rather than plan our day from a position of “this is the best-case scenario and if all goes smoothly and according to plan with no distractions”, let us plan instead for the worst. Be the eternal optimist, but also a realist. By building in the worst-case scenarios, you will wind up budgeting for the unforeseen events that are going to happen anyway, which would otherwise prevent you from achieving your daily goals or tasks in time. 82

JULY 2010


TECH TOOLS

TheEDGE picks today’s best tech’ tools for the busy executive. Off the cuff They may look low-key, but these USB Flash Drive Cufflinks have an air of James Bond about them. Pull out the drive and USB connector without removing the actual cufflink, and access four gigabytes (GB) of information. Each cufflink houses 2GB of storage and is engravable with up to eight characters. Although they are not available from local retail outlets, orders can be placed online and shipped to any address in Qatar. Get yours in silver, gold or 007 gunmetal for US$195 (QR710) plus US$50 (QR182) in shipping fees. www.cufflinks.com

A new Wave in phones There are mobile phones, and there are Mobile Phones. Samsung’s new Wave Phone falls into the latter category, crammed as it is with high-end features and oozing style. Featuring the world’s first super active-matrix organic light-emitting diode (AMOLED) display, the phone’s high-resolution 84mm touch screen offers superb image quality for viewing videos and photos, and allows you to see a huge amount of information in one go. There is a one gigahertz (GHz) Samsung-owned Hummingbird processor, high definition (HD) video recording and a five megapixel (MP) camera, all packed neatly into a super-sleek chassis less than 11mm thick. Available in the Middle East for AED1999 (QR1981). www.samsung.com

For the blue chip boardroom Few things can make or break a career like a big presentation, and when you have the right projector, it can be just the confidence boost you need. Panasonic has launched the PT-F300 Series of liquid crystal display (LCD) projectors, a range designed with Daylight View 2 technology, ensuring excellent colour quality, no matter the room’s lighting conditions. The projector is portable and can easily be set up no matter where your business takes you. The zoom lens and horizontal/ vertical lens shift provides greater freedom in positioning and allows the use of the same mounting position of previous models. The projector also offers a 16-Window Index Style, projecting thumbnail images of up to 16 PCs at the same time. The PT-F300 Series is available in Qatar, priced at approximately QR9165. The Wireless Network Model is available for approximately QR10,265. www.panasonic.net JULY 2010

83


LIFE & STYLE

Even if you’re not on holiday, TheEDGE previews the products that will help you switch off from the office in style.

Super skinny, super stylish Samsung’s new light emitting diode (LED) high definition television (HDTV) has arrived, featuring the 6000, 7000 and 8000 Series. Available in varying sizes, each uses LEDs as their primary light source and all enjoy ultra-high contrast ratios. Innovative features reduce motion blur and image shudder. Aesthetically, the television is super-slim, at just over 25mm thick. The 6000 range is available in 81cm, 100cm and 116cm, the 7000 in 100cm, 116cm and 139cm, and the 8000 in 139cm. Available in the Middle East from AED8799 (QR8724) to AED26,999 (QR26,770), depending on model and size. www.samsung.com

Rule the fairways The Leupold GX-2 Digital Rangefinder is the next best thing to having a professional caddy. The Rangefinder boasts a club selector, an inclinometer, a maximum range of 675 metres and a pin range of 318 metres. Fog Mode means the GX-2 will cut through the weather, rain or fog, and provide a fast, accurate measurement to get you on the green. Scan Mode, meanwhile, allows multiple readings in one quick sweep, continuously updating accurate line-of-site measurements in either yards or metres. Available in Qatar for QR1820. www.leupold.com

Capture the great outdoors Take your outdoor photography to a whole new level with Sony’s new Cyber-shot DSC-TX5. Punted as the world’s slimmest waterproof digital camera, it is also shockproof, weather-resistant and dustproof, making it the perfect all-round camera for anyone who leads an active, outdoor lifestyle. The camera is waterproof to three metres and has a 76mm liquid crystal display (LCD) touch screen that can even be used underwater. There is also an Intelligent Sweep Panorama function where, with a horizontal or vertical sweep of the camera, the DSC-TX5 stitches together high resolution frames to create a single panoramic shot. Available in the Middle East for AED1499 (QR1486). www.sony-mea.com 84

JULY 2010


LIFE & STYLE

Music to go Ideal for fitness and exercise enthusiasts is the new Sony NWZ-W202 Wearable Walkman MP3 Player. This nifty little player has a 2 gigabyte (GB) capacity and can hold up to 480 songs (based on four-minute MP3-format songs). It allows you to effortlessly transfer audio files such as MP3, Windows Media Audio (WMA) and Advanced Audio Coding – Low Complexity (AAC-LC) via Drag-and-Drop or Windows Media Player 10/11. It also boasts a handy Quick Charge feature, so if you’re about to head out for a jog and the battery is flat, a mere three-minute charge gives you 90 minutes of music on the go. Available in Qatar for US$60 (QR218). www.sony-mea.com

The docking station has landed Looking like something straight off the Star Trek set, the Speakal iCrystal Docking Station adds futuristic style to any living room with its floating half orbs, teardrops and glowing blue light. Functionally it is spot-on too. The iCrystal works with all iPhones and iPods, as well as anything with a 3.5mm headphone jack. It offers 360 degrees of sound and a remote to control the speakers and iPod. Available in Qatar for approximately US$79.99 (QR291). www.speakal.com

If it’s good enough for the pros… Reputed for innovation and exploration, Odyssey has engineered Backstryke Putters, a ‘big idea’ product that promises to revolutionise the game of golf. Callaway Staff Professional Thomas Bjorn, who used the Backstryke Marxman with great success in Estoril earlier this year, would agree. Available in three head designs, all with identical weight, loft angles and shaft lengths, the face of each club is offset from the shaft by a large margin, making the face surface fully visible for easier aiming. At the same time, the axis of the shaft is as close as possible to the putter head’s centre of gravity, encouraging a fluid and stable stroke path, promoting better distance control, consistency and accuracy. All three putters – Marxman, Blade and 2-Ball – are available in Qatar for US$217 (QR790). www.callawaygolf.com JULY 2010

85


LIFE & STYLE

- Author Steve Paugh laps up the action at Villaggio’s new go-kart track, Gondolania. -

DRIVING À LA KART As is the case for many experiences within the digital age, my very first go-karting adventure was virtual. It was 1992, and like most of my sugar-fuelled, 11-year-old compatriots, I was addicted to a little game called Super Mario Kart. Eighteen years after my love affair with Mario and his motley crew began, I found myself heading into the Gondolania entertainment wing and quite possibly the mall’s most exciting element: the go-karting track. The 300 metres of race-tamed pavement snakes around the upstairs section of Villaggio’s indoor amusement park and seethes with the notion of motion. As my body adapted to the steady thrum of guttural power that resonated from my chosen chariot (a 200cc go-kart), I took a moment to inhale the heady cloud of competition and exhaust. The beauteous devilry of the Gondolania go-karting track courses through every curve, and from its cursory first corner to its final turn, ludicrous levels of excitement and exasperation abound. In fact, that first turn is a doozy, and I succeeded in spinning out more than one member of our racing retinue repeatedly – while turn five proved to be the bane of others. As frustrating as that might sound, the difficulty of the track actually keeps the experience fresh. Although you get more than a little taste of the kart’s 6.5 brake horsepower (bhp) output, you probably will not reach its top speed, which is an astounding 60 kilometres per hour (km/h). Still, the sweet science that is kart racing is more than just about power and is also largely about learning the graceful racing art of subtlety. Luckily for me, the ‘power slide’ ability that I gleaned after logging hours on the Super Nintendo actually had some real world application. Remembering this and the basic racing truth 86

JULY 2010

that ‘brakes are your enemy’ I was able to not only pass my colleague James McCarthy, but also make a significant gain on our deputy editor, Mina Kavcar and was coasting towards victory in about the 20th lap when Gondalonia’s marketing manager Heidi Klostermann-Larsen came charging up behind me. This was not going to be a case of the gracious host letting the visiting journalist win; Heidi was out for blood, fighting me for position. We found the edges of one another’s karts and skidded in tandem around turns, gritted our teeth as we slammed on the gas neck-and-neck in the straights and caught each other’s eyes under determined, furrowed brows. It was intense, it was a bit scary and it was quite possibly the most fun I have ever had at a mall. The standard cost for a race is QR50 for a ‘calm’ race and QR60 for a ‘busy’ one; for kids, the prices are QR40 and QR50, respectively. This price, which is more than worth it, gives you 10 minutes of unadulterated racing jubilation. That may not seem like a lot, but believe us, that is more than enough time to get your heart pumping. I may not be the next Mario Andretti and I may have learned everything I know about go-kart racing from an old video game, but take my word for it that the track at Gondolania takes the lead in the most fun, fast-paced entertainment that you can legally get away with. For more information: +974 4519993 info@gondolania.com www.gondolania.com


LIFE & STYLE

Wish you were here As the first African World Cup draws to a close and soccer fans head home, now is the perfect time to discover South Africa. From the urban buzz that defines Johannesburg in the north and the sophisticated cool that envelopes Cape Town in the south, to the scenic wonders that dot the landscape in-between, TheEDGE selects the must-sees for every visitor.

Go on safari.

If you are an African first-timer, nothing can prepare you for the impact of standing in front of extraordinary wildlife, preferably one of the Big Five (lion, leopard, elephant, rhinocerous and buffalo). There is no need to rough it though, as South Africa offers up some of the world’s most luxurious safari lodges, such as Sabi Sabi, Singita Game Reserves, Phinda Private Game 88

JULY 2010

Reserves, Londolozi, and Molori Safari Lodge, which made the Condé Nast Traveler Gold List 2010.

Take your camera to Cape Town.

Renowned as one of the world’s most beautiful destinations, Cape Town brims with photo opportunities with attention-stealing Table Mountain as its backdrop. Take the cable car

up the mountain or drive along Chapman’s Peak, the hair-raising mountain pass between Hout Bay and Noordhoek. Visit the colourful, cobbled streets of Bo-Kaap, the spiritual home of Cape Town’s large Muslim community, or travel to the nearby Cape of Good Hope Nature Reserve and photograph the spot where the Indian and Atlantic Oceans meet at the southern tip of Africa.


LIFE & STYLE

Get out of the Land Rover.

Stroke the fur of hand-raised cheetahs at the Cheetah Outreach Programme at Spier in the Western Cape. Let one of the 500 elephants at Addo Elephant Park outside Port Elizabeth wrap its trunk around you. Or go shark-cage diving in Gansbaai’s Shark Alley for a face-to-face meeting with the fearsome Great White.

Play golf.

This is the homeland of Gary Player, Ernie Els, Retief Goosen, and Trevor Immelman, and golfing tourists are spoilt for choice. Try the Gary Player Country Club at Sun City, Leopard Creek which straddles the Kruger National Park and is rated the best course in South Africa by Golf Digest magazine, the Jack Nicklaus-designed Pecanwood Golf and Country Club Estate, and the incredibly scenic Pezula Championship Golf Course in Knysna, also a luxury resort with its own private beach.

Eat!

A delicious way to experience the country is through its food and there is something for every palate, from traditional British High Tea at the iconic Mount Nelson Hotel, to indigenous dining experiences that are unique, such as crocodile sirloin and fried caterpillars.

Seek out authentic South African food at places like Wandie’s Place in Soweto, or the enchanting moyo at Spier in the Western Cape.

Book into The Palace of the Lost City.

Billed as one of the world’s most extraordinary hotels, the Palace of the Lost City is a ‘Disneyland for adults’ featuring casinos, golf, live shows and a vast resort complex. Built with unbelievable attention to detail, the hotel features intricate mosaics and hand-painted ceilings, and some of South Africa’s most luxurious rooms and suites.

Drive the Garden Route and head for Knysna.

Twice voted South Africa’s favourite town, Knysna is set in an incredible natural landscape. Whether you are after boutique shopping, sunset cruises, polo matches or the adrenaline rush of the Bloukrans Bungee Jump (the highest commercial bungee jump in the world at 216 metres), the Garden Route has something for everyone.

Visit the past.

A trip to South Africa is not complete without acknowledging the country’s divisive history. For a profoundly moving experience, catch

the ferry to Robben Island to visit the prison that held Nelson Mandela for 27 years. In Johannesburg, the Apartheid Museum and Constitution Hill’s Old Fort Prison Complex are both must-sees for any history buff, especially as the latter is where both Mahatma Gandhi and Mandela were once held in isolation cells. A visit to Soweto, the historically fascinating home to 3.5 million people, will take you to the former homes of Mandela and fellow Nobel Peace prizewinner, Archbishop Desmond Tutu.

Visit Zululand.

Here, the power of the Zulu nation is stamped in the soil of the green hills and grasslands. Villages like Shakaland and Dumazulu are tourist-friendly, and travellers often find themselves guests at rural wedding ceremonies or visiting the local sangoma (traditional medicine man).

Take the Blue Train.

This famed 27-hour rail journey from Cape Town to Pretoria is perfect for taking in South Africa’s breathtaking countryside at a speed of 90 kilometres per hour. Kings and presidents have travelled on this moving five-star hotel, so connect with a bygone era as you enjoy topnotch dining and personal care, and luxurious accommodation.

JULY 2010

89


EVENTS & CONFERENCES

July 5 – 11 THE TWELFTH AL JAZERA INFORMATION AND COMMUNICATION TECHNOLOGY EXHIBITION (JiTCOM) Sana’a Expo Center, Sana’a, Yemen Exhibitors at the 2010 JiTCOM will be displaying, marketing and selling new products, including a comprehensive range of electronic goods for personal and business use, such as laptops, mobile phones, cameras and home entertainment systems. A number of private and governmental firms will also be participating, introducing their services to visitors and showcasing their latest projects. JiTCOM is the ideal exhibition for IT investors, providers of technical solutions and other members of the communications and IT industries. www.exposanaa.com

July 7 – 8 RELATION S FOR UM THE SECON D BEIR UT PUB LIC Gefinor Rotana Hotel, Beirut, Lebanon es in the region’s public The forum will explore strategic issu presentations, panel of s serie a ugh relations industry thro day will be dedicated discussions and workshops. The first regional and global d ecte to discussions led by highly resp nd will feature seco the and rts, communications expe rest within the public workshops on key topics of inte forum is ideal for public relations industry. The two-day keting and advertising mar ia, relations managers, med officials. agency specialists, and government et cs.n www.trac

J uly 12 – 1 3

TH E S IXTH ICT S E CU RI TY F OR U M Four Seasons Hotel, Damas cus, Syria The Sixth IC T Security Fo rum will gath and decision er experts, sp makers to ecialists discuss issu related to th es and chal e security of lenges information The forum w and IT syst ill expose em em erging threat IT systems, s to networks s. and demonst and ra te applications up-to-date te rela chnology an d include the pr ted to security. Topics up evention of for discussion electronic cr banking info ime, the secu rmation syst rity of ems and case government studies of su information ccessful systems proj www.alsalam ects. .co.sy 90

JULY 2010

J uly 12 – 14

FE R E NCE ATIONAL CON D RN TE IN D TH E S ECON TECTU R E AN AB LE ARCHI ON SUSTAIN of E LOPM E NT logy, University U R BAN D EV ing and Techno er ne gi En of The Faculty , Jordan ence in Libya, Jordan, Amman e 2009 confer th to of s es cc su eful insights in Following the to stimulate us t es ex is nt om co pr e t th en ent within this year’s ev pm lo ve de cs n pi uss to d urba acks will disc architecture an ve research tr Fi e and low y. ur lit ct bi ite na ch ai ar of sust w energy lo , ng ni ps will an pl ks ence wor ho such as urban ee pre-confer hr ts and T ec n. oj pr tio uc gy cost constr newable ener re as le to ch ab su es and are focus on them construction, e bl na ai . st ch su ts ea challenges in 30 participan a maximum of accommodate ter.org www.csaar-cen

July 12 – 15 OMAN ENERGY, WATER and TECHNOLOGY EXHIBITION (OEWTEX) Oman International Exhibition Center, Muscat, Oman This four-day event explores the various elements of the energy industry, including the latest technological applications to counter global problems such as climate change. It will also deal with issues around water resources, such as the impact of water scarcity and alternatives to water desalination. The exhibition will bring together government representatives and investors to explore development opportunities in Oman. www.oewtex.com

July 25 ENTERPRISE ARCHITECTURE BY JOHN ZACHMAN Sheraton Deira Hotel, Dubai, United Arab Emirates This one-day conference, hosted by John Zachman, the inventor of ‘Enterprise Architecture’, will help attendees cut through the complexities of business and to see the big picture. Using Enterprise Architecture as its framework, the conference will address topics such as effective decision making, implementing organisational strategies, identifying obstacles to the successful implementation of strategies, creating value for your organisation, and the factors to consider in Mergers and Acquisitions beyond the balance sheet. The conference will attract business owners, consultants and management professionals. www.icmgworld.com


CONSTRUCTION & TENDERS SECTION

Qatar Projects Update

Lusail’s joint venture In late May, Lusail Real Estate Development, a subsidiary of Qatari Diar, entered into a joint venture with Germany’s Hochtief Construction to offer planning and construction services both in Qatar and internationally. Hochtief is already constructing Barwa Commercial Avenue, an eight-and-a-half-kilometre-long shopping arcade featuring shops, offices and apartments, planned for completion in 2011. The joint venture will be responsible for Lusail, a 35-square-kilometre self-contained community north of Doha that will accommodate 200,000 inhabitants.

Doha Expressway Phase 2 Aecom Technology Corporation, a leading provider of professional technical and management support services for government and commercial clients around the world, has been awarded the US$10.7 million (QR39 million) contract for the Doha Expressway Phase 2 project. The project is located on a 6.7 kilometre stretch of Salwa Road and comprises four interchanges – three of which will be multilevel – upgrading the existing road to provide four lanes in each direction, and a car park to serve the area. JULY 2010

91


SECTION CONSTRUCTION & TENDERS

Al-Ruwais Port Qatar’s Public Works Authority (Ashghal) has awarded the QR781.7 million expansion contract for Al Ruwai Port to Jordanian company, Consolidated Engineering Construction Company (CECC). The project will be executed in three phases and will include the development of the existing fishing port, located 120 kilometres north of Doha, into a commercial port that can accommodate trading vessels and ferry traffic. The project also includes the construction of a fishing harbour, which will feature a fish landing and inspection area, warehouses and administrative buildings.

Qatargas 3 & 4 Projects Qatargas recently took a major step towards completing work on its Qatargas 3 ventures with the Mechanical Acceptance and handover of the first three offshore gas production platforms, from contractor, J Ray McDermott (JRM). The platforms, known as QW8, are located in Qatar’s North Field. The total facilities comprise of three 2200-ton platforms, 33 gas wells and two 65-kilometre pipelines, which are shared by Qatargas 3 and Qatargas 4. The offshore assets will deliver gas to two liquefied natural gas (LNG) mega-trains at Ras Laffan, one each owned by Qatargas 3 and Qatargas 4.

Logistics City Bids for the construction of phase one of Qatar’s planned US$275 million (QR1 billion) Logistics City are expected to be invited next month. The 500,000 square metre project will be located near the planned US$15 billion (QR54 billion) new Doha airport and a planned new deep-water port, expected to be operational by 2014. Logistics City will be a hub for warehousing and logistic businesses and will be operated by Qatar Navigation.

New Doha Port Work on the ambitious QR25 billion New Doha Port is set to begin as soon as the contract for canal excavation is awarded in August. Forty-six local as well as some foreign companies submitted bids and eight have been short-listed for the final award. The entire project is to be divided into 21 sub-projects, and tenders will be floated for each of them. More tenders will be floated in the first quarter of 2011 and local companies are being urged to enter into joint ventures with foreign counterparts to participate in them.

92

JULY 2010


construction & tenders SECTION

QUANTITY SURVEYING

FURNISHING SERVICES

PRINT WORKS

Description: Provision of consultancy, design and quantity surveying services for public works authority. Closing Date: July 18 Client: Public Works Authority Phone: +974 495 0000 Fax: +974 495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/ITC/016/ 2006-2007/R1 Bid Bond: QR184,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal).

Description: Furnishing and partitions preparation for City Tower. Closing Date: July 12 Client: Ministry of Social Affairs Phone: +974 437 8143 Fax: +974 443 9360 Email: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender No: 537/2010-2011 Bid Bond: QR740,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street/Al Muntazah, Doha.

Description: Printing press works and the supply of the official newspaper. Closing Date: July 12 Client: Ministry of Justice Phone: +974 437 8143 Fax: +974 443 9360 Email: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender No: 546/2010-2011 Bid Bond: QR110,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street/Al Muntazah, Doha.

MAINTENANCE & CONSTRUCTION Description: Renovation, upgrading and external works at Ministry building. Closing Date: July 12 Client: Ministry of Municipal Affairs and Agriculture Phone: +974 437 8143 Fax: +974 443 9360 Email: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender No: 547/2010-2011 Bid Bond: QR315,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street/ Al Muntazah, Doha.

QATAR TENDERS

JULY 2010

93


SECTION CONSTRUCTION & TENDERS

INDUSTRIAL & SPECIAL PROJECTS

SEWERAGE & CONSTRUCTION

MUNICIPAL SERVICES

Description: Provision of slickline and associated services, including fishing of tools and wirelines in both offshore and onshore environments for a petroleum company. Closing Date: July 19 Client: Qatargas Phone: +974 473 6000 Fax: +974 473 6666 Email: infos@qatargas.com.qa Website: www.qatargas.com.qa Tender No: LTC/E&V/1435/10C7 Bid Bond: QR91,000 Tender documents can be obtained from: Qatargas, Office, Sixth Floor, Salam Towers, West Bay, Doha.

Description: Design, supply, procurement, construction, commissioning, operation and maintenance of sewage treatment plants for public works authority. Closing Date: July 20 Client: Public Works Authority Phone: +974 495 0000 Fax: +974 495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/GTC/018/10-11 Bid Bond: QR276,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal).

Description: Constructing shaded parking bays for a petroleum company. Closing Date: July 26 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: ST10103300 Bid Bond: QR20,000 Tender documents can be obtained from: Contracts Department, Operations Division, Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Room G13, Doha.

CONSTRUCTION

INDUSTRIAL & SPECIAL PROJECTS

REFURBISHMENT & CONSTRUCTION

Description: Securing access to Barwa City and other developments in the area, including but not limited to site clearance, storm water drainage, earthworks, asphalt works, kerbing works, traffic signs and road markings, street lighting, landscaping, public utility services, water and electricity networks, and protection works for oil and gas pipelines, for public works authority. Closing Date: July 20 Client: Public Works Authority Phone: +974 495 0000 Fax: +974 495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/GTC/001/10-11 Bid Bond: QR15 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal).

Description: Engineering, procurement, installation, construction, precommissioning, commissioning and testing of the facility for upgrading a gas compressor for a petroleum company. Closing Date: July 26 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: GT10105300 Bid Bond: QR1 million Tender documents can be obtained from: Contracts Department, Engineering Division Qatar Petroleum, Mezzanine Floor, Room A-M03, B-Ring Road, Doha.

Description: Refurbishing and upgrading works for various pumping stations for public works authority. Closing Date: July 27 Client: Public Works Authority Phone: +974 495 0000 Fax: +974 495 0777 Email: info@ashgal.gov.qa Website: www.ashghhal.gov.qa Tender No: PWA/GTC/006/10-11 Bid Bond: QR3 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal).

QATAR TENDERS

94

JULY 2010


SUBSCRIPTION

SUBSCRIPTION FORM 2010 TheEDGE is Qatarâ&#x20AC;&#x2122;s dedicated monthly business magazine.

TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations. TheEDGE will not be available on the news stands, but will be delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatarâ&#x20AC;&#x2122;s business landscape, fill in the subscription form (below) to receive TheEDGE on a monthly basis. Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar

Last Name : First Name: Address: Company: Designation: P.O.Box: Area Code: City: Country: Tel: E-mail: Date and Signature: 96

JULY 2010



The Edge - Jul 2010 (Issue 12)