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CONTENTS

w w w. t h e e d g e - m e . c o m

JULY 2011

CONTENTS ON ThE COvER

For a small country that lacks the tourist attractions of Paris, London and New York, Qatar has nevertheless developed ambitious – and some would say optimistically aggressive – plans to build its tourism sector. Rachel Morris investigates this growing industry and speculates what might happen post-2022. (Page 44).

finance & econoMicS .28. MARKET WATCh

Dheeraj Shahdadpuri on the divergent economies of the region.

.30. INSIdE EdGE

Qatar’s ICT sector is well placed for the industry’s next round of growth.

.32. SPECIAL REPORT

A Qatar construction update.

.34. BALANCE ShEET

Employee engagement for profit.

.36. ECONOMIC BAROMETER

Morocco and Jordan to join GCC?

featureS .40. IN ThE SPOTLIGhT

What is the cost of airline security?

.44. FEATURE STORY

Rachel Morris on Qatar’s ambitious tourism plans.

.50. ON ThE PULSE

Modern aviation tries to balance increasing global demand with a view to the environment.

.54. BUSINESS INTERvIEW

Jinanne Tabra’s online success story.

54

KnowleDGe & eXPertiSe

.60. INNOvATION CULTURE

How innovating your business model can invigorate your company.

.62. BUSINESS MANAGEMENT

A lateral approach to goals.

.64. SMALL BUSINESS KNOW-hOW

Guerrilla marketing tactics.

.66. MARKETING & dESIGN Benefit from employer branding.

.68. LEGAL INSIGhT

Owning and operating a hotel.

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CONTENTS

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buSineSS inSiGht

.72. BUSINESS INSIGhT INTERvIEWS

Douglas Beal’s enticing view of private wealth management in Qatar, and Guy Kawasaki shares his start-up insights.

77 reGularS

.06. .07. .08. .16. .18. .20. .22. .24. .77. .80.

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FROM ThE EdITOR CONTRIBUTORS NEWS ETCETERA dOhA dIARY MIddLE EAST MATTERS COUNTRY FOCUS ThINKER’S CORNER SPECIAL FOCUS LIFE & STYLE 10 ThINGS


FROm THE EDITOR

FROM PublicationS Director Mohamed Jaidah m.jaidah@firefly-me.com ManaGinG eDitor Miles Masterson m.masterson@firefly-me.com +974 66080447 coPY eDitor Megan Masterson reGional SaleS Director Julia Toon j.toon@firefly-me.com +974 66880228 Senior SaleS ManaGer Emma Land e.land@firefly-me.com +974 33197446 MarKetinG aDMiniStrator/ DiStribution & SubScriPtionS Azqa Haroon a.haroon@firefly-me.com +974 55692471 creative Director Roula Zinati Ayoub art Direction Lara Nakhlé DeSiGn coorDination Charbel Najem DeSiGnerS Sarah Jabari Teja Jaganjac Haneen Al Sharif finaliSer Michael Logaring PhotoGraPher Herbert Villadelrey

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There is no doubt that a thriving tourism industry, the subject of our cover feature article on page 44, can contribute significantly to a country’s economy. This is all the more relevant for a small nation such as Qatar, which is currently experiencing a boom in hotel construction, in anticipation of both a general rise in visitors, as well as in long-term preparation for a massive spike in sports fans for the Fifa World Cup 2022. Moreover, the benefits of a thriving domestic travel industry extend beyond VIP lounges, glamorous five-star hotels and limousines. Indeed, if the industry is managed and regulated effectively, it can provide smaller entrepreneurs with a myriad of start-up opportunities to become online booking agents, budget hoteliers and tour guides, to name but three examples. The Qatar Tourism Authority is of course working towards this end, not only by attempting to encourage those stopping in transit at Doha International to spend ‘48 Hours’ more in the city to see the sights, but also in the promotion of Qatar as the region’s premier destination for conferences and exhibitions and also, football and Fifa 2022 notwithstanding, as a venue for international professional sports events. But there will no doubt be challenges. Much has been said about the risk the country, with one eye on 2022, is taking in creating thousands of new hotel beds, the critics pointing out that post-World Cup many of these may potentially never be slept in again. There is also the challenge of employing and keeping adequate and competent frontline and service staff, most of whom are currently expatriates. Of course, Qataris cannot and should not fill all these roles as their population numbers

make this impossible anyway. But locals should arguably take more interest in working in this sector, as there is no one better to welcome someone visiting their country than a national bursting with pride. Qatar as a nation must also aggressively enhance, promote and preserve its many natural assets, its desert landscapes, beaches, bird life and rich culture, as well as its first class urban attractions, as a tourist destination. Then, those who visit Qatar once will be able to dismiss any negative misconceptions and recommend it to their friends and come back again themselves. That way, those hotel beds will never be empty, even before 2022, and, we would hope, not afterwards either. Miles Masterson, Managing Editor

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 11 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important and affluent audience. TheeDGe is an authoritative business resource serving both large and small business operators.

Firefly Communications PO Box 11596, Doha , Qatar Tel: +974 44340360 Fax: +974 44340359 www.firefly-me.com

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PrinteD bY Ali Bin Ali Printing Press, Doha, Qatar

THE EDITOR

MA CYC LE TH IS

TheeDGe is printed monthly © 2011 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 Shutterstock and/or iStock Photo.

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CONTRIBUTORS

CONTRIBUTORS

featured contributor KARIM NAKHLE Karim Nakhle, who writes our regular Economic Barometer section, is an economist and a business strategist with a background in management consulting, strategic planning and wealth management. Karim has more than a decade of experience in financial advisory, mergers and acquisitions, investor relations, communications and banking, and has worked with KPMG, IBQ, Inventure and Globaleye in the Middle East, Europe and North Africa. A graduate of Greenwich University in London, Nakhle holds a MBA in Banking and Finance, a BA degree in Marketing, and is a CFP (Certified Financial Planner). Apart fromTheEDGE Nakhle has published numerous market reports, country economic financial analyses and thought leadership publications, and is a regular guest on various news and business satellite TV channels, including BBC, CNBC, Al Jazeera, Al Hurra, and Al Arabia.

P.62 Julian Birkinshaw Business Management Consultant London Business School London, United Kingdom

P.24 Yousuf Al Jaida Director, Strategic Development Asset Management and Banking QFCA Doha, Qatar

P.26 Dheeraj Shahdadpuri Analyst Dubai, UAE

P.30 Manjeet Chhabra General Manager, Middle East Dun and Bradstreet Dubai, UAE

P.32 Greg Harris Editorial Manager Oxford Business Group Doha, Qatar

P.34 Kanchan Ghoshal Director Financial Risk Management KPMG Advisory Bahrain, Manama

P. 40 Mark van Dijk Journalist Cape Town, South Africa

P. 44 Rachel Morris Journalist Middle East and North Africa Region Doha, Qatar

P.50 Edward Jameson Senior Business Journalist Middle East and North Africa Region London, United Kingdom

P.60 Kamal Hassan President and CEO Innovation 360 Institute Dubai, UAE

P.64 Robert Madronic Marketing Instructor College of the North Atlantic Doha, Qatar

P.68 Hannah Kennett Associate, Corporate Dept., SNR Denton Doha, Qatar

All contributors to TheEDGE are wellregarded leaders in their respective industries. If you are interested in joining the esteemed panel of contributors, please contact the editor, Miles Masterson at m.masterson@firefly-me.com

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newS etcetera Qatar founDation’S new recruitS

Khalid Ali Al Mawlawi, acting executive director of human resources at Qatar Foundation, hands a new recruit his inauguration gift at a special ceremony and open day in late May.

Recently the Qatar Foundation (QF) welcomed more than 60 new recruits into the organisation’s ranks at a special open day and award ceremony. Most of the candidates were handpicked from a shortlist of 600, which was in turn taken from more than 2000 applications handed in at the Qatar Career Fair in Doha in late April, as well as other sources. Bringing in quality new recruits and implementing effective human

Qfca to hoSt Doha inveStMent foruM

The Qatar Financial Centre Authority (QFCA) has announced that the 5th Annual MENA Investment Management Forum will be held in Doha from October 2-6, 2011. Previously known as FundForum Middle East, this is the first time the conference has come to Qatar and will offer Qatari financial services companies the opportunity to interact with their peers from across the region. HE Yousef Hussain Kamal, Qatar minister of economy and finance, will officially open the forum. Shashank Srivastava, acting chief executive officer (CEO) of the QFC Authority, commented: “The MENA Investment Management Forum moving to Doha is further recognition that Qatar is becoming the regional centre for the asset management industry. Supported by one of the fastest growing economies in the world, high levels of institutional and retail wealth and increasing investible assets, Qatar is able to provide investment managers emerging market returns at developed market risk levels.” Find out more at www.qfc.com.qa or www.informaglobalevents.com 8

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resources in general, Khalid Ali Al Mawlawi, acting executive director of human resources and employee relations and welfare director, told TheEDGE, is one of the most important aspects of any organisation and is something QF takes very seriously, by hiring high calibre recruits.“It is not like it used to be in the business world,” he explained. “Today human resources are a reflection of Qatar Foundation within the organisation itself, so it is a big responsibility. Marketing takes place outside, regionally and globally, but human resources is an inward reflection and we have to project the same philosophy and image internally too.” Twenty-three male and 43 female graduates were taken in at the event, but, added Ahmad A Al Obaidli, recruitment manager, talent sourcing and development department, HR directorate, QF, there will be scores more recruited over the coming months and years, mostly taken from the shortlist. “Six months from now there will be another recruitment day – we have a five-year plan and we have to evaluate as we go along,” he said. “It’s not just about the numbers but to find the right people at the right time for the right position,” added Al Mawlawi. “A career with Qatar Foundation will give these young Qataris the opportunity to unlock their untapped potential and put them on the road to high achievement. This will not only benefit Qatar, but the region and the world.”

fooD SecuritY or lanD Grab? A move by the Qatar government to buy up land in southeastern Australia has reignited the debate in that country about foreign ownership laws. Qatar’s Hassad Foods, which has been tasked with ensuring the desert country’s food supply in coming years, recently paid about QR135 million for more than 8000 hectares of fertile sheep-grazing and cropping land in Victoria’s Western Districts. While Hassad Foods is refusing to comment on the deal which would see sheep and crops grazed on that land head directly to Qatar for domestic consumption, the deal has stirred up memories of the 1980s controversy over foreign ownership of Australian assets when Japanese investors made large-scale real estate purchases. Australian Greens party deputy federal leader, Christine Milne said foreign demand for farmland had increased in the wake of an international food shortage. “I think Australia has a huge responsibility to protect its land and maximise food production, not only for our own consumption but to make it available for international markets,” she said. More next issue.


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bYe bYe virGin Richard Branson’s controversial commercial partnership with Qatar’s telecommunications provider, Qtel, has ended after regulator ictQATAR ruled it had contravened the law opening up opportunities for the country’s remaining second operator, Vodafone Qatar (VFQ). The decision is a significant boost to Vodafone Qatar, who entered the market to great fanfare in 2009, breaking one of the last telecommunications monopolies in the region. VFQ had asked ictQATAR to rule on the partnership amid claims it was a “third operator by stealth”. The move is significant because of the expected growth in the telecommunications market as Qatar’s population grows amid the anticipated World Cup building and construction boom, which will bring more people – and customers - in. Vodafone has also revealed they may be trying to compete with Skype by launching their own Voice Over Internet Protocol (VOIP) as many are using Skype through their services. VFQ currently has around 750,000 subscribers in Qatar. Qatar Mice DeveloPMent inStitute traininG

In June key staff from a number of prestigious Qatari and Qatarbased companies attended a five-day Meeting Professionals International (MPI) course at Sharq Village in Doha. Among those represented were Qatar Foundation, Qatar Airways, VCU-Q, Georgetown University, Qatar Shell GTL, Firefly Communications, Al Shaqab, Qatar Philharmonic Orchestra, Musheireb Properties, Her Highness’ Office, Bin Yousef Cargo Express and the College of The North Atlantic-Qatar. Delegates received professional instruction on how to plan for and facilitate meeting and convention programming from international experts such as The Netherlands’ Ruud Janssen and France’s Christine Peron. The course was presented by QMDI (Qatar MICE Development Institute) and also featured lectures on venue selection, contracting and modules on event risk assessment and marketing. “I really enjoyed the risk assessment component,” said Firefly Communications’ Michael Javier. “Often event planning goes ahead without considering these kinds of topics, such as what to do if an event is cancelled, for example.”

Successful delegates are awarded their certificates after successfully completing the Qatar MICE Development Institute course held in Doha in June.

june in revIew

NEWS SNIPPETS FROM QATAR’S BUSINESS WORLd hAMAd MEdICAL AWARdEd RESEARCh GRANTS Medical and health sciences research at Hamad Medical Corporation (HMC) received a boost with the awarding of 12 grants amounting to over QR39.5 million under the fourth cycle of Qatar National Research Fund’s (QNRF) National Priorities Research Program (NPRP). “This is an excellent achievement, and a testament to the quality and potential of the HMC researchers,” said HMC managing director Dr Hanan Al Kuwari. MUShEIREB CONTRACTOR ANNOUNCEd Musheireb Properties (formerly Dohaland) announced the appointment of Gensler as lead consultant for Phase 2 and Phase 3 of their flagship project Musheireb. Under two separate agreements, Gensler will undertake the design of the Retail Galleria in Phase 2 in addition to undertaking the lead consultant duties in Phases 2 and 3, through to construction documentation stage and full-time site supervision up to project completion. AAMAL SIGNS JOhNSON CONTROLS dEAL, WIThdRAWS GLOBAL dEPOSITORY RECEIPTS Aamal Company QSC has signed a shareholder agreement with Johnson Controls Inc. to establish Johnson Controls Qatar, a new operations and maintenance and energy solutions company. The new joint venture, with a shareholding of 51 percent and 49 percent split between Aamal and Johnson Controls Inc. respectively will provide facility improvement and energy solutions to customers in Qatar. Its services will comprise total building operations and maintenance services, including energy audits and additional energy efficiency solutions. In an unrelated story, in June Aamal released a statement saying that it would be postponing its intention to proceed with the offering of its shares as Global Depositary Receipts (GDRs) due to “unfavourable issues,” adding “Aamal Company expects to review the timing for its planned GDR offering in due course, subject to market conditions.” QATAR ISLAMIC BANK BS CERTIFICATION Qatar Islamic Bank (QIB) has been awarded the BS 25999 certification, an international standard for Business Continuity Management (BCM). Provided by German accreditation body, TUV SUD, this certification is the first to be granted to a bank in Qatar, underscoring the resilient processes that QIB has put in place to meet clients’ long-term financial needs. QIB Acting CEO, Ahmad Meshari, said: “We are proud to be the first bank in Qatar to receive this highly sought-after certification. Business continuity management is an integral part of QIB’s business strategy.”ure.

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2011

events calendar august 11-03 September

The official charge against 19-year-old British computer geek Ryan Cleary by the United Kingdom’s government-funded Serious Organised Crime Agency (SOCA) for allegedly hacking into their secure online network.

September 17-19

“The classification is an important factor as it will provide much needed liquidity and a strong push to the market.”

ecoQ (Qatar International Environmental Protection, Technology & Sustainable Energy Expo), Doha, Qatar

19

40th Anniversary of the State of Qatar, Doha, Qatar

26-27

7th Annual World Islamic Funds and Capital Markets Conference, Manama, Bahrain

26-29

24th World LP Gas Forum, Doha, Qatar

october 2-5

MENA Investment Management Forum 2011, Doha, Qatar

5-8

International Furniture and Design Exhibition, Doha, Qatar

9-13

GITEX Technology Week, Dubai, UAE

16-19

Super Return Middle East 2011, Dubai, UAE

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Offshore Middle East, Doha, Qatar

25-29

Doha International Film Festival, Doha, Qatar TheEDGE

Walid Hage, head of MENA sales and business support at Gulfmena Investments, commenting on news of the MSCI decision to delay the decision of potentially upgrading the Qatar and UAE stock markets from ‘frontier’ to ‘emerging’, until December 2011.

Direct quotes

Ramadan Consumer Fair, Sharjah, UAE

10

“On 20th June 2011 did an unauthorised act namely a Distributed Denial of Service attack against the website of the Serious Organised Crime Agency, at a time when you knew that it was unauthorised.”

“Biobank Qatar will collect and store biological data of Qatari citizens and expatriates. It is the central piece of our research agenda and basis of Qatar Biomedical Research Institute that is being set up. It will have genetic information that is certified and will be collected for future research in various fields. This will help provide better opportunities in healthcare and advancement of research.”

Dr Mohammad Fathy Saoud, president of Qatar Foundation, at the launch of Qatar’s new Biobank, in late June.


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Pic of the month the Mile hiGh Golf club?

In June aeroplane manufacturer Airbus introduced what it calls the “Concept Cabin Of The Future” an interactive zone of the Airbus Concept Cabin, as imagined in 2050, would provide

space for airborne social scenarios, such as a virtual game of golf with people on ground or even with passengers in other aircrafts. (Photo Illustration by Airbus via Getty Images)

newS in numbers

350

million (US dollars)

In late June Qatar Airways announced it has ordered six new GE90-115Bpowered Boeing 777-300ERs. The engine deal is valued at more than US$350M (QR1.2 billion) list price. “Qatar Airways currently operates 25 GE90-powered Boeing 777 with an additional 15 aircraft on order,” said Kevin McAllister, vice president and general manager of Global Sales at GE Aviation. “This order for six additional GE90-115B-powered Boeing 777-300ERs demonstrates the airlines confidence in this engine-aircraft combination, and we are extremely pleased by the airline’s continued commitment to operate GE engines.” At 115,000 pounds of thrust, the

GE90-115B engine combines advanced technologies from the GE90 family with three-dimensional aerodynamic (3-D aero) compressor and wide-chord, swept composite fan blades for greater efficiency. The dual annular combustor emits no more than 40 percent of the hydrocarbons allowed by today’s international standards. Since entering service in 2004, the GE90-115B engine has proven to be one of the quietest engines per pound of thrust. The GE90-115B engine is part of GE’s ‘ecomagination’ product portfolio – GE’s development of new, cost-effective technologies that enhance customers environmental and operating performance. TheEDGE

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new Qatar founDation barca StriP The Qatar Foundation (QF) could become a household name across the globe this year as hundreds of thousands of football fans rush to buy the 2011-2012 Barcelona football club strip. Following the five-year, EUR150 million (QR777 million) shirt sponsorship deal signed in December last year, QF will join Unicef as the Spanish champions’ jersey sponsor, which will see Barcelona receive EUR30 million (QR155 million) per season from 2011-12, with the funds coming from the Qatar Investment Authority. And with Barcelona selling more than one million jerseys each season from 2005-2009 the exposure for QF will be immense. This will be the first time in the Catalan team’s 111-year history that they will be paid to advertise on their jerseys. And despite Barca’s success on the field, winning the Champions League and Spanish title this year, they are reported to be struggling financially - the club posted a loss of US$105 million (QR382 million) last season with debts of US$582 million (QR2.1 billion) - and the deal could be the difference between the club keeping its top stars, such as world number one Lionel Messi. “The arrival of the Qatar Foundation on our shirts did not please the romantics but it was necessary. Without this sponsorship, we would have had to sell [players],” Barcelona marketing director, Laurent Colette told French newspaper Le Parisien in April.

weirD worlD newS

FCB Barcelona’s new strip, featuring the Qatar Foundation logo, may just be the financially beleaguered Spanish clubs’ saving grace. (Image Getty Images)

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G r e e c e While its leaders deliberate and Europe and the rest of the world ponders the repercussion of yet another Greek bail out, and its population protests in the streets to the severe austerity measures it is proposing, the authorities in the beleaguered European nation of Greece are looking at another option to help pay off their massive debts: sell their natural assets. In 2010 The Guardian newspaper in the United Kingdom reported that the Greek government had made it easier for the rich investors, primarily from China and Russia to purchase long-term leases on many of its idyllic

TheEDGE

firSt Yacht in luSail Marina Doha In early June the first yacht docked at Lusail Marina Doha’s new waterfront destination, located within the burgeoning Lusail City development. Mourjan Marina IGY’s chief executive officer (CEO) Michael Horrigan and Eng. Essa Mohammed Ali Kaldari, CEO of the Lusail Real Estate Development Company, were present to welcome the 29 metre yacht ‘Lulwa’ and its owner Salman Jassim Al Darwish, chairman and CEO of Porsche in Doha, as it arrived into the world-class marina. “We are very proud to see the arrival of the first yacht into this landmark marina, offering the community a yachting and marina lifestyle experience, which signifies the very beginning of an extremely exciting time for the industry in this region,” said Horrigan . errata In the Business Interview with ExxonMobil Qatar’s president and general manager, Alex Dodds, on pages 46-49 of the June edition of TheEDGE there are some unfortunate errors. ExxonMobil Qatar’s investments in Qatar do not stand at almost “QR60 billion with the development of…Barzan Project.” (page 46). ExxonMobil’s investment of USD16 million (QR58 million) in Qatar to date excludes their investment in the three foreign LNG terminals and the Barzan Project. On page 47 it states “...rapid growth in emerging economies will drive global demand up by 70 percent by 2030 from its level in 2005.” According to ExxonMobil, this is not accurate. Rapid economic growth in developing countries that are not part of the Organisation for Economic Cooperation and Development (OECD) will drive an increase in their energy demand of more than 70 percent in 2030 compared to 2005. Regarding global energy demand, expanding prosperity around the world for a growing population will drive an increase of about 35 percent by 2030 compared to 2005. Finally, on page 48-49 the article states that “By 2030, the world’s demand for electricity will increase by more than 30 percent compared with 2005.” As per ExxonMobil’s energy outlook, global electricity demand will in fact rise by more than 80 percent through 2030 from 2005 levels. TheEDGE deeply regrets these factual errors and apologises for any inconvenience they may have caused ExxonMobil or our readership.

F o r

S a l e?

Mediterranean islands. This sentiment has now extended beyond chunks of real estate in the warm southern European sea and now ostensibly includes anything this increasingly desperate state can flog to the highest bidder. According to a report on CNN. com in June, “Greece is preparing to sell off billions of dollars worth of state assets including airports, highways and state-owned companies, as well as banks, real estate and gaming licenses.” A Russian oligarch had also apparently put in an offer to purchase the Acropolis in Athens and turn it into a huge casino, but this report has not be substantiated by any reliable sources.


SUBSCRIPTION

SUBSCRIPTION FORM 2011 TheEDGE is Qatar’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 is delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatar’s business landscape, please 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

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webSite web anD tech newS revIewS

www.SociableMeDia.Me Created by regional media data supplier Media Source, this website is an aggregator of all the Twitter feeds from media outlets, agencies and, journalists throughout the Middle East. Here, one can search for these tweets by every MENA country, from Algeria, and Qatar, to Yemen and all between; via media, including newspapers, television, radio, online and news agencies, as well as see who the top ‘influencers’ are in each of these categories and subcategories. www.ShoPifY.coM Shopify.com is a Canadian-based site that allows almost anyone with a website, and something to sell, a safe e-commerce portal. Those who sign up gain access to a number of cyber storefront designs and a range of payment, shipment and other services, including online analytics. Shopify claim to take the hassle out of receiving payments online and integrate with over 50 gateways including Paypal, so any online store can accept major credit cards. www.Qatar-inSiDe.coM Qatar-Inside is basically a new local online link resource service, with links to Qatar-based websites across a broad spectrum of categories, including arts and culture, business and economy, education and science, government, healthcare, lifestyle and family, news and media, shopping, society and culture, sport, travel and tourism. Any website in Qatar can register for free, although there are options for a paid up link and banner services.

tech terM of THe MonTH url ShortenerS Those new or unfamiliar to the tricks of online social media tool Twitter may have found themselves frustrated in the past that they cannot post a website URL or domain name link into their tweets without using up most if not all of their 140 character limit. For example, the link to the current issue on this magazine’s own website (www.theedge-me.com/issues/theedgeissue24.html) already takes up more than 50 characters. However, using a website that offers a ‘URL shortener’ service, such as bit.ly or tinyurl you can abbreviate your long URL into a tweet less than half of that (for example our above shortened URL is: http://bit.ly/ipczTF).

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al jazeera MoSt influential on Social MeDia Al Jazeera’s English-language television channel is the most followed Middle East media brand on twitter (@AJEnglish), according to a new website which tracks tweets from media, journalists and bloggers in the Middle East and North Africa. The Qatar-based news organisation operates three of the four most-followed twitter handles according to www.SociableMedia.me, (see site review elsewhere on this page) with Al Jazeera Arabic (@AJArabic) second and Al Jazeera English’s breaking news feed (@AJELive) fourth. internet traffic eXPecteD to QauDruPle bY 2015 Research by Cisco predicts that the number of network-connected devices will be more than 15 billion, twice the world’s population, by 2015. In the fifth annual Cisco Visual Networking Index (VNI) Forecast (2010-2015) the company also said the total amount of global Internet traffic will quadruple by 2015. This rapid global internet Protocol (IP) traffic growth is driven by four primary factors, according to Cisco. They are: 1. an increasing number of devices: By 2015, there will be nearly 15 billion network connections via devices – including machine-tomachine – and more than two connections for each person on earth. 2. more Internet users: By 2015, there will be nearly three billion Internet users – more than 40 percent of the world’s projected population. 3. Faster broadband speed: The average fixed broadband speed is expected to increase four-fold, from seven megabits per second (mbps) in 2010 to 28 Mbps in 2015. The average broadband speed has already doubled within the past year from 3.5 Mbps to seven Mbps. 4. more video: By 2015, one million video minutes the - equivalent of 674 days – will traverse the Internet every second. naSPerS inveStS in Dubizzle MIH Internet, a wholly-owned division of the South Africa-headquartered media group Naspers Ltd, has announced a new strategic partnership with the region’s leading online classifieds and community website, Dubizzle.com. Having worked together on a number of previous projects — including the roll out of Dubizzle.com across 14 countries in the MENA region, including Qatar — the management at MIH Internet have confirmed that their latest investment in Dubizzle is the first step in developing a more robust network of media ventures across the region. As a sign of the group’s commitment to the MENA region, MIH Internet will also be establishing a new hub office in Dubai, UAE. “MIH Internet’s extensive knowledge of media and technology industries, as well as their experience in emerging markets, has made them a potentially ideal partner for organisations in the Middle East,” said Sim Whatley, co-founder of Dubizzle.com. “Dubizzle’s own alliance with MIH Internet has been instrumental in turning our creative ideas into thriving business platforms.”


DOHa DIaRY

PULSE CHECK Edd Brookes delves into Qatar’s real estate market for a pulse check on market conditions, and predicts where it might be heading.

T

o obtain a holistic view of the Qatari real estate market, let’s begin with the economy. Qatar’s government expects to receive a budget surplus of QR22.5 billion in the fiscal year 2011/12, and government spending is set to increase by 19 percent over the 2011/12 fiscal year, reaching QR139.9 billion. While the oil and gas sector remains a key economic driver, the government has implemented strategic plans to promote diversification, which are showing indications of being successful. Gross domestic product (GDP) from non-oil and -gas activities accounted for 49 percent of total GDP in 2010. The recently announced National Development Strategy stated that total gross domestic investment will reach QR820 billion from 2011 to 2016. A number of sectors will benefit, such as health, education, social services, sports, and development of the private sector, all of which will include significant investment in infrastructure and transportation such as the New Doha International Airport and InterGulf Rail Network. Inflation, which peaked at 15 percent in 2008, has been brought under control and is expected to average four percent per annum over the short- to mid-term. Increased supply of real estate and a global reduction in

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TheEDGE

construction costs have been the key drivers in achieving this goal. In November 2010, the Qatar Statistics Authority predicted that the population would increase from its 2010 figure of 1.65 million to 2.5 million by 2020. The investment in infrastructure should create additional employment opportunities, driving population growth and demand for real estate. Looking at the commercial market, the total current office stock in Doha is estimated at 3.4 million square metres (sqm), of which 50 percent is considered Grade A stock. The Diplomatic District, regarded as Doha’s central business district, accounts for just over 70 percent of the current Grade A stock. At the end of 2008, the Diplomatic District provided 680,000 sqm of leasable accommodation, a figure that now stands at 1.3 million sqm, a 92 percent increase in supply over 27 months, with a vacancy rate of 21 percent. Supply will continue to grow over the next 24 months, but at a reduced rate in comparison with the previous two years. Personally, I do not believe rents will drop back to the levels of 2009/10 with its rental caps of QR150 per sqm per month (sqm/ month). Quality is the key reason, which explains how certain buildings in West Bay have maintained rental levels of QR220 sqm/ month for entire floors. The residential market also seems to have stabilised after dramatic rental falls in the previous 24 months. Increased economic activity is creating new jobs, attracting people to Qatar, and the focus for new residential development continues to be the three residential areas – the Diplomatic District, West Bay and Al Waab/Ain Khalid.

The luxury apartment market has witnessed an increase of 75 percent in supply over 2010. New developments include Lagoon Plaza ‘Zig Zag’ Towers with 750 apartments. At The Pearl, approximately 2000 to 2200 apartments have been handed over to date, with a further handover of 6000 apartments by the end of 2011. Residential sales at The Pearl continue to dominate the freehold market. The majority of recent sales involve vendors that originally bought units in 2005 and 2006, and are now selling them at a profit, seeking prices equating to QR11,000 to QR13,000 per sqm. Townhouse units and apartments with superior views, finishes and a high level of amenities command sales in the region of QR15,000 per sqm. Secondary market sales of completed product available at the rates mentioned above are expected to lead the recovery, an outlook reflected by an increasing number of banks offering mortgage products. Real estate relies on population growth, much of which will be fuelled by the influx of upper and middle management expatriates to work in the sectors expanding as the economy diversifies away from the reliance on petrochemicals. Finally, I also believe the ‘Arab Spring’ will work in Qatar’s favour, as it is one of the few countries in the region offering political stability, the resources to ensure the continuing development of a modern city with first class infrastructure, and, of course, the legendary Qatari hospitality. Edd Brookes is director and head of valuation, Middle East, at DTZ.


mIDDlE EaST maTTERS

FRANCA

Diversity is the great advantage for business in the GCC. But, says Dr. Tommy Weir, it requires businesses to acknowledge that even though many of us speak English, we may not understand one another.

T

he Gulf Cooperation Council (GCC) workforce is comprised of more nationalities than the United Nations has member countries. In practicality, it is the dictionary definition of diversity as it is common to find companies that have a workforce with vastly different languages, backgrounds and experiences. Although employees may all speak a common business language such as English, businesses should not assume that there is a common understanding, as the meaning that is attached to words varies greatly between cultures. Businesses in the GCC need to master being multilingual in one language if they want to create value and maximise growth opportunities. Businesses that understand and sense different individual perspectives, regional cultures and expectations are able to give a level of respect, trust and understanding from everyone’s perspective, and as a result develop successful customer relationships. When I first moved to the region and set out on the arduous househunt, I told the estate agent that I wanted a villa with a yard and a pool. In clarifying my requirements she communicated that I was looking for a villa with a garden and a pool. I stopped her, saying, “I do not want a garden, I want a yard and a pool.” She stood there with a puzzled

18

TheEDGE

look on her face. For me, a garden was the bit in the back of the yard, where my parents planted vegetables each summer and I was not about to undertake all of that labour. I just wanted a yard – the grassy area where the kids play. It wasn’t until months later that I learned that her meaning of the common word, garden, was very different from my understanding. This simple example illustrates why it is imperative for business to be multilingual in one language. Can you imagine the depth of confusion that transpires at the customer interaction level when communicating to a market coming from a multitude of native languages? Have you ever asked a salesperson for something only to have them do something entirely different from your expected results? Perhaps, it comes down to understanding. Great businesses understand the need to communicate clearly, especially within a diverse market. The complexity of being multilingual in one language is as much related to the employees’ background, as it is the customers’. Recent research has confirmed that there is geography of thought and that people from different parts of the world think differently. I am not proposing that businesses run off and learn every local language, but they should not overlook the value of understanding the nature and structure of a native language. Since language reveals how people think, then if one understands a language by default they

will learn the thinking style and as a result be able to communicate better. The key point for a business is to understand that an employee’s first language highlights how he or she thinks differently. When it is understood how a customer thinks, employees will be able to communicate better and as a result add value and grow the business. When it comes to workplace communication, businesses often use terse, straight-to-the-point language. Most front-line employees in the GCC are from oral cultures. They are accustomed to finding direction and meaning through the stories that are told. They rely on how objects relate to one another and the usage of verbs to communicate and understand meaning. This is juxtaposed to Westerners who categorise objects and rely on nouns as the basis of language. Communicating as a business operating in the GCC means more than simply knowing Arab culture and understanding how to address someone respectfully. Businesses need to understand how to communicate from one background to another, to be able to respond to the specific needs of each customer. It is important to note that leaders need not only be aware of the differences across the diverse market, but also to communicate with understanding to each. Dr. Tommy Weir is an authority on fastgrowth and emerging market leadership, and an advisor and author.


COUNTRY FOCUS

W

here East meets West

It is the country that straddles East and West, Arab and European cultures. Yet as Turkey’s envoy in Qatar, H.Emre Yunt tells Rachel Morris, it is this dual personality that has forged a unique relationship between the countries.

T

urkey is one of the most active foreign policy partners of Qatar and we need to increase it, especially in economic terms,” explains the country’s ambassador, H.Emre Yunt, who has been stationed in Qatar since 2009. The recent Turkish elections, which returned the ruling AK Party, headed by leader, Recep Tayyip Erdogan to power, would not change this relationship. “The same government won an absolute majority,” he says. “Nothing changes between Qatar and Turkey in terms of bilateral relations.” And it is a relationship that is one of Qatar’s strongest, both economically and politically.

“Turkey is perceived very positively (in the region). People think that in the recent six or seven years maybe Turkey has become more visible and this is true. We have never neglected this area but you can say in terms of foreign policy we have become more active,” the ambassador states. “As far as Qatar is concerned we are very good friends, our leaders are very good friends and that reflects in the relations…We see eye to eye.” He says Turkey has gained plaudits both regionally and internationally for its stance on Middle East issues, especially Gaza. “This was very much appreciated by the Qatari people on the street and which is true for the Arabic people on the street,” Yunt says. “We


COUNTRY FOCUS

are cooperating (with Qatar) in terms of helping other people. Both countries have taken the people’s stance. Even as far back as 2008, we helped Lebanon, Palestine, all these countries are very important… We want to help the people. It is a humanitarian issue for us. We don’t have any other type of agenda or issue, we just want to help increase the level of stability in the region so that everyone can focus on the development of the region and increase living standards. This is the time for development. This is the time for peace.” There are 9000 Turkish citizens in Qatar. Around 2000 own businesses such as restaurants and shops and the remaining 3000 to 6000 work for large-scale Turkish companies operating in Qatar. The ambassador confirms that Qatar is a place where Turkish citizens feel “welcome” and “at home”, alluding to issues with Turkish communities in some European countries. Turkey has also emerged as a power player economically. The size and vibrancy of the Turkish economy cannot be underestimated. “In terms of economy, the Turkish economy is either the 16th or 17th largest economy in the world and we are hoping to make it at least the 10th largest in 10 years’ time before the 100th anniversary of our republic,” according to Yunt. “To do that of course we need to increase development within the country, trade development, trade relations with other countries. To do that we have to have stability. If you have conflict, nobody can focus on the economy.” He says Turkish companies have a very visible presence in Qatar: “We are already here and more companies are looking for opportunities to come here. We have mostly infrastructure companies.” Construction giant Yuksel is working on the revamp currently underway on one of the city’s main arterial roads, Salwa Road. TAV Airports, which has built airports in Turkey and the region, is the main contractor for the New Doha International Airport main terminal. And construction company Baytur is building the iconic Qatar National Convention Centre at Education City, which is due to be unveiled later this year. And, if the ambassador is to be believed, other major Turkish companies are also ready to do business in Qatar.

TURKEY AT A GLANCE: Population: 74 million Gross domestic product (GDP) per capita: US$13,464 (2010) (QR49,000) Currency: Turkish Lira Economy: Turkey has the 15th largest GDP per person (according to 2010 statistics) GDP growth (2010): 8.9 percent Around 30 years ago, Turkey’s main export was agriculture. Today 80 percent of exports are finished goods. Turkey’s main export is automotives with many large European and Japanese car makers housing manufacturing plants in the country. It is the largest producer of televisions in Europe.

With the current average trade volume between Qatar and Turkey at US$400 million (QR1.4 billion), Turkey is one of Qatar’s strongest relationships. “They have already completed the planning for the railway tenders, which, when completed, will make Qatar a different country. I am sure a lot of companies will benefit from this and share expertise, and we want to have more input.” Turkey is also a major supplier of materials for the construction industry including iron, steel and ‘finished goods’ such as marble tiles, plumbing materials. During the last Project Qatar (in Doha) we had more than 90 Turkish companies participate…They were very happy to be here,” the ambassador says. Meanwhile, Qatari investment in Turkey is also on the rise, but there is room for improvement, he adds. “(Qatari agriculture firm) Hassad Foods have been trying form a partnership in Turkey but we haven’t been able to achieve a final result yet,” says Yunt. “But they are still negotiating. In terms of the land, Turkey has that land but it is not owned by one individual…it’s not easy to get a deal. “Several real estate companies have real estate investments but on a smaller scale and we are trying to get them to increase that. “Turkey is potentially a rich country and a very diverse country. If you are looking for tourism investment you can find it in Turkey. If you are looking to invest in agriculture and other industries, you will find it there.” Currently the average trade volume between Qatar and Turkey sits at US$400 million (QR1.4 billion). Continues the ambassador, “2008 was a record year – it was US$1.3 billion (QR4.7 billion) because we exported a lot of construction materials. If and when the construction sector takes off (for Qatar 2022) our exports will increase. “But we are not buying any liquefied natural gas (LNG) from Qatar yet. We are negotiating. LNG is very important for Turkey, we are a big importer, but we have to have a good deal, because everyone is using LNG and that means that price is very important.” Turkey is extremely keen to import Qatar’s gas and have proposed a novel way to mutually benefit both countries. “We are proposing a direct pipeline (without converting to LNG) from Qatar through Saudi Arabia and several other countries to Turkey. We can have multiple pipelines to bring gas from Qatar and we can export drinking water to Qatar through multiple pipelines,” he explains. “It’s still at the idea level…We have a project which is almost complete that will export drinking water to North Cyprus. We have this potential.” TheEDGE

21


THINKER’S CORNER

By Sangeeta Badal and Bryant Ott

Prolonged unemployment jeopardises young Arabs’ wellbeing

I

n the Middle East and North Africa (MENA) region, a rapidly growing labour force is giving rise to high levels of unemployment. The region’s economy has been unable to provide work for the growing number of potential employees, resulting in about one-quarter of the workforce being underemployed – either unemployed or wanting to move from parttime to full-time work. Underemployment is even higher, at 34 percent, among young Arabs aged 15 to 29. The region must add 80 million new jobs by 2020 to absorb these new entrants into the labour market, according to a 2007 World Bank report titled, Economic Development & Prospects: Job Creation in an Era of High Growth. Young Arabs are not confident in the region’s ability to produce job opportunities. One-quarter of young Arabs say now is a good time to find a job in the city or area

where they live. But levels of optimism range widely among young people in the 21 countries Gallup studies in the MENA region. According to recent data used to create the Silatech Index: Voices of Young Arabs April 2011 report, young Arabs in Gulf States such as Kuwait (66 percent), Qatar (63 percent), and Bahrain (59 percent) are most likely to say now is a good time to find a job in their respective countries. Conversely, young people in politically unstable or conflict-stricken Arab states such as Egypt (16 percent), the Palestinian Territories (14 percent), Iraq (14 percent), and Yemen (12 percent) are the least optimistic about finding a job in the current environment. At stake, aside from potential workers with few or no job opportunities, is the wellbeing of a generation of young Arabs. Extant research indicates that unemployment has a negative effect on young Arabs’ life

satisfaction and wellbeing. Those who work full-time for an employer are twice as likely as the unemployed to rate their lives well enough to be considered ‘thriving’. The current employment situation in the MENA region denies many young Arabs the benefits of full-time employment. It is not surprising, then, that prolonged unemployment in the region causes young people to consider alternatives when it comes to earning a livelihood. Gallup asked respondents in the MENA region whether they would be willing to take each of six different actions if unemployed and looking for work for six months or more. Twothirds of young Arabs (66 percent) say they would start their own business if faced with prolonged unemployment. Slightly more than one-half (55 percent) say they would be willing to take up home-based work. Similar percentages of young Arabs say they would


THINKER’S CORNER

be willing to re-train in a different career (61 percent) or take a job beneath their academic credentials, skills, or training (57 percent). Young Arabs in low-income countries are the most likely to say they would engage in many of these alternative actions. Specifically, they are more likely than those in mediumincome countries to say they would take a job beneath their skills if unemployed for six months or longer. And those in low-income countries are more likely than their highincome counterparts to re-train for a different career under these circumstances. Young Arabs in low-income countries are also more likely than their peers in medium- and high-income countries to say they would perform home-based work. Young Arabs in medium-income countries, like their counterparts in low-income countries, are also more likely than those in high-income countries to say they would start a business if facing prolonged unemployment. The risk of brain drain is serious if policymakers and business leaders cannot develop new career opportunities and improve

skill-building and training programmes for the region’s young people, especially in lowerincome countries. When asked if they would relocate to another country if unemployed for six months or longer, a slight majority of young Arabs from low-income countries say yes, making them more likely to do so than others from medium- and high-income countries. And even if they stay in their current country, young people in low-income countries are more likely than those in medium-income countries to say they would relocate to another city. Young Arabs express differences in what prolonged unemployment would mean for them based on their education levels. Those with a primary education or less are more likely than those with more education to say they would take a job beneath their skills and perform home-based work. Young Arabs who have completed four years of education beyond high school or who have received a four-year college degree are more likely than those with a primary education or less to say they would

Survey Methods Results are based on face-to-face interviews with roughly 16,000 young Arab nationals, aged 15 to 29, conducted in the spring and fall of 2010. Surveys were conducted in 21 Arab League member states: Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Palestinian Territories, Qatar, Saudi Arabia, Somaliland Region, Sudan, Syria, Tunisia, United Arab Emirates (UAE), and Yemen. For results based on the total sample of young people, one can say with 95 percent confidence that the maximum margin of sampling error is ±3 percentage points. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls. The countries in the high-income category are Saudi Arabia, Qatar, UAE, Bahrain, and Kuwait. The middle-income countries consist of Algeria, Egypt, Jordan, Libya, Lebanon, Morocco, Syria, Iraq, and Tunisia. The lowincome countries are Comoros, Djibouti, Mauritania, Yemen, Sudan, the Palestinian Territories, and the Somaliland Region.

relocate to another city within their home country if unemployed six months or longer. This data, in concert with the lower likelihood of unemployed young Arabs to say they are ‘thriving’, suggest prolonged unemployment could have a negative effect on the wellbeing of young people across the MENA region.

This Silatech Index analysis is conducted by Gallup scientists and researchers pursuant to the Silatech-Gallup partnership. In addition to systematically measuring the perceptions of young people across the region on the challenges related to employment and entrepreneurship, Gallup analysts lead the effort in disseminating the findings of the Silatech Index to regional and global leaders and institutions engaged in addressing the challenges surrounding young people and employment in the region. TheEDGE

23


SPECIAL FOCUS

QATAR’S GROWING OFFSHORE WEALTH Qatari investors are choosing to keep more of their assets within the region as economic prospects, and potential returns, look increasingly attractive. At the same time, investors are looking to diversify their investment portfolios into other asset classes and away from real estate, which generally suffered in the region during the global financial crisis, writes the Qatar Financial Centre Authority’s Yousuf Mohamed Al Jaida atar’s exceptional gross domestic product (GDP) growth and booming economy is increasingly fuelling demand for wealth management services. The country has the world’s third largest reserves of natural gas and this equates to an estimated US$16.7 trillion (QR60.8 trillion) in monetisable oil and gas reserves (based on a Qatar Financial Centre Authority analysis of the BP Statistical Review of World Energy). The well-documented growth in hydrocarbon production is set to continue strongly: Business Monitor International forecasts that Qatar’s oil and gas liquids production will increase by more than 34 percent by the end of 2019, while gas production is also expected to rise considerably. Driven by this inherent hydrocarbon wealth, Qatar boasts one of the world’s most dynamic and fastest growing economies, forecast by the International Monetary Fund (IMF) to have grown 16.3 percent in real terms in 2010, to reach a nominal GDP of US$129.5 billion (QR471 billion). In 2011, the economy is set to grow a further 20 percent in real terms, to reach a nominal GDP of US$194.3 billion, with the IMF expecting Qatar’s per capita income to surge to just under US$110,000

Qatar has the third largest proportion of millionaire households and the seventh highest proportion of extremely wealthy households in the world.

(QR400,400) by the year-end, up from US$76,160 (QR277,222) in 2010, to rank Qatar’s GDP per capita as the second highest in the world, after Luxembourg. Meanwhile, Qatar’s population has also shown dramatic growth, more than quadrupling over the past decade from over 400,000 in 2000 to nearly 1.7 million according to the 2010 Qatar census. Furthermore, Qatar continues to enjoy one of the highest savings rates in the region, at 49 percent, significantly higher than the world average of 22 percent (source: EIU). This pool of savings makes Qatar one of the most promising markets for wealth management in the Middle East and represents a major opportunity for fund managers looking to provide a high quality service to local investors. A high savings rate contributes to Qatar’s significant onshore high net worth individual (HNWI) wealth, which amounted to some US$25 billion (QR91 billion) in 2009, reflecting the deep pool of HNWI wealth and strong surplus liquidity available in the Gulf Cooperation Council (GCC) region which is estimated to reach US$3.8 trillion (QR14 trillion) by 2012 (source: Oliver Wyman). HNWIs are typically defined as those with more than US$1mn investable assets. Globally, wealth grew in nearly every region in the world in 2010 according to the Boston Consulting Group (BCG). However, in the Middle East and Africa HNWI growth was above the 8.6 percent global average but was limited by volatility in the price of oil and the after effects of the real estate market correction in the UAE. Nevertheless, Qatar has the third largest proportion of millionaire households at 8.9 percent (according to the 2011 BCG Global Wealth Market-Sizing Database). The same research suggests that Qatar also has the seventh highest proportion of ultra high net worth (UHNW) households, defined as those with more than US$100 million (QR364,000 million) in assets under management (AUM) per 100,000 households. Qatar has third largest proportion of millionaire households at 8.9 percent and the small nation also has the seventh highest proportion of UHNW households


SPECIAL FOCUS

This is creating huge opportunities for local asset managers – for those companies that are ready to meet the markets specific needs. This has prompted many international institutions to enhance their local presence. According to Datamonitor, Qatar is unsurprisingly one of the most attractive HNWI markets in the Middle East, offering high potential for international managers to develop onshore products for their clients, as well as offer investors access to a wide range of offshore products. And yet BCG also states that the majority of MENA’s offshore wealth is still held in Switzerland and the United Kingdom.

Proportion of Millionaire Households by market (percentage) 1

(1) Singapore

15.5

2

(3) Switzerland

9.9

3

(2) Qatar

8.9

4

(4) Hong Kong

8.7

5

(5) Kuwait

8.5

6

(6) UAE

5

7

(7) United States

4.5

8

(8) Taiwan

3.5

9

(10) Israel

3.4

10

(9) Belgium

3.1

( ) = Ranking in 2009 Source: BGC Global Wealth Market-Sizing Database, 2011

Proportion of UHNW households by market (per 100.000 households) 1

(1) Saudi Arabia

18

2

(2) Switzerland

10

3

(3) Hong Kong

9

4

(5) Kuwait

8

5

(4) Austria

8

6

(6) Norway

7

7

(7) Qatar

6

8

(8) Denmark

5

9

(10) Singapore

5

10

(9) UAE

5

( ) = Ranking in 2009 Source: BGC Global Wealth Market-Sizing Database, 2011

Increasingly however, investors are demanding representation closer to home – regionally or ideally, locally. Reasons for this include a desire for wealth managers to have better proximity to higher growth markets (such as Qatar) and better, more efficient personal service levels. Greater transparency and portfolio management control are also growing themes for GCC HNWI investors, especially those based in Qatar. Interestingly, the 2011 Invesco Middle East Asset Management Study suggests that Qataris exhibit the most aggressive risk/ return profiles of all the GCC countries. To add to this demand for performance, it is also clear from Invesco’s study that GCC investors set the shortest time horizons for their targeted returns, as opposed to the long term investment horizons of sovereign funds and expatriate investors. This presents a challenge to wealth managers - but those providers that can develop innovative, products and services and calibrate their offerings to these local investment characteristics will clearly stand to benefit most as demand accelerates for increasingly sophisticated and tailored financial, capital and risk intermediation services in the country and wider region. For instance, within the GCC, managers need to address and tailor products to the Islamic Finance markets. Alongside conventional funds, Shari’ah funds have been rapidly growing in popularity. Although only 35 percent of funds in the GCC are Shari’ah compliant, the number of funds and asset allocation to these funds has been steadily increasing. This growing demand continues to open avenues for asset management as well as insurance and banking services, while fostering the growth of local capital markets and will reward those committed to serve the unique needs of the region’s HNWIs.

To read more about the Boston Consulting Group’s 2011 Wealth Management report and the topic itself, please refer to the Business Insight interview with BCG’s Douglas Beal, on page 72 of this issue. TheEDGE

25


FINANCE & ECONOMICS

Market Watch • Inside Edge • Special Report • Balance Sheet • Economic barometer

The GCC: A Royal Alliance? (P.36)

Karim Nakhle tackles the recent and, in some quarters at least, controversial decision by the GCC to accept Morocco’s application to join their ranks, as well as their invitation to Jordan. While both are Arab states, neither of these countries is situated in the Gulf; however, like almost all the GCC states, they are monarchies troubled by protests and unrest, which has raised suspicion that more than economics might be at play...

ALSO IN THIS SECTION: • Market Watch: Dheeraj Shahdadpuri examines how the financial fallout from the MENA unrest will affect its economies in divergent ways (P.28). • Inside Edge: As the ICT industry expands rapidly in Qatar and the Middle East, Manjeet Chhabra looks at the sector’s future growth potential (P.30). • Special Report: Greg Harris looks at the latest developments, investments and competition in Qatar’s construction sector (P.32). • Balance Sheet: Kanchan Ghoshal illustrates how companies can engage their employees to make a significant impact on the bottom line (P.34).

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MARKET WATCH

A divergent

outlook

At a time when the global economic outlook is generally improving, the Middle East and North Africa (MENA) is facing a period of unprecedented changes that will impact the political and subsequently the financial dynamics of the region. As a result, the region’s nations will experience largely divergent economic futures, split to a large degree between oilproducing and oil-importing countries, writes Dheeraj Shahdadpuri

U

ntil late last year, the economic recovery in the MENA region was looking positive, as growth accelerated to 3.9 percent from 2.1 percent in the previous year. As per the International Monetary Fund’s (IMF) projections, by the beginning of 2011, MENA economic growth was expected to further accelerate to 4.6 percent (World Economic Outlook, IMF, January 2011) on account of an improving global macroeconomic climate and strong hydrocarbon receipts for oil-exporting nations. However, the Middle East uprisings have severely dented economic activity in a number of countries in the region, causing the IMF to cut its regional growth projection to 4.1 percent (World Economic Outlook, April 2011). The recent developments in the region have also compelled governments to increase food subsidies, civil service wages and other public spending. While some countries should be able to afford this extra spending, others will find it pressures their debt levels, especially due to the fact that commodity prices in the international markets have elevated since the beginning of the year. OIL IMPORTERS SUFFER The ripple effects of the political events, especially in Tunisia and Egypt, have spread in varying degrees to other nations in the region. Decreased economic activity by way of reduced tourism, foreign capital flows, declining industrial production and shaken consumer confidence, will take its toll on the outlook of affected countries. Recovery from the current standstill situation will not be easy, as financing costs and the cost of insuring sovereign debt, measured by credit default swap, has increased substantially in recent months. Stock markets have plummeted and investors are now compelled to reassess their exposure to the region. This, combined with prospects of higher non-performing loans, could make the situation for the banking sector severe and make

affected countries more vulnerable to a prolonged downturn. Making matters worse is the need to increase government spending, further burdening the already strained balance sheet of oil-importing nations. The current account balance of oil-importing countries could see further shortfall due to elevated global commodity prices, which makes imports dearer. As per the IMF, the average current account deficit of oil-importing nations will increase to 4.1 percent of the total gross domestic product, which last year stood at 3.3 percent. The deficit for Egypt is estimated at 2.7 percent in 2011, and for Tunisia this percentage is expected to rise to 7.8 percent. Lebanon and Jordan could see deficits of 12.9 percent and 8.5 percent respectively. Indeed, as a result of the political events that have taken place recently, the economic growth of oil-importing nations is seen sharply falling to 2.3 percent in 2011 as compared to a healthy 4.7 percent growth rate recorded last year.


MARKET WATCH

Real GDP (% change from previous year) 7%

The Middle East uprisings have caused the IMF to cut its regional growth projection to 4.1 percent.

6% 5% 4% 3% 2% 1% 0% 2008 MENA

2009 MENA Oil Importers

2010

2011 MENA Oil Exporters

Worst hit would be Egypt, where the IMF has projected growth to fall to a mere one percent in 2011. The inflation rate of Egypt averaged 11.6 percent last year and the IMF foresees that the rate could remain in the same range for the current year. OIL IMPORTERS BENEFIT Where oil-importing countries in the MENA region are facing uncertain economic outlook, the prospects of oil-exporting nations have turned positive, with the exception of Bahrain. The Organisation of Oil Exporting Countries crude average (as of early June) for 2011 is averaging US$106 (QR385) compared to last year’s average of US$77 (QR280). This represents a massive increase of 38 percent, and the cause of this surge is mainly the events reshaping much of the Arab world. Many economists and analysts are sceptical that the recent increase in the oil price is isolated from the fundamentals of demand and supply, and is caused mainly by speculators who are betting on the worst-case scenario of a drastic supply disruption from the region. No matter the reason, the high oil price has brought windfall gains for crude supplying countries. According to estimates by the IMF, the current account surplus of oil-exporting nations in the region (except Libya) might reach as

much as US$304 billion (QR1.1 trillion) in 2011, most of it generated in the Gulf Cooperation Council (GCC) states. This will provide a further cushion to the governments of oil-exporting nations to increase their public spending in order to bolster the pace of economic diversification, which will push growth rates higher. The IMF projects that the growth rate, particularly in the GCC, will reach 7.8 percent, with Qatar at the forefront with projected real growth of 20 percent. The IMF is of the view that the region’s biggest economy, Saudi Arabia, can grow by 4.7 percent if its oil production level remains the same as in January 2011, which was around 8.5 million barrels per day. However, a few oil-exporting nations have also suffered political unrest. The economic situation in Bahrain (GCC member), Yemen and Libya remains extremely uncertain. The economic growth especially in Libya could fall sharply as the violence has severely dented the hydrocarbon sector, which accounts for 70 percent of the country’s GDP. AN OVERALL OUTLOOK With the region undergoing dramatic transformation, the overall outlook for the MENA region is unusually uncertain. In the near term risks are mainly on the downside if political unrest spreads. Protracted unrest could adversely impact investor sentiment and weigh on private sector activity, which will affect the availability of financing. However, on a positive note, the transforming political landscape of oil-importing nations could provide a much-needed boost to their economies in near future. A robust reform agenda could enable these countries to leverage the advantage of proximity to Europe and the emerging economies of Asia. If a tangible and stable political solution is reached, these economies could witness influx of foreign capital, which could make private sector activity prosper. The medium-term goal of oil-exporting nations must be to continue their diversification drives, which could take care of extreme price volatility in the hydrocarbon revenues. Additionally, these nations must focus on developing their financial systems to increase efficiencies and increase their resilience to any future global financial shock. The current changes taking place in the region provide an opportunity to introduce far-reaching reforms in the financial sector, by way of improving legal frameworks to protect creditors and minority shareholders’ rights, introducing governance framework and establishing a secondary debt market to channelise alternate financing. All the figures mentioned in this article are sourced from the IMF. TheEDGE

29


INSIDE EDGE

ELECTRONIC SHIFT

The information, communications and telecommunications (ICT) industry has been at the forefront of staving off global recessionary trends and this burgeoning industry has emerged largely unscathed from the global crisis. As Qatar’s ICT sector braces for the next round of growth, the numbers tell Manjeet Chhabra that the country and the Gulf in general are well positioned to take advantage.

W

ith the growing interdependence of the global economy, the electronic communication needs of businesses worldwide will only increase in the future. Nevertheless global demand patterns are witnessing a tectonic shift, as mobile penetration reaches saturation levels and the next round of growth will seemingly be spearheaded by internet services. The GCC region has followed the global pattern and the players in the region (majority of them government owned) are bracing for the next round. Qatar has been no exception and in fact it is using the opportunity to lead from the front. 2010 has been a landmark year for the Qatari ICT industry as the new e-commerce law was ratified and the 2015 National ICT Strategy was developed. MOBILE SLOWDOWN The International Telecommunications Union’s (ITU) report for 2010 discloses that mobile cellular growth is witnessing a slowdown across the globe. Mobile markets in developed countries are already at saturation levels with average subscriptions at 116 per 100 inhabitants. Moreover, if we peruse the ITU’s ICT Indicators Database for the Gulf Cooperation Council (GCC) states, mobile cellular subscriptions average 171 per 100 inhabitants for 2009, which is more than double the 82 per 100 inhabitant figure for 2005.

This leads to two conclusions; one that mobile subscriptions have grown at a rapid pace from 2005 to 2009 and two that mobile subscriptions have reached a saturation point in the GCC region as well. From here on, mobile subscription growth rates treading in the double-digit region will be a rare occurrence. The average compound annual growth rate (CAGR) for mobile subscriptions per 100 inhabitants for the six GCC states for the 200509 period stood at 20 percent. Saudi Arabia and Oman, which began with a low base, realised CAGR in the 30 percent range, while the United Arab Emirates (UAE) and Qatar have grown at a pace similar to the regional average. The UAE tops the mobile penetration chart in GCC with subscriptions of 232 per 100 inhabitants and is followed by Bahrain, Qatar and Saudi Arabia with subscriptions of more than 170 per 100 inhabitants. This hints at saturation in the GCC markets as well, as far as mobile subscriptions are concerned. BEYOND HANDHELD In the GCC region, the fixed line business has so far played second fiddle to the mobile business, with the fixed line subscriber base displaying a modest 3.27 percent CAGR in the 2005-09 period. Qatar witnessed an 8.56 percent CAGR in fixed line numbers growth, but on the contrary, fixed line penetration per 100 inhabitants dropped from 23 in 2005, to 20 in 2009.


INSIDE EDGE

Internet users per 100 inhabitants 80

2010 has been a landmark year for the Qatari ICT industry as the new e-commerce law was ratified and the 2015 National ICT Strategy was developed.

64 48 32 16 0 2005 Bahrain

2006 Kuwait

2007 Oman

2008 Qatar

2009

Saudi Arabia

UAE

Source: ITU ICT Indicators database However, internet penetration in the GCC region has grown at a CAGR of 22 percent in the 2005-09 period, but average penetration levels still remain low at less than 50 percent. Internet penetration in the UAE is the highest at 75 percent, while Qatar lags behind at 40 percent. During the period under consideration, Oman has witnessed a 67 percent CAGR in internet users per hundred, while Qatar with a CAGR of 13 percent has grown better than only Kuwait which registered a nine percent CAGR. The GCC telecommunications landscape is characterised by the presence of two or three major players in every country and at least one of the players has the government as a key stakeholder. In all, the GCC telecommunications industry has 11 listed players, two each in Saudi Arabia, UAE, Kuwait, Qatar and Oman and one in Bahrain. Between 2006 and 2010, the Qatari companies, comprising of Qtel and Vodafone Qatar, have showed a strong 59 percent CAGR in combined revenue growth from US$1.2 billion (QR4.4 billion) at the end of 2006, to US$8 billion (QR29 billion) at the end of 2010. Kuwaiti companies have lagged behind their peers with a three percent CAGR during the same period, while companies in other countries posted

4,000

16

3,200

12

2,400

8

1,600

4

800

Profit (Thousands)

Revenue (Millions)

Revenue & profitability of GCC listed telecommunications 20

0

0 KSA 2006

UAE 2006

Qatar

Kuwait 2006

Oman 2006

Bahrain 2006

Source: Annual figures for listed companies from Zawya

double digit CAGRs. But on the profitability front, Omani companies led with a 19 percent CAGR, while Qatar’s profitability grew at an eight percent CAGR. QATAR ONLINE Qatar’s telecom industry has been one of the late adopters of the liberalisation policy; until 2009, Qtel was the sole service provider, after which Vodafone Qatar was allowed to provide mobile cellular services. In April 2010, Vodafone was also issued the fixed license thus paving the way for a major liberalisation phase. The National ICT Strategy Plan formulated by the Supreme Council of Information and Communication Technology aims to build the ‘knowledge economy’ in Qatar, which entails a total investment of QR6.2 billion over the 2011-2015 period. According to Qatar’s ICT Landscape Report 2011, Qatar has made significant strides with regards to ICT penetration rates as compared to 2008. According to the report, 84 percent of households had access to the internet in 2010 as compared to 63 percent in 2008. Among them the broadband connectivity has grown at a rapid pace from just over 40 percent in 2008 to 70 percent in 2010. The overall number of internet subscribers has seen a near twelve-time jump from the 2001 levels. The emphasis has been on the telecommunications infrastructure, which has expanded and evolved over the past five years. The Qatari government has been a frontrunner in the drive for market expansion for ICT usage and adoption. This is evident from the fact that Qatar is ranked third in the world for ICT government readiness as per the World Economic Forum’s Global Information Technology Report 2009-10. The ICT plan furthers the government initiatives by aiming to create social benefits from digitised public services information. More tellingly, almost 60 percent of Qatar’s businesses have an internet connection, and 58 percent have broadband connection. This poses an opportunity for service providers to increase internet penetration among the country’s firms. The ICT plan aims to roll out and install a national, affordable, high-speed broadband network with public and private investment, and will also promote the development of an innovative and entrepreneurial ICT market. Qatar has taken appropriate formidable steps to drive into the next round of growth in the telecommunications industry and is ready to play its part in the region’s electronic future. TheEDGE

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SPECIAL REPORT

Qatar:

Building momentum

By Greg Harris

Q

atar’s already-busy construction industry is about to step up a gear, and it’s not just hosting the 2022 World Cup that is going to spur growth. A massive state investment programme to expand the nation’s infrastructure and private sector spending is also tipped to build momentum in the sector. According to Craig Plumb, head of research at Jones Lang LaSalle for the Middle East and North Africa (MENA), Qatar is responsible for 19 percent of all construction-related investments in the region. Qatar is planning to invest at least US$53 billion (QR193 billion) in new projects between now and 2015, with the construction sector set to expand by an average of 12 percent a year, according to a report issued by research firm, Ventures Middle East, in late April. The scale of investment will increase further in the lead-up to the World Cup, with another US$100 billion (QR364 billion) or so of investments in the pipeline. In total, Qatar intends to spend some US$160 billion (QR580 billion) over the coming 11 years on infrastructure and other construction projects, Sheikh Abdulrahman bin Khalifa, the minister of Municipality and Urban Planning, said on May 2. Though it is the World Cup that tends to get star billing when Qatar’s construction sector is mentioned, the planned expenditure for the event is just a fraction of the total investment budget referred to by the minister. The budget allocated for the development of a national rail network, including a light rail system for Doha, is US$35 billion (QR127 billion), dwarfing the US$4 billion (QR14.5 billion) cost of the nine new football stadiums to be built for the games. Throw in the US$23 billion (QR83.7 billion) New Doha International Airport, along with heavy investments in ports, roads and highways – part of the government’s plans to upgrade logistics capacity to keep pace with domestic growth – and the World Cup outlays come to be seen for what they are: just one part of a far larger economic and social development scheme. While the building activity will see benefits flow through the economy, there could also be pitfalls. One concern over the construction boom is its potential to fuel inflation. A sharply increased demand for materials and labour could push up costs in the sector and beyond, bringing a ripple effect for inflation similar to that seen prior to the global financial crisis in 2008, a year in which Qatar’s consumer price index hit an annualised rate of 15 percent. Qatar’s building plans will be impacted by its neighbours, who are similarly investing heavily in new projects, with Saudi Arabia and the

United Arab Emirates in particular pouring billions into infrastructure, residential and commercial developments. This heightened activity, with Saudi Arabia alone looking to invest up to US$200 billion (QR728 billion) in new or already announced projects, will add to the competition for supplies, and could well inflate costs further. However, demand-side pressures could be, in part, balanced by the scaling back on construction projects elsewhere in the region, such as has occurred in the commercial and residential segments in Dubai. This possible slowdown is likely to be short-term, with some projects in countries such as Egypt already being resumed now that political stability has returned. Local materials producers, such as the Qatar National Cement Company are looking to increase their output to meet the requirements for building supplies – with the firm’s general manager, Mohamed Al Sulaiti, saying in early May that new capacity could be added to cope with demand. However, the sheer scale of the government’s infrastructure programme means that there will be a sharp rise in imports of materials. All of this will provide international builders and suppliers with a gilt-edged opportunity, with Qatar and some of its wealthy neighbours competing for their goods and services. With the 2022 World Cup imposing hard deadlines for the delivery of transport, hospitality and infrastructure projects, the opportunities are immense, but the pressure will certainly be on in terms of performance. Greg Harris is the editorial manager at Oxford Business Group.


BALANCE SHEET

the people

Principle Kanchan Ghoshal illustrates how companies can engage their employees to make a significant impact on the bottom line.

S

ome time ago, a leading retailer in the United Kingdom came up with the idea of an ‘employee customer profit chain’, which works on the principle that if an organisation recruits talented people and engages them effectively, this will translate into a better customer experience and, in turn, better business performance. Similarly, a recent research study has revealed that a 10 percent rise in employee engagement leads to a six percent increase in effort, which should in turn, lead to an at least two percent increase in business performance. Both of these examples indicate that employee engagement has increasingly become seen as a key driver of business value. Organisations with more engaged employees have demonstrated a higher retention of key employees, higher productivity and higher customer satisfaction, leading to better achievement of business objectives. An ‘engaged employee’ is one who is focused, passionate about and totally involved in his or her work, and will act in a way that furthers the organisation’s objectives and interests.

In fact, while the 1980s and 1990s saw a business wave driven by a growth and scale agenda, the 1990s saw a wave of standardisation enabled by new technologies. From 2000 onwards, a people and performance wave has taken over. The focus on how people work and create value for customers and their employers has never been higher. In a global survey, chief executive officers were asked which factors were most

important to their company’s success in the next five years. Unsurprisingly, six out of the 11 stated that most important issues were people-related (see table opposite). The top management of a number of prestigious organisations in the Gulf Cooperation Council region, including Qatar, have been continuously and unanimously sharing a similar concern that the most critical challenge facing human resources (HR)


BALANCE SHEET

initiatives and functions today is the need to re-define HR from a traditional, bureaucratic, non-responsive ‘necessity’, to a true strategic partner, providing high-value added activities, and contributing in meaningful ways to the accomplishment of organisational objectives. HR transformation is hence at the top of the agenda for organisations focused on leveraging their people to positively impact their balance sheet. One of the most elusive areas for HR remains the establishment of a tangible link between people and profit. Demonstrating this link in a way that business leaders can understand, endorse and support remains a challenge. This process could begin by people managers and HR professionals trying to address a few fundamental questions: • How does the business make money or deliver on its objectives? • How do people affect the business’s ability to make money (positively or negatively)? • Who in the organisation has a direct impact on revenue? • What are the key tactics your organisation can employ to surpass competitors and increase profits? • How do people support or hinder these? • What changes must your organisation make to be more successful in the future? As this process of linking business strategy to people begins, a few key steps are useful: • Evaluate the tangible return on investment associated with your people • Be clear and objective when defining the value of your talent • Communicate messages that are relevant to leadership in terms they understand

Customer retention

33.4%

Developing and retaning potential leaders

30.5%

Improving product innovation and commercialization

27.7%

Top management succession

27.4%

Mergers/Acquisitions/Alliances

22.3%

Talent identification and growth

22.3%

Reducing costs

18.3%

Engaging employees in company’s vision/values/goals

17.7%

Launching new technology initiatives

17.5%

Making investment/allocation decisions

15.5%

Transferring knowledge, ideas and practices

13.2%

People-related issues

• Be flexible and quick in responding – business direction and objectives are always changing. Employee engagement initiatives linked to the above brought about by suitable HR transformation interventions have been seen to be key drivers of business value in successful organisations. They can lead to higher employee retention and productivity leading to customer satisfaction and better financial results. This however brings us to the key question of understanding whether employees in an organisation are already engaged or are we attempting to work on a non-existent problem? Do we know how our employees are feeling, what are they thinking or saying about the company? Employees in a recession-hit job market recently revealed that 56 percent of them were dissatisfied with their jobs; 57 percent believe their employers are exploiting the recession to drive longer hours and lower pay; 89 percent

Companies with more engaged employees have a higher retention rate of key staff, higher productivity and higher customer satisfaction, leading to achievement of business objectives.

have high levels of anxiety; 73 percent of survivors of layoffs are demoralised; 64 percent are demotivated; 48 percent say their productivity has been affected by fear of being laid off; and 54 percent will look for a new job when the economy improves. There is no ‘rocket science’ involved in HR systems design. The key lies in customisation and implementation. Some typical initiatives and practices found to be useful are as follows: • Merit-based incentives as opposed to adhoc or discretionary bonuses • Customised career-pathing and developmental opportunities • Work hard/play hard culture • Frequent performance feedback as opposed to year-end surprises • Opportunities to take risks and work on new ventures/projects (however small they may be) • Continuous and open dialogue – strong channels of formal communication • Innovative employee benefits and work/ life balance • Transparency and meritocracy Linking business strategy and results to people initiatives and systems is indeed a continuous process and the without doubt, the HR function in an organisation has a key role to play in enabling this. Kanchan Ghoshal is a director with KPMG, leading the People and Change Advisory Practice of the firm in Qatar and Bahrain. TheEDGE

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ECONOMIC BAROMETER

THE GCC: A ROYAL ALL I A N C E ?

Though he is widely known in the West and is considered one of the most progressive Arab monarchs, King Abdullah II bin Al Hussein of Jordan was still considered as a ‘dictator’ by a recent cbsnews.com article. He has been promising widespread democratic reforms for the past few years but despite some mild ‘Arab Spring’ protests in Jordan every Friday for the past four months, remains firmly and resolutely in power. (Image Alex Wong/Getty Images)

While the Gulf Cooperation Council celebrated its 30th anniversary in late May, the six-nation regional economic and political bloc was also considering the membership bids of the kingdoms of Jordan and Morocco. Karim Nakhle looks at the strategic reasons of such a decision, the pros and cons of allowing these two non-Gulf situated monarchies to join, and the potential economic benefits.

One of King Abdullah of Jordan’s recent reforms was to pardon more than 8000 prisoners and annul the charges of 6000 of those awaiting trial in Jordan. Such moves are seen by critics, who also point to Jordan wanting to join the GCC in similar vein, as a blatant ploy to curry favour with the local populace and secure his regime’s rule. (Image Salah Malkawi/Getty Images).


ECONOMIC BAROMETER

T

he Gulf Cooperation Council (GCC), member nations encompass Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates (UAE). These six countries are seen as among the most influential of the Organisation of the Petroleum Exporting Countries’ (OPEC) members and have long relied on their oil wealth to secure political and economic clout, both in the region and beyond. At the celebrations of the organisation’s 30th birthday recently, the leaders of the Middle Eastern bloc welcomed the request of the Hashemite Kingdom of Jordan to join them as their latest addition. The leaders also sent an invitation to Morocco to join the council, and instructed the foreign ministers of the six current member countries to start negotiations with their Jordanian and Moroccan counterparts to complete the required procedures. POLITICAL CONSIDERATIONS Of course, neither Jordan nor Morocco produces significant quantities of oil. But the GCC ostensibly, aims to expand its horizons, some say, by being the umbrella for all the monarchies in the Arab world. This sentiment has been confirmed after the Arab uprising of 2011, which placed most of the region’s monarchies in jeopardy – be it real or merely mildly threatened – including those of Jordan and Morocco. Indeed, the controversial membership of Jordan and Morocco will also potentially have a deep political, social, economic, security and defence impact. Politically, if they become GCC members, these two monarchies would bring to the organisation political situations that generally do not affect Gulf countries at present. For example, Jordan is deeply involved in Iraq and Syria, the latter currently marked by continuing pro-democracy protests. Morocco itself also has unresolved territorial disputes with neighbouring Algeria, which assists the political and military organisation, the Polisario Front. Polisario claims the disputed territory of Western Sahara, from which Spain withdrew in 1976, but Morocco has largely occupied it. The United Nations wants a referendum on the matter, for which many attempts have failed.

Although Jordan has no coastline on the Gulf, nor is it in the Arabian Peninsula, and has some differences in tribal societies structure with the rest of its GCC counterparts, it is geographically linked to Saudi Arabia and both kingdoms share terrestrial borders that stretch more than 700 kilometres. Aside from the political considerations, the prospect of free movement and employment within an expanded GCC for Moroccans and Jordanians is likely to be the subject of intense debate within the current GCC administrations. The influx into the wealthier economies of the GCC of migrant workers from these newly-admitted members might be welcomed if mass migration into the economic powerhouses of the Gulf were to result in the replacement of other non-GCC nationals by Jordanians and Moroccans, since both countries possess large numbers of highly qualified professionals who would be an asset to prospective new employers. However, since their arrival might impact so-called nationalisation programmes created recently in GCC countries to increase the employment numbers of their citizens, these additional migrants might arguably not be so welcomed after all. SHARED INTERESTS Though these potentially new member states will of course share further wealth and resources with the existing members, they also currently already share security forces, in a region plagued with ethnic and religious conflicts. Jordan has one of the best-trained militaries in the Arab region, which usually assists GCC member states in military training and operations. Jordan’s expertise in military is relevant here, as military assistance to combat political reform is one of the many assumptions that seek to explain why the GCC welcomed Jordan’s potential membership. Jordan has even sent a unit of about 800 police and army to assist GCC troops in Bahrain. The force, however, operated under the umbrella of Saudi Arabia to avoid being seen publicly as trying to crush the predominantly Shiite uprising. However, despite this, Jordan, currently facing a US$2 billion (QR7.5 billion) deficit,

is in an economic recession. In addition, it has limited availability of water and energy. Joining the GCC will hopefully allow Jordan access to the vast wealth and resources of member states, and allow it to gain economically from this venture, with financial support and additional foreign investment, tourism and remittances. Jordan is seeking a free trade agreement with the GCC to encourage investment on both sides. The GCC has agreed to boost bilateral cooperation in the trade, economic and investment spheres, and pledged coordination on world, regional and Arab forums in such a manner that fulfils their common interest. Discussion on a technical cooperation protocol between the investment establishments of both parties is currently under process. The GCC promised to study proposals for concluding agreements with Jordan in the spheres of competitiveness, protection of national industrial production, customs, and insurance. The two parties expressed satisfaction over the volume of trade in crude and oil derivatives, and welcomed joint efforts to sign a technical cooperation agreement in the sphere of renewable energy and conservation of energy. The council is also investigating complaints raised by the Jordanian delegation over obstacles facing the Jordanian private sector in trade with GCC countries, particularly the slow clearance of goods exported to GCC markets, especially

A man digs for food in a bin in Rabat, the capital of Morocco. Like many parts of the MENA region, rising poverty and high unemployment have fuelled discontent with the incumbent ruler – in this case Moroccan King Mohammed VI – resulting in violent unrest. (Image Spencer Platt/Getty Images)

TheEDGE

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ECONOMIC BAROMETER

perishable goods, which are often spoiled due to slow import processes. Little has been said about how each of the member nations feels about Jordan joining their ranks. But Kuwait and Oman may have issues regarding Jordan’s decision to support Saddam Hussein during Iraq’s invasion of Kuwait in 1990. Further west, the decision to ask Morocco to join the GCC, came after years of efforts by successive Saudi monarchs to bridge the political differences between Morocco and its neighbouring Algeria. The Saudis would rather have the Morocco-Algeria axis as the basis of a stable North Africa. Morocco is a vital member of the Saudi front in containing the Iranian influence. Indeed, Morocco has been blunt in its criticism of Iran to the point of cutting off diplomatic relations with Tehran. Morocco has a well-developed military that could assist and intervene whenever the GCC members will need it. Morocco previously assisted coalition forces during the first Gulf War and their army has been sending military advisors to GCC country for years and backed the Saudi military effort to support Saddam during the Iraq-Iran war. ECONOMIC BENEFITS If the Moroccans (and the rest of the world) were surprised by the GCC invitation to join their organisation, this was mostly considering its location relative to the Arabian Peninsula, since it is not even located in the Middle East but in on the Atlantic coast of Africa. Moreover Morocco has a completely different political structure that has been marred by financial and economical problems, but nevertheless, GCC leaders view Morocco as the perfect addition to their union in political, military and economic terms. No doubt, joining the GCC will be a winning situation for the Moroccan economy, especially if Morocco implements real democratic and economic reforms. Given its strategic location over both the Mediterranean and Atlantic Ocean, Morocco has always looked to Europe and the United States as trade partners and focused its trade relations with them. Yet, from a geopolitical

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TheEDGE

perspective, joining the GCC will inaugurate a new page in the history of Morocco’s trade with the world and re-establish the old-rooted Arab trade routes. Morocco is already a favourite tourist destination for Gulf residents given its diverse cultural heritage, natural landscapes, food and temperate weather. Its tourism industry will likely also witness dramatic development upon joining the bloc. Moreover, Gulf businessmen already currently invest heavily in Morocco, especially in the real estate industry, and opening the boundaries of the country would result in a significant boom in direct investments and cooperation. Energy is another sector from which Morocco can gain significant benefits as joining the oil-rich club can give Morocco special privileges like subsidised prices of crude oil and gas. AN UNCERTAIN FUTURE Whether there is truth to the wide-ranging suspicions that the proposed expansion of the GCC to Morocco and Jordan is merely just a symbolic show of unity between the ruling Arab royal families to preserve their monarchical systems against the democratic

Joining the GCC will hopefully allow Jordan access to the vast wealth and resources of member states. revolutions sweeping the Arab region, nobody can say for sure. The terms of membership have not been announced yet, and so it is equally uncertain what type of roles Jordan or Morocco will play in the GCC, or if they will receive the benefits available to current member states. Whatever happens, their inclusion will undeniably change the face of politics and commerce in the MENA region, as well as set an interesting argument for the potential inclusion of other regional states, most of whom no longer have ruling monarchies, in the future.

THE GCC’S OBJECTIVES The GCC was created in 1981 to strengthen political and economic unity and coordinate policies among the states constituting the Arabian Peninsula. All six member states are monarchies. Thirty years on, Karim Nakhle asks whether the GCC’s founding objectives have been achieved so far: Formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation and administration, as well as encouraging cooperation of the private sector and setting up joint ventures. Verdict: This has mostly been fairly achieved. Fostering scientific and technical progress in industry, mining, agriculture, water and animal resources.

Verdict: This has yet to be significantly achieved. Establishing scientific research centres. Verdict: This has been achieved on some levels, but each country has their own competing programmes, rather than having joint ones. Strengthening ties between their peoples; Verdict: This has been fairly well achieved. Establishing a common currency by 2010: Verdict: This has not been achieved. Unified military presence (Peninsula Shield Force); Verdict: This has been achieved, though not without political flak.


IN THE SPOTlIGHT

fliGht riSK coUnTInG THe coST oF MoDern airline SecuritY Whether you’re on a business trip to New York, a holiday to Europe, a Hajj pilgrimage to Mecca, or simply visiting family overseas if you travel abroad you’ll invariably travel by air. And if that’s the case, the inconvenience of this model of travelling goes well beyond carrying your heavy luggage around, as security procedures become more invasive and time-consuming worldwide. But, thanks to 9/11 in main, while the global aviation industry cannot afford not skimp on safety and security, what are the hidden costs of all those baggage checks, scans and pat-downs? Mark van Dijk investigates


IN THE SPOTLIGHT

A

irline safety is one of the biggest concerns of the modern age. And why shouldn’t it be? A report released in June by the International Air Transport Association (IATA) detailed 75 separate incidents where passengers using mobile phones caused dangerous interference with the aircraft’s onboard electronic equipment. So that homesick traveller sitting next to you in Business Class, who quietly checked his Blackberry, while the stewardess was not looking? Yes, he could have killed you and everyone else on board. But it seems inconsiderate fellow travellers with an addiction to their electronic devices are the least of our concerns. In our ever-shrinking, terrorised world, can we afford not to worry about airline safety? And are our security fears really grounded? Yes – if you believe the full-body scanners and pat-downs now in operation at most airports. These security checks are considered by some travellers to be so invasive that the state of Texas in the United States (US) recently passed a bill in June criminalising pat-downs by Transportation Security Administration (TSA) agents. The bill, HB 1937, would make it a misdemeanour for TSA personnel to touch various sensitive body parts – and it comes amid threats from US law-makers to cancel flights out of Texas if it were to pass. DESPERATE MEASURES Indeed, for many Americans, the strict security regulations that followed the infamous September 11, 2001 terror attacks have now reached unacceptably strict proportions. “Neither the full-body scanners or the enhanced pat-downs are making anyone safer,” US security expert Bruce Schneier blasted in an opinion piece for the New York Times. “A short history of airport security: We screen for guns and bombs, so the terrorists use box cutters,” he wrote. “We confiscate box cutters and corkscrews, so they put explosives in their sneakers. We screen footwear, so they try to use liquids. We confiscate liquids, so they put…bombs in their underwear. We roll out full-body

Following the tragedy at the World Trade Centre in New York on September 11, 2011, as well as further threats of attack, in the early 2000’s the United States buffed up its formerly lax security on internal flights, exemplified but this sign advising passengers of the necessity of early flight check-in due to increased precautions. (Image William B. Plowman/Getty Images)

scanners, even though they wouldn’t have caught the Underwear Bomber, so they put a bomb in a printer cartridge. We ban printer cartridges over 16 ounces – the level of magical thinking here is amazing – and they’re going to do something else. This is a stupid game, and we should stop playing it. … This isn’t security; it’s security theatre.” Schneier may or may not be right – but what is incontestable is the fact that it’s now much harder to cause trouble on a commercial flight than it was before 9/11. In mid-May this year, just two weeks after the death of Osama bin Laden – the Al Qaeda head who, directly or indirectly, has done more than anybody to influence airline security – passengers on three separate US commercial flights subdued men who were causing disturbances. In one incident, the man tried to open the plane’s front door in mid-air. “The men were all up and out in a minute getting him subdued,” one of the passengers told a US television station. COUNTING THE COST But airline security is of course not solely an American problem nor is investing in tighter measures. Here in the Gulf, where investment in airport development is expected to cost about US$90 billion (QR328 billion)

by 2020 – almost a third of that will be spent on security. “Despite a worldwide slump, the aviation industry in the Middle East region continues to gain momentum,” General Manager of Fujairah International Airport in the United Arab Emirates (UAE), Khaled Almazroui, said in a speech in Dubai in June. “To name a few developments, Dubai has allocated US$10 billion (QR36 billion), Abu Dhabi has allocated US$6.8 billion (QR25 billion), Qatar US$11 billion (QR40 billion), Jeddah US$1.5 billon (QR6 billion), Muscat US$1.2-billion (QR4 billion) and approximately US$2.1 billion (QR8 billion), in Kuwait.” Global airlines are also expected to invest in improving their fleets in the near future. After all, why go through all the effort of ensuring your passengers’ safety, only to put them in a plane that isn’t fit to fly? No airline can afford to risk putting unsafe aircraft in the skies – especially not when an industry leader like Air France has an unenviable record of 23 major accidents since 1990, three of them with fatalities, and a total of 348 deaths. Speaking in June to the journal Military & Aerospace Electronics, Diogenis Papiomytis, principal consultant at the aerospace, defence and security group Frost TheEDGE

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IN THE SPOTLIGHT

and Sullivan, said that the commercial avionics industry is now starting to see an increase in aircraft deliveries and new aircraft programmes. He expects older aircraft to soon be retrofitted, and forecasts the average market growth for commercial avionics at 5.2 percent. But investments in airport security and aircraft avionics are direct costs. Often overlooked are the hidden costs – the money not earned (as opposed to the money spent) as a result of airline security concerns. “Consider what happens, for instance, when travellers are inconvenienced by a new security procedure,” statistician Nate Silver wrote last year in the New York Times. “Yes, most of them will simply pass through the new body-scanners without incident, buy a snack at the Cinnabon, and go on their merry way. But others will do something different: they will be sufficiently annoyed by the procedures that they will decide not to travel by air the next time they have the choice.” Silver points to research from Cornell University, which revealed a six percent drop in passenger traffic when the TSA introduced baggage screening in 2002.

Of course there are knock-on effects on the broader economy if fewer people choose not to fly due to invasive security, but the global airline industry is in such a precarious state right now that it cannot afford any loss of income. Of course there are knock-on effects on the broader economy if fewer people choose not to fly due to invasive security – such as business deals not done because investors didn’t fly to visit potential clients (after all, why bother when you can communicate via teleconference?) – but the global airline industry is in such a precarious state right now that it cannot afford any loss of income. In May, political unrest forced Bahrain’s Gulf Air to lay off 200 employees. “Due to the situation in the region as a whole as well as the Kingdom of Bahrain, Gulf Air

TSA officers give a demonstration of the first Advanced Imaging Technology unit at John F. Kennedy International Airport’s Terminal 8 passenger security checkpoint on October 22, 2010 in New York City. Since then, the intrusive nature of this method, perceived as an abused of personal privacy, has sparked a backlash controversy in the US. (Michael Nagle/Getty Images)

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witnessed a 25 percent drop in bookings in the first five months of 2011,” the carrier said in a statement. A DRAIN ON PROFITS In mid-June, the IATA further downgraded its 2011 airline industry profit forecast to US$4 billion (QR15 billion). On expected revenues of US$598-billion, that signals a 54 percent fall compared to the $8.6 billion (QR31 billion) profit forecast in March, and a 78 percent fall compared to the $18 billion (QR66 billion) net profit recorded in 2010. “Natural disasters in Japan, unrest in the Middle East and North Africa, plus the sharp rise in oil prices have slashed industry profit expectations,” IATA director general, Giovanni Bisignani told the media. “That we are making any money at all in a year with this combination of unprecedented shocks is a result of a very fragile balance. The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel but with a dismal 0.7 percent margin, there is little buffer left against further shocks.” Those “further shocks” could, of course, come in the unexpected form of an erupting volcano. Ash from Iceland’s Grímsvötn volcano grounded hundreds of flights in Northern Europe in May, while ash from Chile’s Puyehue volcano had the same effect on flights in South America two weeks later. Then again, more tellingly, those “shocks” could also come in the form of thousands of stay-at-home passengers, who don’t want the hassle of not being allowed to carry


IN THE SPOTLIGHT

CRASHING TO EARTH

The Five Most Notorious Airline Incidents Of All Time December 1977 Malaysia Airlines Flight 653 crashes near the Malaysian village of Tanjung Kupang, killing all 100 passengers on impact. While the exact circumstances remain a mystery, the plane appears to have been hijacked by a lone member of Japanese Red Army militia group when it reached cruise altitude.

and the fourth - targeting either the White House or the Washington, DC, Capitol Building - crash-lands in a field when passengers overpower the hijackers. In total 2976 victims (plus the hijackers) die and more than 6000 are injured.

December 1988 A bomb destroys Pan Am Flight 103 flying from London to New York, killing all 259 passengers. Sections of the plane fall onto the Scottish town of Lockerbie, killing a further 11 people. Earlier this year, former Libyan government officials claimed that President Muammar Gaddafi personally ordered the attack. October 1990 Xiamen Airlines Flight 8301 is hijacked by a Chinese national seeking political asylum in Taiwan. The plane runs low on fuel and is forced to make an emergency landing at Guangzhou Baiyun International Airport, where it crashes into two other planes waiting on the runway, resulting in 128 fatalities. November 1996 Ethiopian Airlines Flight 961 is hijacked between Addis Ababa and Nairobi, and crash-lands in the Indian Ocean near Comoros when it runs out of fuel, killing 122 of the 172 people on board. Despite initial reports that there were 11 hijackers carrying a bomb, it later emerges that there were only three hijackers - and their ‘bomb’ was in fact a concealed bottle of liquor. September 2001 Co-ordinated suicide attacks see 19 Al Qaeda operatives hijacking four US commercial airliners. Two planes are deliberately crashed into the twin towers of the World Trade Centre, one crashes into the Pentagon, any liquids in their hand luggage, then getting a pat-down from an overly touchyfeely security guard, and then suffering the indignity of having their bodies X-rayed for airport staff to gawk at. “How the new security procedures affect demand for air travel overall is hard to gauge,” Silver wrote in his New York Times piece. “And of course, if they indeed prevent another terrorist attack, the upside would be quite significant, since few events would do more to reduce air travel than another 9/11.”

The events of 9/11 in 2001 sparked a review of airport security, not only in the US but also across the world. (Getty Images)

In a special report compiled for the US Congress a year after those attacks, economic policy specialist Gaile Makinen concluded that: “9/11 is more appropriately viewed as a human tragedy than as an economic calamity. Notwithstanding their dire costs in human life, the direct effects of the attacks were too small and too geographically concentrated to make a significant dent in the nation’s economic output. September 11 did not trip a fragile economy into recession.

“But the net effect has been devastating for the passenger airline industry even with the government aid that has been forthcoming. It is now doubtful that the industry will survive in its present state.” That report was written in 2002. Now, almost 10 years later and amid mounting financial insecurity, the global airline industry simply cannot afford another major security incident. Perhaps this is food for thought the next time you feel yourself becoming frustrated or impatient during your next airport baggage check or pat-down. TheEDGE

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welcoMe To

Doha eXPlorInG QaTar’S Travel anD ToUrISM PoTenTIal


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For a country that boasts very little in the way of mass tourist attractions, Qatar’s agenda for its hospitality industry is ambitious and some would even say, optimistically aggressive. With Qatar Airways now flying to more than 100 destinations, a new airport designed to bring 50 million passengers through Doha in less than five years and a raft of five-star luxury hotels beckoning, Rachel Morris looks at the country’s developing tourism and MICE industries and speculates what might happen in this sector post-2022.

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he cranes have returned to Doha’s skyline. After the slowdown of 2008 and 2009, the sights and sounds of construction – jackhammers, trucks filled with building materials, an influx of workers – echo across the city. And many of these huge construction projects are hotels or hotel residences bearing familiar international brand names in the hospitality sector, including the Marriott, Intercontinental, Regent, Crowne Plaza and Hilton. This hotel building frenzy has sparked the obvious question – who will occupy these rooms in the coming years? And can we expect Qatar to become a tourist icon any time soon? The answers are not a simple yes or no. Realistically, Qatar has never chased the mass tourism market that neighbouring Dubai and

Abu Dhabi have in recent years. It doesn’t have the big ticket items like Grand Prix tracks, fun parks, record-breaking shopping malls and billion-dollar resorts to lure that lucrative and big spending market. So instead, Qatar has looked to other means to get visitors through the arrivals gates at Doha International – some successfully, and others… well, the jury is still out on those. SMALL FIGURES Comparatively, Qatar’s tourism figures are small by regional standards. According to statistics released in 2010, the number of tourists visiting Qatar in 2007 was around 700,000. In 2008, the figure rose to 800,000 and it is hoped it will climb to around 1.25 million at the end of 2011.

The combination of a focus by the Qatar Tourism Authority (QTA) on direct travel tourism, as well as increasing the country’s attraction as a hub of business conferences – as exemplified here by this rendering of the soon to be completed Qatar National Convention Centre (QNCC) – is already resulting in a marked increase in visitor numbers to Qatar. (Image courtesy QNCC).

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According to statistics released in 2010, the number of tourists visiting Qatar in 2007 was around 700,000. In 2008, the figure rose to 800,000 and it is hoped it will climb to around 1.25 million in 2011. Compared with Dubai, who in 2010 claimed to have around 10 million visitors to the tiny emirate (and where they expect to hit the 15 million mark by 2015, global economic downturns notwithstanding), Qatar’s numbers barely register as a blip. However, on paper there is no reason why Qatar couldn’t become a tourist destination. Sitting at the crossroads between Asia and Europe, it is one of the most easily accessible countries in the region. It has 500 kilometres of pristine beaches, world-class museums (see box out) and sporting facilities. But there is more to creating a sustainable tourism industry than just building infrastructure. Much of the country’s hospitality talent is imported from elsewhere and most hotel chains look to Europe and Australia for its executives, and south Asia and increasingly Eastern Europe for staff. Many in the industry are pushing for an approach similar to that in Oman, where Omanis are encouraged to work in the hospitality sector. Qataris have traditionally shied away from the industry but the Qatar Tourism Authority (QTA) and other major operators are working to change this, but so far it has been slow. Currently there is only one hospitality training centre, Stenden, but this offers mainly business-related courses. There are no Qatari hotel general managers and, anecdotally, most establishments struggle to find qualified Qatari staff for key roles. A SPORTING ChANCE Aside from the talent shortage, to attract tourists in the form of sports fans, Qatar has worked hard to establish itself as a sporting destination in the region and has invested US$2.8 billion (QR10.2 billion) for sporting infrastructure. It has kilometres of beautiful coastline with water sports such as scuba diving, jet-skiing, kiteboarding and sailing available, yet these remain more the reserve of the local market and resident expatriates. Meanwhile, the country has spent millions luring world-class sporting events to Qatar’s shores, including the WTA year-end tennis tournament and the ATP tour men’s event as well as the MotoGP and the tour of Qatar cycle race. Yet again, most play to mainly local crowds, lured by the reasonably priced tickets and the novelty of

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2022 aside, although Qatar’s QR10 billion investment in facilities and infrastructure has increased the country’s profile as a sporting destination, this has not quite translated into scores of sports fans, such as the Japanese football supporters cheering for their winning team at the recent AFC Asian Cup in Doha, visiting the country. (Images Getty Images)

seeing major sporting icons in action. In a similar vein, the Pan Arab Games in December is expected to attract around 4000 athletes from around the region and other support crews to Qatar, but few overseas sports tourists are anticipated, despite the fact that this is the first time the event will be held in a Gulf Cooperation Council (GCC) country. MAJOR INvESTMENT Yet, the major hotel chains like Hyatt and Hilton continue to consider Qatar, along with India and China, as a lucrative and solid investment.


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This year alone will see the opening of the much anticipated Hilton, Renaissance, St Regis and Marriott Courtyard and in 2012 the new Intercontinental is also set to open along with other big names. Many of the new entrants are five-star hotels. Boasting room rates in the vicinity of QR1200 plus per night, they occupy a certain market ‘niche’. Meanwhile, other lesser-known brands such as Crystal (which is planning a hotel in Qatar in 2012) also see the country as a place to set up shop. But there are also new ‘budget’ options entering the market including the Qatar Foundation’s first foray into hospitality with the low-cost Premier Inn at Education City due to open in 2012, angling for the traveller not necessarily on an expense account. 2022 ANd BEYONd By 2022 Qatar plans to have 240 hotels ready to take in footballers, fans and other assorted hangers-on. Currently there are more than 120 hotels under construction in Qatar as well as two state-of-the-art convention and exhibition centres (Qatar National Convention Centre at Qatar Foundation) with more than 90,000 square metres of space for events and large-scale conferences. Also scheduled for opening in late 2012 or early 2013 is the New Doha International Airport, which will see an estimated 50 million-passenger movements per year at full capacity. Much of this construction was planned well before the momentous decision last year to hand the World Cup hosting rights in 2022 to this small, young yet stunningly ambitious country. But the question still lingers, what happens after 2022 and what is being done to build a sustainable tourism and hospitality industry in Qatar? “In terms of hotel capacity, all decisions made by operators and investors are based on the long term prospects for the country’s future, not just in tourism but also as a business destination,” says a spokesperson for the QTA, the country’s external ambassador and chief lobbyist for its hospitality interests. “Our role is not just as an external ambassador for Qatar. QTA also works within Qatar to promote the country’s wide range of tourism, cultural and sporting events and facilities. QTA also acts in a strategic capacity, providing vision and advice on major tourism infrastructure projects and acts as a liaison between stakeholders seeking to capitalize on Qatar’s growth.”

There are more than 120 hotels under construction in Qatar as well as two state-of-theart convention and exhibition centres totalling more than 90,000 square metres of space.

By 2022, The St Regis Hotel, which is opening in late 2011, will be one of around 250 hotels in Qatar, collectively offering up to 90,000 beds.

According to the QTA, by 2013 they expect a 400 percent increase in hotel construction within the country and by 2015 they expect to have full capacity to host the World Cup event with the numbers expected. Yet most hoteliers report occupancy rates for most of the year hovering round 60 percent or even less in the ‘off season’. In 2010 the average hotel occupancy rate was around at 60 percent and says the QTA this “shows year-on-year growth in bookings”. “Our figures show that the occupancy rate was put at 50 percent in 2009 after reaching 67 percent in 2008. Huge investments are pouring into Qatar’s hotel sector as confidence grows in the business and travel industry in Qatar and in 2011 we expect approximate capacity of 7089 hotel rooms and 1359 hotel apartments,” the spokesperson said. OF MICE ANd BUSINESSMEN So what about the decade long period in between now and the World Cup? The answer may lie in two very divergent fields – the abovementioned lucrative international MICE (Meetings, Incentives, Conferences and Exhibitions) market and the neighbouring GCC. “QTA is supporting Qatar’s development in sector which we see developing further in the coming years with the opening of the Qatar National Convention Centre this year and the hosting of the World Petroleum Congress 2011,” says the tourism body’s spokesperson. “This will be the biggest event Qatar has hosted and will showcase Qatar not just as a destination but as a place to hold large scale events and conferences. “Qatar is evolving into a world class meetings and events destination. Not only are we hosting WPC 2011 but also the World Chambers of Commerce meeting in 2013.” The QTA highlights that Qatar beat off stiff competition for each of these large-scale events, judged on capacity, ability to host and facilities. “For each event Qatar entered a competitive selection process, highlighting our facilities, access and other attractions,” says the QTA. TheEDGE

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It is understood that Qatar has also been lobbying MICE decisionmakers, those who choose destinations and advise organisations in planning these events including the Association of UK tour operators ABTA and the Annual Congress of German Tour Operators. Currently 95 percent of visitors come for business and they are mainly from the GCC region. Most visitors are in the oil and gas and finance sector, but an increasing number are coming for the slew of trade shows and conferences, which have become a part of Qatar’s business landscape. Much is riding on the Qatar National Convention Centre housed in a landmark building at Education City. The mammoth complex has already scheduled the world Petroleum Congress in 2011 as well as Qatar Health 2012 and future events including QITCOM, the World Postal Congress and the World Chamber of Commerce gathering all over the next three to four years. The QNCC features a 2500-seat auditorium, a 500-seat theatre and a multi-purpose hall for conferences and is one of the biggest in the region. Recently a QNCC spokesperson said that Qatar was “already regarded as a quality destination for meetings and events in the gulf region”, namely for its good facilities and the “ease of access” into Doha from Europe and Asia. This is not lost on the QTA, who have been plying the travel trade fairs extolling the virtues of the tiny desert nation. During 2010, approximately 140 conferences and exhibitions took place in Qatar on topics as diverse as oil and gas, finance, real-estate development, medicine as well as international conventions and meetings sponsored by the United Nations. “Our marketing and promotion efforts target tourist-exporting countries with the aim of attracting tourists who may be interested in the tourist attractions and popular destinations in Qatar,” the QTA spokesperson said. “QTA set for 2010 an intensive awareness campaign for European countries and to follow in 2011 the Asian countries, and continues awareness campaigns in the Middle East.” 48 hOURS IN QATAR They have also embarked on an interesting strategy to parlay this boom in business travellers and transit passengers into more value for their tourism buck. It is hoped that this will develop a rich vein of visitors to Qatar over the next five years and beyond 2022. It is also cheeky in that it recognises that Qatar, unlike Dubai, might not necessarily have the ‘glamour’ attractions nor as many as Abu Dhabi to lure tourists. “An estimated 50 million passengers will come through the New Doha International Airport when it opens fully in 2012, with a capacity to handle 320,000 planes. QTA is targeting five percent of these passengers to stay an extra 48 hours in the country beyond their initial scheduled stopover, totalling 2.5 million travellers, hence our successful marketing and promotional Campaign ‘48 hours in Qatar’ which will continue for 2011,” says the spokesperson. The strategy can best be described as ‘slow and steady’. The aim is to increase visitor numbers steadily to a 20 per cent increase over five years, in an effort to ensure infrastructure (not just hotels but museums, malls and other facilities) keep pace with arrivals.

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The Qatar Tourism Authority campaign is targeting five percent of transit passengers to stay an extra ‘48 hours’ in the country beyond their initial scheduled stopover LARGER NUMBERS As part of its ongoing tourism efforts, the QTA, in partnership with hotels and other operators in Qatar, are looking to our GCC neighbours for an increase in visitor numbers and it is already paying off. In 2011 alone, with the region beset by revolution, civil war and other strife, Qatar saw its visitor numbers shoot through the roof. Savvy Qatar-based hotel chains including the Hyatt and Four Seasons have sent sales delegations to neighbouring Saudi Arabia to encourage those who might have chosen Bahrain, Egypt or even the occasionally unstable Lebanon for their summer breaks to come to Qatar. And the results have been extraordinary. Occupancy rates for all hotels in the country are up nearly 10 percent in 2011 compared to last year, according to statistics released by QTA in May. Spurred by the Asian Football Cup held in Doha in January 2011 and the abovementioned events in the Middle East, occupancy rates for that month were 24 percent higher than for January 2010. On average, hotel occupancy rates were nine per cent higher for the first quarter of 2011 at 68 percent compared to 59 percent in 2010. The month of February also saw a significant increase – eight percent higher than 2010. Meanwhile, GCC travellers, many of whom would have taken trips to Bahrain, the traditional playground of Saudis and Kuwaitis, flocked to Doha in the first three months of 2011 – looking for a safe, close and easy destination. Many Saudi visitors can easily drive to Qatar and there are no issues with visas. In terms of GCC travellers to Qatar, Saudi Arabia recorded the biggest increase in visitors from 71,943 in 2010 to 117,894 visitors in the first three months of 2011 – a staggering 64 percent increase. There were 30,787 visitors from the UAE and 18,249 from Kuwait in the first quarter of 2011. “From a leisure perspective, Qatar is starting to get more Saudis and western Asians and there the GCC market that is growing,” said Starwood hotels, which operates the W and Sheraton brands in Qatar, Senior VP and regional director Middle East Guido de Wilde. Hospitality consultant and General Manager of Viability, Guy Wilkinson, said at April’s GM’s debate on the effects of the World


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Cup on the tourism industry, of Qatar’s tourism strategy that it was “selective” and this had set it up well for the future and would be able to “pick up the slack”. “It’s a long time and with the wealth at their disposal, the Qataris certainly have the potential to achieve this,” Wilkinson says. Starwood’s De Wilde is also optimistic about Qatar’s efforts to

maintain interest in the country pre and post World Cup 2022 and falls into the “build it and they will come” camp. “Typically,” he said, “Qatar has always been a corporate destination and with the infrastructure, construction of the port, the nine stadiums being built – with all these projects on the way, automatically that will bring the traveller to this destination.”

for the love oF arT Museum Tourism in Qatar

Standing on the east side of the Doha corniche, with the city skyline in the background, the Museum of Islamic Art (MIA) and its collection of ancient artefacts has been attracting hundreds of thousands of visitors since it opened in 2008. The MIA forms the cornerstone of the Qatar Museums Authority’s (QMA) plans to develop the country into a hub of art and culture for the Gulf region and internationally by developing cultural centres such as Mathaf: Arab Museum of Modern Art, opened in December 2010, and two more museums planned for the future. With its iconic design by Pritziker prize-winning architect I.M. Pei, the MIA is not only boosting tourism but has the potential to attract new businesses to Qatar and could be a springboard for new investments in the arts. Cultural tourism is a key element in Qatar’s tourism drive, which according to Qatar Tourism Authority (QTA) visitor figures will reach 1.4 million a year by 2014 and is expected to grow exponentially in the lead up to the 2022 World Cup. “Infrastructure throughout the country continues to develop and expand presenting a new and modern environment in the heart of traditional Arabia and the new museums and other cultural attractions planned by the QMA are greatly contributing to this growth,” said a QTA spokesperson. “Qatar has established itself as a cultural destination on the agenda of many travellers looking to experience both the country’s Arabian heritage and the benefits of its support of the arts through establishments like the MIA and Mathaf.” The QTA believes the country is increasing its profile among those wanting to know more about the Arab world’s contribution to the arts, because of the recognition both institutions have received internationally. QMA was established in 2005 with the aim of upgrading the museums and improving the archaeology sector as well as archaeological excavation. The opening of the MIA in 2008 was a global news story and a defining moment in its history. “We have been impressed by the overwhelming public interest in museums from our visitors from Qatar and around the world,” said Roger Mandle, QMA’s director. “The Museum of Islamic Art receives about 300,000 visitors per year which for a country with the population of Qatar is significant.

“With the opening of the Museum of Islamic Art in 2008, Qatar became the place where the public can appreciate the great treasures of Islamic heritage, which spans centuries and cultures. When Mathaf opened in December 2010, Qatar also became the place where it’s possible to explore and discuss the creations of Arab artists of the modern era and our own time.” Housed in the former Al Wajba preparatory school in Education City, Mathaf was transformed by French architect Jean-François Bodin into a contemporary 5,500 square metre two-story art museum. The museum consists of a 6,000-strong collection donated by Sheikh Hassan Al Thani, dating back to the 1840s, and it offers visitors an unprecedented history of impressive contemporary Arab art by more than 100 artists. Future plans include The National Museum of Qatar designed by Jean Nouvel, which has a collection of 8,000 historical objects that will tell the story of Qatar, and the Museum of Orientalist Art. The QTA said that every delegation of visitors it brings to Qatar, as part of its efforts to promote the country, is taken on a tour of the museums, a practice often repeated by Doha’s business leaders. With the creation of the museums it is possible that Qatar will develop its own indigenous and sustainable art market in the future, which will benefit the economy in new ways, and with their impressive designs and collections they will ensure Doha continues to attract worldwide attention. – Adrian Murphy.

The Museum of Islamic Art on the Corniche in Doha is but one of the cultural institutions in Qatar designed to attract regional and international tourists to the country.

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eMiSSion Modern aviation faces a grand challenge in how to meet rising global demand while slashing carbon emissions. Some governments have favoured an interventionist tax-led approach. But in the Middle East, where the sector’s growth is expected to drive national economies, altogether different tools are required. Edward Jameson reports


ON THE PUlSE

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n 2010, as the world worked its way out of the great recession, global greenhouse gas emissions hit a record 30.6 billion tonnes. The International Energy Agency (IEA) figures represent “another wakeup call” to increase efforts to curb carbon emissions, says IEA chief economist, Fatih Birol. The figures indicate that emissions are rising significantly faster than they should if the globe is to hold long-term average temperature increases to the stated goal of two degrees Celsius above preindustrial levels. It is widely estimated that the aviation sector is responsible for around two percent of global carbon emissions, equal to over 600 million tonnes annually. This compares to 14 percent (4.3 billion tonnes) within the wider transportation sector, including road, rail, air and shipping; and 25 percent (7.7 billion tonnes) within the electricity generation and heating sector. Huge efforts are underway globally to cut emissions from road transport and power generation, with the shift towards renewable energy sources slowly pulling down emissions in many countries. Similarly, within the aviation industry, which is getting bigger, fast, the challenge of cutting emissions while sustaining its strong growth trajectory is a grand one. Taking both the passenger and cargo sectors combined, aviation is expected to grow at a rate of 4.5 percent per year through to 2050, according to the World Economic Forum. That equates to an industry in 2050 that will be more than five-and-a-half times larger than it was in 2010. the challenGe The aviation industry has set itself a major challenge – it is aiming for carbon-neutral growth from 2020 onward, and a 50 percent net carbon reduction by 2050 compared with 2005 levels. In the words of International Air Transport Association (IATA) director general, Giovanni Bisignani: “Aviation is united behind the most aggressive climate change targets of any global industrial sector.” At the global level, the aviation sector has begun to explore a variety of means of

The European Union system will apply a charge every time a plane belonging to one of the major airlines touches down in a country that is a member state of the European Union, a controversial decision. striving for its harsh emissions reductions goal without compromising on the growth opportunities presented by rapid industrialisation and economic development the world over. These include both positive and punitive measures, also known as the ‘carrot and stick’ approach. Positive measures include such steps as supporting the development of biofuel production technologies through public subsidies, or designing a market to encourage private sector investment in aviation infrastructure, via stable and guaranteed longterm returns. In light of the scale of the challenge facing the industry, however, many governments have opted to pursue punitive measures alongside positive ones. These include putting a price on carbon via the inclusion of aviation within emissions trading regimes, the primary example of this being the European Union Emissions Trading Scheme (EU ETS). the traDinG lanDScaPe The EU ETS was launched in 2005. The scheme enters its second phase next year and, after having examined several types of market-based solutions such as departure taxes or emissions charges, the European Commission has concluded that the most cost-efficient option of lowering emissions from aviation will be to include the sector in the ETS. According to official EU documentation, compared to a fuel tax or a charge, “Including aviation in the EU ETS can provide the same environmental benefit at a lower cost to society”. In other words, the impact on ticket prices, airline companies and the

overall economy, will be smaller for a given environmental improvement. However, the implementation of such a measure will bring with it a host of additional challenges, namely in the area of global competitiveness – challenges which look set to have an unavoidable impact on the Middle East and Qatar. A new report, Policies and Collaborative Partnership for Sustainable Aviation published by the World Economic Forum, says: “For market-based measures such as emissions trading and offsetting...a global sectoral approach is needed to avoid competitive distortion and negative macroeconomic effects on the industry and the wider global economy.” The primary problem is, therefore, one of competitive distortion which could lead to what is known as ‘carbon leakage’, which in the case of aviation could mean unintended consequences such as airlines running longer flights to avoid flying through a region with carbon levies or emissions trading measures. The EU system will apply a charge every time a plane belonging to one of the major airlines touches down in a country that is a European Union member state. “Some of the major [international] airlines were not too happy,” explains Reed Business Information carbon analyst, Tomas Marzec-Manser “They said ‘We are nothing to do with this exercise,’ But the EU went ahead anyway.” Yet despite such frictions, the chances of multilateral action appear slim. The Middle East is immensely self-sufficient in terms of fossil fuels due to the huge amounts of oil and gas deposited beneath the regions’ waters and sands. Carbon pricing in the western TheEDGE

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Boeing predicts that Middle East air travel will grow by an average of 7.1 percent per annum over the next two decades. world is necessary both for environmental and economic reasons: Carbon pricing is the ‘stick’ that is employed to incentivise a shift away from burning fossil fuels. But in the Middle East, there is no economic necessity to put in place such a punitive policy. The motivation would purely be an environmental one – hence the lack of progress across the region towards an emissions trading system. The problem is not that Middle East governments do not care for environmentally sound policies; it is more the case that economic growth and diversification must come first at such a pivotal time in the global energy economy. Rapid growth In line with the rise of particular states in the Middle East to the upper echelons of the global tourism agenda, air travel in the Middle East region has experienced rapid growth in recent years both in terms of business and leisure travel. The region’s geographical position, as a pivotal transport hub between east and west, has also contributed to this growth. Boeing, comfortably the world’s largest aerospace firm, predicts that Middle East air travel will grow by an average of 7.1 percent per annum over the next two decades. When compared with the region’s estimated economic growth rate of four percent per annum over the same period, according to Boeing, this highlights the importance of the region as a hub – spurring sectoral growth beyond that which could be expected at a regional level. “Although the region’s oil wealth is certainly a driving force, the remarkable growth of air travel and growing prominence of Middle East carriers also owes to geography, demographics, improved airplane capabilities, and the airlines’ well-coordinated

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The Middle East opts for the carrot rather than the stick in the battle to reduce carbon emissions in the aviation sector. growth and investment plans,” Boeing says in a statement. “Middle East demographics favour continued air travel growth”. Over the next three decades, according to Boeing figures, QR175 billion is committed to airport projects to significantly increase the number of passengers able to visit Dubai, Doha, Jeddah, Abu Dhabi, Cairo, Bahrain, Kuwait, and Muscat. Carrot or stick? The true challenge facing the airlines therefore, in the face of such growth, is how to meet demand on a sustainable footing; economically, socially, and environmentally. The industry’s goal is a 50 percent net carbon reduction by 2050 compared to 2005 levels. The WEF report identifies a number of possible mechanisms that the industry could turn to in pursuit of its goals. Overall, positive incentives are seen as having a higher potential to increase investment in reducing carbon in the aviation industry than green levies and taxes. The WEF cautions that taxes usually result in a “net outflow of funds from the industry that inhibits investment in carbon reduction projects”. It could thus be argued that the adoption of a carbon pricing mechanism across the Middle East could result in such an outcome. Principally, the report identifies biofuels as the “game-changing” technological innovation for decarbonising the aviation sector – an innovation that costs money to develop. And such work is already underway in the Middle East. Qatar Airways is spearheading a project called the Qatar Advanced Biofuel Platform, which aims to pull the fledgling technology through to commercialisation. Meanwhile, Etihad Airways is undertaking a project to develop and commercialise

saltwater agricultural for biofuel for aviation purposes. The Middle East has to date opted for the carrot as opposed to the stick in the global battle to reduce carbon emissions within the aviation sector, a strategy that may

pay dividends for the region’s economies. On an infinitely more important note however, with global greenhouse gas emissions hitting new highs in 2010, it may also contribute to a higher goal – that of saving the planet.

doha, dubai and abu dhabi: Battle of the hubs As in any growing market, competition between the aviation hubs across the Middle East is fierce, and getting fiercer. The political turmoil that has struck certain states in the region throughout the year to date dampened aviation growth figures to an extent. For example, in February, the most recent month for which figures are available, year on year growth in passenger numbers fell to six percent according to the International Air Transport Association. However this merely represents a one percent decline from what had previously been projected, hardly cause for concern. Such growth has seen a number of states bid for a piece of the ever-growing pie. Due to open for business next year, the New Doha International Airport is being built to handle 50 million passengers per year, and two million tonnes of cargo. The hub’s development has partly been driven by the aggressive growth strategy of Qatar Airways since the ascension to chief executive of Akbar Al Baker. However, even this sprawling development is put in the shadows by Dubai’s underconstruction Al Maktoum International Airport, the first phase of which began operations in June last year. The hub is expected to become the largest freight handling airport on the planet by 2013, dealing with 12 million tonnes of cargo annually. Upon completion, which is expected around 2020, the airport will have the capacity to handle a mammoth 120 million passengers per year. By comparison, the world’s busiest airport at present, Jackson Atlanta International in Georgia, United States, dealt with almost 90 million passengers in 2010. As is the case in Doha, the ambitious long-term development plans for the airport have been partly spurred by the growth primarily of Dubai’s signature carrier Emirates, but also of neighbouring Abu Dhabi’s Etihad Airways. Although the two may appear candidates for direct competition in the cutthroat world of international air travel, only last month Etihad launched a deal designed to encourage its first class passengers – those with money to spend – to stopover in Dubai via the offer of a free night’s stay in a luxury hotel. Such a step represents a rare example of cooperation between individual states. Alongside the rise of giant air travel hubs and international carriers, the growth of budget travel has also contributed to global increases in air traffic. In the Middle East, a host of companies, including Flydubai and Air Arabia in the United Arab Emirates, Kuwait’s Jazeera Airways, Saudi Arabia-based Nas Air, and even Yemen’s Felix Airways, have risen to occupy the budget space, one which has become saturated in more developed markets such as Europe, and Asia outside of the Middle East, both of which host more than 40 budget airlines.

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BUSINESS INTERVIEw

BooK SMarT, cYber SavvY


Business interview

Qatar-based online entrepreneur Jinanne Tabra has parlayed her own childhood experiences, trying to learn more about the language of her father and her lifelong love of books, into a business, one that is helping thousands of Arabic speaking children around the world discover their linguistic roots. Rachel Morris met the founder of what many are calling the ‘Arabic Amazon’, Araboh.com LINGUISTIC ROOTS As a child of Arab lineage growing up in the United Kingdom, with a Scottish mother and an Iraqi father, from a young age Jinanne Tabra felt she was losing her grasp on the essence and fluency of her Arabic language heritage. However, when her family moved to Iraq for a year, when Tabra was in primary school, she recalls how this period formed the foundation of her nascent Arabic language skills – and in many ways gave rise to her future entrepreneurial vocation. In fact, Tabra turned the legacy of her early linguistic difficulties – which she later found out she shared with many other families in the Arabic-speaking diaspora around the globe – into the genesis of her now flourishing online business. “Araboh.com really stemmed from my own struggles with the Arabic language,” Tabra furthers. “I had a tough time learning Arabic in Scotland when I was younger, and I wanted to change that experience for other families and children living around the world. I have always loved to read, as a child I remember taking a flashlight to bed with me so that I could read under the covers when I was supposed to be asleep.” The genesis and what she calls her “light bulb moment” for what would become Araboh.com, came for Tabra from a conversation with her mother, now a librarian in Qatar, about the distinct lack of Arabic language books for children. Tabra, whose family returned to the Gulf several years ago, was then studying business administration at Carnegie Mellon University in Qatar at Education City. Taking the idea for the website to her teachers, she used the resources available at the Doha campus of the world-renowned business school to help her incubate it.

The online bookstore, which has since sold thousands of books around the world, has grown by more than 200 percent since being launched in 2008, obviously hitting the sweet spot many young entrepreneurs crave – that nexus between a growing demand for a service or product and ease of availability. “I launched Araboh because I realised that if I’d had access to fun Arabic books and could have grown to love reading in Arabic as much as I did in English, my Arabic today would probably be a whole lot better than it actually is,” says Tabra, who admits there are not enough engaging, fun and interesting Arabic language books for children on the market. “I believe there is a need for the best Arabic educational tools to be made available for families living in non-Arab countries.” RAPID SUCCESS In just three years, Araboh.com has grown to become one of the biggest portals of its kind in the world. Tabra, as founder and managing director, now employs 13 staff (several part-time) and sends books as far afield as Japan and Australia. With thousands of titles, the main base of the operations is being moved to the United States (US). Tabra had initially set up the logistics side of the business in Sharjah in the United Arab Emirates (UAE), where there is a free zone for businesses.

The site now sells not just Arabic language educational and other books for children, but also DVDs to customers in more than 50 countries worldwide. The company sources books from all over the world including top name publishers such as Scholastic, Academia International and Asala. Like Amazon. com, Tabra’s company draws from sources around the world so customers can come to one place. Recently the Al Jazeera Children’s Channel DVDs Lulu and Marmar have been very popular with visitors to Araboh.com, proving the Qatarbased channel’s wide influence. The site also sells Shakespeare’s works, translated into Arabic. “The majority of our customers are Arab families in the US,” Tabra says. “We also sell books to adult Arabic learners everyone from Japanese college students to US military serving in the Middle East. We have also supplied libraries around the world, everywhere from Australia to Japan, from Norway to Brazil.” The name, ‘Araboh’ also harks back to Tabra’s childhood. In the Gulf Arab countries, adding the suffix ‘oh’ to a name is a term of endearment and is an informal way of referring to someone, usually a child. She added ‘oh’ to the word Arab as a way of showing the company and its products are about communities and families.

In three years, Araboh.com has become one of the world’s biggest portals, shipping books as far afield as Japan and Australia. TheEDGE

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Business interview

The quirky name obviously hit a chord. Tabra has since been named by CEO magazine as one of the ‘Top 30 under 30’ in the Arab world in 2009. But her journey from the early days as a budding student businesswoman has not been without its obstacles, especially in the fledging world of e-commerce and internet marketing. “When Araboh first launched in 2008, there was almost no such thing as e-commerce in the Middle East and just convincing a bank to sign us up was a challenge,” she says. Tabra also had to deal with sceptical Arabic language publishers who had never done business this way before.” Explaining to Arabic publishers that we needed images and data on their products because we would sell them online was pretty foreign - it ended up being easier for us to scan, weigh and write a summary on every single book ourselves when we started out,” Tabra says. “The lack of an entrepreneurial community in Qatar was also a challenge when I started thinking about a start-up in late 2007. I leaned on my entrepreneurship mentor, Professor George White, at Carnegie Mellon a lot, but I wish I had known of other people in Qatar, especially women, who had established businesses and who I could turn to for advice. “As Araboh has grown over the past few years it has begun to take on a life of its own - I quickly learned that if you’re not very careful with how you run your business, it can start to run you. In Araboh’s early

Tabra was named by CEO magazine as one of the Arab world’s ‘Top 30 under 30’ in 2009. But the journey from the early days as a budding student to businesswoman has had its obstacles. days, I was doing a little bit of everything - but spending all day on spreadsheets and e-mails was slowly killing my passion for the business. I’m not the type of person who’s ever going to be passionate about managing cash flow or organising inventory, so in order for me to stay passionate about the business and to continue to give it 100 percent, I have come to realise that I can’t do everything.” One key discovery for Tabra was surrounding herself with people she trusts and can rely on so she can spend more time on new products and new directions for the company. “I am very lucky to work with a team of people that I trust to take care of some high-level business issues so that I can spend more time developing the business and creating educational solutions for families and children,” she says. “I would encourage any business owner to have enough self-awareness to delegate

True to the inspiration and founding spirit of Araboh.com, Jinanne Tabra and her company are touring Arabic festivals in Qatar and the UAE to promote reading and language skills among the youth. Images courtesy Araboh.com

56

TheEDGE

responsibilities that can pull you away from the reason you started the business in the first place.” MANAGING GROWTH But Tabra, despite the early teething problems, admits she still faces both personal and the expected business challenges as head of her own company. “Today our challenges are very different. The company is now based in the US where most of our customers are, we’re working to overcome challenges like the high cost of shipping products from the Middle East,” Tabra says. “On a personal level,” she adds, “one of the ongoing challenges I face is still my own abilities in Arabic. I run an Arabic website promoting the Arabic language, but if I receive an Arabic business e-mail - it is very difficult for me to reply in the language that I am trying so hard to promote. I would need every email I write to be proofread, twice. So I communicate primarily in English, but I’m conscious that it is a bit of a double standard.” Another challenge has been facilitating a secure, easy-to-use online payment system, which is naturally the cornerstone of all e-commerce portals. “Online payment facilities that serve MENA have improved slightly since we launched in 2008,” explains Tabra, “but the industry is not nearly where it needs to be. A lot of local e-commerce companies are using services like Authorize. net and 2CO, which are pretty much the same as Paypal, work well, but their fee structure is expensive, which makes it tough to scale an e-commerce business using their systems. Alternatively, some banks have set up payment gateways of their own, but a


Business interview

“Our majority of our customers are Arab families in the US. We also sell to... everyone from Japanese college students to US military serving in the Middle East.”

lack of quality service and support from the banks can make it very difficult to do basic things like issue refunds.” Araboh.com now processes all of its payments through the US company First Data, which Tabra says is ranked by Fortune 500 as number one in financial data services and is trusted by companies such as Starbucks and Wal-Mart. “Aligning ourselves with First Data makes our customers feel more comfortable buying online,” she says. “We don’t actually hold credit card data on our site at any point in the transaction, when a customer checks out - they are essentially redirected to First Data’s secure server where their card is processed. It works very well; the process is straightforward on the customer end because it looks and feels like you never leave the Araboh website, but it allows us to pass the credit card responsibility on to a company that is much better equipped to secure it than we would be.”

EXPANSION PLANS Tabra then reveals that Araboh.com is continuing to grow and this month, when the company will launch its new website, she says the changes reflect listening to her customers and what they want, bearing parents in mind the most. “With the new site, Araboh is so much more than just a bookstore. We have created areas customised for teachers and librarians to help them get the most out of their Arabic resources and curriculums,” Tabra explains. “We built a great kids corner packed with educational games, interactive activities and free downloads that will put the fun back into learning Arabic. “My favourite area on the new site is the ‘Parents Section’. Millions of parents living overseas have no choice but to teach their kids Arabic at home, but they don’t know where to start, what resources to use or how to progress. So we have developed step-bystep guides for every grade level that parents

ENTREPRENEUR PROFILE Name: Jinanne Tabra Company: Araboh.com Position: Managing Director and Founder Founded: 2008 Staff: 13 (some part-time) Education: BSc from Carnegie Mellon University Qatar and next month will start Masters in International Education Policy at Harvard Website: www.araboh.com

can follow at home, along with free resources they can download and fun ideas to keep learning fun and interesting. It’s going to make a big difference to a lot of families.” Araboh.com and Tabra are also undertaking a series of visits schools in Qatar and the UAE and hosting Arabic language festivals in the region to promote the language among children. There are also more changes in store for Araboh.com post-summer, according to a tight-lipped Tabra, who says the key to a successful online business is continuing to evolve and use technology. “We have a very exciting announcement lined up for fall 2011. We will be launching a brand new Araboh service that will be the first of its kind in Arabic literature, and I believe the first of its kind to come from an Arab company. We will be launching a beta version of the service in the US before taking it global in 2012. That’s all I can say at the moment.” Tabra, who splits her time between the US and Qatar, says the entrepreneurial landscape in Qatar and the Middle East is changing rapidly. She says she has seen great leaps in terms of access to information and technology since starting her fledgling web portal in 2007 and 2008, making it easier for young people like her with a ‘big idea’. “A lot of this has changed in the past few years - the QITCOM Conference held in Doha (in May 2011 hosted by ictQATAR) recently is a great example, and there are several business competitions that now encourage regional innovation,” she says. “Now when I’m in Doha it seems like everyone I meet is working on a start-up of their own or has an idea they are waiting to run with - this wasn’t the case a few years ago, it is exciting!” TheEDGE

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KNOWLEDGE & EXPERTISE

Innovation culture • BUSINESS management • small business know-how • marketing and design • legal insight

TIME TO MOVE ON (P.60)

i360’s Kamal Hassan believes that many businesses would benefit from business model innovation, and illustrates how the world’s great companies have used this approach to open up new markets.

ALSO IN THIS SECTION: •

Business Management: Part Two in our series by Julian Birkinshaw on aligning an organisation to meet a common goal. Here, he explores why a lateral approach may be your best option (P.62). Small Business Know-How: For new businesses that lack the budget to build brand awareness, Robert Madronic talks guerrilla marketing tactics (P.64).

Marketing and Design: Roula Zinati Ayoub investigates how the concept of employer branding has become a core part of corporate strategy for growth and is a vital component for success (P.66). Legal Insight: Hannah Kennett provides a brief overview of the legal requirements and issues pertaining to owning and operating a hotel in Qatar (P.68).


innovation culture

Reinvent your business i360’s Kamal Hassan shows how the world’s great companies have used business model innovation to open up new markets.

I

nnovation can be a nebulous term; what is innovative to one person may be only clever marketing to someone else. A new technology may solve a problem and bring real value to users, or it may simply be another patent that sits in a drawer – but the company awarded the patent is still called innovative. With such different definitions of innovation, it is no wonder that companies are confused about what it is and how to apply it, leverage it, or profit from it. It’s also not surprising that the phrase, ‘business model innovation’, engenders even more confusion. After all, if innovative products and services are so hard to conceive, how can

an organisation be expected to innovate its business model? And why should they go to such lengths? business model innovation A company’s business model is its plan for creating value, making a profit and differentiating itself from the competition. A business model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs. Using a business model framework – a way to understand your business model in terms of the complete value chain (customers, partners, suppliers and cost structure) – can help you better understand who your

customers are, what value you provide to them and how you do it. Understanding your current business model is the first step to reinventing it using business model innovation. Although a business model is meant to have more longevity than a strategic plan, that doesn’t mean it will remain relevant and optimised forever. Regularly ask questions such as ‘Who are our customers? What value do we offer to them? How do we do this?’ If you get different answers than before, it may be time for business model innovation. You can think of business model innovation as ‘the search for newness’. Innovating your business model helps you


innovation culture

find new customers and new markets, create new offerings and, ultimately, create new value. It can also help you discover new ways of doing business. Dell is a famous example because they innovated the traditional distribution model for personal computers. Instead of selling pre-configured systems, they let customers customise their computer order online, and then built the computer to spec. Changing their business model in this way also required their suppliers to modify their processes, causing a ripple throughout the industry, but one that turned out to be advantageous for the industry and consumers alike. Dell’s business model capitalised on new internet technology, as did the business models of Amazon and eBay. And, nearly 100 years ago, the auto maker Henry Ford leveraged new technology to transform his industry from labour-intensive single car creation to production line efficiency. Today, the rapid pace of technology has made it possible for companies to innovate their business model without waiting for a new technology to arrive – they simply need to look for new ways to use existing technology to deliver a better value proposition. This includes better, faster and cheaper value to current customers, as well as new value that serves a segment of the market that was previously neglected. Is your model threatened? No company today can afford to rest on its laurels. Most industries are very competitive, and if you are one of the few in an industry without much competition, you are likely to be disrupted by someone entering your market at a lower price point or with an equally damaging competitive stance. A recent PricewaterhouseCoopers survey of chief executive officers worldwide reported that the majority of companies are shifting their growth strategies away from existing markets and are instead focusing on creating new products and services aimed at different markets. These companies are looking for ways to diversify their offerings and appeal to new markets because they know there is too much competition to simply rely on price changes, deals or feature-focused incremental

innovations. To appeal to new markets they need to innovate their business model. Thus, every organisation should, on a regular basis, question the who, what and how of their current approach to business, and ask if there is a better way to offer value to customers. Most likely the answer will be ‘yes’ – although the way to improve it may be product, service, process or operational innovation. If none of these solutions will get you where you need to go, it is time for business model innovation. For example, companies in commoditised industries such as telecommunications have been forced to innovate their business models because they can no longer compete on price. Companies that once offered voice and internet services are now offering online games, internet television, videoconferencing and other value-added services to distinguish them from the competition. Your current business model might also be threatened if you offer a high-end product or service that not many people can afford. When (not if) low-end disruptors enter the market, business model innovation may be the only way to compete. Airlines, for example, used to be a mode of transportation reserved for the rich – everybody else took the train, drove, or stayed home. Then United States-based Southwest Airlines disrupted the market by capitalising on operational efficiency and eliminated the ‘luxury’ aspect of air travel. Other carriers, like Ryanair and Air Arabia, copied their model and the whole industry was forced to change its business model in terms of who its customers were and how it served them. These two examples – industry disruption and commoditisation – are reactive reasons to engage in business model innovation, but there are also proactive reasons to reinvent your value proposition. Is opportunity knocking? Instead of innovating your business model because of a threat, reinvent it to take advantage of an opportunity. FedEx recognised an opportunity in the form of guaranteed overnight package delivery. It was the first delivery company to offer this service, its first slogan stating:

“When it absolutely, positively has to be there overnight.” FedEx was able to provide a solution for a ‘job to be done’, shaping an entire industry in the process. Other times there may be an opportunity to serve a large market that is unable to access existing solutions due to price or other constraints. The so-called ‘$100 laptop’ is a computer designed for children in developing countries. The manufacturer uses existing technology in an innovative configuration to make it affordable but also durable. Business model innovations such as these enable established organisations to open up new markets by appealing to the ‘base of the pyramid’ (the poorest socio-economic group) with value propositions that are new to this market (existing offering plus new market equals business model innovation.) Perhaps the argument for business model innovation is return on investment. Statistics show that business model innovators see operational margin growth of more than five times that of competitors who only practice product or service innovation. If your company’s revenues are down or stagnant, innovating your business model could bring significant return on investment and put you back on the path to profitability. Of course, there is inherent risk associated with business model innovation (as with any significant strategic change). But along with great risk comes great rewards – and you can minimise the risk using tools for business model design and innovation. The first step is to fully understand your current business model, using a proven framework for analysing your entire value chain. Spend time analysing your market, competitors, potential competitors, and customers’ (or potential customers’) needs. With this in mind, revisit your business model and consider changes you might make to better serve your customers or expand. There are many companies that have breathed new life into their offerings, revenue streams and their organisations by using business model innovation. Let us learn from these examples and apply the tools of business model innovation to leverage new technology, enter new markets and create new value propositions. TheEDGE

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Business management

Get there

In Part One of our series on setting business goals, Julian Birkinshaw contended that alignment – where every person in an organisation moves together towards a common goal – may not be the best course for your business. In Part Two, he explores taking the lateral approach instead.

L

ateral objective setting is not a new concept. John Kay, a British economist, discussing it as ‘obliquity’, said, “Strange as it may seem, overcoming geographic obstacles, winning decisive battles or meeting global business targets are the type of goals often best achieved when pursued indirectly. This is the idea of obliquity. Oblique approaches are most effective in difficult terrain, or where outcomes depend on interactions with other people”. Kay suggested that companies with oblique goals often outperformed those with much narrower or financially driven targets. A small company in a predictable business environment will often succeed in pursuing its goals directly, through careful alignment

of all its constituent parts. But the more unpredictable the environment, and the more complex the company, the more important the oblique principle becomes. Pursuing an indirect goal It is often beneficial to pursue your ultimate objective through one or more indirect goals. Consider HCL Technologies. In 2006, chief executive officer, Vineet Nayar, began a transformation process to improve the quality of management in the company, and he wanted to lay out his vision in an open forum. He hosted a conference, ‘Explore and Transform’, bringing together customers, analysts and employees. In the closing session, Nayar introduced the concept of ‘Employees First, Customers

Second’ (EFCS). He made it clear that HCL was going to start making choices about which customers it wanted to do business with — even walking away from many smalltime, non-strategic relationships. By creating a satisfying work environment for employees, Nayar argued, the impact would be highly positive for customers as well. This was a risky approach to take in front of a large group of customers. One attendee observed, “EFCS got a good reception, but maybe it would have been safer to socialise the idea with key customers first.” Another recalled that some customers were unhappy and walked out. But the logic behind Nayar’s approach was sound. By telling his customers that they were less important than his employees, he sent a


Business management

later lly very strong and positive message to the entire employee base of HCL. Four years later, EFCS is still a centrepiece of the company’s management model. Employee satisfaction continues to improve and so, in turn, does customer satisfaction. Of course, there is no guarantee that satisfied employees will create satisfied customers, but Nayar knew from his experience in the information technology industry that there was a strong likelihood these relationships would hold and that the risk was worth taking. It is important to state some caveats to this lateral approach. First, there must be a clear and strong relationship between the indirect goal and the ultimate goal, so that by pursuing the indirect goal we can be confident of reaching the ultimate goal. Second, there must be risks, and perhaps even major barriers, to pursuing the ultimate goal directly, so an indirect approach works better. Third, there must be agreement among stakeholders about the nature of the ultimate goal. Pursuing a creative goal The second lateral approach applies to creative and science-based workplaces. Management writer, Bill Breen, wrote about the development process of a drug, having followed a team of diabetes-drug specialists at Pfizer who maintained their enthusiasm despite repeated failures. One interviewee observed, “Science folk don’t live for the big day when a drug makes it to market; they live for the small moments when you see exciting results in journals.” For these scientists, it was the ‘sheer intellectual challenge of the pursuit’ that they cared about. Commercial success didn’t change the way they behaved on a day-to-day basis. Yet, the ultimate objective is clear: Pfizer has to secure a good return on its shareholders’ money. The company knows it will fail if its

research scientists are told to align all their efforts around its financial objectives. Executives in pharmaceutical companies, therefore, allow scientists freedom to pursue early-stage projects on the basis that they can then select which ones to stop and which to invest more money in as their potential value becomes clearer. Pursuing projects for their ‘sheer intellectual challenge’ is not a recipe for commercial success. But some projects end up being successful anyway, so that the money they bring in covers a whole range of failures. Here, employees are encouraged to pursue an intermediate goal — even though its relationship to the end goal is uncertain — and it is then up to the company’s executives to decide when their commercial priorities should be brought to bear.

Taking a leap of faith The third approach to goal setting does not involve executives taking a strong position about the company’s financial goals. The leap-of-faith approach assumes that every company has multiple stakeholders, and that these stakeholders are interdependent. Consider the case of Seventh Generation, a company that makes products such as toilet paper and laundry detergent. The company is committed to becoming the world’s most trusted brand of safe and environmentally responsible products for the home. Decisions about what products to launch, where to sell them and how to source their materials are made according to a different set of principles than those used by Procter and Gamble or Unilever. One such principle is transparency. It is not enough, say, for the company to eliminate a certain chemical from its laundry detergent — stakeholders are involved in the dialogue. While this may seem counter-intuitive, it has helped Seventh Generation thrive.

Another key principle is ‘reconciling systemic dissonance’, which means avoiding a scenario in which one stakeholder wins at the expense of another. For example, WalMart’s purpose of saving consumers money can hurt suppliers, so Seventh Generation does not sell its products through Wal-Mart. A key objective of Seventh Generation is to get other companies to behave more responsibly. According to Hollender, “A lot of what we do is to actually engage with other businesses in helping them think about these things because the solutions aren’t going to come from [us]. We are a little company. Most of our influence is not even on our consumers; most of our influence is on other businesses who look at what we do and say, ‘Wow, that’s interesting. I didn’t think that was possible.’” Seventh Generation’s mission is to create conscious consumers and ensure the sustainable use of natural resources. Nowhere among their objectives is ‘profitability’, yet Seventh Generation’s growth has gone from 25 percent per year in the late 1990s, to 45 percent in 2008. Which way? Alignment-based approaches to setting objectives are best where work is conducted in a linear manner (for example, through a production line), and where there is a reasonable degree of predictability and outcomes are measured. It also works well in small companies where objectives can be quickly communicated. Lateral approaches, on the other hand, are more appropriate in an environment where work involves a high degree of creativity and interactivity, the system in which one operates is complex, and outcomes are harder to predict and measure.

Julian Birkinshaw is professor of Strategic and International Management and deputy dean for Programmes at the London Business School. The EDGE

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small business know-how

How to

shout

Very few new businesses have the budget to book advertising campaigns in expensive media. But, as Robert Madronic illustrates, a creative approach – known as guerrilla marketing – could be your greatest tool for building awareness of your brand.

R

ichard Branson, founder of the Virgin Group, once said, “A business has to be involving, it has to be fun, and it has to exercise your creative instincts.” This month, we focus on creativity as a driver for your company’s marketing efforts. Marketing in Qatar has evolved into a highly professional and sophisticated industry. Of course, if your pockets are deep enough,

you can hire someone to plan a world class advertising campaign, outstanding public relations and leading consumer research. Unfortunately, the marketing landscape has become crowded and extremely competitive. According to the Pan Arab Research Centre, the outdoor advertising market alone in Qatar was worth more than QR240 million last year. However, if you are a new business with limited capital, you are likely to feel overwhelmed at the prospect of competing in this environment. Rather than spending what little money you have trying to carve out a niche in this market, use your creativity, use guerrilla marketing. First coined by Jay Conrad Levinson, ‘guerrilla marketing’ is when a business has little capital and makes up for it by using creativity, effort and time to their advantage. When

starting a business, you are better off spending your capital on revenue generating assets such as vehicles, machinery and inventory, but far too many inexperienced entrepreneurs throw money at marketing efforts that may not achieve the goals they are looking for. Here is a brief list of some of the guerrilla marketing tactics you can use to make your business stand out: Tactic #1: Ambient marketing This is a form of marketing that uses free available locations and assets to advertise your product or service. For example, a restaurant may have several branded vehicles making deliveries around the city, using these vehicles as mobile advertisements. When these vehicles are not in use, they are usually stored at a company location, either in front of the restaurant or


small business know-how

at an employee’s home. To take advantage of ambient marketing, the restaurant can park their unused vehicles at free parking locations around the city so that anyone driving by can see the vehicle which now serves as a billboard but without paying for the privilege. Investigate locations such as the Corniche, mall or stadium parking lots, even on the side of the road in key locations during busy times when not being used by the company. Given the cost of billboard advertising, this is certainly a less expensive alternative, using an asset that has already been paid for. Tactic #2: social networks These are a newer avenue for marketers with effective, long term strategies still evolving. The best way for a new business to use social media is to segment and target their potential customers effectively. For example, if you are a restaurant looking to bring in more business, consider looking for various clubs and organisations in Qatar on Facebook or LinkedIn. Once you identify these groups, offer to host meetings in your restaurant with light snacks and soft drinks provided. You may find that many of the group members will order meals and more profitable beverages. Once the group members have become accustomed to your service quality, they will undoubtedly spread the word. This tactic can also be used by recreation firms offering group discounts or party planners, to name a few. Tactic #3: competitions Using competitions, you can gather contact, demographic and preference information from current and potential customers and then use it for sales and marketing purposes. We are all familiar with the various competitions held by hypermarkets in town. You fill out a ticket for the chance to win a prize. What you may not know is that this is a fantastic way to gather information about current and potential customers. If you offer your product or service as the prize, it is likely that the only people who will enter the competition are those who are interested, and you will, therefore, not waste time and money contacting people that have no desire to use your products. Using

Firms should spend between four and 10 percent of their budgets on marketing, but not everyone is able to spare that much. the information they provide, you can send them text messages about sales, changes in inventory or, for larger purchases like vehicles, arrange for test drives. Tactic #4: ambush marketing This is when numerous people arrive at a location wearing branded items such as t-shirts so that as a group they become a live advertisement. This group can simply move around the location or perform a pre-arranged action to draw attention. Ambush marketing can take place anywhere large groups gather such as the Corniche or a beach. Imagine the attention a business will get if 40 people arrive on the Corniche in branded jumpsuits and simply skip from one end to the other chanting a company’s slogan, or today’s lunch specials. Tactic #5: creative buzz marketing This is when you create a more traditional advertisement but you use so much creativity and imagination, that your advertisement actually creates a buzz for the advertisement itself as much as the company. For example, if you own a drycleaner, you can walk around in a thobe with a huge coffee stain on the front and the name and number of your business on your back. You can even walk up to people and ask them if they know where they can find a good, inexpensive cleaner. Whatever their response, hand them your card and say, “This one is better”. Tactic #6: direct marketing Most people are familiar with direct marketing, but few make effective use of this low-cost marketing strategy. Again, it has to do with identifying potential customers and targeting them effectively. Every week, hundreds of expatriates arrive

in Doha, most working for large companies. If you run a new car rental agency or taxi service, for example, you could contact these companies and offer deals and discounts to their new arrivals, ensuring that they have transportation available without looking for it. When embarking upon a guerrilla marketing campaign, it is important to understand the environment in which you are operating. We all know that the kind of advertising you can employ in Holland or Japan could get you into a great deal of trouble in the Gulf. And when guerrilla marketing goes wrong, it can go very wrong. At the 2004 Olympic Games in Athens, a man dressed in a tutu with his website written across his chest climbed a high diving platform and did a belly flop in front of thousands of fans and millions of television viewers. Perhaps his message was well received but he ended up being sentenced to months in a Greek prison for a variety of charges. It would be wise to keep him in mind when you plan your campaign here in Doha. According to the small business counselling website, Score.org, firms should spend between four and 10 percent of their budgets on marketing, but new businesses will need to spend more to establish themselves. Unfortunately, not everyone is willing or able to spare that much. These tactics, when used properly, can increase your exposure without increasing your costs dramatically. But always remember that the best and most cost effective form of marketing is to do a good job. No matter how much advertising you do of any kind, if your business sells substandard products or has terrible service, people will find out and any money you spend will be wasted.

Robert Madronic is a marketing instructor at the College of the North Atlantic-Qatar. TheEDGE

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Marketing & Design

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In a nutshell, employer branding is matchmaking, creating the perfect relationship between a company and its current and future employees. Roula Zinati Ayoub takes a closer look.

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n employer brand is the ideal way in which to communicate a company’s culture and values, and helps ensure employees fit in with – and are passionate about – the organisational culture, helping a company move forward. Simply put, it is a collection of ideas and beliefs that influence the way a company is perceived by current and future employees. Explains James Wiggins, employer branding practice manager of TMP Worldwide Australia, “Anything an organisation does will influence how people perceive its employer brand…From the way

that jobs are designed, the way that tasks and activities are allocated, the way that managers and supervisors deal with and communicate with their people, through to the way their product or service brand is perceived by the wider market.” A successful employer brand incorporates internal communication, recruitment communication and organisational personality, focusing on the entire employment experience, and reflecting a true understanding of what motivates employees. Continues Wiggins, “It is a case of most organisations not recognising that a whole range of activity – from the way they communicate externally, to the way they communicate internally, to the way they behave internally in developing organisational culture – actually does result in brand perceptions.” “If you are not living the brand values internally, then it is very hard to build the brand externally,” confirms Tim Pethick, founder of Nudie Juice.


Marketing & Design

The term, employer brand, was first used in the early 1990s to describe an organisation’s reputation as an employer. Since then, it has become widely adopted by the global management community. In 2003, a global employer brand survey conducted by The Economist indicated a 61 percent level of awareness of the term ‘employer brand’ among human resources (HR) professionals and 41 percent among non-HR professionals. Jackie Orme, the director general of the United Kingdom Chartered Institute of Personnel Directors, observed, “When I started out in the profession, nobody talked about employer branding. Now it’s absolutely integral to business strategy, resonating well beyond the doors of the HR department.” The value proposition The marketing disciplines associated with brand management have been applied by the HR community to attract, engage and retain talented candidates. As with consumer brands, effective employer branding and brand management requires a clear employer or employee value proposition (EVP), which defines what the organisation would like to be associated with as an employer, highlights the attributes that differentiate the employer from others, and clarifies the ‘give and get’ of the employment deal (balancing what employees are expected to contribute and the value from employment that they can expect in return), otherwise known as the ‘psychological contract’. A recent study indicated that 63 percent of respondents approach employer branding as an ongoing activity, considering it a long-term and strategic process. The same study showed that employers are confident that employer branding will help them address their talent needs. Respondents agreed that employer branding helps them to: - Improve the company’s ability to retain the right talent - Define the kind of people that the organisation wants to retain and promote, creating the right cultural fit - Build a consistent employment experience across the organisation - Be more consistent in internal and external communication - Build employee engagement and increase group performance - Increase the knowledge of the talent market/ segment preferences Compared to internal marketing – which focuses on communicating the customer brand promise and what is expected from employees to deliver on that promise –

A FIVE-step process 1. Research: Understand where your company is positioned in the employment market and determine the action plan. The factors to consider are: how the target group perceives your company; knowing what the target group wants and needs from your company as an employer; and where your company is positioned in relation to competitors. 2. Employer Value Proposition (EVP): What reason do current and future employees have to work for your company? Employers that manage their EVP effectively benefit from an increase in their talent pool and employee engagement. By defining a strong and true EVP, you will be able to deliver consistent communications and develop an attractive and unique employer brand. 3. Communication strategy: Once you know who you want to talk to and what you want to say, you have to choose the most effective and efficient channels for reaching them. 4. Communication solutions: Use the right words and images, consistent with the corporate identity and branding efforts. The communication material should have the same look and feel irrespective of the communication channel, be it in a newspaper, on a website or at an event. 5. Action: Implement all the steps and monitor closely to discover what works and what needs to be adjusted along the way. Set targets for what needs to be achieved in a clear and measurable way.

internal branding, or brand engagement, takes an ‘inside-out’ value-based approach to shaping employee perceptions and behaviours. As Jeff Bezos, founder of Amazon, states, “One of the things you find in companies is that once a culture is formed, it takes nuclear weaponry to change it.” It is not enough to simply assert your way to a new corporate culture – it needs to be continually shaped and managed, leading many organisations to turn from the short-term focus of internal marketing, to the more long-term focus of employer brand management. A great company to work for Many companies spending lots of money and time developing their employer brand. But a terrific starting point for anyone looking into the concept could begin by looking at Fortune magazine’s annual ‘Best Companies To Work For’. Those on this list have effective employer brands, and they realise that it is intellectual capital – what is in the hearts and minds of people – that has the power to truly differentiate and grow a business. They do what is needed to attract, grow and keep their people. Benchmarking how these companies got to the list is the ideal place to begin your employer branding exercise. It is not a difficult process, it is very straightforward and there are several main aspects that need to be addressed. Trust is the essential ingredient for the relationship between employee and employer, and this is made up of three components: credibility, respect and fairness. Other important aspects to study are an employee’s sense of pride (their relationship with their job), and the relationships between employees, or camaraderie. By treating people well, the companies on the Fortune list reap business and financial benefits far superior to their competitors, ensuring their employees are constantly driving the company forward.

Roula Zinati Ayoub is the creative director at Firefly Communications and can be contacted at r.ayoub@firefly-me.com TheEDGE

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LEGAL INSIGHT

Owning & Operating

Hotels in Qatar Hannah Kennett gives a brief overview of some of the legal issues relating to owning and operating hotels in Qatar.

Qatar intended to spend approximately US$100 billion (QR364 billion) on infrastructure projects as part of its National Vision 2030 programme, but securing the 2022 FIFA World Cup has necessitated accelerating some of these projects for completion in time for the tournament. The World Cup is expected to attract around 500,000 visitors to Qatar and as part of its preparations, Qatar plans to have 90,000 hotel rooms available to accommodate fans, journalists, players and their families in more than 240 hotel properties. Currently there are around 9,500 rooms. Within the next five years alone, Qatar intends to invest US$17 billion (QR62 billion) on its tourism infrastructure to make the country more attractive to visitors. There are initiatives aimed at developing Qatar’s heritage tourism and persuading transit and business travellers to extend their stay and experience the country’s tourism and leisure activities with the Experience Qatar in 48 Hours – Our Business is Your Pleasure initiative. There is therefore significant scope for the international hospitality sector to enter the Qatar hospitality market in the coming years. When setting up a hotel, the key initial considerations are: a) The hotel’s location, and b) Who will operate the hotel.

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Property Ownership in Qatar Generally, only Qatari nationals and companies wholly-owned by Qataris can own real estate in Qatar. Yet, there are some exceptions and non-Qataris are now able to acquire or hold an interest in real estate under Law No.17 of 2004 (Law concerning Ownership and Usufruct by NonQataris of Real Estate) by: (a) Owning property at The Pearl Qatar, West Bay Lagoon and Barwa’s ‘Urjuan’ project at Al Khor, and (b) Benefiting from a 99-year renewable right of usufruct in one of the 18 investment areas as specified by the Cabinet Decision No.6 of 2006. Usufruct is not a defined term in Qatar law, however, it is recognised as the right to use property (usually land) belonging to another for one’s own benefit. The right of usufruct is a real property right attaches to the land once it is has been registered. If the non-Qatari is a Gulf Cooperation Council national, they may also own real estate in three designated areas Qatari Diar is developing, namely Lusail, Fox Hills and Al Khuraj, besides the above exceptions. Although foreign entities can legally have property rights in certain areas of Qatar, hotels are mostly owned by Qatari nationals or wholly-owned Qatari companies because of the above restrictions. The Qatari owners then enter into hotel management or franchise agreements with a foreign hotel operator.


LEGAL INSIGHT

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Qatar Tourism Authority Once acquired, the hotel owner will need to obtain a licence to operate the property as a hotel. This licence is issued by the Qatar Tourism Authority (QTA) and will specify the hotel’s permitted activities, for example, providing alcohol and spa facilities to its guests. The QTA is the official representative of the Ministry of Tourism. Its role is to organise, enable and supervise the tourism industry, and also promote Qatar as a tourist destination.

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Commercial Registration As well as a licence, because the hotel will be undertaking commercial activities in Qatar, the hotel owner will need to register the hotel as a business with the Ministry of Business and Trade, and obtain a commercial registration number and register with the Qatar Chamber of Commerce and obtain a municipality licence. If the owner intends to employ non-Qatari nationals, then an immigration card from the Immigration Department at the Ministry of Interior will also be required.

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Agreements Given the limitations non-Qataris face acquiring or holding an interest in property in Qatar, many foreign hotel operators have introduced and promoted their brand in Qatar by managing the hotel for the Qatari national or company. If the foreign hotel operator does not wish to manage the hotel, but still wishes to have a commercial presence in Qatar to promote their brand, then a franchise agreement is available as an alternative. This allows the Qatari owner to use the brand name but make its own separate arrangements for the actual management of the hotel. Hotel Management Agreement Hotel Management Agreements (HMAs) are lengthy and complex agreements whose main purpose is to free up the owner from running the business and provide the operator with the rights, powers and authorities it needs to make it a success. Usually an owner pays an operator a fixed fee and an incentive fee linked to the profitability of the hotel. Owners need to build in protection and control by including provisions regarding budgets, reviews, key performance indicators and protection against certain types of loss. Normally HMAs are created for a long duration and often difficult to terminate. Owners usually seek to include a performance test which allows them to terminate the contract if the operator fails to reach certain standards. This is often calculated by comparing the revenue per room of the hotel with similar hotels in the area. Franchise Agreement Franchise Agreements (FAs) can be very attractive for hotel owners as it gives them access to a known brand’s reputation, marketing and reservations system. FAs can also facilitate securing debt financing as many lenders will not finance hotel construction or acquisition unless they know the hotel property has a strong brand attached to it. For a franchisor, a FA is not particularly onerous. The majority of the obligations rest with the hotel owner. For example, a hotel owner pays franchise fees, it must observe franchise restrictions and maintain brand standards. If the hotel owner does not meet these requirements, then it risks legal action by the franchisor for damages. Other Agreements Consideration will also need to be given as to whether the hotel owner needs to enter into other agreements in respect of facilities for use by hotel guests. These are know as ‘use agreements’ and may include agreements to use spa facilities, tennis courts, golf courses and marinas.

TheEDGE

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05

Employees The legislation governing the employment relationship between the hotel and its employees is Law No.14 of 2004 (Labour Law). Employees are usually employees of the Qatari owner, rather than the hotel operator (if an operator is in place). The Labour Law covers: a) A maximum number of hours that can be worked each day, b) A weekly rest period, and c) Annual holidays. At the moment, there is no national minimum wage in Qatar. The majority of hotel employees in Qatar are non-Qatari nationals. Law No.4 of 2009 (Sponsorship Law) requires all non-Qatari nationals residing and working in Qatar to have a Qatari sponsor, as well as a residence permit and work visa. The Qatari sponsor is responsible for the non-Qatari national while they are in Qatar, including being accountable for any obligations the non-Qatari may enter into, such as bank loans.

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Conclusion Clearly there are significant opportunities in Qatar for the international hospitality sector. Until now, Qatar has predominately been a corporate destination, with leisure guests accounting for only around 10 percent of total demand. However, this is likely to change with the 2022 World Cup. Major investments in Qatar’s tourism infrastructure and other initiatives such as Experience Qatar in 48 Hours will also have a positive effect by enticing more visitors to Qatar.

Note: This article is of a general nature and should not be considered legal advice. Any person or entity requiring legal advice should consult a lawyer. For more information and enquiries, please contact Hannah Kennett (hannah.kennett@ snrdenton.com)

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Guests The Sponsorship Law requires all non-Qatari nationals visiting Qatar to have: a) A visa to enter and remain in Qatar. Tourist visas can be purchased on arrival at the international airport by nationals of 33 countries, including many European nations, the United States and Australia, and b) A Qatari national sponsor who is responsible for them during their stay. For non-Qataris staying at hotels, the hotel is deemed to be their sponsor. The identity and addresses of all hotel guests must be registered with the hotel’s security department within 24 hours of the guests’ arrival at the hotel. The hotel’s manager is responsible for providing the Ministry of Interior with this list. If the hotel cannot account for a guest for more than 48 hours, the hotel is under an obligation to inform the Ministry of Interior.


BUSINESS INSIGHT Inside the minds of leading business figures

Private Wealth Management (P.72)

Financial managers in Qatar and the MENA region, says Douglas Beal, Dubai-based partner and managing director at Boston Consulting Group, are in the enviable position of having an underserviced market of extremely wealthy private individuals at their disposal.

ALSO IN THIS SECTION: •

Undoubtedly the star of Qatar’s inaugural QITCOM 2011, venture capitalist and New York Times bestselling author, Guy Kawasaki, spoke to a standing-room-only audience, explaining the need for courage in a recession

and the acceptance of failure for start-ups, harking back to his experience with Yahoo and Apple. He sat with Rachel Morris to impart advice for TheEDGE’s entrepreneurs, and share his impressions of his visit to Qatar (P.75).


BUSINESS INSIGHT

Wealth Management

New BCG Report shows private wealth in Qatar heralds opportunity for financial sector The Boston Consulting Group (BCG) is one of the world’s leading advisors on business strategy. In June 2011 they released the new edition of their annual Global Wealth Report series, entitled Shaping a New Tomorrow. The report explores continued strong recovery of international private wealth, the standing of millionaire households as well as the implications for offshore private banks and wealth managers, particularly those in the Middle East and specifically Qatar. Financial managers in the latter, says Douglas Beal, Dubai-based partner and managing director at BCG, are in the enviable position of having an underserviced market of extremely wealthy private individuals, both in Qatar and the region. Beal spoke to Miles Masterson about this and other aspects of the 2011 report. Can you please offer a brief explanation, for the uninitiated, of exactly what private wealth management is? Wealth management is the term used that financial institutions use to describe a set of services and products that help individuals preserve and grow the money they have been able to save. Wealth managers typically offer mutual funds, structured products, brokerage services, and for the very wealthy, they offer family wealth structuring and family office services. Are private wealth management services for the very rich only, or where does the term wealthy begin and end? One doesn’t need to be rich to take advantage of wealth management services that financial institutions offer. The ‘mass affluent’ – a term used for those with more than US$100,000 (QR364, 000) to invest – are often served by banks through a special offering – often called ‘gold banking’ or a similar term. The term ‘private banking’ is often used for services provided for the very wealthy – with at least US$1 million (QR3.6 million) [to] US$5 million (QR18 million) or more to invest.

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BUSINESS INSIGHT

How does BCG’s consulting work in the region and how did you come by the facts and figures mentioned in the report? We partner with clients in all sectors and regions to address their highest value opportunities, address their most critical challenges, and transform their businesses. In Qatar, we have worked extensively for several years with government entities and leading companies, including in the financial services sector. I have personally spent most of my time here since 2008. The data in our report comes from BCG’s proprietary global wealth sizing model. Our model has inputs from several sources. First, most of the leading, global wealth managers participate in a benchmarking and thus provide us with their own data, which can be aggregated and extrapolated. Second, we add statistical data – economic, census, etcetera – from countries representing 98 percent of the world’s wealth. And third, we conduct interviews with wealth managers and high net worth individuals in the various regions covered. We use all of these sources together to create the wealth data we have in our report. What were the most significant effects of the economic downturn still being felt in the wealth management sector? One of the immediate short-term effects was a retreat from equities towards less volatile investments – and a willingness to accept less upside if there is a protected downside, for example through a structured product of some sort. Equity markets hit such a low after the financial crisis that they actually became very attractive – and investors who understood the fundamentals began buying again. How did this affect the wealth managers? One of the most significant and long-term effects of the economic downturn on the wealth management industry is the realisation by wealth managers that they need to manage risk better. I’m not talking about credit risk here – I’m talking about reputational risk. There were many wealth management clients who were sold complicated investments that they didn’t understand – even by reading the fine print – and then lost a lot of their savings during the downturn as a result. Wealth managers now will need to focus much more on consumer protection, understanding their clients’ risk profiles better, and being much more transparent about the risks of certain investments. Pointing the client to the fine print isn’t good enough anymore.

“In Qatar nearly nine percent of households are dollar millionaires, and excluding expatriates this figure is even higher for Qatari national households.” Was this echoed in Qatar and the Middle East region? As part of the preparation for our annual wealth report we did dozens of interviews with wealth management clients in Qatar and elsewhere in the Gulf Cooperation Council (GCC). The wealthier clients have multiple banking relationships, many with offshore accounts with international wealth managers in Europe and elsewhere. Many of these clients were disillusioned, yes, after the financial crisis. Many reported that during the boom times they received a lot of attention from their international wealth manager – often in the process of investing in the complicated investments I mentioned earlier – but that this attention stopped during the crisis! One client said to me, “When my investments started going downhill, my relationship manager (RM) didn’t call me anymore.” So, just when clients needed advice the most, they didn’t get it. As a result, they lost their trust in their RMs and their wealth managers. This trust needs to be re-earned through honesty, transparency, and good customer service. Region-specific data shows that the Middle East is becoming an attractive prospect for wealth management services and also for investors from outside the region? There is a high concentration of wealthy households in the GCC, and so customers are plentiful. In Qatar, for example, nearly nine percent of households are [dollar] millionaires, and [excluding expatriates] this figure is even higher for Qatari national households. We recently spoke with many international wealth managers about their thoughts related to setting up operations in the GCC instead of flying their relationship managers back and forth. They reported that historically, Dubai was the first location to promote itself as a services hub for the region – and its relatively liberal lifestyle made it an easy place to send European wealth managers and their families, and so it captured many of the early movers. Those wealth managers not yet in the region, however, suggest that either Abu Dhabi or

Qatar could become their preferred location as Qatar and Abu Dhabi actually have more wealth - both private and institutional – and are now increasingly attractive places to live. Saudi Arabia and Kuwait also have a lot of wealth to invest, of course, but are still more difficult places to send a European family. Now let’s compare Abu Dhabi and Qatar. The Qatar Financial Centre has taken very proactive steps to create a world-class regulatory and business environment to attract international and local financial institutions, while Abu Dhabi has focused more on the development of other sectors. Dubai is the hub of offshore wealth in the region dominated by proximal countries (Saudi Arabia, Turkey, Iran, Kuwait and Russia). Why is this geographic clustering generally the case? What bearing does this trend have for wealth growth in the region? Geographical clustering is a good term for this, and it happens in other geographies as well. Singapore, for example, is the leading offshore centre for Indonesia, Malaysia, and other Southeast Asian countries. Hong Kong is for China and Taiwan. Switzerland is for Europe. This clustering is also reflected in the business models of the international wealth managers, where they base their relationship managers in the respective hubs who then fly out to these countries to visit their clients. This is sometimes called the ‘suitcase model’. Dubai’s history as a trading hub - with large numbers of Iranians, Indians, etcetera, settling there has contributed to its hub status for offshore wealth from the region. Islamic wealth is mentioned in the report, specifically – the potential and relative accessibility, but also the complexities. How does this factor in overall? Yes, in the region there tends to be an inverse relationship between an individual’s wealth and the likelihood they will follow strict Islamic banking principles. This is not necessarily because the wealthy are less religious, but more because until recently there was a lack of TheEDGE

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“Qatar is currently labelled a frontier market, but when it does achieve emerging market status it will be in a better position to attract foreign entities.” credible Islamic wealth management providers, both local and international. The fact that Islamic wealth management is growing much faster than conventional wealth management is an indication that this latent demand is now being met more and more. Shari’ah wealth management is more complex – for example, while maintaining an Islamic mutual fund, additional filters need to be applied and reviewed on a regular basis. While it is easy to screen out some companies – those that deal in alcohol, for example – others may be screened out due to a high debt to equity ratio. A company’s debt to equity ratios change over time, fund managers need to review them regularly. There is [also] a similarity in philosophies between Islamic investing and socially responsible investing – both employ filters to screen out companies and industries that aren’t considered ethical based on their own criteria. And yes, we do see an increase in Westerners and expatriates using Islamic banking services to access certain investment opportunities – many Islamic funds are in fact very high performing. BCG has identified that there are many opportunities for wealth managers to enter the Qatar market, where there is currently more emphasis on the ‘mass affluent’ than extremely wealthy, who are currently being underserviced . Can you explain more about why you feel this is? While many local Qatar banks have wealth management services, the business model and product set they use is really geared towards the mass affluent customers, not the truly wealthy. For example, each mass affluent relationship manager may have 200 or more clients to service rather than 20, 30 or so for a relationship manager that serves very wealthy clients. Many foreign wealth managers are in the Qatari market – but most of them now employ the ‘suitcase’ model where their relationship managers fly in and out – and most of the money is booked offshore. As our data shows, however, even the truly wealthy keep about a third of their money in Qatar, and nearly all of them will have a relationship with a local bank.

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Their local banking relationship might be mainly for retail banking oriented services, and the majority of their wealth may lie in local cash deposits. The big opportunity is for a local Qatari bank to build a true private banking business model to serve these customers. This means highly skilled relationship managers, a full set of wealth products, wealth planning and advisory, trust and other services. This would allow the Qatari bank to turn some unprofitable deposits into significant fee income. It is noteworthy that most offshore wealth in Switzerland and the United Kingdom (UK)/Channel Islands emanates from the MENA region. Can you comment on why this might be? Historically Switzerland was the traditional destination for offshore wealth due to its banking secrecy laws and its comparatively long experience in private banking and wealth management. The UK/Channel Islands are popular domiciles for trust services, which are in high demand in the Middle East due to the frequency of large and complex family structures. Other destinations are becoming more popular over time, however. For example, Singapore is attracting more and more wealth from the Middle East, but this is really only over the past few years. Over-regulation issues in established markets are cited as a reason for growth in emerging and frontier markets and their attractiveness for international investors. However, due to the volatility of the latter, countries such as Qatar ostensibly need to work more towards ‘emerging’ status to truly grow. Can you add anything to this reasoning and how it affects private wealth growth? Qatar is currently labelled a frontier market, but when it does achieve emerging market status it will be in a better position to attract foreign entities to invest in Qatari listed entities. The biggest reason for this is because many large institutional investors – such as American pension funds, university endowments, and insurance companies -

currently don’t invest in frontier markets as they consider them too risky. These same institutional investors will, however, designate a certain percentage of their portfolio to invest into emerging markets. When Qatar becomes an emerging market it will then be eligible for these investments. While this doesn’t necessarily have a direct impact on private wealth growth, anything that reduces the risk and increases the attractiveness of the local markets is bound to have a positive impact on local companies, and hence the wealth of their shareholders. A related issue is the region’s banking sector. Merger and acquisition (M&A) experts feel that some degree of consolidation is required to increase lending potential for M&A activity. How this a factor in the private wealth environment? The banking sector in many Middle East countries is very crowded – Qatar included. Qatar has about 15 local banks competing for a population of less than two million – of which several hundred thousand are not even in the banking system – and so many of the banks just won’t be able to achieve economies of scale needed to be very profitable in the long-term. I have had many Qatari retail bankers comment to me that it is very difficult to make money in retail banking in Qatar these days. Qatar is bound to go through a period of consolidation, and it should happen – however probably slower than it should. I say that because if you look at other countries that historically were overbanked their banking sectors also took many, many years to consolidate which resulted in lower profitability for local banks as many continued operating for years without sufficient economies of scale. Do you have any other final comments or input on where Qatar fits into regional and international wealth management? Qatar’s National Development Strategy states that one of its goals is to diversify into non-petroleum based industries, and financial services is a very logical industry for Qatar to focus on. Qatar is increasingly becoming a hub for financial services, and asset and wealth management is one of the Qatar Financial Centre’s target industries. Qatar’s high levels of wealth, its ambitions, its stable government and booming economy are sure to increase Qatar’s role in the wealth management industry.


BUSINESS INSIGHT

Start-Up Motivation

Guru’s words of wisdom for Qatar’s start-up entrepreneurs Silicon Valley venture capitalist, author, motivational speaker and innovation guru, Guy Kawasaki, visited Qatar in late May, where he was guest speaker at the inaugural QITCOM Conference and Exhibition. The former chief evangelist for Apple spoke to TheEDGE’s RACHEL MORRIS about Qatar’s clarity of vision and playing ice hockey in the desert.

With more than 365,000 followers on Twitter and a book currently on the New York Times Best Seller List, Guy Kawasaki is a man with influence. Beloved by technology enthusiasts for his former association with Apple and his commitment to innovative start-ups, Kawasaki made his first trip to the Middle East to address Qatar’s newest information, communication and technology (ICT) conference in late May.

Kawasaki is a unique and very American brand of media entrepreneurship that is at once loved and controversial. He was one of the early evangelists working with Apple in the 1980s for the launch of the now legendary Macintosh computer which has evolved into not just a laptop, but a way of life. At Apple in the 1980s, Kawasaki was behind marketing the then underdog’s computer

to hardware and software developers, who favoured IBM’s dominant technology. While Steve Jobs co-founded Apple, many in the ICT industry credit Kawasaki for boosting the Mac’s popularity and creating the ‘cult of Apple’ that today sees mania at the company’s stores and waiting lists for their latest products. Brought here by QITCOM and ictQATAR to impart his knowledge to a new generation TheEDGE

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of Middle East entrepreneurs and innovators, Kawasaki admits he was impressed and also surprised by the strides being made by Qatar. He said he was especially encouraged by the emphasis on the fields of technology and innovation, in particular with the support given by the government to a ‘post carbon’ knowledge-based future economy. “Qatar seems quite committed to innovation,” Kawasaki told TheEDGE. “It is certainly ‘putting its money where its mouth is’ as we say in the United States (US). There’s clearly a vision that depending on an infinite supply of oil and natural gas is not the way to go. “I saw such an emphasis on education. I hope that this is something that other countries and organisations can replicate.” Born in Honolulu, Hawaii, in 1954, Kawasaki has a Bachelor of Arts from Stanford University and a Masters of Business Administration (MBA) from University of California Los Angeles, as well as an honourary doctorate from Babson College. He is currently a managing director of Garage Technology Ventures which he formed with veteran entrepreneur Bill Reichert and former Adobe Systems manager Joyce Chung, both Stanford MBAs. Garage receives 3000 start-up pitches a year but only invests in around five. Kawasaki says he didn’t see any pitches in Doha but was certainly impressed with the enthusiasm and commitment. Another Kawasaki venture is his popular news aggregator, Alltop.com which he describes as an “online magazine rack”. His blog, How to Change the World, is listed among the top 2000 internationally. The author of a slew of bestselling books including Enchantment, Reality Check, The Art of the Start, Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way, Kawasaki has become something of a cult figure in the technology and marketing worlds. His tenth book, Enchantment: The Art of Changing Hearts, Minds and Actions, revolves around how to influence what people will do while maintaining the highest standards of ethics. It also looks at launching a business, overcoming resistance, making ‘enchantment’ endure and using technology to work for you. “Enchantment of others, or yourself, is a process, not an event. It’s like fitness: you don’t stay fit without continuous effort. Maybe it’s an Asian thing: simple to learn but a lifetime to master. The best way to keep yourself enchanted is to enjoy the process. We had a

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“Qatar seems committed to innovation…There’s clearly a vision that depending on an infinite supply of oil and natural gas is not the way to go. I saw such an emphasis on education. I hope this is something that other countries can replicate. If you are waiting for the recession to end to start your company, if you have courage, now is the time…A key element for an entrepreneur’s success is courage.” saying in the Macintosh division: ‘The journey is the reward’. If you can embrace this attitude, you’ll be enchanted and enchant others for a long, long time,” Kawasaki writes in the book. Enchantment’s cover features a butterfly and was chosen after a worldwide competition with entries from his Twitter and blog followers. Kawasaki says the winning design is deeply significant to him. “I chose the winning cover design because of the symbolism of changing from a caterpillar to a butterfly. I liked the metamorphosis theme – it depicts what happens to people as they become enchanting,” he explains. Kawasaki hasn’t always been a winner in business. When Yahoo was a small but ambitious start-up in the late 1990s, venture capitalist Michael Moritz of Sequoia Capital, one of Yahoo’s original investors, asked Kawasaki if he wanted to be chief executive officer of the Silicon Valley firm. Kawasaki was skeptical. He couldn’t see how Yahoo’s business model would generate revenue, and he declined the offer. He now calls it his “billion dollar mistake”. Kawasaki’s keynote speech to QITCOM, played to a standing-room-only audience, was a ‘crash course’ for aspiring entrepreneurs and innovators. Kawasaki advises would-be entrepreneurs: “If you have courage, now is the time…If you are waiting for the recession to end to start your company, you may take another one year to finish, whatever you do…A key element for an entrepreneur’s success is courage.” During his visit he said entrepreneurs and innovators must understand there could be failures in their ventures. “I now live in California, where failure is acceptable. So, it definitely does not ruin you, even if you fail. Failure is very much accepted in California. That encourages people to take risks, because it is not a big deal, failing. That way California is vastly different from other states in the United States and other countries of the

world,” Kawasaki said on his visit to Doha. He says his one single piece of advice to would-be entrepreneurs and start-ups was to “build a prototype” – something he says is a key investment in success. “This is more important that writing a business plan, making PowerPoint pitches, or creating a financial forecast,” he said. He says his message in Doha has three distinct and important parts: “Firstly, if you want to innovate, you have to make meaning and not simply money,” he says. “Secondly, great innovation occurs when you jump curves, not compete on the same curve, and thirdly, innovators should ‘don’t worry, be happy’ and ship a prototype as soon as they can – they don’t try to build the perfect version of one.” QITCOM 2011 was billed as ‘Arabs Got Talent for the ICT sector’ and brought together a range of businesses, organisations, associations and committed individuals to showcase technological business solutions to small and medium enterprises in Qatar as well as in the region. Adoption of these solutions are expected to spur growth in the businesses by using cloud computing, e-commerce and other digitisation tactics. Kawasaki said his visit to Qatar opened his eyes and also exemplified many of the things that make this dynamic and visionary country have its own brand of uniqueness. “Three things impressed me about Qatar: First, I loved visiting Al Jazeera [TV]. Most Americans have big misconceptions about what Al Jazeera is doing,” he said. “It [also] did my heart good to see many Macintoshes in the socialmedia group [at Al Jazeera], and the employees’ total familiarity with Twitter and Facebook. “Second, there were many women in high positions of power. It seemed like every man that I met reported to a woman. “Third, playing ice hockey when it was 104 degrees outside was pretty cool.”


LIFE & STYLE A FAMILY-FRIENDLY GOLF HOLIDAY (P.78)

You get to play the Ernie Els-designed 18-hole course on your doorstep, your family gets to luxuriate in a private, serviced Mauritian villa. What is not to love?

ALSO IN THIS SECTION: •

The golf satorialist: When your golf wardrobe is heaving with Caddyshack-style plaid, you need to start over. Let our handy guide lead you through the style perils of bad golf fashion on the links (P.79). Read it: Creative Strategies by Mario Pricken will inspire your marketing and design team to innovate (P.79).

10 career-killing Facebook mistakes: From your status updates to the photos friends tag you in, here are ten surefire ways to turn off current and prospective employers and clients (P.80).


TRAVEL

Slice of holiday heaven An 18-hole Ernie Els-designed golf course with ocean views. A private villa perfect for the entire family. The Anahita resort in Mauritius is exactly where you need to be.

We at TheEDGE are partial to tropical holidays and private villas, which is why Anahita, a resort in Mauritius, has hit the number one spot in our desired travel destination of the month. Surrounded by a golf course, the Anahita villas are just a short stroll from the beach and resort amenities, and offer breathtaking views of the lagoon, gardens and mountains of Mauritius. Choose between three-, four- and five-bedroom luxury villas, all with private swimming pools, contemporary kitchens, large outdoor entertainment areas, daily maid and turndown service. The resort itself features a concierge service, restaurants, in-villa dining services, kids’ club, teens’ club, fitness centre and wellness spa. Best of all, visitors have exclusive access to an 18-hole golf course, designed by South African golfing legend, Ernie Els, with complementary green fees, golf cart and practice balls. With five sets of tee-off areas, a 300-metre practice range, fully equipped clubhouse and stunning ocean views from holes 16, 17 and 18, this is easily one of the most beautiful courses in the world, challenging enough to allow players of all levels a perfectly enjoyable tropical golfing experience. For further information: visit www.villasdemaitre.com or e-mail resa@villasdemaitre.com

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LIFESTYLE

A golfer’s guide to fashion

Thanks to Rodney Dangerfield and Caddyshack, golfer fashion has a bad rap. And while Gary Player may have dodged the trap of mismatched plaid by wearing all black, we can help you with this nifty sartorial guide. That golfers dress badly is a bit of a running joke, and nowhere is this usually more evident than in the golf shop, stuffed as it is with garments of every hue and pattern, and staffed by people who should not be giving sartorial advice. Role models on the PGA tour are even more difficult to come by. Tiger’s too-baggy, pale trousers look terrible, and while Phil might be getting into better physical shape, that means he usually wears too-tight outfits for his age. Ian Poulter is as close to a sartorial role model as we’re likely to get, but his styling does get too over-the-top sometimes. So let’s begin with a solid foundation. Let’s begin with Arnold Palmer in the 1960s. A solid pique polo shirt, solid chino trousers, dark socks and dark golf shoes. On cool days, he added a solid cardigan. Build your golf wardrobe beginning with solids, dark socks and dark shoes. As the weather warms, add some patterned shorts. Experimentation with pattern and colour should only happen from the waist down. And if you’re wearing shorts, keep your socks (always dark to match your dark shoes) barely visible. For the ladies, short skirts are out of the question, and most clubs, in fact, have banned them outright. While many of the women on the LPGA have shown that it is possible to be stylish in sleeveless polo shirts, err on the side of preppy and stick with Capri pants or chinos, paired with a polo or buttondown shirt. Add a sweater vest if the weather is cool. Liz Claiborne, Izod and Nike have fantastic ranges, and you’re also likely to find something suitable at Ralph Lauren.

Read it

Creative Strategies: Idea Management for Marketing, Advertising, Media and Design, by Mario Pricken This is one of those books that you see so rarely in Doha, it’s almost immediately sold out. Indeed, when we popped by Virgin Megastore, we were given the last copy but assured that a new shipment is on its way. It is easy to see why Creative Strategies is so popular. Showcasing 230 amazing campaigns from all over the world, ranging from print advertisements to product designs, it’s a trove of inspiration. Prickens identifies the keys to success and demonstrates how they achieved better relationships between creatives and clients. He explores the strategies that can turn an agency into a creative powerhouse, and, echoing Guy Kawasaki’s speech at QITCOM 2011, shows that it is when people are not afraid to make mistakes innovation can flourish. Available at Virgin Megastore for QR252. TheEDGE

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10 TEN THINGS

career-killing

Facebook mistakes

Surveys suggest that 30 percent of employers use Facebook to screen potential employees. Reason enough then to carefully edit your profile and avoid these career-killing mistakes. No security! Unbelievably, many people haven’t yet visited their security settings page and their profiles are open to all 500 million Facebook users. The best thing to do is lock your profile down so that only friends you approve can see your profile, pictures and comments. Lack of customisation Facebook has come a long way since it was first launched, and it is now possible to customise lists of friends and decide what each list can and cannot see. Alternatively, create a second, public profile purely for professional use, which contains only the information you feel comfortable telling your employer – or potential employer – to their, uh, face. Complaining about your job While everyone complains about work sometimes, doing it in a public forum is a stupid career move. Whether you’re complaining about your job in a wall posting, mentioning your incompetent boss in a public chat with a friend, or creating a status update about your chronically late colleague, nobody will be impressed. You’re where?! “Pauline has checked in at the Franck Provost salon”. Funny, didn’t she say she was off to meet a client? If you’ve decided to sneak off for an afternoon mani-pedi or game of squash at the club, be smart enough not to check in with Facebook while you are there.

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Contradicting your CV Your CV says you went to one university but your Facebook profile says you went to another. You’re likely to be immediately cut from the shortlist – such disparities make you look like a liar, or, at best, careless. The stupid status update “Tom is calling in sick tomorrow for some me-time”, or “Sam is watching the 2005 Champions League Liverpool versus AC Milan replay on YouTube at his desk” are statuses that emphasise you are unreliable, deceitful, and let’s just say it, stupid. No matter how professional you are in an interview, this will undoubtedly undermine your chances at that new job.

Losing by association It’s sad but true, we judge others by the company they keep. So if your friend tags you on a picture of even themselves falling down drunk, or posts a rude note on your wall, it won’t reflect well on you, whether it is a potential employer or new client looking at your profile. Uncontrolled ‘tags’ While your personal photo albums may be on security shutdown, the pictures other people tag of you may not. Take a closer look at your settings and ensure you’ve blocked these as well, as photos in which you’ve been tagged could be more damaging than your own. While you can’t control what your friends do, you are perfectly able to ‘untag’ yourself in their pictures. Your groups Just as a person’s record or book collection says a lot about them, so too do the Facebook groups they belong to. If you’ve joined a group that you wouldn’t be comfortable your boss knowing about, or if it uses offensive language in its title, best be safe and ‘unjoin’. No self-editing Be aware of your online behaviour at all times. Even if you are merely commenting on a friend’s page or picture, make a point to self-edit, and definitely do not use profanity in your online language. You do not know who is watching you...


The Edge - Jul 2011 (Issue 24)  

The Edge is a business magazine targeting ambitious professionals operating within Qatar’s multi-sector business landscape. The Edge is read...

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