Gulf Business December 2011 | CEO Letters

THE POWER It’s been a spellbinding year. As the Arab world fought for freedom, the wider world battled economic woes and an uncertain future of its own. Gulf Business asked the region’s top business minds what the future holds in 2012. compiled BY alicia buller illustrations BY rom miclat

48 / DECEMBER 2011

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cover story

LETTERS

GULF BUSINESS / 49

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energy

Abdalla Salem El-Badri, Secretary General, OPEC

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fast facts - The Organisation of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, in 1960 by five countries. Currently, it has 12 member countries.

- OPEC countries supply about a third of the world’s oil.

- Recently, the organisation cut its global economic growth forecast for 2012 to 3.6 per cent from 3.7 per cent.

iving an assessment of the global oil outlook for the short and medium-term is notoriously challenging.

But offering views on the outlook for investments in the industry, especially given recent economic and financial developments around the world, is even more difficult.

Continuing unemployment and a manufacturing slowdown in the US, as well as a growing sovereign debt crisis in Europe, have recently prompted OPEC to revise down its economic growth forecasts for 2011 and 2012 – and, consequently, oil demand. And despite rapid growth in developing countries, great uncertainties remain about a sustained and broad-based recovery in the major oil-consuming countries of the world.

There is also the ongoing challenge of not having a sufficiently stable crude price environment. Our industry’s growth requires prices that are neither too high nor too low – and which are stable enough to continue to attract investments.

We should not forget the experience of 2008 when extreme volatility resulted in prices rising to nearly $150/b and then falling to around $30/b by the end of the year. This led to the postponement or cancellation of more than 30 investment projects across our Member Countries.

Despite the complex nature of the economic challenges, our Member Countries have an ongoing commitment to capacity investments. According to

our 2011 World Oil Outlook, which was released in November, OPEC Member Countries are expected to invest close to $300 billion in 132 upstream investment projects through 2015.

Moving forward, of course, remains challenging. But such investments are, as I have often said, the lifeblood of the oil industry. Without investments now – in exploration, production and expanded capacity – future supplies may not materialise and future needs may not be met. And this is something neither consumers nor oil producers can afford.

Our Member Countries know this very well. That is why OPEC consistently expresses its interest in ensuring the security of supply to all consumers and, through its Member Countries, maintains a commitment to investments in new projects.

While the current global outlook provides little security to producers and investors, we must remember that future oil supply depends on ongoing and timely investments in capacity expansion. They are central to ensuring future supply.

What motivates us is, of course, an interest in satisfying the world’s energy needs and striving towards stability in the market. This is what our Member Countries always try to keep in mind, in line with our broader organisational mission. It is only in this way that OPEC can continue to be ready to act when necessary – despite what the global outlook may show.

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banking and Finance

h.e. Abdul Aziz Al Ghurair, chairman, Mashreq

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011 has been quite an eventful year for the global economy, but the UAE has weathered the turbulence well and largely remained insulated from the impact of the Eurozone crisis. The UAE financial services industry, being the barometer of the overall economic climate of the country, reflected this stability, which is evident from the reasonably good performance posted by UAE banks for the first nine months of the year.

However, during 2011 there was a visible shift in the thinking and strategy of most UAE banks. Having overcome the impact of the 2008 financial crisis, banks in the UAE have shifted their focus internally and have been working to strengthen their systems, processes, structure and risk management policies.

Banks are, in general, looking internally for improvement opportunities.

Most of them are revisiting and re-shaping their medium to long-term strategies, revamping their distribution strategies and identifying areas for future growth. In short, they are spending time and efforts to build strong fundamentals to face the new economic reality.

The after effects of the economic upheaval witnessed in 2011 in the Western economies will impact the fast growing economies of Asia, which are expected to slow down in 2012. This will affect the UAE and I expect flat performance or marginal growth for the UAE banking sector in 2012.

Customers will be more demanding and banks will be under competitive pressure. Margins will compress, customers will demand flexibility, and won't accept a ‘one size fits all’ approach. Banks will be expected to come up with innovative solutions to meet customer demands. To be able to compete effectively in a market, where growth is flat and customers are

“The after effects of the economic upheaval witnessed in 2011 will affect the UAE, with flat performance or marginal growth for the UAE banking sector in 2012.”

fast facts - Mashreq is the second oldest bank in the UAE (after Dubai Islamic Bank), with total assets of Dhs70.9 billion and net profits of Dhs756 million in the first nine months of 2011. The bank is listed on the Dubai Financial Market.

- Mashreq introduced the first ATMs and credit cards to the UAE. - The bank opened its 54th branch in Umm Suqeim, Dubai, this year, which includes a Mashreq Gold Centre.

demanding, banks will need reorganise themselves in line with the needs of their customers. Quality customer service will be the major differentiating factor.

Since the financial crisis of 2008, the global regulatory environment has changed forever and this will ensure that banks behave more responsibly. Risk management will take precedence over profitability and considerations. Liquidity and capital management will be the first priority for banks.

Finally, let me add that changes in the banking regulations and fiscal discipline, introduced during the last two years, will make the UAE banking sector stronger and will foster long-term growth in the country.

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real estate

H. E. Mohamed Alabbar, chairman, Emaar Properties

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fast facts – UAE-founded property titan Emaar has built some of the country's most striking landmarks, from the world's largest tower, Burj Khalifa, to the world's largest mall, Dubai Mall.

– Recurring revenues from the hospitality and shopping malls businesses of Emaar accounted for nearly 41 per cent of total revenue in the first nine months of this year.

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Founded in 1997, Emaar is listed on the Dubai Financial Market.

eal estate, like just about everything else in life, is cyclical. The eternal challenge – for homeowners, investors and developers – is figuring out which way the cycle is moving, and when it is most likely to shift direction.

Because in real estate, as in life, we all want to be ahead of the curve.

We want to buy when the cycle is down, and sell when it’s up. And, as developers, we want to build for not just current but also future demand.

That sounds awfully simple.

Unfortunately, real estate cycles are complex things, influenced by countless factors, both local and global, that make them hard to predict.

So what do we do? Generally, we study historical trends, current leading indicators and ongoing price fluctuations to assess, as best we can, the direction of the cycle.

That’s one option. Another is to focus less attention on the vagaries of the market and, instead, zero in on underlying demand, asking ourselves: What do people really need, right now and in the future, that they can’t get?

So let’s step back for a moment and look at our region with a bird’s eye view.

What do we see? A lot of young people, including millions who need good jobs and just as many who require quality homes for themselves and their families.

Our region needs sustainable jobs and affordable homes. It’s hard to miss this plain fact.

My belief in fundamentals, in the importance of going back to basics, is one of the reasons why Emaar, which has traditionally focused on affordable luxury developments, recently launched a new subsidiary - Al Dawahi Development, a next-generation developer of value housing projects across the Arab world.

At a time when the housing shortage in some of the fastest growing cities in the Middle East is estimated at over five million units, Al Dawahi Development will address the huge demand for value housing. Creating a new category of homes and communities that provide value to young families, we will create self-sufficient communities that fulfill the aspirations of Arab youth and their families.

A back of the envelope calculation will show that if we can build 40,000 homes annually, it would take at least 100 years to meet pent up demand. Clearly there is room here for not just Al Dawahi, but many more developers to enter the market of value housing. However, it is important for developers to implement the right business model that works on volume and a good supply chain that offers the best prices for building materials.

Three years after the world’s financial system nearly collapsed, we need to go back to basics. After all, as any builder knows, every project must start with a strong foundation.

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banking and finance

V. Shankar, ceo, Standard Chartered, EMEA ANd americas

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011 has been a challenging year for the banking industry.

Banks around the globe have had to contend with changing economics, shifting political winds and a plethora of new banking regulations. The Eurozone turmoil, US sovereign downgrade, the Arab Spring and unprecedented market volatility were just a few of the challenges. Whereas the 2008 post-Lehman crisis was a genuine banking crisis, the current one is arguably a political and sovereign crisis that is stressing the banking system. And it is unclear where this will all end.

Looking ahead, what is clear is that some fundamental shifts are taking place.

The economic centre of gravity is shifting from West to East. While the West contends with an ageing population and high debt levels, the East has favourable demographics and growing financial reserves. South-South trade and investment flows are driving the global economy.

A new Silk Road is being spun from Asia to Latin America. The Middle East is well placed to benefit from this shift as it has a favourable geographic position and trading in its DNA. This should help create millions of jobs. The Arab spring highlighted that a potential demographic dividend can become a debacle if we don’t create enough jobs for our young people. The Middle East needs to diversify away from its reliance on energy and ensure education puts a greater emphasis on employability..

In 2012, I expect the world to remain ‘interesting’. We live in an interconnected world. If the developed West, which still accounts for two-thirds of the global GDP, grows at a low or negative rate, it will impact the developing world as well. The world will also keenly watch events in Egypt, Syria and Iran. Asia will continue to be the fastest growing region, driven by growing consumerism in China, India and Indonesia.

Once Basel III and the panoply of other banking regulations are implemented, the minimum capital requirement for banks will be almost four times as high as before the crisis. Many will respond by deleveraging their balance sheets and retreating to home markets. Banking sector profitability could be under pressure from reduced loan demand and hedging activity.

Standard Chartered’s strategy in 2012 will be much the same as that we have pursued over the last decade. We will maintain our focus on our core growth markets in Asia, Africa and the Middle East. We will stand by our clients. We will continue to be disciplined on costs, capital usage, liquidity and risk management.

These strategies are hardly novel.

However, our sustained performance has proven that focusing on the basics of banking and being true to our brand promise of being here for good delivers results. So expect more of the same from us in 2012 and beyond. In banking it is good to be predictable and boring!

fast facts Standard Chartered bank is headquartered in London, UK, with over 85,000 staff in 70 countries and around 3,000 employees in the MENA region.

- The bank paid $5.76 billion in salaries last year, a 17.3 per cent increase on 2009.

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aviation

tim clark, president, Emirates airline fast facts –

Emirates was launched in 1985 with two leased aircraft. Today, the carrier has a 160-plus fleet of Airbus and Boeing aircraft. The carrier also placed an order for an additional 50 Boeing 777s during the Dubai Airshow in November, with the deal being valued at $18 billion.

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The airline flies to more than 100 destinations in over 60 countries, and employs a cabin crew of around 12,000 people.

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The airline announced that its net profits for the first half of the 2011 fiscal year fell by 76 per cent, thanks to increasing fuel costs and foreignexchange losses.

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ere at Emirates we are always looking forward. We have a detailed growth plan that will take us many years into the future.

In 2011, the global airline industry took a hit from multiple areas. Shifting global economies, political unrest and soaring fuel prices are factors we cannot always plan for. We do our best to mitigate their effect on our business but the reality is that we do not have the power to stop them; we simply have the resilience and determination to weather them. You cannot plan for adversity but you have to be smart enough to expect it and work your way around it.

2011 was a challenging one for Emirates with the incredible high of our record breaking full-year results in March, followed by a dip in our half year profits in up to September.

The excruciatingly high price of fuel has had a detrimental effect on our half year profits, yet despite this we remain on our strong growth trajectory as one of the fastest growing airlines in the world.

At Emirates we are looking ahead to 2012 with cautious optimism. The world economy is currently suffering from disequilibrium.Next year, we expect the global economy to begin to balance itself out again and we are well poised to capitalise on this. We have the network, the aircraft and, importantly, the drive to do so.

Despite the global slowdown Emirates has not halted our own growth as evident in our recent order for 50 Boeing 777’s, made during November’s Dubai Airshow.

World markets are continuing to develop. Many airlines are still stuck in the 1990’s mind-set and have taken far too long to react to the world’s newest and fastest growing economies.

India, China, Africa and Brazil are fast becoming the global powerhouses of this millennium. Adaptation is the key to survival for any business and we have always been quick to react and take advantage of these global shifts.

In 2012, markets in Africa and South America will further push themselves forward. Africa in particular is a resourcerich land. The business is there, it’s just a matter of being bold enough to go there and grab it. We already have 19 African destinations and in February next year we will launch Lusaka and Harare taking us to 21. The fact that other airlines are only just waking up to this opportunity-rich land is to their own detriment.

There is no great secret to our success.

It is the collective hard work of our employees that has propelled Emirates to become the world’s largest airline.

We are optimistic about the next 12 months as we continue to move forward with implementing our growth plans.

The whole aviation industry has taken a hit this year but with the right planning in place I am certain that 2012 will be a better year for all of us.

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banking and finance

Rick Pudner, CEO, Emirates NBD

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he past year was dominated by a number of significant macro events both regionally and globally, including the Arab spring, the tsunami in Japan, the US debt ceiling issues and, of course, the ongoing sovereign debt crisis in Europe.

The local and regional economies have not been immune to these developments and this was reflected in weaker private sector activity and consumer confidence, while access to international capital markets was affected by heightened global uncertainty and risk aversion.

Nevertheless, the region has been relatively resilient in the face of these challenges as growth has benefited from increased oil production as Saudi Arabia, the UAE and Kuwait stepped in to offset the decline in production from Libya, as well as higher oil revenues.

In the context of this macroeconomic backdrop, the UAE banking system has similarly been resilient with capitalisation and liquidity levels remaining extremely healthy and mid single-digit average operating profitability year-to-date. This was achieved despite relatively subdued private sector loan growth and continued balance sheet de-risking in the aftermath of the 2008 global credit crisis. During 2011 the UAE banking sector also faced additional regulatory tightening from the Central Bank.

Looking ahead to 2012, the macroeconomic environment remains challenging and the global outlook is

still uncertain. Regional private sector activity will depend to a large extent on continued stimulus from government spending, as well as global growth in 2012. In addition, Libyan oil production is expected to revert to more normal levels over the next few months, which suggests that GCC oil production is likely to decline, or at best remain flat, providing a headwind to growth in the region next year.

The uncertain outlook for next year will have implications for the UAE banking system and the evolution of business strategies. Firstly, volatility and uncertainty will likely remain for some time which means that speed of decision making and execution becomes a critical success factor. Secondly, private sector activity and loan growth is expected to remain relatively subdued, which implies greater competition for underwriting opportunities and pressure on banks’ net interest margins. As a result, strategies are likely to focus on building and developing fee-generating businesses, improving customer service and delivery, enhancing credit appetite in selected sectors and refocus to under-penetrated segments. At the same time, optimising operating costs and efficiency as well as balance sheet management will remain high on the priority list. Finally, we may see a pickup in local and regional mergers and acquisitions activity as banks seek diversification and growth or, alternatively, to strengthen vulnerabilities in parts of the banking system.

fast facts – The bank was formed by a merger between Emirates Bank International and the National Bank of Dubai in 2007, and boasts the largest asset base in the GCC – Dhs286.2 billion as of the end of 2010.

– The UAE’s largest bank, Emirates NBD saw its shares rise 20 per cent this year.

– The bank has 132 branches and around 700 ATMs across the UAE. GULF BUSINESS / 55

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logistics

Tarek Sultan, CEO, AGILITY

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fast facts - The integrated logistics firm employs around 22,000 people in 550 offices spread over 100 countries.

- Agility was created in Kuwait in 1979, and is currently a publicly traded company with close to $6 billion in annual revenue.

- The company’s commercial business, Global Integrated Logistics (GIL), is headquartered in Switzerland.

011 has been an extraordinary year and while we hope for more stability in 2012, this by no means looks certain. Against a backdrop of global economic uncertainty, emerging markets continue to offer good prospects.

Agility’s biggest revenue gains came from the Middle East, Asia, Eastern Europe and Latin America. Our strength in such markets is a differentiator for us and is key to Agility’s long-term growth.

The Arab Spring has clearly transformed the Middle East. Over the long-term, I remain bullish on prospects for the region, with new governments hopefully becoming more responsive to the need for growth and development and more private sector oriented than they have been in the past. They will need to create jobs to satisfy the demands of their people. In the shortterm, our industry is focused on getting essential goods and services through.

Even while there is conflict, people need to eat, obtain medicines and so on, and our job is to secure supply chains around those critical items. Having our roots in the Middle East helps – we have experience working under extremely challenging and difficult operating environments so we continue to not only to function but to perform well, delivering for our global customers.

2011 was also marked by the sheer scale of catastrophe that occurred in Japan in March. Compounded by other serious natural disasters across the year

and the massive business disruption they trigger, the logistics industry has really woken up to the need to engineer supply chains which are tougher and more resilient – ‘just-in-case’ supply chains and not merely ‘just-in-time’.

So the industry is looking at factors such as diversified production and distribution that help remove the risk of single-pointof-failure as well as increased flexibility in the flow and routing of goods.

Given the volatility we have seen in 2011, I anticipate a continuation of the mixed global economic picture in 2012 with emerging markets moving ahead and more developed markets continuing to struggle. As a reflection of this, we will see continued trade lane growth in the Far East and in the Middle East – a trend set to continue for several years into the future. Trade lanes will also increase between the Middle East and emerging markets such as Brazil and India. As the Agility Emerging Markets Logistics Index predicted, we will see the continued rise of ‘near-sourcing’ markets like UAE, Mexico and Turkey, while in Asia, economies such as Indonesia, Malaysia, Thailand, Vietnam and Cambodia will continue with their strong development.

But while we have good reason to be upbeat, uncertainty in the global economic picture means that we will remain cautious and conservative, streamlining the organisation to boost efficiency, while looking to grow revenue organically.

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aviation

james hogan, CEO, etihad airways

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t Etihad Airways we are excited about 2012, concerns about the global economy not withstanding.

Now eight years old, we have established ourselves as one of the fastest growing airlines in the world and as a brand to watch.

We have been named World’s Leading Airline at the World Travel Awards for two years in a row, which is a measure of our commitment to product and service excellence, and we continue to strive to improve our offering both on the ground and in the air.

Importantly, the financial strategies that we put in place as long ago as 2006 are maturing and delivering results, and we expect to deliver sustainable profitability next year, after reaching break-even in 2011.

In terms of the wider industry, 2012 will be a very interesting year as Gulf carriers continue to assert themselves globally in difficult financial conditions, particularly in the West.

It goes without saying that the performance of the industry is closely linked to the health of the global economy.

Historically, when the average global economic growth rate has slowed to less than two per cent, the aviation industry as a whole has struggled to prevent losses.

With the global economic growth rate for 2012 widely forecast to be perilously close to two per cent, the International Air Transport Association (IATA) has recently stated it expects the industry

to make weak net profits: $4.9 billion on revenues of $632 billion, which represents a net margin of just 0.8 per cent.

Although the brunt of austerity is expected to be felt in the Eurozone and North America, with developing economies expected to fare considerably better, airlines in the Middle East are certainly not immune to the effects of slowed growth in the West.

A slowdown in any market into which Middle East carriers operate will inevitably be felt in decreased numbers of passengers travelling for leisure or business. Cargo volumes could also be hurt by slowed international import/export trade.

Oil prices in 2012 are expected to remain volatile. We will continue our policy of hedging, providing a buffer of certainty against price spikes.

As we always have, we will work hard to navigate the economic landscape and to respond quickly to changed realities.

In this respect, we are fortunate that our comparative youth allows us more flexibility and agility than many traditional legacy carriers – we are what I call a new wave carrier, still operating with a clean sheet of paper.

Our agility, along with the strength of Abu Dhabi and its increasing importance as a business and leisure destination, and the millions of potential travellers on our doorstop – not only in the Gulf, but also the huge markets of India and China – will ensure that in 2012, we are not only well positioned to weather global economic difficulties, but to emerge well placed to kick on when the eventual upturn comes.

fast facts - Abu Dhabi’s government-owned national carrier began operations in 2003.

- Etihad plans to break even this year.

- The airline currently flies to 86 cities, and is planning to add six new destinations over the next six months.

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aviation

Samer Majali, ceo, Gulf Air

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fast facts - The airline, the oldest in the region, turned 61 this year, and is fully owned by the Kingdom of Bahrain.

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Gulf Air recently added three new destinations in Saudi Arabia and is also negotiating with the Indian government to launch new routes into the country.

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Gulf Air's falcon logo appeared on the shirts of the Premier League club Queens Park Rangers for three years, after the airline signed a £7 million ($11 million) deal with the team in 2008.

t is strange, if not unusual, that despite a meagre 1.2 per cent profit margin there is so much competition in the aviation business. It is even more peculiar to see the global interest in this industry despite all the challenges it presents.

It is an industry that is anything but volatile, anything but predictable.

Yes, unpredictability seems to be the name of the game in this business.

From fluctuations in the price of oil over the last decade and the periodic increase in aviation fuel prices pushing up the operating costs, price wars among competitors eating into each other’s revenue, flash strikes by industry workers leading to grounding of entire fleets and creating chaos among thousands of travellers, the industry is in a predicament.

And who would have thought that a sleeping volcano in far off Iceland would erupt and cripple the aviation industry for almost four weeks resulting in millions of dollars loss in revenue? Added to this woe was the recent unrest in the Middle East and North Africa that resulted in hundreds of airlines reducing and cancelling flights, creating a huge dent in their revenue and profitability? The list seems endless.

We have experienced a rollercoaster ride in our business in the last ten years with a mix of economic crises and geo-political events, as well as brief spells of recovery. For the first

time since 1998, the industry achieved an EBIT margin in excess of five per cent in 2010. Last year proved to be fairly a good year for airlines with their profit margin touching 2.9 per cent but, once again, we will see a dip in 2011 with industry pundit forecasts even tougher for 2012.

However, there are booming economies that present huge opportunities for the aviation business to grow, particularly China, India and in Brazil. China, alone, is expecting to increase its number of aircraft to 4,500 in the next five years from its current 2,600, while India's domestic aviation market has tripled in the past five years.

But standing out from this, and standing tall, is the Middle East aviation industry. Though not immune to the above said uncertainties, the Middle East has emerged as the strongest growing region in the global aviation market. Its geographically strategic location, connecting the East and the West enabling easy access to some of world’s largest growing economies, its ‘hub and spoke’ business model of the GCC airlines that connect practically every part of the world through modern airports and, of course, the ability to invest in the latest aircraft have all made the global aviation business take notice of this region.

Yes, the industry may witness turbulence and storms but the future belongs here.

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banking and finance

Abdulla Mohammed Al Awar, CEO, DIFC Authority

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his year will be regarded as a critical moment in the history of the Middle East and North Africa and the development of its economies. 2011 will come to be recognised as the beginning of a long-term process of sweeping social, political and economic reforms that will have far-reaching consequences for every aspect of life in MENA, including business and commerce.

Throughout 2011, DIFC has continued to grow by connecting the region’s emerging markets with the developed markets of Europe, Asia and the Americas. Our role during such an unprecedented year of change has been to provide a stable platform supporting the growth of regional operations of corporations and financial institutions from around the world.

Indeed, Dubai continued to climb the top ranks of international financial centres, and was ranked eighth in both the Banker’s (FT Business) ranking of international financial centres and the Xinhua-Dow Jones International Financial Centres Development Index 2011. Despite the unrest in several MENA countries, DIFC has experienced a 10 per cent increase in the number of companies operating from the Centre compared to last year. The growth of new member firms in DIFC reflects longterm opportunities in the region.

In its latest economic forecast, the IMF has estimated that growth will slow from 3.9 per cent in 2011 to 3.6 per cent in 2012. However, the prospects for longer-

term economic growth in the region remain strong, particularly in the GCC, due to the abundance of natural resources and youthful populations, as well as the benefits of economic integration through the GCC Common

fast facts

“Despite the unrest in several MENA countries, DIFC has experienced a 10 per cent increase in the number of companies operating from the Centre compared to last year. The growth of new member firms reflects long-term opportunities in the region.”

– The DIFC has independent civil and commercial laws and also runs its own court. The DIFC courts are, in fact, witnessing more cases – rising from nine in 2008 to 36 in 2010.

– Dubai International Financial Centre is a federal financial free zone that provides a platform for businesses and financial institutions.

– The DIFC Authority also includes a risk-based regulator, the Dubai Financial Services Authority (DFSA), which grants licences and regulates the activities of all the institutions in DIFC.

Market and larger Free Trade Area.

DIFC, with its modern infrastructure, free zone status and international legal system, is uniquely positioned to support this growth in the region. in 2011 growth came from the Middle East and Asia, reflecting the continuing global shift in economic focus towards the East.

DIFC’s strategy in 2012 will remain focused on supporting our existing clients with the expansion of their regional business and their presence in the Centre. We will also maintain our global drive to attract new business to the Centre from Asia, Brazil, India, North America and Europe.

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11/27/11 2:19:34 PM

public relations

Sunil John, CEO, ASDA'A Burson-Marsteller

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f public relations is the art of reputation management, then it seems clear that the industry needs to take its own PR a lot more seriously. Like the proverbial cobbler’s children who go without shoes, public relations firms – worldwide and especially here in the Middle East – ignore the fact that their profession’s own reputation is generally on par with that of ambulancechasing lawyers and used-car salesmen.

Worldwide, the PR industry employs about 60,000 people, generating around $9 billion in annual fee revenues. At a time when related sectors like advertising are suffering a global crunch, our business remains robust.

Yet we remain our own worst client.

Seen as either subservient to media, or as masters of the dark art of spin, we need to address with seriousness of purpose our fundamental image problem.

Our own future depends on it, especially here in the Middle East.

PR is relatively new to the Arab world.

Yet, by 2009, barely a decade after the profession first became institutionalised here, total fee revenues reached approximately $150 million. Today, the overall value of the industry, including work done by in-house communications departments, stands at about $500 million. If current trends continue, there is every reason to believe that the industry will be worth $1 billion annually within a decade.

That may sound like a fantastic growth curve, and in many ways it is. But we

could grow even more rapidly if we more clearly communicated what we actually do, as well as the tangible value it provides the clients we serve.

ASDA’A Burson-Marsteller, the firm I lead, recognised early the importance of managing the image of our industry, and of our own company. That is why, for example, we have been investing in conducting the annual ASDA’A BursonMarsteller Arab Youth Survey since 2008. The largest study of its kind of the region’s largest demographic, this survey is our contribution to the important, ongoing dialogue about the future of the Arab world.

A decade ago, about three-quarters of our clients were multinationals seeking to raise their profile in the Middle East, while the remaining 25 per cent were local firms keen to communicate their success. Ten years later, those numbers have been reversed: this trend, towards localisation, is an important indicator of the health of the regional PR sector, which shows that locally-based firms increasingly appreciate the value such consultancy can provide them. In the Arab spring, at a time communication has never been more critical to regional governments and companies.

Perhaps this is a sign, after all, that our industry is finally on the verge of gaining the respect it deserves – and that, as the one-time cobbler’s children, we will be able to stride confidently into the future.

fast facts – Asda'a Burson-Marsteller was founded in 1999, and includes six teams operating in corporate, financial, public affairs, consumer marketing, technology and healthcare sectors.

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The firm is part of the MENACOM Group, owned by WPP, a global communications services network.

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Asdaa'a clients include Emaar (Burj Khalifa launch), Dubai International Film Festival and Ford Middle East.

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technology

Enrique Salem, president & CEO, Symantec

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s we approach 2012, mobility, virtualisation and cloud computing are three big trends driving change in IT. At the same time, organisations are grappling with a growing amount of information and an increasingly toxic threat landscape. These trends are giving IT an opportunity to rethink their approach to make their organisations more efficient, more scalable and more cost effective.

As information becomes more accessible across more devices – such as PCs, smartphones, and tablets – the workforce experiences better productivity. More and more we’re seeing personal devices connected

“Both Saudi Arabia and the UAE have featured in the top five globally for spam and virus levels. We are no longer in a position where we can ignore the threats.” to the business network, creating tension between individuals that want to ensure personal privacy and IT that wants control of the corporate information.

Virtualisation is another trend that continues to accelerate. As businesses move to virtualise business critical applications, there is immense pressure to secure and manage these environments. It is essential to manage

your backups, manage storage and to ensure systems remain highly available as you would with a physical environment.

The need to better secure information and the fact IT organisations have more to do with less money is driving the mindset shift to cloud computing, the third big trend transforming IT. There are significant benefits for organisations looking at Software-as-a-Services (SaaS) solutions like higher availability and reduced CAPEX. Most of the adoption of cloud services today is around email, security or virtual desktops, but that is just the beginning.

While IT is looking at how to leverage these three trends, they are also dealing with explosive data growth. In 2010, we predicted data would grow 40 per cent, in reality it grew 62 per cent. Most of this is unstructured and the challenge comes in getting a grip on the data, ensuring we know what is important, where data is, who is accessing it and how can we eliminate redundant information.

As threats evolve to become much more targeted, no network or individual is immune. Both KSA and the UAE have featured in the top five globally for spam and virus levels. We are no longer in a position where we can ignore the threats.

The truth is businesses can’t afford the cash losses, intellectual property or downtime that result from an attack.

Those firms that start with protecting people and information will be the ones poised for success.

fast facts - Symantec is the largest maker of security software for computers.

The company is headquartered in California, and is a Fortune 500 company and a member of the S&P 500 stock market index.

- The security firm has announced $6.19 billion in revenues so far this year and employs over 18,500 people.

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law

Husam Hourani, Managing partner, AL Tamimi & co fast facts – Established in 1989, Al Tamimi & Company is the largest law firm in the Middle East region today.

– Al Tamimi employs more than 360 staff, with offices throughout the UAE in Dubai, Abu Dhabi and Sharjah as well as in Iraq, Jordan, Kuwait, Saudi Arabia and Qatar.

– The team regularly represents clients such as Dubai World and Landmark Properties

I

n my opinion, 2012 will be an extremely important year for lawyers and law firms in the GCC, UAE and specifically in the emirate of Dubai. It will mark the implementation of a major change to Dubai law that came into effect on 31 October 2011, which is the opening up, to all local, regional and foreign companies, of the jurisdiction of the DIFC Courts, an independent English

consultation papers on short-selling, liquidity provisions, securities lending and borrowing, market-making, investment fund incorporation and marketing of foreign funds in the UAE. I do believe this will generate substantial activities in both local and regional markets.

We also expect the long awaited Commercial Companies Law to be amended and enacted in the first quarter of 2012. This has been under review since 2006 and will have a major impact on the capital markets and the conversion of businesses into public joint stock companies, as well as on share option schemes, family businesses and the setting up of investment funds.

In addition, we expect new laws that will have a significant impact on business in the UAE to include the regulation of the management of investment activity; an additional protocol for IAEA agreement; new guidelines for coastal development; a new energy law; rules regarding cash declarations; new child protection legislation and changes to industrial ownership and consumer protection law.

We also expect the DIFC to enact new legislation covering labour, employment, data protection, real property and nonprofit incorporation.

“The Commercial Companies law will have a major impact on the capital markets and the conversion of businesses into public joint stock companies, as well as on share option schemes, family businesses and the setting up of investment funds. ” language common law court. In addition, from November 2011, banks and financial institutions will be able to utilise foreign law contracts (or DIFC law) with greater certainty that this choice will be recognised in the UAE through the DIFC Courts. I expect many international law firms will start to encourage their clients to choose the DIFC Courts.

We will also see several new laws and regulations that have been in the drafting or consultation stage come into effect in 2012 which will have a major impact on the Dubai Financial Market, Abu Dhabi Stock Exchange and NASDAQ Dubai. SCA has issued

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telecommunications

Osman Sultan, CEO, DU

2

011 has been a year full of milestones for us – big and small. Our focus this year was three-fold – on our customers, to improve their overall communications experience, our employees, to motivate and reward them

“We understand the faith our shareholders and investors have in du, and our team’s focus has always been to continue our growth and efficiency story and thereby create further value for our shareholders and investors. I’m glad to note that we didn’t disappoint them.” for their contribution to the growth of du, and very importantly – to create value for our shareholders and investors.

For our customers, we specifically strengthened our network capabilities by upgrading and rolling-out our HSPA+(4G) network that promises a vastly superior user experience. Apart from significant updates to our existing plans, this year we also launched several plans and schemes that tackle new segments such as one designed for Emiratis and women entrepreneurs.

For our employees, who constitute human capital and are our primary assets, we undertook several initiatives

to maximise their productivity and motivation in our journey to make them feel proud of their work and contribution. We did this by training them, helping them focus on their personal goals, offering them the right resources and work environment to achieve their goals at work. Last but not least, we streamlined benchmarks and processes to reward the high performers.

We understand the faith our shareholders and investors have in du, and our team’s focus has always been to continue our growth and efficiency story and thereby create further value for our shareholders and investors. I’m glad to note that we didn’t disappoint them. Our company’s good will in the market is at a new high and our scrip continues to be among the good performers in the financial markets.

In 2012 I believe we will see a continuation of this year’s trends. Our customers are better informed and demand quality and better value. It is our intention to become the preferred telecommunications company in the country, through constant innovation and delivery of the latest telecom technologies. We will continue to invest in our employees – our biggest assets, and further empower them to bring out the best of their capabilities.

And we will be mindful of the value that we create for our shareholders and investors, for they are the ones we are answerable to.

fast facts - The Emirates Integrated Telecommunications Company, du, began operations in 2006, breaking the monopoly held by Etisalat in the UAE. - At the end of September this year, du held a 45 per cent share of the mobile market in the UAE. - As of October 2011, the company said that it provided services to over five million people and about 40,000 businesses.

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