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TUESDAY, APRIL 26, 2011
BUSINESS
Dubai airport passengers up 5.8%, unrest slows traffic DUBAI: Passenger traffic at Dubai International Airport rose by 5.8 percent year-on-year in March, Dubai Airports said yesterday, but traffic on Middle Eastern and African routes dropped due to regional unrest. In March, 4.2 million passengers passed through the world’s fourth busiest airport for international passenger traffic, Dubai Airports said in a statement. The number was up 5.8 percent compared to 3.97 million during the same period last year, it said. “Passenger traffic growth continues to be robust. At the current levels we are on track to exceed 50 million passengers this year,” said Chief Executive Paul Griffiths. The company also said 12.3 million passengers passed through the airport in the first quarter, up 7 percent from 11.5 million in the first three months of 2010. Passenger numbers on Middle Eastern routes dropped
23,240, while African routes saw a decline of 24,402 passengers as traffic was affected by political unrest in these regions, Dubai Airports said. Turmoil across the Arab world has toppled leaders in Egypt and Tunisia and challenged autocratic regimes in Libya as well as nearby Bahrain and Oman, discouraging travellers. Dubai, known for opulent hotels and artificial palm-shaped islands, has so far escaped the regional unrest, which
started in December. International freight volumes handled in March dropped by 3.7 percent. The opening of the Al Maktoum airport, estimated to cost around $34 billion, to passengers had been already delayed to the last quarter of 2011 from March. Dubai’s second airport, billed as the world’s largest when it becomes fully operational, should have an expected passenger capacity of up to 160 million people a year. —Reuters
KUWAIT: Public Relations Manager at the Al-Soor Al-Taase’a General Trading Company Ahmad Al-Sarie’a (right) with Samjung official during the signing of the agreement.
UAE forwards at 11-month low, dirham to stay near peg
LG unveils big plans for ME energy solutions market KUWAIT: This year LG announced its plans to become a major player in global energy solutions market by introducing the 3rd version of existing tropical Multi V III, and the newly released VRF Air Handling Unit (AHU) within the [0]Middle East and Africa (MEA) markets. The Multi V III boasts a 4.6 coefficient of performance (COP) for heating and 4.3 for cooling, as well as a bigger capacity per unit with an extended piping length of 1,000m. In addition, LG’s HSS Inverter Compressor greatly enhance efficiency on the Multi V III, reducing energy use by up to 11 percent compared with previous models. LG’s VRF Air Handling Unit (AHU), integrated control system lets users manage air conditioning for an entire building. The AHU provides outstanding heating, cooling and outdoor fresh air conditioning while saving energy. These AHU’s can be used for 100% fresh air application or re-circulating air application. Based around these advanced solutions, LG plans to aggressively expand its market share in MEA commercial air conditioning this year. With the establishment of a full line-up of air conditioning systems, LG is planning to evolve into a total solution provider for the MEA market. Through heavy investment, LG has built up its technical capabilities, by constructing a custom-built AC Academy at Jebel Ali which has been LEED Silver certified ,where LG is customizing products to the needs of MEA consumers. LG Electronics also aims to further heighten the reliability of LG’s products, ensuring they are equipped to work in all weather conditions. Moving beyond its traditional role as a leader in air conditioning, LG is making a for-
ay into the energy business, with solutions including LED lighting and solar power. LG plans to invest $500 million as it ramps up its workforce and R&D, with a further aim of hitting US $10 billion in global sales by 2013. “We’ve developed a range of products and solutions that meet the ever more pressing demands of consumers, while also containing costs and reducing energy consumption,” said HS Paik, President of LG Electronics Gulf FZE. We’re confident that we have every energy solution covered, whatever the business. We already have references with the Multi V, including Al-Gurm in Abu Dhabi, Dubai Arabian Horse stud in Dubai, American Academy School in Abu Dhabi and many more. This proves the awareness and acceptance level of this technology which is popular across the MEA.” Providing technical insight, Senior Manager, Commercial Air Conditioners, Dharmesh Sawant added “With the increased emphasis on local green building codes like Estidama in Abu-Dhabi and Q-SAS in Qatar, tropical Multi V III and VRF AHU solution will help the local authorities to meet its objective. LG supports the stakeholders across the value chain. We have a dedicated team to support the consultants and developers in the concept, design stage, as well as a dedicated team for contractors in the post-tender stage and a dedicated team for facilities management companies. Also the local AC Academy provides training and certifies all contractors to reduce operational headaches due to improper installation. We are confident that this technology will reduce the burden on the power grid which is currently running on peak.”
DUBAI: United Arab Emirates one-year currency forwards fell to an 11-month low yesterday helped by improved liquidity in the banking system, indicating the OPEC member’s dirham would keep near its US dollar peg. One-year dirham forwards edged down to -5.5/5.5 points yesterday, compared with Friday’s close of 6/11 points, traders said. The level below zero implies bets that the currency of the world’s third largest oil exporter will be stronger than its 3.6725 peg to the greenback over next 12 months, pricing in better lending conditions and a stronger economy recovering from Dubai’s debt crisis. Currently “there is a lot of liquidity in the system, things are looking better over the last few months as there have been no hiccups in Dubai or the UAE,” said Lyndon Loos, head of forex trading for Middle East and North Africa at Standard Chartered. Although UAE banks have been flush with cash in recent months, lending has been slow to pick up despite improved business sentiment after stateowned Dubai World reached a deal to restructure nearly $25 billion in September. However, improved liquidity in the banking sector pushed UAE interbank offered rates to more than 14month lows last week. The central bank called meetings with treasurers over the past weeks to encourage them set lower rates. “The recent reduction in EIBOR reflects the improving liquidity situation within the UAE and we expect the 3month EIBOR to reduce further to around 1.75 percent over the coming months,” said Stephen Jordan, general manager for liquidity management and interest rate products at the National Bank of Abu Dhabi. The benchmark three-month offered rate fell to 2.016 percent at the central bank’s fixing yesterday, from 2.023 percent on Sunday. It held above 2.3 percent for several months last year following Dubai’s debt woes. —Reuters
Samjung brings HVAC technology to Kuwait Al-Soor Al-Taase’a signs deal
KUWAIT: Chemmanur International Jewellers’ Golden Draw winner Thulasidas, (membership No. 5947), receives a gold chain with pendant from sales officer Remesh Babu.
KUWAIT: A local building material and real-estate company signed a contract with the Korean-based Samjung Company to become the exclusive agent for the company’s brand in HVAC systems in Kuwait, Saudi Arabia, Qatar and Iraq. “Signing the contract came following an extensive study regarding Samjung’s technology in heating, ventilating and air conditioning (HVAC) technology”, said public relations manager at the Al-Soor AlTaase’a (ninth wall) General Trading Company Ahmad Al-Sarie’a in a press statement, in which he mentioned
devices that the Korean manufacture is specialized in making such as the air handling units (AHU) and the fan coil units (FCU). Samjung’s building team director explained in a statement how his company’s technologies have evolved since secession from the Korean giant Samsung in Januar y 2000 and is looking forward for partnership with the Al-Soor Al-Taase’a company and tie up with their projects in various fields in Kuwait. The projects could include airports, commercial buildings, malls, exhibitions, hotels and hospitals.
UAE economic outlook for 2011 remains upbeat KAMCO RESEARCH REPORT KUWAIT: The economic recovery in the UAE is gaining strength, supported by a favorable global environment but subject to increased regional political uncertainty and a slowdown in the real estate sector Underpinned by its wealth in oil, the UAE’s economy has recorded an overall steady level of growth over the years and the value of GDP has more than doubled from AED 387.8 billion ($105.6 billion) in 2004 to AED 934.3 billion ($254.4 billion) in 2008. Non-oil GDP in recent years, however, has been a main driver of growth, accounting for an average of 65 per cent of GDP from 2004 to 2008. Major non-oil sectors in the economy in 2008 include: Trade (16 per cent), Manufacturing (12 per cent), Real Estate (8 per cent), Construction (7 per cent), and the Financial Sector (7 per cent). Although Abu Dhabi and Dubai contribute the most to the country’s GDP at 56 per cent and 32 per cent respectively in 2008, the latter has played a greater role in the growth witnessed among the majority of non-oil sectors. Additionally, in line with the effects the global financial crisis had on countries around the globe; the UAE wasn’t able to entirely avoid the crisis in the latter part of 2008 and 2009 as evidenced by the 2 per cent contraction witnessed in its 2009 GDP, which stood at AED 914.3 billion ($248.9 billion). The contraction was led by the 22 per cent drop in the oil sector to reach AED 267 billion ($72.7
billion). While non-oil GDP rose 10 per cent, albeit at a slower pace than 2008; thus leading it to contribute a hefty 71 per cent of the UAE’s GDP - a considerable jump from the 63 per cent contribution it registered in 2008. As a result, growth prospects in the UAE over the coming years will undoubtedly be shaped by the pace of the global economic recovery and the slowdown within the real estate sector - particularly in Dubai. Prospects for the long-term health and stability of the economy will depend on the progression of Abu Dhabi’s Economic Vision of 2030 and Dubai’s Strategic Plan of 2015. Additionally, with average oil prices ending 2010 at $77pb, 18 per cent higher than 2009, growth in the oil & gas sector is set to rebound. As a result, the expected increase in the oil & gas sector will help drive GDP growth in the short-term horizon, as well as the government’s expansionary fiscal policies as they will ensure expansion in the non-oil sectors; thus enabling the UAE to deliver towards its diversification strategy goals. It is the government’s redirection of hydrocarbon revenues towards the development of key industries over the long run that will enhance the Emirate’s economy and enable it to compete with emerging markets. According to the IMF, real economic growth in UAE is expected to remain unchanged in 2011 at 3.25 per cent and
non-oil GDP growth is forecasted to grow from 2 per cent in 2010 to 3.25 per cent in 2011; reflective of strong tourism, logistics, and trade in Dubai and large public investment spending in Abu Dhabi. Real estate sector A contraction in real estate growth is expected as a further drop in property prices is forecasted to prevail in the shor t-term horizon as new supply enters the market coupled with lower demand; thus widening the supplydemand gap. The excess supply of property in Dubai, which will increase in light of the expected completion of unfinished projects, will continue to weigh down on property prices and growth prospects. However, massive government investment in infrastructure projects is expected to reignite demand for construction and contracting ser vices while also boosting employment, consequently providing a more solid base for the economy to grow in the near future. Domestic Credit Bank lending is reviving but credit growth remains sluggish. 2010 data from the Central Bank of the UAE (CBUAE) reveals that lending was up 1.4 per cent in 2010 reaching AED 972.1 billion ($264.6 billion), indicative of a slow recovery and bank’s general cautiousness in lending to the economy. In line with the government’s con-
tinued expansionary policies, lending to the government maintained its upward trend reaching AED 100 billion ($27.2 billion) during the in 2010. Lending for construction, on the other hand, decreased 2.6 per cent to AED 122.7 billion ($33.4 billion) in 2010 while credit extended for real estate mortgage loans has witnessed a sense of revival rising 15 per cent in 2010 to reach AED 163.2 billion ($44.4 billion) as of Dec-10. Despite the modest loan growth, continued depositor confidence led deposits to surpass one trillion dirhams, leading the aggregate loan to deposits ratio to maintain its downward trend since the star t of 2010, dropping to 92.6 per cent as of Dec-10 compared to its peak of 101.3 per cent at the end of 2008. Banking Sector Further along, the capitalization of the UAE’s banking system remains sound as the capital adequacy ratio (CAR) stands at 21 per cent as of Dec-10. Despite rising impairments and difficult operating conditions; the UAE banking sector’s sound capitalization should make the country’s asset quality challenges and liquidity pressures manageable with support from the government to the sector less likely required. In addition, stress tests on aggregate banking data indicate resilience to shocks despite nonperforming loans (NPLs) doubling since the crisis, marking the second highest increase in the GCC.
The banking sector remains resilient to shocks, backed by solid capital baseincluding money injected by the government, and strong earnings, although nonperforming loans have doubled since the crisis. The Central Bank of UAE has made important progress in strengthening its financial stability approach, revamping the regulatory framework, and developing macro-prudential policies. The Central Bank continues to ensure that banks provision adequately, particularly in light of increasing provisioning needs on Dubai GREs. Moreover, approval of Dubai World’s estimated $ 25 billion debt restructuring by its creditors in Mar-11 has once again restored investor confidence, thereby easing concerns on the soundness of the UAE’s economic prospect. The agreement will shed light once again on UAE banks as the restructuring approval will be a key element in defining and clarifying the picture of “problem” loans to investors as banks are expected to follow the guidance of provisions by the CBUAE in terms of their exposure to Dubai World in the near future. Additionally, the restructuring approval marks a new star t for debt-struck Dubai as it continues to look for fruitful investment opportunities within its tourism, transport, and trade sectors to ensure sustainable economic growth and development, which will simultaneously enable the emirate to regain its position as a regional trade and services hub.