Page 1


Mohammad Omran

Riad Kamal

Abdul Aziz Al Ghurair

Samer Majali

James Hogan

Sameer Al Ansari







Abdulla Al Awar

Dave Lesar

Joseph Anis

Ammar AlKhudairy

Tarek Sultan






CEO PREDICTIONS The region’s leading business


minds share their hopes, fears and strategies Bahrain..............BD 1.0 Kuwait............... KD 1.0 Oman................ RO 1.0 Qatar.................. QR 10 Saudi Arabia.......SR 10 UAE.................. DHS 10

oyster perpetual day-date ii in 18 ct white gold

41 the day-date collection is also available in 36 mm and 39 mm.


Glashütte Original � 165 years of watchmaking art. PanoInverse XL

Glashütte Original. Founder of the German Watch Museum Glashütte.

The PanoInverse XL. A revelation. Given pride of place by design, the extraordinary duplex swan-neck fine adjustment and hand engraved black balance bridge

Bahrain: ASIA JEWELLERS, +973 17 534 444 · Jordan: TIME CENTER, +9626 552 5706 · Kuwait: MORAD Qatar: RIVOLI, +9744 833 679 · Saudi Arabia: ALFARDAN JEWELLERY, +9661 462 8972 · Syria: WATCH

reveal the beauty of the Caliber 66 manual winding movement at the heart of this exceptional timepiece. Find out more at

YOUSUF BEHBEHANI, +965 2467 626, Lebanon: ATAMIAN, +9611 256 655 路 Oman: MISTAL, +968 24771444 TOWN, +963 11 3736 115, Turkey: LPI, +90 212 296 7960 路 United Arab Emirates: RIVOLI, +9714 800 rivoli

April 1819. François Constantin takes responsibility for the worldwide business expansion of Vacheron Constantin. During a business trip to Italy, this visionary man coined the phrase which would become the company motto in a letter addressed to the manufacture: « …do better if possible, and that is always possible …».

True to this motto and to the spirit that forged its history, Vacheron Constantin still remains committed to pushing the boundaries of watchmaking in order to provide its clients with the highest standards of technology, aesthetics and nish.

Patrimony Contemporaine Retrograde Day and Date Hallmark of Geneva, Pink gold case, Self-winding mechanical movement Ref. 86020 / 000R-9239


Mall of the Emirates, 1st Floor, Sheikh Zayed Road, Dubai Tel: 04 2221222


GCC NOW 12 The round-up News, numbers and people from around the region.

COMMENT 22 Mishal Kanoo Greed delays the long road to recovery.

24 Matein Khalid How to gain from currency wars.

26 Tommy Weir A tribute to Vodafone’s Grahame Maher.

28 Chris Bruin Why credit bureaus are a must

ANALYSIS 32 Gold rush COMMODITIES Gold prices edges up after QE2 in the US.

34 Liquid assets RETAIL Region’s energy drink consumption shows growth.

36 Travel tactics TOURISM The Gulf courts Asians to offset decline in traditional markets.

38 Takaful review INSURANCE Analysts debate the credibility of Islamic insurance.

Issue 8 December 2010

CEO 2011

The top 100 companies in the GCC


As the economy recovers from the worst recession since 1930s, a collection of the region’s leading CEOs share their hopes, fears and strategies for 2011 with Gulf Business.

42 Back on track REAL ESTATE Dubai Pearl says it can deliver despite gloomy outlook.

FEATURES 66 Green report ENVIRONMENT Profits and protecting the earth go hand in hand.

77 Turning tides LOGISTICS The regional shipping industry says stormy waters are over.

40 New frontiers

83 Aerial ambitions

MARKETS UAE’s emerging market status could open investment gates.

SPACE Dubai’s first satellite has spurred a raft of space initiatives.

LUXURY SPECIAL 88 Prestige profits RETAIL Analysis of the region’s high-end shopping sector.

92 Everlasting beauty PROFILE An interview with Clarins Middle East.

94 Designs on Lebanon RETAIL Louis Vuitton plans to extend Mid-East footprint.

96 Stepping up profits RETAIL Italy exports 10 per cent of high-end shoes to the UAE.

December 2010 gulfbusiness



Editor-in-Chief Obaid Humaid Al Tayer Group Editor and Managing Partner Ian Fairservice Group Senior Editor Gina Johnson Group Editor Catherine Belbin


Editor Alicia Buller Business editor Karen Remo-Listana Chief Sub-editor Iain Smith Editorial coordinator - business Concessa D’Souza Art Director Cris Domdom Senior Designer B Raveendran Contributors Ryan Harrison; Martin Morris; Adrian Morley; Robert Bailey. General Manager Production and Circulation S Sasidharan Production Manager C Sudhakar


110 100 Business essentials GIFTS High-end shopping ideas for Christmas.



General Manager – Abu Dhabi Joe Marritt


108 Travel Explore the Orient Express train journey from Istanbul to Venice.

110 Cars Glenn Freeman tests the new highperformance sedan from Lexus.

30 Letters 43 Executive moves 107 Hotels 115 Data monitor

111 Art Intrigue and scandal governed the last Islamic art season.

120 Events

112 Competition

122 In your shoes

Win a two-night stay at Yas Hotel Abu Dhabi.

Alicia Buller goes racing with Gordon Ramsay.

8 gulfbusiness

General Manager Group Sales Anthony Milne Senior Advertisement Manager Abraham Koshy Advertisement Manager Ajay Mathews Deputy Advertisement Manager Melroy Noronha

December 2010

Head Office: PO Box 2331, Dubai, UAE Tel: +971 4 282 4060, Fax: +971 4 282 4436, Dubai Media City: Office 508, 5th Floor, Building 8, Dubai, UAE, Tel: +971 4 390 3550, Fax: +971 4 390 4845 Abu Dhabi: PO Box 43072, UAE, Tel: +971 2 677 2005, Fax: +971 2 677 0124, London: Acre House, 11/15 William Road, London NW1 3ER, UK, Editorial syndication details, Tel: + 971 4 2824060

Printed by Emirates Printing Press, Dubai


Saudi interior minister Prince Muhammad helped thwart a recent bomb plot.

for Homeland Security and counter-terrorism, and former CIA station chief in Riyadh, to warn him of the 2010 cargo plane bomb plot. His communication with US and British investigators over the information led authorities to seize two parcel bombs at airports in the Midlands and Dubai. Qatar Airways


Saudi Arabia may be the birthplace of Osama bin Laden and 15 of the 19 hijackers in the terrorist attacks of September 11, 2001 but from this kingdom also hails Prince Muhammad bin Nayef who has helped foil a handful of terrorist attempts. Prince Muhammad, son of minister of interior Nayef bin Abdul Aziz, is the Saudi interior minister in charge of counter-terrorism and the man behind the thwarting of a recent bomb plot which could have brought down two planes. Born in Jeddah in August 30, 1959, he moved to the United States to study for his bachelor degree, with political science as a major. On October 28, 2010, he called US Homeland Security official John Brennan, the US administration’s deputy national security advisor

has confirmed that the intercepted explosive device was carried by two of its planes via Doha. The hidden bomb, a printer cartridge packed with the explosive PETN attached to a concealed mobile SIM card, was posted via freight firm FedEx, and the second device – which was posted via UPS in Yemen


– was also found at East Midlands Airport in the UK. The two explosive devices were addressed to destinations in Chicago in the US. Prince Muhammad and his team impressed the Western intelligence agencies. He appears to be building a network of informers across Yemen, and some terrorism analysts say the tip may well have come from one of his spies, possibly even from inside Al Qaeda, the New York Times reported. The Saudis have stepped up their intelligencegathering efforts in Yemen since last year, when Al Qaeda in the Arabian Peninsula came close to assassinating Prince Muhammad. On August 27, 2009, a suicide bomber posing as a reformed jihadist detonated a bomb hidden inside his body, but only lightly injured the prince.

SOAPBOX We have good relations with America, in terms of military ties, education, health, but politically, no.

I have no fear whatsoever. I strongly believe that the orderbook today is over exaggerated.

Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani gets candid in an interview with the FT, saying they the small state is against military attacks on Iran.

Why ask people to remove flat shoes? What can you conceal in a flat shoe?

Per Wistoft,

Akbar Al Baker,

CEO of Gulf Navigation Holding shrugs off projection that the shipping sector is set to face a supply glut.

Qatar Airways‘ CEO criticises the US policy on aviation security and its ”excessive” screening checks at the airports.

GCC AND THE WORLD DP World has become the first international marine terminal operator to join the Carbon Disclosure Project (CDP), a disclosure and reporting framework used by 3,000 of the world’s largest companies to report

12 gulfbusiness December 2010

their greenhouse gas (GHG) emissions and climate change strategies. The Dubai-based global port operator reduced the absolute carbon emissions of its terminals and businesses by 4.24 per cent


per cent DP World’s target green house gas reduction.

and 3.52 per cent when normalised against TEU throughput against a 2008 base year. DP World has set a goal to reduce GHG emissions at its terminals by 27 per cent by 2013 under its five-year plan.


UAE shifts to recovery mode


The UAE private sector business activity hit a 15-month high in October.

The UAE has entered recovery mode with two prominent surveys indicating a growth in business activity and recruitment prospects. According to the HSBC UAE Purchasing Managers’ Index (PMI), private sector business activity hit a 15-month high in October. The index, which measures

the performance of GCC countries’ manufacturing and services sectors, rose to 53.8 points in October for the UAE, its highest level since the series began, holding above the 50 point mark that separates growth from contraction. It stood at 52.6 in September. Results from the bi-annual Regus Business

Tracker survey show that UAE firms are planning to hire new staff. The study, which interviews over 10,000 businesses around the world, says 36 per cent of the respondents said they intend to increase headcount. Business in the UAE slightly underperformed the global average with 34 per cent.


UAE supports new ruler of RAK Sheikh Saud bin Saqr Al Qassimi was confirmed the ruler of Ras Al Khaimah after his father, Sheikh Saqr, succumbed to a long illness. RAK has been under the leadership of Sheikh Saud since his older half brother, Sheikh Khalid, was deposed as crown prince in 2003 by decree. Sheikh Khalid has campaigned for

several years to regain the leadership, but most analysts believe it is unlikely he will win power. He managed to return to RAK with an armed entourage on the night his father died, but was quickly isolated by federal forces. The UAE supreme council gave its full support to Sheikh Saud.


Dhs122 bn Dhs10 bn The UAE federal budget for the 20112013 period, of which Dhs 41 billion is earmarked for 2011.

Aldar Properties’ funding requirements by 2011 in order to “survive”, according to Bank of America Merrill Lynch.

Emirates profit quadruples

Emirates Airline’s net profit for the first half of 2010 more than quadrupled, fuelled by a surge in passenger traffic and cargo volumes. The Arab world’s largest carrier said H1 net profit rose to Dhs3.4 billion ($925.9 million) up from Dhs752 million for the same period last year. H1 revenue rose 35.5 per cent to Dhs26.4 billion from Dhs19.5 billion. The airline is the largest customer for the Airbus A380 super jumbo.

Adco’s expansion on track Abu Dhabi is on track to add 213,000 barrels per day (bdp) of oil production capacity by 2012, according to Abdul Munim Saif Al Kindy, chief executive of the Abu Dhabi Company for Onshore Oil Operations (Adco), Adnoc’s 60 per cent-owned upstream production venture. Abu Dhabi plans to increase oil output from the current 2.8 million bpd today to 3.5 million bpd by 2018.

Dubai’s trade breaks record

Dubai non-oil trade reached Dhs377 billion in the first eight months of this year, 18 per cent up from Dhs320 billion during the same period last year. Dubai direct exports scored the highest growth rate throughout the past five years, exceeding Dhs44 billion by the end of August 2010 with a 39 per cent increase rate on last year, according to Dubai Customs. December 2010 gulfbusiness



Saudi is world’s 11th easiest place to do business

Smoking in airport banned


Saudi ranked first in ease in registering a property and third in dealing with construction permits.

Saudi Arabia took the 11th position in the Doing Business 2011 report, one notch higher than last year but one notch away from its desired top 10 spot. The kingdom is behind on achieving the 10 x 10 goal which aims to put Saudi Arabia in the top 10 of the world’s most competitive nations by 2010. Nonetheless, Saudi Arabia trumped the whole

Mena region. All other countries in the GCC either dropped or maintained last year’s rankings. The kingdom was ranked first in terms of the ease in registering a property, and third in terms of improvement in dealing with construction permits. It was also one of the 10 economies that made the largest strides in making their regulatory environment

more favourable to business and used the company law of France as a model for revising its own. The report by the International Finance Corporation commended the kingdom for putting procedures online, streamlining procedures, improving a one-stop shop and expanding a range of revolving movable assets that can be used as collateral.



King Abdullah ranked third richest royal With a net worth of $21 billion, Forbes ranked King Abdullah bin Abdul Aziz as the third richest royal after Thailand’s King Bhumibol Adulyadej ($35 billion) and UAE’s Sheikh Khalifa bin Zayed Al Nahyan ($23 billion). King Abdullah, 84, ascended to the throne in August 2005, soon after

construction began on a $26 billion city named in his honour, which the

government hopes will become the new economic epicenter of the Middle East. Saudi Arabia is now earning approximately $1 billion a day from oil exports, helping boost the royal family’s fortune. The king is an avid horseman and breeds Arabian horses. He founded the Equestrian Club in Riyadh.


2 million 5.8 per cent

The number of Haj pilgrims this year, pumping about SAR2 billion into the Madinah economy.

14 gulfbusiness December 2010

Saudi Arabia’s inflation in October, down from 5.9 per cent in September, while cost of living rose .7 points, official data shows.

Smoking at Saudi Arabia’s airport will now land you a SAR200 fine, as per the new regulation passed by the General Authority for Civil Aviation. The fine is applicable to all travellers and airport employees. ”There will be zero tolerance for those who violate the ban on smoking, no matter who they are,” King Abdulaziz International Airport director general Mazen Khashoggi, said.

Saudi orders 20 aircraft

Saudi Airlines signed a contract for 12 new Boeing 777-300ER and eight 787 Dreamliners for its fleet. The 777300ER deal was valued at $3.3 billion at average list prices, and includes an option for 10 more of the aircraft, which carry up to 365 passengers. The value for the 787 purchase was not disclosed.

Saudi investors buy Crillon

A group of Saudi investors have bought the Crillon Hotel in Paris, France from US-based Starwood Capital for around €250 million ($353.6 million), local media reported. The buyers may have to spend an additional €100 million to renovate the luxury hotel, with management of the Crillon expected to be handed to luxury hotel chain Kempinski, the report says, citing sources close to the sale.


Cosmo quits block 11


Qatar Airways chief says some security measures should be ditched.

Qatar Airways slams overreaction in the West The outspoken CEO of Qatar Airways caught the world’s attention once again by slamming Air Canada for restraining his airline’s access to the Canadian market. He also accused the US of hypocrisy in their demands for tight airline security. Speaking at an aviation

industry event in Doha, Akbar Al Baker said measures such as asking passengers to remove their shoes at security checks and removing laptops from bags should be ditched. ”Sometimes we are overreacting,” he said. Airports, he added, were

Qatar to set up SME body

using “excessive“ screening “which at times really may not be necessary.“ He said airline companies in the West do not have the capacity or the capability to grow and were putting the blame on Middle Eastern carriers ”instead of putting their house in order.”



QIB leads Islamic franchise in Qatar Credit ratings agency Fitch has affirmed Qatar Islamic Bank’s (QIB) long-term issuer default (IDR) at A with stable outlook. The agency also affirmed short-term IDR at F1, individual rating at C support rating at 1 and support rating floor at A.

The individual rating reflected QIB’s position as the leading Islamic franchise with a nearly 50 per cent share of Islamic assets and nine per cent overall market share, in addition to the bank’s high earnings power from core banking and healthy capital

ratios. QIB’s funding profile has strengthened with the bank’s recent $750 million sukuk to boost assets. The bank also announced a recorded net profit of QAR907 million and operational income of QAR1.73 billion during the first nine months of 2010.


QAR80 bn 300,000 The combined assets of Islamic banks in Qatar, a fifth of the total local banking sector’s assets.

16 gulfbusiness December 2010

Barrels per day is the production from Al Shaheen field, overshooting original estimates of 50,000 barrels.

Japan’s Cosmo Oil has given up on commercial production from the block 11 offshore oil field in Qatar and has booked a 3.5 billion yen ($43 million) special loss as a result. Japan’s fourthbiggest oil refiner, said the firm and its partners could not find enough oil reserves in the block after they had drilled two trial wells.

Saudi-based Capitas Group International, a member of the Islamic Development Bank Group, said it has won the exclusive contract to establish Enterprise Qatar, the state’s small and medium enterprise authority, local media reported. Enterprise Qatar aims to create a comprehensive infrastructure to support entrepreneurial ventures, champion innovation and foster the growth of business culture in country.

Oil market stable —minister The oil market is not over supplied, Qatari deputy premier and oil minister Abdullah bin Hamad Al Attiyah, said. “I think the market is very stable, but we are seeing high inventories in other countries,” he said, adding that countries have to cope with rising oil prices. He said $70-$90 per barrel was “very reasonable” for consumers and producers.


Jazeera returns to profitability


Zain is in the process of collecting the needed shares from other holders to make up the deal.

Zain agrees to open books for Etisalat Kuwait’s Zain telecom has agreed to open its books for due diligence to UAE operator Etisalat, which has offered to buy a controlling stake in the firm worth around $12 billion. The move follows a formal request by Al Khorafi Group, the largest private shareholder in Zain. Etisalat said it had signed a preliminary agreement with Khorafi

Group to buy 51 per cent of Zain shares traded on the Kuwait Stock Exchange at KWD1.7 ($6.1) per share. Conditions it listed include the completion of satisfactory due diligence, obtaining all applicable regulatory approvals and that there should be no material adverse change in Zain’s business, financial or regulatory affairs. Due diligence and the other

work required to reach definitive agreements could take a number of weeks, while the transaction is unlikely to close before the end of the first quarter of 2011, Etisalat said. Khorafi Group is estimated to own around 20 per cent of Zain and is beginning the process of collecting the needed shares from other holders to make up the deal.



Clean fuels project refinery upgrade programme to be re-tendered Kuwait is preparing a re-launch of tenders for its Clean Fuels project, hoping to get the stalled refinery modernisation and upgrade project off the starting blocks by issuing the main tender packages by April. According to IHS Global

Insight, the project aims to install at least 30 new units at Kuwait’s exiting Mina Abdullah and Mina Al Ahmadi refineries, enabling them to produce fuels of the highest international environmental standards for export. The capacity to produce fuels with

a sulphur content of less than 10 parts per would allow Kuwait National Petroleum Company to retake market shares in the most developed markets, where environmental regulations also tend to be the highest.


KWD4 bn

5.3 per cent

The amount Kuwait hopes to earn in non-oil revenue in 2014, the final year of its four-year development plan.

Kuwait’s inflation in September, the highest point since March 2009, due to a surge in food prices, official data shows.

18 gulfbusiness December 2010

Jazeera Airways, a Kuwaiti low-cost airline, is confident of sustaining profit into next year and beyond after reporting an almost six-fold rise in third-quarter net income. The company incurred losses in the previous three quarters. Net income in the three months to September 30 increased to KWD4.4 million dinars ($15.7 million) from KWD763,000 in the yearearlier period, marking Jazeera’s best quarter in its five years of operations.

Oil price to rise in 2011

Crude oil prices will continue to rise if the US dollar’s weakness persists and prices for commodities increase further, a member of Kuwait’s Supreme Petroleum Council, the country’s top energy decision-making body, said. “This will be good because the cost of living has risen dramatically in the world,” SPC Member Imad Al Atiqi, said.

Kuwait mulls higher spending

Kuwait plans “some increase” in government spending in the fiscal year starting April 1, finance minister Mustafa Al Shimali, said. He said it was not possible to predict the size of the additional spending until members of parliament meet. The planned increase in the 2011-2012 budget will focus on investments as part of financing the country’s development plan.



30 seconds to make sense of… the coffee business.

Kim Thompson gulfpics

Owner and manager, Raw Coffee Company

Nawras celebrated its first day of trading on the Muscat Securities Market .

Nawras lists on Oman Nawras has completed its IPO, which raised OMR182 million ($472 million) and has listed on the Muscat Securities Market under the ticker symbol, ‘nwrs’. The initial market capitalisation of Nawras was OMR456 million, positioning Nawras as a top five Omani company by market capitalisation. The IPO is the largest to take place in the GCC since July 2009 and was also the first offer in Oman to be completed using the book build method.

Al Khalili to revive IPO plans Al Khalili United Enterprise, the flagship company of the Al Khalili Group, will revive its plans to float an IPO, after seeing response to the Nawras share offer. The company is planning to offer 40 per cent of its stake in the IPO, which was postponed last year due to sluggish market conditions. The group will follow the traditional fixed price method, unlike Nawras’ book building process. Oman Arab Bank is the financial adviser and lead manager of the proposed IPO.

Bahrain is most tax-friendly state Bahrain has the most cost-competitive tax environment in the world and the most liberalised domestic financial sector out of 57 leading economies, according to the 2010 Financial Development Report published by the World Economic Forum (WEF). Bahrain’s banking system was also ranked as first in the lack of frequency of banking crises. The report puts Bahrain 23rd in the financial development index, an improvement of four places from 2009.


8 out of 10

Bahrain’s score in the Economic Freedom of the Arab World: 2010 report, making it the most free economy in the Arab world.

20 gulfbusiness December 2010

How was the coffee business affected by the recession? We have not been affected by the economic recession because we are a gourmet niche business. If people are looking to reduce their big expenditure items, maybe they didn’t buy the home espresso machine package from us, but they will still pop in and buy a coffee each day. As an export commodity, the price of coffee in the global market is volatile. How do coffee shop owners respond to these price movements? We have been able to hold our roasted coffee price fixed since inception three years ago. Coffee pricing is controlled on a daily basis by the New York Coffee Exchange, and as a company we have had to absorb the variances.


You import coffee beans from Ethiopia, Nicaragua, Peru, Colombia, East Timor and Mexico. How do they differ from one another? The taste profile of the green coffee beans varies by origin, due to the microclimate of each area – soil type, rainfall, sunshine, temperature, age of plants, etc. All Raw Coffee Company product is certified organic and fairly traded at origin and all from the Arabica coffee bean family. For example African beans tend to have a floral citrus flavour and South American beans will have a more chocolate-nutty flavour. How do you spot a good coffee? There are so many contributing factors that go into a good coffee. Fresh beans, good equipment and good training. Good coffee should be roasted fresh and is at its peak at about seven to 14 days after roasting. When you order a coffee in a café or restaurant, check to see that the coffee hopper is not full of ground coffee and that the portafilters (the handles that you put the ground coffee into) of the espresso machine are sitting in place, and therefore at the correct temperature. How does the healthy lifestyle trend affect your business? Coffee is classified as one of the 20 super foods – as with many food groups, moderation is sensible. Freshly extracted espresso is high in antioxidants, it has anticarcinogenic properties, specifically for the prostate, is used in skin products in Japanese health spas, and has stimulant properties, with caffeine found in many pharmaceutical products such as Panadol Extra.


TAKING THE LONG ROAD TO ECONOMIC RECOVERY The greedy habits of pre-recession days are dying hard but we can get through this financial crisis by changing our attitudes. MISHAL KANOO


oaning and groaning are just a constant in this part of the world. If not for one reason, it’s for another. But do we really have something genuine to groan about when it comes to the economy? Two years on from the beginning of the financial crisis that brought the house of cards down all over the world, we are still not close to seeing the light at the end of the proverbial tunnel. The reason we must ask ourselves is why? Why, after two years of a lot of pain and suffering and after many people discovered how stupid they were in buying into Ponzi schemes that they euphemistically called investments, after people discovered that land prices cannot double for no good reason, and after the gullible were taken out and financially shot for thinking that it was normal for banks to lend them money with no strings attached? The simple answer is greed, but it gets complicated. The people who used the system were greedy. Both the consumers got greedy because they lived in la la land thinking that banks gave them money for free. Land developers got greedy because they believed that there was an endless supply of dumb and greedy people who would feed their addiction to their own greed. The press got greedy because they saw that the land developers were throwing away money into advertising because they all wanted to tell the fools…oops...I mean prospective, intelligent buyers that their pie in the sky was the one the greedy consumer could make the most money from flipping it to yet an even greedier sucker. All of this naked stupidity was fueled by banks and mortgage lenders who touted themselves as the one with the most money to give away. Imagine, if you will, an addict with dealers all vying to hook the addict with their particular designer addiction. The only problem with that scenario is that the addict will eventually die. If you give the addict an overdose that he cannot handle, his death will come faster than the dealer would like and that is not good for business. But this is something you all know happened. The question that is staring us all in the face but seemingly unanswered is what should we do about it? Simple again… stop being greedy.

For the economy to revive itself two things need to happen. The first is that people should understand that they have to pay back what they owe and live within their means. The second is that banks must start living the reality of the situation and not hope that with time things will correct themselves. That is the theory. Now here is a practical solution. Banks must lower their mortgage rate to three to four per cent and make the time horizon 20-30 years. This will immediately incentivise the people who were interested in leaving their asset and going back home to think twice because eventually the value of the asset will recover over the next decade and that will still mean if they have a 30 year outlook, they will make a capital gain as well. Why this is not happening is also due to greed. Greed by the banks as they are now making double or triple the amount I had mentioned but it is paper money that has no value unless someone takes it up. There is a secondary reason for the banks as they are in a quagmire that they can’t extricate themselves from. Over the years of 2003 to 2008, they had taught their shareholders that double-digit dividend rates were the norm. They also fortified this ridiculous notion by issuing bonus shares. Now the shareholders’ greed has taken over rationality and that is the norm that is now expected by the shareholders of the banks. Here’s a suggestion. In order for people to deposit their money with the banks, and trust me on this, instead of focusing on the deposit rate, the banks should focus on customer service. When banks offer a higher rate than the norm, it usually means one thing. They are desperate for liquidity to survive and that is never a good sign. Personally, I would rather have a low rate with a solid bank that is not about to collapse than a bank that offers me a higher percentage but is on the brink of collapsing due to their bad management in the past. Yes we have a real reason to moan and yes the economy can be fixed. The only question is whether all parties involved have the will and strength to make the changes that are necessary and to see it through. Mishal Kanoo, deputy chairman, Kanoo Group.

People should now pay back what they owe and live within their means. Banks must also start getting real and not just hope that things will correct themselves in time.

22 gulfbusiness December 2010

1 1 NO.





Emirates Printing Press wins the Sappi International Printers of the year award from amongst 6,000 entries worldwide. Amongst all the regional gold winners from Europe, North America, Asia, Middle East & Africa, Australasia, South and Central America who competed, we're proud to be chosen as the world's best printer in the magazine web production, and prouder still of the fact that it is an extra bold achievement for the UAE.


HOW TO GAIN FROM THE CURRENCY WARS Looming problems in Ireland lend caution to Euro-speculators, while the UK pound and US equities could offer surprising gains. MATEIN KHALID


he Fed, the G-20 conclave in Seoul, currency wars and Ireland’s woes obsess the financial markets. Time to gaze into my macro crystal glass, even at the risk of swallowing crushed glass. The forex gnomes were shocked by Uncle Ben’s money printing spree after the Federal Reserve’s FOMC voted to pump $600 billion to revive a moribund US economy. This meant the dollar plunged against the Euro and commodities soared on safe haven flows in November. However, Ireland has joined Greece as the EU’s next policy nightmare and Dublin might well be forced to go cap in hand to the ECB/ IMF at a time when Berlin and the Elysee Palace will not allow taxpayer bailouts to spare private investors pain from a potential default. This means Euro-dollar can fall as low as 1.32 in December, particularly if risk aversion in the sovereign debt markets continues to rise. The ideal macro trade for next month is to sell the Euro against sterling at 0.86 for an eventual 0.78 target with a 0.88 stop loss. Why? One, the Bank of England need not and will not follow the Fed’s QE model and boost its gilt purchase programme as long as inflation is running above its two per cent target limit. Inflation will only rise, not fall, due to VAT higher priced high street imports, crude oil spikes and the fallout from sterling’s epic 2008 devaluation. Two, the monetary mandarins at the Old Lady of Threadneedle Street have clearly underestimated both economic growth and inflation in the sceptred isle in 2010. Three, UK growth rates may well rise while the Eurozone, plagued by Club Med/Celtic pussycat debt woes and a strong Euro, stumble this winter. The Euro could well fall significantly against sterling and the high yield Australian dollar next month. Oil prices have broken above their $65-85 trading range due to the lower dollar, Fed quant easing, rise in Chinese imports, speculative inflows into the London North Sea Brent and New York West Texas futures contracts and, above all, Saudi Arabia’s public admission that the kingdom was comfortable with a $70-90 trading range. This is a hugely positive backdrop for cheaply valued, reserves rich, high dividend integrated oil supermajor shares such as Total, whose dividend yield is now an

incredible six per cent. Winter heating oil demand alone should allow crude oil to trade above $90. This macro milieu is obviously bullish for Saudi petrochemical shares, notably SABIC, APQ and Petro Rabigh, whose product margins will rise even as operating rates expand. It is no coincidence that Saudi petrochemical shares outperformed the Tadawul by a factor of five in November. This sector outperformance will continue in December. US equities have been on a roll since early September and the S&P 500 index added 200 points to regain its April 1218 high before Cisco Systems shocked the financial markets with a revenue miss. However, trading at 13 times forward with inflation and bond yields at epic lows, US equities are not expensive. Cash yields zero, Uncle Sam’s 10 year debt yields a mere 2.6 per cent but the free cash flow yield on American equities is a juicy six per cent even as corporate balance sheets are better credits than most Western governments. The old Wall Street adage “don’t fight the Fed” is also bullish for stock prices. So I doubt the stock market will fall much below 1180 even in a correction in December. This means the index fund SPZ is a buy on any dip below 1190 for a 15 per cent total return potential in 2011. Gold is the optimal reserve currency in the Euro, dollar and yen ugly stepsisters contest. At $1400, nervous longs should be introspective as gold no longer offers steep adjusted returns. At 30 year highs, silver is an accident waiting to happen. All asset bubbles end in tears. That much, at least, is certain. The G-20 conclave in Seoul ended with predictable platitudes. The Chinese inflation data and the Irish bailout rumours have now coupled to trigger a global sell off in risk assets and a rise in the dollar. The financial markets, as usual, have priced in a worst case scenario for Ireland and its nationalised banking system. Since US retail sales rose for a fourth month in October, long-term Treasury bond yields have begun to move sharply higher as double dip recession risk is priced out of the bond market. This is yen bearish! Matein Khalid, fund manager in a royal investment office and writer in finance and geopolitics.

UK growth rates may rise, while the Eurozone, plagued by Club Med/Celtic debt woes and a strong Euro, could stumble against the sterling and Australian dollar.

24 gulfbusiness December 2010


VODAFONE QATAR’S CEO WAS AN INSPIRATION The late Grahame Maher, CEO of Vodafone Qatar will be greatly missed as a visionary leader who championed meaning as well as profits. DR. TOMMY WEIR


his is not the typical article that I would normally write for Gulf Business. But this painful event deserves a tribute to purpose. On November 2, I found a surprising post on Facebook reading “Rest in peace Grahame. May God rest your soul. You were a true respectful gentleman and I was honoured and privileged to have met you on several occasions. My deep condolences to Jenny, Jess, Kate, your friends and colleagues.” I was shocked and confused by what I was reading until I learned…That Grahame Maher, CEO of Vodafone Qatar, had passed away in the night. Grahame began his career with Vodafone in 1998, where he soon after became their CEO. During his three years at the helm of Vodafone NZ, the mobile carrier lifted its market share from 16 per cent to 53 per cent. Then in September 2001 he left to become Chief Executive of Vodafone Australia. Grahame went on to become Chief Executive of Vodafone Sweden, and Chairman and Chief Executive of Vodafone Czech Republic before taking his Qatar role in 2008. Grahame was not your ordinary CEO; he believed that the reason an organisation exists goes beyond profits. “This is why we exist, our reason for being, and it goes beyond just making money. We simply won’t compromise on it. We need to live it every day in everything we do.” As CEO he was committed to shaping a Purpose Based Organization (PBO). He inspired this approach in every operating company that he helmed. For Qatar, Vodafone’s purpose is “To make a world of difference for all people in Qatar.” It is easy to have a mission or statement. But a purpose is much deeper as the purpose is your reason for being. Can you imagine the difference it would make for your business if you were a Purpose Based Organization? Simply put, a PBO is an organisation that holds people firmly at its heart. When all of your employees understand and live the ethos of a PBO, they will know why your business exists (your purpose), how you work together (values), where you’re going (your vision) and what you’ll do to get there (strategies). It also helps to create an environment where power is shared, where rules and titles are secondary and where people feel valued, respected and

are able to grow. So, how did Grahame do in leading the PBO? On the financial and business growth side, since 2008 he led Vodafone Qatar through a $1 billion initial public offering and the rollout of service to the public last year. The company, which achieved a customer base of 600,000 in September out of a population of about 1.6 million, became the first domestic competitor to QTel. And it hopes to be profitable by the year-end. Not bad for two years of work. But the real tribute to his leadership comes from what others have to say: “Everyone who worked at Vodafone NZ during Grahame’s time has very fond memories of an electric working environment where we believed anything was possible. But most of all he was down to earth and humble.” “He absolutely believed that people were a company’s most valuable asset and treated everyone, regardless of position, with equal value. He drove a culture that just can’t be manufactured. It came from his heart and that was clear to everyone. His ready sense of fun was absolutely infectious.” “His mission has truly made a world of difference for all people in Qatar.” “Now this guy was healthier than I. He ran marathons, went on Tour De France-style bike rides, and was an amazingly positive person. So why did this happen? In Qatar, we don’t question why. We accept that this was written by God. It’s in His plan and with every action there’s some good reason. Maher has left a legacy. Every single person in Vodafone feels for him.” In his obituary, Mr Maher’s colleagues remember an “inspiration leader”; his family, a man “who crammed 100 years of life into just 51.” Grahame himself made a difference to the lives of everyone he touched. He was a great CEO, coach, mentor, and friend. We will all sorely miss his inspiration and vision, his passion and energy, and his love for all the people he worked with. Will your tribute be to profits or purpose? Grahame is survived by his wife Jenny Maher, and his daughters Jessica and Kate, both in their 20s. Dr Tommy Weir, vice president of leadership solutions at Kenexa and author of The CEO Shift.

Everyone who worked at Vodafone NZ during Grahame’s time has very fond memories of an electric working environment.

26 gulfbusiness December 2010


THE IMPORTANCE OF CREDIT BUREAUS The announcement of the UAE’s federal credit information initiative will boost the economy and ensure good borrowers get preferential rates. CHRIS J DE BRUIN


s banks and regulators continue to fine-tune risk-management processes, the question of credit bureaus has increasingly popped up, especially in Asia, where they are still relatively new. The concept has come a little later to this region for a number of reasons. Many banks have, in the past, been reluctant to share credit information with other banks for competitive reasons, although there has been a shift since the global economic downturn began. This shift occurred as financial institutions across the region started looking at new ways to provide a better level of service to the market. On the other hand, consumer advocacy groups opposed the concept because it was perceived to undermine rules protecting individual privacy. In more and more countries, concerns over data sharing has given way to two basic realities: consumers and businesses want easier and quicker access to competitively priced loans and banks seek to make safer, more reliable financial decisions to drive growth. One of the best means of achieving both is through the establishment of a positive credit bureau. A positive bureau is one whereby banks and other lenders share and receive all information on a borrower, allowing them to have a holistic view on a person’s credit history. A negative bureau on the other hand only allows for banks/ lenders to view negative information on a borrower including where he/she has defaulted. Approximately 35 per cent of potential good customers are refused credit if an application is only based on negative information. From a macroeconomic point of view, credit bureaus can bring about higher growth rates for businesses and individuals, and therefore the economy, through an increase in credit lines to those who wish to borrow. There are several other benefits of positive credit bureaus that end up benefiting the economy, organisations and individuals. It is always important for banks not to lend money to those who are already over leveraged and therefore unable to pay back their debts – credit bureaus allow lenders to assess a candidate’s total indebtedness and calculate a borrower’s capacity to honour their debt.

Credit bureaus also allow for greater information sharing which allows lenders to review how much and at what rate they lend to borrowers. Good borrowers should not be penalised as a result of a large number of bad borrowers – as is the case without a bureau. With the establishment of a positive bureau, good borrowers get access to credit at more beneficial interest rates. The UAE Ministry of Finance’s decision to introduce a Federal credit bureau is a step made by the government to improve transparency in the UAE’s financial sector. Shortly after this announcement, emcredit was made the official credit information agency of Dubai. Both moves will bring about a greater sharing of information between banks across the UAE . For both bureaus to be a success, getting the correct infrastructure right is essential as economic growth becomes driven by domestic consumption, although exports will remain important. What the UAE and a number of other countries in the region have increasingly realised is an export-led strategy can put them in a severe boom and bust cycle, whereas personal consumption is a mitigating influence. Additionally, by building an informed financial society, consumers will become more aware of their financial exposure and turn to better financial management tools to grow and protect their wealth effectively and manage their finances more closely. To be successful, credit bureaus need to be either government-led, or industry controlled and regulated by the government. If it is to be a success, such a move must be a collective initiative by the financial services industry for the benefit of the sector and consumers. Banks need to be aware of a number of dimensions to truly assess the credit risk of customers. Proactive and positive data sharing enables banks to get loans out to the vast majority of reliable borrowers faster, will help with good lending to drive growth in the economy and help protect the end user by providing beneficial interest rates to those who are financially responsible. Chris J de Bruin, head of consumer banking, Standard Chartered UAE

From a macroeconomic point of view, credit bureaus can bring about higher growth rates for businesses and the economy.

28 gulfbusiness December 2010





IN THE GCC Bahrain..............BD 1.0 Kuwait............... KD 1.0 Oman................ RO 1.0 Qatar.................. QR 10 Saudi Arabia.......SR 10 UAE.................. DHS 10

Can the UAE go nuclear by 2017?

Oman’s healthy balance sheet

How to lead your firm, post-recession

Harnessing Saudi’s unemployed youth

GB Regional4 .indd 1

10/28/10 9:54:52 AM

Ambiguity challenges Tommy Weir’s commentary (Gulf Business, November, p. 26) on CEO turnover rate in the UAE is rather worrying for two broad reasons. The country seems to be leading other markets for all the wrong reasons – with a staggering 50 Per cent CEO turnover rate. Weir cites four interesting challenges about the UAE market – young, mobile, fast-moving and ambiguous. The expectation of CEOs to hit the ground running might not bode well for this market as “what got the CEO here might not be enough to keep him here.” If the fat pay packet in the financial incentive is deemed the only motivating factor I am sure most OB (organisational behaviour) and HR academics and practitioners would argue that there is more to performance than an attractive remuneration. An appropriate enabling work environment, a cohesive team, and an unambiguous market garnished with a set of realistic expectations of CEOs should complement the young, mobile and fast-moving

30 gulfbusiness December 2010

Sell crown jewels It’s fascinating to notice that only a handful of companies dropped out of your list of top 100 companies. I wonder why. But what’s obvious is that quite a lot of these companies are largely owned by the state who have deep pockets. Banks, utility firms and telecom companies dominate the list and these are all widely influenced, if not controlled, by the government. When the world realised that capitalism was the way to go, governments opened up to the private sector to pave the way for efficiency, efffectivity and competitiveness. I remember during the previous downturn cycles, powerful state firms divested big stakes to the private sector to kick off economic activities. Such measures did work. I think a true and sustainable recovery will only be achieved if the private sector is given a bigger chance to compete. So much for the talks about opening up to the private sector. What we need is government entities divesting their crown jewels for privatisation. But that is unlikely to happen any time soon. Christa Dionisio, Doha, Qatar.


economy that characterises the UAE today. These ingredients will also serve to trim the exponential turnover rates. Dr. Nnamdi O. Madichie University of Sharjah, UAE.

Secretive equity I have always been against private equity. Granted that they are helpful in the transition period of privately owned companies to the public market but their greedy goal to take multiples of profit from an investment bought three to five years ago was a major reason for the world’s financial collapse. And they are very secretive. For me, transparency is the only way to go. How can they teach transparency to their portfolio companies if the management decision-making itself is opaque? John Matthews Dubai, UAE.

Telecom tactic I love the honesty in your story, Calling for Growth. Indeed, this region has been very aggressive in

its growth strategy but, on the other hand, they tend to forget that they belong to a world without borders. But how come they were able to continue their primitive rules? Sovereignty has always been their escape clause. But that defence also has its own limit. Baiju Nimer Bahrain.

Email: Write to the editor, Gulf Business, and the letter of the month wins an Alessi watch.


All that glitters is gold The appeal of gold climbs as the future of the US dollar looks uncertain following quantative easing round two, writes ROBERT BAILEY.

32 gulfbusiness December 2010



lobal economic uncertainty has seen gold prices soar over the last 12 months. Since the yellow stuff’s break above the key $1,000 an ounce level in early September 2009, its stellar ride has continued unabated. Just over one year later, following the US Fed’s decision to pump more money into the American economy through a process of quantitative easing, the price of gold has since soared to a record $1,400 an ounce. However, QE carries longer term risks for the country’s economy and the dollar. It is this uncertainty that is pushing investors to load more gold into their portfolios, either through acquisition of bullion, coin, exchange traded funds or mining shares. The fear is that the dollar weakens further, which means higher prices for commodities that historically are priced in US currency. Oil prices have also accelerated to a year long high with the expectation that easier money will give a substantial upside to many commodities, but especially precious metals such as platinum, palladium, silver as well as gold. Claire Miller, head of marketing at Dubai Gold & Commodities Exchange (DGCX) told Gulf Business that “uncertainty in the equity markets and economy as a whole, as a result of the global financial crisis, has led to increased demand and price volatility in gold. Institutional investors have also been allocating higher assets to bullion linked Exchange Traded Funds” The World Gold Council (WGC), which represents the international gold industry, says that between October 2007 and March 2009 – the height of the global financial meltdown – an investor with a portfolio of $10 million experienced an additional $500,000 loss simply by not maintaining a position in gold.

“While gold’s role as a protection against inflation and a currency hedge are widely known, its ability both to diversify risk and to mitigate investment losses is increasingly attracting investor attention,” says Juan Carlos Artigas, WGC investment research manager. As a result the future for gold is looking very bright. Year to date volume for DGCX gold futures as at November 9, 2010 was just over 425,000 contracts. Average daily volume for DGCX gold futures currently stands at 2,750 contracts. Overall the exchange has traded 1.63 million contracts in the year to

for their negative correlation with equity and financial based markets and so offer an ideal tool for portfolio diversification, according to Miller. “DGCX gold futures are the exchange’s flagship contract and have introduced a new pricing benchmark for gold in the UAE – namely, the 1kg gold futures contract. We expect gold trade to grow further in the region and DGCX is well positioned to benefit from this demand.” How long the trend continues though is dependent on the global economy and whether its prospects are as fragile as the gold price suggests. In several emerging markets such as

Gold futures are now the DGCX’s flagship contract with a new pricing benchmark for gold in the UAE – the 1kg gold futures. date, already surpassing the total annual volume achieved in 2009. The metal is seen by many as a safe haven investment and an asset class which can be easily liquidated to generate cash. Commodities, including gold, have traditionally been known

Russia, central banks have continued to increase their gold reserves while sales by European banks have remained negligible in 2010. The USA holds more than 72 per cent of its reserves in gold a total of 8,100 tonnes. Germany, Italy, France,

getty images

US Federal Reserve chairman, Ben Bernanke.

the Netherlands, Austria and Greece also have more than half of their total reserves in gold. Other factors also impact on price levels such as the world’s jewellery market, which has been active even in the recession with India and China accounting for 45 per cent of global demand in 2009. Gold usage in technology applications, particularly in the electronics industry for semiconductors as well as in mobile phones, also remains a steady source of demand. As a result, the World Gold Council does not consider the metal to be overvalued and points out that “even modest allocations to gold in a portfolio can help investors mitigate losses and hedge against tail risks without sacrificing long-term returns.�

I]ZbZY[gdbi]ZigVkZahd[&)i]XZcijgnZmeadgZg>Wc7ViijiV!i]^hĂ&#x2019;kZ"hiVgajmjgn]diZa^c i]Z]ZVgid[CZl9jWV^^hVc^YZVakZcjZ[dgWjh^cZhhbZZi^c\h#;jaanZfj^eeZYl^i]VgVc\Z d[gddbh!hiViZd[i]ZVgiiZX]cdad\n!ajmjgnhj^iZhVcYĂ&#x2019;cZY^c^c\X]d^XZh!>Wc7ViijiV<ViZ =diZa^hi]ZeZg[ZXi\ViZlVnidWjh^cZhh#HiVnl^i]jhVcYlZl^aaegdk^YZV[jaabZZi^c\ eVX`V\Z!^cXajY^c\kZcjZ!ajcX]VcYXd[[ZZWgZV`h"VWhdajiZan[gZZ IdĂ&#x2019;cYdjibdgZdgidbV`ZVgZhZgkVi^dc!eaZVhZXdciVXii]Z]diZaY^gZXidc/ .,&))))%))%! ]diZa#YjWV^#^WcWViijiV5bdZkZce^X`#XdbdgXdciVXindjgigVkZaV\Zci#8Vaaidaa[gZZ[gdb/i]Z J6:-%%).()!7V]gV^c-%%%&..&!@H6-%%&')'.'.!@jlV^i'''*(''-!FViVg-%%'%%& VcYfjdiZĂ&#x2C6;BZZi[dg;gZZĂ&#x2030;#IZgbhVcYXdcY^i^dchVeean#

>Wc7ViijiV<ViZ=diZa DeZgViZYWnBÂ&#x17D;kZce^X`=diZahGZhdgih



See you at the gate

MP0009-IBG LAUNCH-Gulf Business HP V1.indd 1

10/24/10 3:01:58â&#x20AC;­ â&#x20AC;ŹPM

December 2010 gulfbusiness



The region’s liquid assets Over 15 billion litres of beverages are consumed in the Gulf each year, RYAN HARRISON looks at the prospects for new energy drink Monster.


he Gulf has a thirst for energy drinks like no other region in the world. After a blistering few years of growth, the numbers on beverage consumption are truly staggering. In the UAE alone about 12 million litres of the energy drinks are consumed a year. Plus, the UAE has one of the highest per capita consumption of drinks in the world – about 635 litres per year, versus 197 litres annually for the global average. Annually, approximately 15.5 billion litres of packaged water, tea and carbonated drinks are consumed in the GCC, with Saudi Arabia having the highest share with approx 65 per cent and the rest being made up by UAE (18 per cent), Kuwait (seven per cent), Oman (six per cent) and Bahrain & Qatar (two per cent each). Out of all the beverage categories, sugary brands are far and away the best-sellers year after year. With demand through the roof, the market has become fiercely competitive, verging on the cut-throat. Underpinning this demand is dry weather, disposal incomes and thriving young populations across the Gulf states. Red Bull is largely regarded as the energy drink incumbent in the region,

Energy is actually the number one energy drink in the US. It’s bigger than Red Bull and is the fastest growing energy drink in the world. “We are currently rated 4.5 /5 vs Red Bull at 2/5 on taste flavour by BevNet. com, with Monster Energy being a smooth tasting energy drink, unlike

Beverage demand is driven by dry weather, high disposal incomes and thriving young populations across the Gulf states. although it suffered a stagnant financial crisis. But US giant Monster recently launched in the UAE through retailer African & Eastern to upset the applecart. The two players face a brutal fight for the Gulf’s sweet tooth. Both tell dramatic growth stories. Damon Tudor, general manager at African & Eastern, said: “Monster

34 gulfbusiness December 2010

what some describe as the ‘medicinal taste’ of Red Bull.” He added: “In terms of retail price, given the size of the Monster Energy cans, consumers get double the energy for approximately the same price, plus our extended flavour categories gives us a broader choice range for consumers.” Monster is pulling no punches and

has hired big name endorsers such as Michael Schumacher and MotoGP World Champion Valentino Rossi. The firm said it’s taken a different approach to Red Bull and other energy drink competitors by using these proathlete ambassadors at the forefront of their marketing campaigns. Red Bull has the first mover advantage in the Gulf and even though its recession wasn’t the best, growth, and more importantly market share, remain solid. The company will need to keep its wits about it in the coming years. Energy drinks started in Asian markets, and Red Bull helped fully exploit the category in the west. Since 1998, the firm has been instrumental in spreading the word around the Middle East. Alberto Chahoud, area communication manager for Middle East & Africa at Red Bull, said: “Engaging our target audience has always been a main pillar

Red Bull is regarded as the energy drink incumbent in the region, although it suffered a stagnant financial crisis. in our marketing strategy. Through a wide array of innovative events and activities tackling different sport and cultural disciplines down to our sampling activities, direct interaction with consumers has been a consistent trend for Red Bull. â&#x20AC;&#x153;Following a sustainable year-onyear growth, we witnessed a relative stagnation in 2009, due to the economic crisis; therefore, we have intensified our marketing activation in 2010 to curb the impact of the crisis and give wings to our business,â&#x20AC;? he added.

Although the economic downturn is not yet totally behind them, these drinks firms will likely register optimistic growth in the next two years, followed by a steadier growth in the years to come, according to some estimates. Experts say that consumer taste profiles in the Middle East are very different from Western countries. With over 80 nationalities living in UAE, the region is a melting pot of taste and preferences when it comes to products such a energy drinks. But with a growing thirst and penchant for all things sweet,

Red Bull and Monster have no concerns about widespread demand for their products. Going toe-to-toe over market share will be a different story.


HEAVY LOAD Tractor truck gross combination weight 62 tons powerful engine 400 HP, EURO-3 reliable gearbox ZF 16S151

KAMAZ 6460 Call Toll Free in UAE: 800-KAMAZ (52629), * in Russia

December 2010 gulfbusiness



Wooing the Asians As Western tourism recedes, Egypt, Qatar and the UAE are pro-actively courting South East Asian markets to plug the gap, writes MANIK MEHTA.


ash-rich Asians are being courted by Middle Eastern countries as a source of tourism revenue to offset declining revenue from the traditional Western markets. This trend was in full evidence at Asia’s leading tourism fair, ITB Asia in Singapore where tourism promotion agencies from a number of Gulf and Middle Eastern countries made a strong pitch to woo tourists from the Association of Southeast Asian Nations (ASEAN) and other parts of Asia. While Egypt’s pyramids have historically attracted tourists from around the world, the bulk of its tourism revenue has always come from Western countries. “The 21st century is the century of Asia,” Egypt’s senior assistant minister of tourism Hisham Zaazou, declared. “We are using ITB Asia as a

S. Iswaran, senior minister of State Singapore (right) and Hisham Zaazou, assistant minister, Egypt (far right) at the Qatar Tourism pavilion at ITB Asia.

Tourism accounts for 11.1 per cent of Egypt’s GDP. Some 13 per cent of the national workforce is employed, directly or indirectly, by tourism. platform to promote Egypt in Asia. Some 700,000 Asian visitors trekked to Egypt in 2009, Zaazou told Gulf Business. “Arab tourists only provide about 17 per cent of Egypt’s inbound tourists, with Saudi Arabia and Libya being the leading nations,” he said. Juggling with figures, Zaazou highlighted the significance of tourism for the national economy of his country. “Some 20 per cent of each foreign dollar earned by Egypt comes from tourism. Tourism’s contribution used to be $300 million in 1982 but by 2009, it surged to $2.5 billion. Tourism accounts for 11.1 per cent of our national GDP. Some 13 per cent of our national workforce is employed, directly, or indirectly, by tourism,” he said.

36 gulfbusiness December 2010

Qatar is equally keen to lure traffic but has a different kind of tourism segment in mind. “We are not interested in mass tourism. We are trying to attract traffic interested in arts, history, culture, etc. We have built the Museum of Islamic Art, tracing a 1,400-year-old history,” explained Ahmed Abdullah M. Al Nuaimi, chairman of Qatar Tourism Authority (QTA), which promotes tourism to Qatar. The QTA chairman also highlighted the common religious bonds of Islam existing between Qatar and some of the ASEAN countries. Prior to QTA’s participation in Singapore, the country had held a roadshow in Kuala Lumpur. Al Nuaimi underlined the “keen interest”

on the part of the QTA to attract tourists from ASEAN. He pointed out that Qatar Airways, for example, had increased the frequency of connections with Kuala Lumpur to 11 flights a week. “This will give a strong boost to tourism from Malaysia and other ASEAN countries to Qatar,” he said. “The bottom line is that Qatar has traditionally maintained a strong business relationship with both Malaysia and Singapore.” The importance of the ASEAN region as a source of tourism was also the reason behind Messe Berlin’s creation of ITB Asia, an Asian edition of its ITB Berlin, the world’s largest tourism fair. “India, China and ASEAN are the growth markets of the future,” said Raimund Hosch, Messe Berlin’s president and CEO.” This is a why you see here a number of Middle Eastern countries that recognise the crucial importance of the ASEAN region as a source of tourism.” ■


Insuring the future Despite double-digit growth in takaful, analysts doubt the Islamic insurance sector has finally established credibility, writes KAREN REMO-LISTANA.

getty images


ohammad Al Marri, 45, a perfume shop owner in Sharjah, is not familiar with the concept of takaful insurance. “I’m not used to that, but I would like to have one soon and perhaps I can also offer that to my staff. And if ever I avail that, I want a policy that follows Islamic principles,” he says. Al Marri is part of a large majority that the insurance sector plans to tap. Although volume of insurance premiums in the Gulf Corporation Council last year grew 28 per cent, compared to the global average of 3.4 per cent, penetration remains extremely low at one per cent of the GDP.

The GCC takaful operators fall short of industry best practice in terms of transparency and governance. Research by consulting firm Value Partners shows that Saudi Arabia – the region’s largest economy – has penetration of 0.6 per cent which is dwarfed by its smaller neighbour the UAE which has a penetration rate of two per cent. “Insurance penetration lags behind that of the Western economies, yet economic growth rates would be the envy of most of the world,” Paul Koster, chief executive, Dubai Financial Services Authority (DFSA) told a global industry event in Dubai. One specific source of growth is the Islamic-compliant insurance (or takaful) concept of which dates back more than 1,400 years and is based on the principle of mutual guarantee. Saudi Arabia, whose contributions

38 gulfbusiness December 2010

stood at $2.9 billion in 2008 and Malaysia, with $900 million, are the top takaful markets in the world. “In the recent past, cultural practices and religious beliefs have limited the development of the life insurance market. However, the growing awareness and acceptance of Islamic insurance is opening up a significant growth opportunity,” Koster says. According to Ernst & Young, the global market for takaful is set to surpass $8.8 billion this year with contributions growing by 29 per cent in 2008 to $5.3 billion. Zurich Insurance, which recently acquired 99.98 per cent in Lebanon’s Campagnie Libanaise D’Assurances, is bullish that the deal will boost its takaful business. “The takaful business

is a key activity for us hence one of the objectives of this acquisition is to strengthen our takaful operations,” says Axel Lehmann, member of the group executive committee and chief risk officer of Zurich Financial Services Group. But many have been unable to access the growing market. Oman Insurance, the UAE’s largest insurer has been denied a licence to operate in this sector. “We tried to obtain a licence but the authorities objected. It can only be offered by a specialised insurance company,” says Abdul Muttalib Al Jaidi, CEO of Oman Insurance, noting that the policy in issuing new licences has been rigid. “We have existing partnerships but I don’t think the authority is granting any new licence. We have not applied for a licence, though,” adds Michel Khalaf, Middle East, Africa and South Asia president of Alico, which was acquired by Metlife earlier this year. The nascent sector also faces a number of challenges. First, takaful operators are somewhat constrained in their investment opportunities. The most common investment class for global insurers is investment grade rated bonds. However, the bond market is not well developed in the Middle East, primarily due to a small local market for such instruments. There is also no regulatory requirement dictating the asset allocation of insurance companies and takaful operators. In a study conducted by Alpen Capital, the GCC takaful insurers score way below their conventional peers in terms of efficiency. The GCC takaful operators are also falling short of industry best practice in terms of transparency and governance practices. “The demand for takaful is there because people always look for something different,” says Al Jaidi. “If that new something can add value to their business then yes, the demand will be great but were the takaful companies able to offer that added value? I don’t think so.” ■


New market frontiers The UAE’s upgraded status as an ‘emerging market’ on the FTSE could lead to significant inward investment gains for the region, writes ROBERT BAILEY.

Naveed Ahmed


ulf financial industry officials believe that the UAE could attract nearly $40 billion in foreign capital into its stock markets. This follows a decision by the FTSE index to upgrade the investment ranking of the emirates’ from frontier to secondary emerging market status. Many frontier markets offer attractive valuations partly because they are relatively undiscovered, and even less correlated with developed markets than traditional emerging markets. However, they are mainly limited to niche foreign investment funds. It is more than a fine point of distinction for the legions of fund managers sitting in London, Frankfurt, New York and Tokyo. Emerging market status implies fewer local restrictions on foreign participation, greater market depth, transparency as well as efficient settlement and custody proceedings. The status provides a comfort zone making it easier to disburse fund allocations measured worldwide in billions of dollars a day. In the last two years, professional investors have, too, become more bullish on emerging markets, betting on some of them being a haven

“Upgrading Arab stock markets by international institutions from frontier to emerging markets is of great importance at this stage, a course of action that is earnestly pursued by the UAE owing to the vast opportunities offered by placing Arab stock markets on the map of international investment opportunities,” says Rashed Al Baloushi, deputy chief executive and director of operations of Abu Dhabi Securities Exchange (ADX). Nasdaq Dubai’s chief executive Jeff Singer also believes the move is

Consolidation is another important factor. A region with a population of less than 40 million is too small to support nine stock markets. from an economic slowdown in the developed world. The Financial Times Stock Exchange (FTSE) list upgraded the UAE stock markets from frontier to secondary emerging markets in September. Another influential index, Morgan Stanley Capital International (MSCI), has also announced that the UAE and Qatar will be under review for a potential reclassification to emerging markets in 2011.

40 gulfbusiness December 2010

significant since many institutional investors have mandates to invest in emerging markets he points out that previously an emerging market fund could easily overlook a country that did not have the classification of emerging market but it is now likely that funds will allocate an increasing amount of assets to the UAE which could be measured in billions of dollars. In an effort to open up to support the country’s drive to attract capital,

ADX introduced exchange trade funds (ETF) in March one of a few emerging markets to do so. Qatar’s bourse, in which the NYSE Euronext has a 20 per cent stake, is also considering opening up to exchange-traded funds. According to Al Baloushi the upgrading of Arab stock markets by international institutions is “of great importance” to the investment aims of the region. He and other professionals in the region are aware though that the necessary moves will require Arab exchanges to adhere increasingly to international norms and standards of efficiency for trading, settlement, clearance, custody and depositary. Consolidation is another important factor. A region with a population of less than 40 million is too small to support nine stock markets. Since the financial crisis gripped the world in late 2008, calls for mergers among the region’s stock markets have increased. This would allow exchanges to offer a broad enough liquidity pool to attract sizeable global investments. The merger, in July, of Dubai Financial Market and Nasdaq Dubai, under one holding company, for example, is expected to improve liquidity, lower brokers’ fees and attract more listings.


Dubai Pearl back on track Despite property oversupply in the emirate, the megaproject is convinced it can meet its targets, writes KAREN REMO-LISTANA.


report from the Institute of International Finance says the UAE is returning to a solid growth path, thanks to robust government spending and normalisation of global trade. But some remain sceptical. With the Dubai sovereign bond prospectus revealing that half of all projects registered by Dubai’s Real Estate Regulatory Agency have been cancelled and industry forecasts indicating that supply won’t peak until 2012, there’s valid reasons for doubt. Yet against this oversupply projection, Dubai Pearl has taken bold steps to continue the project after months of quiet market observation. The project, known for its plans with MGM Mirage to develop Bellagio, MGM Grand and Skylofts, has resumed construction activity at the 15 million square feet development. It was originally intended for completion in the 2011-2012 period. Because of the crisis, however, Dubai Pearl construction was divided into two phases, the first one to be completed in 2013 and the second in 2015. “We believe markets will show signs of good recovery end 2011 or early 2012 and by 2014, we expect markets to reach very stable levels,” says Santosh Joseph, president and CEO of Dubai Pearl. “I have been in the real estate business for 20 years and I have seen that every five years there is a cycle. Things will go up again and people will realise that the maximum appreciation is in real estate.” Joseph says one of the main reasons real estate is still in a slump condition is the lack of liquidity due to scarce mortgage lending. “When the banking industry is weak, the real estate

42 gulfbusiness December 2010

Dubai Pearl rendering.

industry is also weak but when it recovers, so does real estate. I expect that to happen at the end of next year.’’ Currently, Dubai Pearl has zerodebt on its balance sheet. It has sold 95 per cent of the commercial units and 25 per cent of the residential units. On the surface, Joseph’s job looks less troubling than that of other Dubai bosses. But on closer inspection, the company is in a dire need of increased liquidity. Although Dhs 5 billion worth of properties, or half of phase one, has been sold, customers are nevertheless struggling to pay. So in addition to the pressure of sourcing cash to

on the purchase. DIFCI has an outstanding legal agreement with Dubai Pearl valued at Dhs3 billion for the purchase of commercial space within phase 1. The deal is now being restructured. “We have considered that. That’s why we may be increasing our equity and quasiequity base to overcome that. Our equity base is Dhs1 billion, but over the next two years we are looking at bringing in at least Dhs2 billion of equity and quasi-equity,” Joseph says. Today, Dubai Pearl is owned by the Al Fahim Group of Abu Dhabi and Joseph. But other institutional investors have also begun to look at Dubai Pearl as a prime investment, claims Joseph.

Markets will show signs of recovery by late 2011 or early 2012 and we will see stable real estate levels by 2014. finance the completion, the company has to restructure most of its payment terms. In 2008, DIFC Investments (DIFCI), purchased 29 floors of a yet-to-be-constructed building at the development. This year, DIFCI claimed that Bisher Barazi, its former managing director, failed to carry out due diligence

“One of the Dubai Pearl’s advantages is we have the work, play, stay and live concept altogether in once place. It’s like a city within a city.” So despite the roller coaster ride of the recession, Joseph exudes a contagious optimism that Dubai – like Sheikh Mohammed says – will spring back to its feet in time. ■


Dubai-based construction firm Arabtec Holding said its board had accepted the nomination of Abdulla Kalban, CEO of Dubai Aluminium Company, as a new board member following the resignation of Arif Naqvi, founder of Abraaj Capital. The company also elected Ibrahim Balsaleh as chairman of the firmâ&#x20AC;&#x2122;s Audit Committee, Dr Henry Azzam as chairman of the Investment Committee and Adel Al Nowais as chairman of the Nomination and Remuneration Committee.

Khaled Al Khattaf has joined global investment bank Nomura as CEO for Saudi Arabia from the Tadawul, the Saudi Arabia Stock Exchange, where he served as the chief financial officer. Prior to Tadawul, he worked at Saudi Arabia Monetary Agency for nearly 20 years. He represented Saudi Arabia in the G20 team and in the drafting of the Santiago Principles (2008) on SWF activities.

Standard Chartered has named Apoorva Shah as managing director for mergers and acquisitions for the Middle East, North Africa region. Shah joins from Deutsche Bank where he was most recently regional head of M&A. Shah has a Masters of Arts in Economics from Cambridge University and has 16 years of experience in the banking and finance industry.

The Saudi British Bank (SABB) has appointed Alaa Shekib Al Jabri as chief risk officer. Al Jabri joined SABB in November 2006 as the area general manager for Western Province. He has more than two decades of banking experience in leading financial institutions in Saudi Arabia and the Gulf. He has a Master of Business Administration from the INSEAD, France and a Bachelor of Business Administration from the American University of Beirut, Lebanon.

UAE +971 4 338 4759

Kuwait +965 247 58 141

Qatar +974 4 460 2334

Saudi Arabia +966 1 214 7444 |

December 2010 gulfbusiness


CEOs ETISALAT About Mohammad Omran Omran leads Etisalat, which is now one of the largest telecommunications companies in the world with a market value of approximately $25 billion. Under Omran’s leadership, revenues increased at a compound annual growth rate of 24 per cent between 2005 and 2009 to reach Dhs30.8 billion. Net profits increased by 20 per cent in the same period. Through Omran’s strategy which is based on deploying international best practice, thorough market analysis and selecting opportunities based on stringent criteria, the number of Etisalat’s customers increased from only four million in 2004 to 107 million customers in Q1 2010 across 18 markets in Asia, Africa and the Middle East.

Mohammad Omran The chairman of UAE telecommunications company, Etisalat, says social networking will become the norm for work decision making.


he telecommunications sectors are developing at a relentless pace. Competing for market share, delivering innovative solutions and keeping pace with technology were just some challenges that faced the telecom industry in the past couple of years. As global markets evolve, converge and grow, there is a need for operators to be constantly updated with capabilities and talents in order to keep pace. Etisalat excelled in its operations and has continued to spend where needed, whether it is on infrastructure such as the fiber optic network, which will be accomplished in UAE in 2011 making Abu Dhabi the first city in the world be fully connected by this network, or in maintaining the quality of services and networks upgrades. In a world where seamless connectivity will be far more

important in the future, whether between people or machines, we hope to position Etisalat to profit from rising demand for machine-tomachine connectivity. The internet will become much more about

creating on-the-move avenues for easy access to e-mail and business applications; on the other, the same proliferation and growing reliance on mobility is creating higher stress for the CIOs who have an additional task of integrating and controlling mobility to obtain optimum workforce efficiency. This is where organisations need to collaborate with solution partners, such as Etisalat, who understand every component of the mobility ecosystem. In addition, the trend of social networks will spread further in the workplace. As the lines

Growing reliance on mobility is creating higher stress for the CIOs who have the task of integrating efficiency. connectivity for the customer, whether it is customers with networks, or machines. There are now more machines than people and this will be a major area of future growth in the telecom market. Mobility solutions have created a paradigm shift in the way businesses are conducted in the region. While, on the one hand, proliferation of mobile devices are helping to liberate the workforce by

between professional and personal communications become increasingly blurred, the industry will need to incorporate enterprise social networking into their overall unified communications and strategy. Enterprise-grade versions of Facebook, Twitter and Wikis in the workplace will begin to be as common as e-mail and will change the way business is conducted. As a result, the decisionmaking process will be accelerated. ■ December 2010 gulfbusiness




n 2008, there were $44 billion of construction contract awards in the emirate; in 2009 this decreased to $9 billion; and so far in 2010 there has been just $5 billion of projects awarded in Dubai. Our home market, which traditionally accounted for most of our turnover, has slowed down in awarding contracts. The slowdown has resulted in fierce competition and squeezed margins, the contracts awarded for mega projects are not healthy and for the smaller ones the margins are even worse. Squeezing margins to unhealthy levels results in them not being delivered as they should be; quality will suffer. Both the construction and real estate market in Dubai continued to exhibit signs of sluggishness throughout 2010. Arabtec tackles these issues by maintaining close and continuous interactions with clients, particularly with regard to payment terms and completion schedules, whilst continuing to back our commitment to the UAE and our clients. To compensate for the slowdown in business in Dubai, the main trends will be of continued geographical expansion. The UAE’s construction market is now driven by development projects in Abu Dhabi, while, just two years ago, it was Dubai’s real estate projects that dominated the sector. Abu Dhabi will remain the best market for contractors in the UAE for the near future. The UAE accounts for nearly 20.3 per cent of total construction industry in the region, followed by Saudi Arabia, Algeria and Egypt. There is a trend towards moving into infrastructure projects and an increased demand for work in this sub-sector caused by the regional macro-economic factors and the related increased governmental spending. Most countries in the MENA region have to cater to a young growing population and a faster moving society – this has created ambitious intentions to push

Riad Kamal Riad Kamal, CEO of Arabtec, the region’s largest construction company, says local firms will have to expand out of Dubai to survive the near-term. infrastructure development projects. Following a challenging period in 2009 and this year, we are expecting a more promising 2011 and beyond. In recent months, firms have branched into new markets, switching focus from private to public sector schemes and forming new alliances in a bid to win work in this increasingly competitive environment.

We continue to seek both local and regional opportunities with the aim of continuing to grow and expand on our current capabilities. We have confidence the emerging markets we are growing in, especially Abu Dhabi, Saudi Arabia, Egypt, Syria, Qatar, Bahrain and Angola, will compensate for the reduced opportunities in the UAE market, namely Dubai. ■

To compensate for the slowdown in business in Dubai, the main trends will be of continued geographical expansion.

Decemberr 2010 gulfbusiness



Skipper of the MOD 70â&#x20AC;&#x2122; N°02

MOD 70â&#x20AC;&#x2122;

On Equal Terms on the Ocean Planet - CrÊdits photo : Š Yvan Zedda - Multi One Design S.A. 2010


0$&"/3"$& July 2012 & 2014



0$&"/803-%5063 0DUUP"QSJM

A GLOBAL COMMUNICATION PLATFORM The MOD70â&#x20AC;&#x2122; one-design oceanic multihull circuit represents a new generation of international sporting events combining performance, sports equity, cost control, media impact and eco-responsibility. As a rallying call on every continent, the Multi One Design circuit offers a unique, international platform for communication. A UNIQUE CONCEPT, A UNIQUE CAUSE, A UNIQUE OPPORTUNITY Join us at




t’s important to state that 2010 is the year where the banking industry has settled, after two years of trying to emerge from the financial crisis. Now, we can say that the market is stable and there is no fluctuation. The UAE banking industry has been through the worst and it’s recovering now, slow but steadily. In the region, the crisis has been dealt with very cautiously to limit damages and operate at the same time. Financial institutions now are more vigilant and decisions to lend are led by a concrete business plan. Lending never stopped in such a tough environment, however, it has slowed down because certain measures are taken before such a decision is made. We have observed how banks are focusing on risk management now more than ever, as it is the backbone of any business. Seizing of opportunities with no planning is a trend that has changed as well, forcing companies to analyse and identify the consequences towards their performance. In the past, we have noticed the lack of planning across various organisations and how it has impacted their business. It’s imperative for every organisation to acquire a solid plan with detailed processes on how its goals will be accomplished. This year was also a year of steady jobs in the banking industry, where

Abdul Aziz Al Ghurair The chairman of Mashreqbank says better risk management will lead to growth and diversification in the industry. There will be more focus on customer retention, while developing attractive products that accommodate customer requirements and market conditions. In today’s volatile and uncertain markets, where the crisis is redefining the industry and its competitive environment, banks need

In the past, we have noticed the lack of planning across various organisations and how it has impacted their business. previously shift of jobs used to vary between 20 per cent, however, the scene has changed with the financial crisis taking place. Shifting of jobs in the industry plays a major role in effecting a business and customer relations. We anticipate 2011 to be a year of further growth and diversifying of investments and stable revenue streams. Small and medium business will be an attractive segment for banks to extend their facilities to.

to concentrate on managing their capitalization and liquidity, realigning their strategies and business models, focusing on innovative solutions; and managing increased regulations. As a national financial institution, we are committed to UAE’s economic growth and we are strongly moving towards our expansion strategy in the UAE and the region. Mashreq continues to develop innovative and convenient products based on

customer requirements and offer unmatched services to maintain our leading position in the banking industry. In spite of the difficult global financial environment, we continue to grow and invest in strategic projects. Over the years we have succeeded in launching innovative products and services in order to offer convenience to customers. In line with our strategy to be a regional financial institution, we are exploring opportunities to tap into new markets and complement our network of branches and representative offices around the world. Today, we are present in Egypt, Kuwait, Bahrain, Qatar, Hong Kong, India, Bangladesh, USA, Pakistan, Sudan and United Kingdom. In the UAE, we have 54 branches and 242 ATM’s and we look forward to further expand in 2011. Our primary goal is to offer a comprehensive banking experience, whether it’s offering products or customer service. ■ December 2010 gulfbusiness


Scientific excellence and experience. Together, theyâ&#x20AC;&#x2122;re turning innovation into real-world solutions. More at


James Hogan CEO of the UAE’s national airline writes that 2011 will be a year of increasing frequencies and depth for corporate customers, as well as boosting alliances.


010 was a year where, month by month, we saw our yields edge rather than gallop towards pre-crisis levels. And as the year concludes, I’d say we’re pretty much there. There were no seismic shifts for global aviation in 2010. But, certainly, there was consolidation – British Airways and Iberia in Europe; Delta and Northwest, as well as Continental and United in the US, both eclipsing American Airlines as the world’s largest carrier. And Emirates overtook Lufthansa as the largest international carrier. But it was mainly a year that fortified the existing trends. One of those trends is the growth of the Gulf, both as a passenger hub and as an endpoint. Etihad, like its competitors in the Gulf, is growing strongly. We took delivery of four aircraft this year and launched routes to Baghdad and

52 gulfbusiness December 2010

Erbil in Iraq; to Nagoya and Tokyo in Japan; and to Alexandria, Colombo and Seoul. We also increased our frequencies on our services to Beijing, Beirut, Brussels, Cairo, Dublin, Frankfurt,

that, for our corporate customers, this depth is essential. All businesses, not just airlines, will need to be lean and fast-moving to make the most of the upturn. We are watching the global economy closely for relevant movements. Our future plans for our network are determined by the greatest areas of opportunity. Naturally, as China and India mature, we will focus on those important markets. Other parts of south east Asia will be high on our list. Soon enough, we will look to Brazil and its neighbours as major sources of transfer and point-to-point traffic. As these spokes continue to build, Abu Dhabi will be ideally placed. The increasing number of visitors will help drive the emirate’s expansion while the emirate’s expansion will help generate more traffic as it becomes an increasingly sophisticated place to vacation and to do business. Etihad will use 2011 to further increase its scale through key strategic alliances with likeminded airlines. Partnering with other carriers in their home markets to source greater banks of traffic is the most effective way we can design a global network. Out of Korea we will codeshare from Seoul and into other Asian cities on ASIANA, while they will be doing the same over Abu Dhabi and onwards. We have partnered with Virgin’s Australian airline brands to connect our passengers across that vast

We will take delivery of six widebody aircraft, almost all of which will be allocated to our existing route network. Geneva, Hyderabad, Manila and Milan. So I’d say this year our growth has been unmistakable, if not headline grabbing. 2011 is likely to be similarly steady. We will take delivery of six widebody aircraft, almost all of which will be allocated to our existing route network to increase our frequencies, adding depth to the network. We know

continent and into New Zealand the Pacific Islands. And from February next year, V Australia will be the first Australian airline to operate into the Middle East for twenty years. But making too many predictions is a pointless practice in the aviation industry. Anything can happen. The best strategy is to always be prepared for the best and the worst. ■


Samer Majali CEO of Bahrain-government owned airline Gulf Air says there will be turbulent times ahead for the industry, with brighter skies to come.


omeone once said the only way to make a million dollars in the airline business was to start with a billion; somewhat ironic considering that the aviation industry is the greatest catalyst of the global economy, driving more than a trillion dollars in economic activity. The problem facing airlines is their susceptibility to external factors; no industry in the world can be more volatile than the aviation industry. If 2009 mauled the industry with economic recession, 2010 punished it with rising fuel prices. Yet commercial aviation has demonstrated resilience in the past and will continue to do so in the future. This year is a perfect example; despite difficult operating conditions, the industry is set to return to the ’black’ this year, expecting to post an estimated $8.9 billion in profit and

record 11 per cent growth. Leading this growth is the Middle East which set for a 15.2 per cent increase this year. This remarkable progress is driven by the region’s oil wealth, its unique geographical position making it a

they compete aggressively for the same traffic. How does Gulf Air position itself in this scenario? We have a clear mandate from the airline’s ownership – to make Gulf Air a commercially sustainable business that adds value to the kingdom and people of Bahrain. Therefore, in 2010 Gulf Air launched a new strategy to achieve this: our vision – to create a commercially sustainable business through identifying niche markets, where we could exploit a leadership position while raising the levels of product and service delivery to higher quality and greater consistency. For the first time in the region, we introduced regional jets to connect underserved and niche markets. We opened 11 new destinations, 10 of which are within the MENA region. We brought in 12 new aircraft and phased out 12 older aircraft, reducing the average age of our fleet to just 6.8 years. Financially, our costs have come down and losses have reduced while our load factors and punctuality have improved significantly. Our ultimate goal is to continue to improve our customer travel experience with superior and more consistent products as we continue implementing our strategy through 2011. Though our strategy has seen us stay on in the right track during 2010, we are approaching 2011 with

I believe that, despite all the positive signals, full recovery in the industry will not come until after 2014. transit hub between the East and the West, improved airplane and airport capabilities and the owner countries ambitious growth and investment plans. Despite all the positive investment, operating in the region is far from easy. Planned aircraft purchases of $200 billion over the next decade will flood the market with over-capacity, resulting in the more generouslyfunded carriers subsidising fares as

cautious optimism. We will continue to maintain our leadership position in the ME region, but will also connect the region with the key financial capitals of the world. Coming back to my 2011 predictions for the industry in general, I believe that despite all the positive signals, full recovery will not come until after 2014. But 2014 is not far off and I am optimistic that the coming years will be bullish. Maybe investing a billion may be a wise idea now! ■ December 2010 gulfbusiness




he closing months of the year look to be bringing some relief to the financial services industry and we will enter 2011 with cautious optimism. Without question, 2010 had a profound impact on our industry. We have seen many of our smaller competitors fall away and industry consolidation increase. In brokerage, we have seen a reduction of the number of securities firms by a third to around 70 and predict this will continue into 2011. For larger players such as Shuaa, this consolidation, along with flight to quality, will benefit our business and help increase our market share. The financial crisis has forced leadership teams to reassess their strategy and to refocus on core strengths. This has also been the case at Shuaa, where we spent the last 12 months rebuilding the business and implementing a more focused fee-based strategy, developing our management, governance, internal processes and systems and positioning ourselves for the eventual recovery. We went into 2010 with over 100 business improvement projects, of which two thirds have already been delivered and are now part of ‘business as usual’. As a result, we have become more efficient and better-positioned to compete across our core markets.

Sameer Al Ansari CEO of investment firm Shuaa Capital says the Dubai World restructure will usher in a more positive financial year in 2011. launch of a number of important transactions. Dubai’s successful sovereign bond launch reassured markets that Dubai was over its credit difficulties. This was followed by several successful key Dubai

Firms have been strengthening their finances, improving working capital and reducing balance sheet liabilities. Many companies have been strengthening their financial position, improving working capital, tightening costs and reducing balance sheet liabilities. This has been a major focus for Shuaa and we leave 2010 with a much stronger balance sheet and more focused business than when we entered it. Since September, we have seen a pick-up in market sentiment with trading volumes increasing and the

54 gulfbusiness December 2010

corporate bond offerings, a clear testament to the positive sentiment that Dubai is receiving from regional and international investors. Additionally, we saw a number of IPO launches across the Gulf, including Axiom Telecom, the first in the UAE for over two years. Shuaa has been working on several IPOs which are to launch shortly and expect defensive sectors, including consumer and food products, as well as healthcare, to

emerge with the first IPOs in 2011. Acquisitions have been few and far between in recent years as buyers and sellers have remained resolutely far apart on price. This looks to be changing slowly as asset valuations fall and financing for good transactions in certain sectors becomes available. Organic growth has been hampered by reduced access to capital and we expect sources of bank funding to remain tight into 2011. Although there are signs of a shift back into equities, investors remain primarily interested in lower risk fixed income products. Since I joined Shuaa Capital just over a year ago, I have led a major change programme. We also have a strong view that the GCC region, and the UAE in particular with strong fundamentals, will be clear winners in the medium to long-term. ■



new perspectives. HEC Executive MBA, 6 majors, 5 locations, 1 degree. First intake in Doha in February 2011 Contact: + 974 5567 3354 - HEC Paris #1 Business School in Europe since 2006 #2 Worldwide for Executive Education Financial Times rankings 2010



ver the course of 2010 we have seen an important shift in sentiment towards the economic climate of the GCC. This time last year we were facing significant challenges, with regional economic confidence at possibly its lowest point since the invasion of Kuwait in 1991. However, decades of careful planning, investment and guidance by our governments have ensured that the long-term fundamentals of our economies are strong, resilient and capable of withstanding the worst economic crisis the world has faced since 1929. Dubai International Financial Centre was established with the aim of being a leading international financial centre, serving not just Dubai and the UAE, but the entire region. Since its inception in 2004, DIFC has become recognised as the gateway connecting the Middle East, Africa and South Asia (MEASA) region and the world. Today, DIFC, with its modern infrastructure, free zone status and self-governing laws and courts, is the pre-eminent and favoured financial centre in the region. These facets have enabled DIFC to continue to make a major contribution to the UAE’s economy throughout the global economic crisis. Despite the testing times, DIFC now comprises of 760 active registered companies, with 299 regulated and 384 non-regulated

Abdulla M. Al Awar The CEO of Dubai International Financial Centre Authority is hopeful for a shift in confidence going into 2011. growth of our clients as it is this which determines our success. By working closely with our clients we are able to tailor DIFC to their specific needs, allowing them to use

Equity markets are picking up as liquidity eases and firms are looking to deploy dry powder, this will inject life into the economy. companies and 77 retailers. We are able to count 16 of the world’s top 20 banks, 14 of the world’s 20 largest asset managers and four of the world’s five largest insurers as members of our community. We at DIFC are committed to supporting and encouraging the

DIFC to grow their businesses and be as competitive as possible. Perhaps the most significant case of working with our clients was in the first half of 2010 when DIFC’s senior management, in consultation with its clients, completed a comprehensive strategic review

and analysis of the core business proposition. This included extensive analysis and benchmarking of costs. Accordingly, DIFC is currently reducing the cost of doing business from the centre and will enhance its client services. As we look to 2011, we can expect the region to continue on its path to recovery. I firmly believe the worst is behind us. Equity and debt markets are picking up as liquidity eases and firms are looking to deploy dry powder, this will inject life into the wider economy. DIFC will continue to work closely with its clients throughout 2011 as we strive towards developing not just our own businesses, but also the region’s. ■ December 2010 gulfbusiness



Ammar AlKhudairy Private equity firm Amwal AlKhaleej says 2011 will mean putting into practice modesty lessons learned from the financial crisis.


s private equity investment starts to come out of the cautious environment that has prevailed since the financial crisis, Amwal AlKhaleej, along with its peers, has been taking stock of lessons learnt from the tumultuous times brought on by the events of 2008 and 2009. With 2010 and 2011 promising to be good vintages for private equity investments, every deal maker will have the lessons learnt from the financial crisis engrained in their minds forever, and it is these lessons that will shape private equity in the MENA going forward. For Amwal AlKhaleej, these lessons are threedimensional: a strict price discipline with respect to entry valuations, a continued emphasis on value creation, and keeping an eye on tangible exits based on fundamentals that are planned from the outset.


gulfbusiness December 2010

Perhaps the first application of postcrisis wisdom for MENA investment is to adopt the right model for the right region. Against this background, and in the absence of the plentiful debt that was the hallmark of pre-

leisure, while our investments in Egypt are similarly positioned to bet on textiles, petrochemicals and retail financing. In the absence of multiple arbitrages, investors have increasingly turned to working more closely with portfolio companies on value accretive initiatives. Since its establishment in 2005, Amwal AlKhaleej has adopted an ‘active minority’ approach which sees us work with and guide portfolio company management towards achieving the company’s long-term objectives and, in so doing, bringing our investment closer to that allimportant exit. This year and 2011 will see us continue to work with our partners on creating such value. Finally, ensuing market rationality has forced exits away from the other ‘copy-paste’ approach that prevailed – namely IPO exits. Now that IPOs have proven more difficult to pull off, investors will have to pour blood, sweat and tears into identifying and planning for exits. Going forward, exits will be very meticulously planned from the outset, and much of the holding period will be spent polishing up and positioning the investment for what will likely be a trade sale exit. In conclusion, we believe that starting 2011 and for the next few years to come, MENA private equity stands to see some creativity, hard work and potentially lucrative exits.

Perhaps the first application of post-crisis wisdom for MENA investment is to adopt the right model for the right region. crisis times, investors will turn away from ‘copy-paste’ use of debt, in favour of back-to-basics investing where higher returns are a function of value creation, not leveraging and flipping. For Amwal AlKhaleej this has served to underscore our policy of unleveraged growth investing in sectors where competitive advantages prevail. Our investments in Saudi Arabia are betting on demand for education services, healthcare and

Through a combination of strict price discipline, a hands-on approach to operational and strategic value addition and continuing to partner with management capable of taking companies to the next level, we at Amwal AlKhaleej are confident that we will successfully build value into our portfolio companies and build towards realising the exits that will confirm that 2011 can lead to excellent vintage years. ■


Dave Lesar The chairman, president and CEO of Halliburton predicts growth for the energy sector in 2011, particularly for unconventional resources.


alliburton and other integrated energy services companies provide the well construction and reservoir evaluation services our customers need to create producing oil and gas fields. We go where the work is – wherever national oil companies, international oil companies and independents are exploring and developing fields. We have more than 55,000 employees working in more than 70 countries; managing that vast infrastructure so we have the right technology, equipment and expertise where our customers need it most is one of our greatest challenges. Being in the right place at the right time demands close cooperation with our customers so we can anticipate their needs, and it demands flexibility and quick responses, because even slight

changes in the relative demand make us redeploy assets. The most important phenomenon shaping the energy business in 2011 and beyond is the dramatic rise of unconventional resources,

undercapitalised from an equipment standpoint. As unconventional projects take shape, we will be investing in equipment to meet that demand. Our global infrastructure and technological leadership in horizontal wells and hydraulic fracturing will make this a major opportunity for Halliburton in the coming year. Overall, growth in the Eastern Hemisphere has been uneven since the 2009 trough – five countries represent 70 per cent of the rig count increase. We expect growth to become more evenly distributed throughout the hemisphere as the global economic recovery develops during 2011, and we expect global energy demand in 2012 to exceed the peak of the fourth quarter of 2007. In North America, the primary fact is relatively stable prices for oil, but soft prices for natural gas. This is causing operators to invest more heavily in oil and liquids-rich plays, causing us to position our resources in those basins. Weak natural gas fundamentals will likely restrain dry gas directed drilling and completions next year. However, we believe strongly in the long-term prospects for the North American gas market, and we are working with our customers to create new business models that will keep the rigs working in those basins even if short-term gas

Unconventionals depend on horizontal drilling and completions technology – both areas of strength for Halliburton. especially shale gas. Unconventionals depend on horizontal drilling and sophisticated multi-stage fracturing and completions technology – both areas of strength for Halliburton. These advanced technologies are also finding increasing application in conventional oil developments; this will be positive for our future business and for energy supply. Across the Eastern Hemisphere, unconventional basins are

fundamentals decline. We anticipate 2011 will be a year of solid if not spectacular growth in the energy industry and for Halliburton. Most importantly, the fundamental trends in energy demand, combined with our constantly improving technical ability to develop oil and gas resources, point to a continued strong demand for our services around the world. ■ December 2010 gulfbusiness



Tarek Sultan Chairman of Kuwait logistics giant Agility says industry will face higher fuel costs and regulatory changes, but growth lies in emerging markets


he logistics and transportation industry continues to be impacted adversely by repercussions of the global financial crisis of late 2008. GDP declined in nearly every country; global trade was down nine per cent in 2009 and international air and sea freight volumes followed suit, dropping 10 per cent in 2009. Figures for 2010 are unlikely to be stellar. Against this backdrop, customers are looking to us more than ever to contain cost while providing tailored, value added solutions. This has driven an increased focus on the role of technology across the industry.

62 gulfbusiness December 2010

Being able to tell our customers where their freight is at any time, being able instantly to identify, escalate and address issues – and even track the carbon impact of shipments – are becoming real differentiators. Technology can help us provide these “real time” solutions, and at Agility, we are investing heavily in our technology platform.

Most crystal balls are pointing to something of a mixed picture in 2011, with modest growth predicted for developed markets but developing economies enjoying moderate to high growth. Here in the Middle East for example, a rebound in oil prices will buoy a strong recovery across the region, while authoritative sources such as IMF point to an average growth rate for Asia of more than eight per cent, with China and India leading the pack. Growth in both regions will mean opportunity. Players in our industry will need to address this mixed landscape. They will also need to contend with potentially higher fuel costs in 2011, and regulatory changes related to manufacturing and product safety and sustainability. It is also possible that recent terrorist scares involving air-freight may herald new security measures that will have a cost impact right across the industry. This year has been a year of transition for Agility – but we’re closing the year in good shape to take advantage of the major business opportunities we see ahead for us in 2011. Our Global Integrated Logistics business serves thousands of commercial customers across more than 120 countries and will drive our growth in the coming year – especially in emerging markets. Emerging market leadership continues to differentiate the company, and it’s where we continue to make big investments. Agility is the only player in the industry top 10 with roots in developing markets. It’s where we have grown our business and it’s where we have an edge over the competition. Many of our customers see their best opportunities here too, so Agility is uniquely positioned to meet their needs. ■

Being able to tell our customers where their freight is and being able to address issues are becoming real differentiators.


ECO-DRIVE, WORLD-FIRST ECO-FRIENDLY TECHNOLOGY BY CITIZEN Back in 1976, Citizen has had the foresight to commercialise the analogue solar watch and commitment to develop it further to contribute to the sustainable life style. In 1995, before the word “eco” became commonplace in Japan, we came up with the name “Eco-Drive” for Citizen’s range of watches fitted with solar cells that uses any source of light absorbed through the crystal and dial to power a rechargeable battery. Eco-Drive constantly keeps on running anytime and anywhere, as long as there is light. Since battery changes are never required, Eco-Drive watches well meet the universal demand for environmentally friendly products. If the total of 7.2 million pieces sales of Eco-Drive watches in 20052007 had been conventional quartz watches, their primary batteries could be piled up to 1.7 times the height of Mt. Everest and such a massive quantity of batteries would have been eventually dumped into the soil. Ever since becoming the first watches to be granted Eco-Mark certification in Japan in 1996, as well as the Chinese Eco-Mark in 2001, our Eco-Drive watches have continued to lead the solar-powered watch market. At BASEL WORLD in 2009 and 2010, we unveiled Eco-Drive concept models, demonstrating Citizen’s potential for the future and towards the eco-sustainability in terms of expanding the possibilities of design and technology. Not only

Noboru Yamaguchi, General Manager Citizen Watches Gulf Co.

Eco-Drive concept models, but also all our models of Eco-Drive watches feature the innovative designs and powered by Eco-Drive engine inside the casing. I am proud to say that Citizen would commit ourselves to endeavour to deliver comfortable and exciting eco-friendly time to you.



chieving a sustainable energy future for the Middle East is clearly one of the most pressing issues facing the region today. Next year will continue to see countries in the region working hard to meet the increasing energy demand – projected to double for power and triple for water over the next 20 years. With no silver bullet in sight, pursuing a sustainable energy future requires a comprehensive approach, with countries in the region looking at diversifying the power generation technology mix and increasing the adoption of wastewater reuse. To meet the growing energy demand, regional governments are also encouraging increased private investments into new energy infrastructure projects in the form of Public Private Partnerships which support national privatisation strategies for utilities. On the power side, reflecting global trends, renewable and alternative energy will play an increasingly significant role in the regional power mix. Some countries have already set a target in order to encourage the adoption of new technology. The establishment of long-term renewable energy targets for Abu Dhabi and Egypt are cases in point. However, with fossil fuels and thermal energy continuing to be the mainstay for regional power generation, the public and private sectors are working together to implement solutions to enhance the efficiency of power generation while fulfilling environmental obligations. The region is increasingly turning to emission-reducing technologies to promote a sustainable environment, with countries such as Qatar already putting in place regulatory requirements that limit emission levels. Technologies such as DLN that GE is supplying to utility and industrial customers around the region can go a long way to fulfilling environmental obligations. As the region increases its power

Joseph Anis The president of GE Energy in the Middle East presses for a sustainable energy plan in the region and ramps up Gulf investment plans. generation capacity, there is also an urgent need to enhance the flexibility, efficiency and reliability of the grid and transmission and distribution of electricity. New technologies, such as Smart Grid that GE is investing in to deliver cleaner, smarter, and more efficient solutions, will gain more attention as the region begins to integrate the delivery of energy from different sources. On the water side, regional governments are looking into technologies that can maximise the use of water while greening the environment. Another trend that we are seeing in the region is the

integration of power and water at a single site. Integrated Water and Power Plants (IWPP) are gaining strength, as they are able to achieve economies of scale by providing two essential resources simultaneously. GE has played a key role in supplying innovative technology to key regional IWPP projects in Oman, Bahrain, UAE and Saudi’s Marafiq, the world’s largest IWPP. GE has been a growth partner in the region’s energy infrastructure growth for almost 80 years. We announced over $11 billion in energy projects that support the region’s growth in the last 24 months. ■

As the region increases its power generation capacity, there is an urgent need to enhance grid efficiency. December 2010 gulfbusiness



Sustainability fuels profits Pumping up your bottom line and saving the earth can actually go hand in hand, writes GULF BUSINESS.


66 gulfbusiness December 2010

Switch bowling centre, pool hall.


n the last decade, the corporate world has accepted that sustainability can save money, increase efficiency and ultimately boost profits. Indeed, although the Gulf has been somewhat of a late bloomer in this regard, businesses and governments have taken to environmental action in a big way. This has often led to big statements like Abu Dhabi hosting the International Renewable Energy Agency, the construction of Masdar City or Saudi Arabia’s numerous large scale eco-cities. Yet, companies are still struggling to find day-to-day practical examples of implementing their broad commitments to the environment. Plus, they often battle with the exact definition of corporate sustainability. A key moment in all of this was the UK government’s publication in 2006 of the groundbreaking Stern Review on the Economics of Climate Change, which served as a wake-up call for many businesses to take action on managing their climate impact. The 700-page report written by economist Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, was internationally hailed for putting the challenge of climate change into terms that corporate leaders could understand. This helped to cement the concept that increasing your bottom line doesn’t have to mean depleting the earth’s resources. To take it further, some would say the only reason that corporations have taken action in recent years is precisely because being green made financial sense to their bottom line. Tim Drury, Unilever’s vice president of supply chain for North Africa

How Do We Power The Future?

Is it by developing the next-generation solar thermal technology or by funding tomorrowâ&#x20AC;&#x2122;s leading cleantech companies? Is it by providing market-driven incentives to reduce carbon emissions or developing carbon capture networks? Is it by nurturing future energy leaders or by developing a cleantech cluster? Actually, it is all of the above and just the start of things to come. After all, what we are creating in Abu Dhabi is a centre of excellence dedicated to renewable energy and sustainable technologies. To ďŹ nd out more email or visit us online at

The Global Centre of Future Energy

Masdar City is an emerging clean technology hub in Abu Dhabi, UAE. Organizations and institutions from around the world are coming here to pioneer solutions to the global energy challenge. With access to key international markets, funding and investment, and a skilled, specialist talent pool, Masdar City creates an environment where innovation and entrepreneurialism ďŹ&#x201A;ourish. To learn how partnering with us can transform your business and change the world, email, or visit us online at

getty images

Middle East & Central Africa, said it may not be quite as simple as that. “Corporate social responsibility of the past was about mindful compliance. Companies were more about ‘doing good by doing less bad’ and achieved that by focusing on producing charity and complianceoriented programmes. “In recent years, many corporations have been adopting a more strategic approach. Understanding that social change is a key driver of business growth, not just an obligation or a nice thing to do, and knowing that companies are both capable and powerful when it comes to generating social impact, they are today becoming more proactive in their social investments.” He added: “Companies have accordingly developed more strategic objectives, focusing on specific social impact goals that are meaningful in the communities they serve and to the employees that work for them.” Unilever, a company that has historically been quick off the mark when it comes to the environment, recently launched what it called a Sustainable Living Plan, which it said aims to “decouple business growth from environmental impact by setting out a more sustainable business model.” By 2020, the consumer good’s giant plans to halve the environmental footprint of its products, source 100 per cent of its agricultural raw materials sustainably and help a

Nicholas Stern, author of the Stern Review.

billion people take action to improve their health and well-being. Meanwhile, Simon Major, general manager for Middle East business development at ICI Paints AkzoNobel, agrees that sustainability is now so firmly entrenched in the boardroom agenda that there’s a very clear understanding that being sustainable is not only the “right” thing to do but also contributes to your company’s financial success. “A few years ago only a small selection of senior management were really interested in sustainability as there was a belief that customers did not really want sustainable products. Although this viewpoint changed to some degree it was only after the Stern Report that there was a clear realisation that being a sustainable company would actually help



overnments and local authorities in the Gulf have introduced increasingly stringent guidelines to force major industries, like the property sector, to comply with green standards. For instance, in 2007 Dubai launched a set of green building ground rules which said all owners of residential and commercial buildings must comply with internationally recognised environmentally-friendly specifications.

One of these was the US Green Building Council Leed (Leadership in Energy and Environmental Design) certificate. In the last few years, the Dubai Electricity and Water Authority has introduced green building regulations, Abu Dhabi’s Urban Planning Council has launched its Estidama (sustainability) ratings system and Qatari Diar has established a Sustainable Assessment System.

deliver the bottom line. Sustainable champions are now seen as being part of the mainstream and not out on the periphery,” said Major. However, he warned corporate green exponents they may face some opposition when trying grease the wheels of their sustainable revolution. “Firstly, there is the internal sell to your own company. When this has been won the funds become available for innovation to proceed – research and then development of environmentally beneficial product offerings. Also, when there is top management consensus, people can be allocated to tasks connected with sustainable improvements. “After the internal sell comes the external sell. Sustainable innovation often requires customers to break with tradition and procure or operate in a different way. Customers are very conservative and often, despite what they may say, do not like change,” he added. Technology company IBM and food giant Walmart have in the last two years offered some practical advice on how companies can drive down costs and boost profits using sustainability as a lever. For instance, in 2008 Walmart announced plans to investigate its 100,000-plus suppliers with a Sustainability Index. Meanwhile, earlier this year, IBM asked its 30,000 suppliers in 60 countries to establish environmental goals and measure energy conservation, greenhouse gas December 2010gulfbusiness




he Arab world, one of the fastest growing emerging markets, is taking sustainability one-step further by creating new green buildings and transforming current ecosystems into green cities. “With two-thirds of humanity expected to live in cities by 2050, the future of our lives and the generations to come is dependent upon our care and concern for our cities,” says Hussain Nasser Lootah, director general of Dubai Municipality. Cities in the Middle East have thus started planning how to create resourceefficient structures from finding sites to design, construction, operation, maintenance, renovation, and demolition. “It is indispensable for all who are associated with cities of the future to have a fine understanding of the green city concepts, standards and tools to achieve and maintain a safe, healthy and

sustainable city environment,” Lootah says. In line with this, an international conference covering green city initiatives across the region was held in Dubai last month. The EnviroCities 2010 – organised by Environmental Centre for Arab Town in cooperation with Dubai Municipality – drew more than 500 leading figures in the field from around the world. It featured presentations on green hotels, green transportation, green lifestyles, introduction of zero carbon cities, successful case studies, and management of land, energy, water and wastes. “However, even if we have 100 per cent green building but we have poor management, no good results will be achieved,” Lootah tells Gulf Business. He said simple steps, and not only skyrocket green science, can go a long way in saving the environment. “There are people leaving their air conditioning units on for 24 hours, some

leave their TVs on round-the-clock while some have TVs in every room,” he adds. “You don’t have to do those. Why don’t you bring all the family in one room to watch? And why do you have to have light the entire house? I have seen houses that look like an airport that an airplane may just land there. Management is what we really need.”

emissions, and waste management/ recycling practices. If suppliers want to stay on IBM’s radar, they have to report their results and ask subcontractors to do the same thing. Wayne Balta, IBM’s vice president of corporate environmental affairs and product safety, said: “A key aspect of this programme is that we want suppliers to create a management system that works for their particular business operations. Since our suppliers are diverse, there cannot be a one-size-fits-all solution. Some are huge publicallytraded companies while others may be small businesses with much fewer employees. We want them all to build long-term sustainability in a way that is integral to their routine operations, not as an add-on fix.” He added: “We’re seeing more activity in areas where business interests intersect with the environment and sustainability. More companies are realising that what is good for the environment is good for business, especially when it makes a company more efficient and effective. A case in point: if you produce a

product – anything from hula hoops to heavy machinery – if you do it in a way that is more efficient, you’ll consume less energy, save money on energy costs and lessen your contribution to greenhouse gas emissions. We’re seeing this across all industries.” Practical environmental solutions don’t have to be as large as IBM’s gesture, though. Major said one particular product development which seemed to have caught people’s imagination is Light & Space paint. “This paint is more that 20 per cent more efficient at reflecting available light, so dark rooms require less light to appear equally bright. This means you have to turn your lights on less often and when you do they can be of a lower wattage or power consumption.” Meanwhile, at Unilever, Drury said one of the firm’s most effective green endeavours was hatched out of its Lipton factory in the UAE and involved replacing costly wooden pallets with environmentally friendly polly plastic slip sheets. Logistics companies globally agree that wooden pallets are now too expensive to buy, ship and dispose of.

Drury said: “We replaced the wooden pallets, that are traditionally used by Unilever’s Global Tea Supply Network to ship teas worldwide, with slip sheets. It was initiated by the Lipton factory at Jebel Ali, Dubai in which tea raw materials have been received on the slip-sheets from Assam, India to Dubai. It is a classic example of Unilever’s belief of ‘small actions making a big difference’. “This eco-friendly initiative enabled Lipton to save wood while also minimise shipping costs by increasing loadability per container. The slipsheets are much thinner than the traditional wooden pallets which helps cut down transportation and fuel costs while reducing the impact on the environment,” he added. Regardless of the size of the initiative, it’s clear that doing something sustainable is doing something savvy. In fact, going green properly, which experts say is not just cynically jumping on the green bandwagon, will drive the sort of behavior which will add to your bottom line profitability and therefore shareholder delight. ■

68 gulfbusiness December 2010

Hussain Nasser Lootah, director general, Dubai Municipality.


Regional renewal The Gulf is starting to take sustainabilty seriously and has launched some of the world’s most ambitious green projects, writes RYAN HARRISON.


ome will say the Gulf has had little choice but to pump billions of dollars into sustainable green projects; after all, oil has a shelf life. Governments, however, argue it’s their social duty to protect the future of their citizens. But in all of this there’s no disputing that the petrodollars invested in green initiatives in recent years have spawned some of the most exciting and innovative projects in the world.

70 gulfbusiness December 2010

It‘s only natural that the debate around harnessing renewable sources of energy has centred on solar. Indeed, the Gulf is a global leader in producing green ventures to recycle the sun’s power. Yet Donald Huisingh, from the Institute for a Secure and Sustainable Environment at the University of Tennessee in the US, said still more needs to be done on the research and development side to fully make the transition to solar-based systems. “The Middle East has so much wealth and so much sun, they need

to take advantage of it. After all, their oil and natural gas reserves are also limited capital that is not increasing. “Start living on the solar income to change from using capital to using annual income from the sun,” he added. A company that specialises in making that happen is SunTech, which is now the world’s largest producer of solar panels. The firm has shipped more than 12 million solar panels and works with hundreds of partners in more than 80 countries around the world. But James Hu, president of Asia

Masdar eco-city.

Pacific, Middle East, and Africa at SunTech, said solar technology still only provides for a small fraction of the world’s total energy consumption. “In one hour, the sun provides enough energy to meet the world’s annual energy consumption. Think of it this way: almost all of the mechanical energy that humans

consume – coal, oil, gas – is really just some form of solar energy. SunTech wants to simplify that entire process and make it much more efficient. “In the Middle East, we are particularly impressed by Masdar City, which is one of the first largescale projects to really tackle sustainability throughout the entire ecosystem of urban living. Although we may not be able to rebuild the entire world from scratch, the Masdar experiment is already proving instructive for other urban development projects around the world,” Hu added. Masdar City is arguably the most talked about green project in the region, although recently it has suffered a number of setbacks, partly because of the downturn. In October, Masdar said it will delay the first phase of the $22 billion lowcarbon city after undertaking a review during the financial crisis. Meanwhile, last month, the International Renewable Energy Agency, for which Abu Dhabi lobbied to host the headquarters, appointed Adnan Amin as interim director general after Helene Pelosse quit. Finally, in what is seen as one of the teething problems with solar technology, the project said it will receive less energy than planned because of dust particles in the area blocking sunlight. However, there are still plans to have more than 1,500 companies from around the world locate to the complex to fund, research, develop

and implement new and sustainable technologies. There is also the Masdar Institute of Science and Technology. The institute, which is modeled on the Massachusetts Institute of Technology, enrolled 90 students from 22 countries in September 2009. Masdar had originally unveiled its ambitious plans to invest in renewable energy projects back in 2007. Abu Dhabi has since pumped billions into the clean energy initiative as it aims both to cut emissions and prepare the world’s third-largest crude exporter for a future less dependent on oil. As is common knowledge, the UAE is one of the world’s largest emitters of greenhouse gas per capita. Meanwhile, the need to reduce greenhouse gas emissions generally from buildings in the region has underpinned a lot of the green project activity. Buildings – residential and commercial – are responsible for around 40 per cent of global primary energy use and 12 per cent of the global water consumption, according to the Intergovernmental Panel on Climate Change. Some of the major green building projects in the Gulf include the economic cities in Saudi Arabia. At a cost of more than $60 billion, the kingdom has planned and begun constructing four economic cities, which are located in Rabigh (King Abdullah Economic City), Hail (Prince AbdulAziz bin Mousaed Economic City), Madinah (Knowledge Economic City) and Jazan (Jazan Economic City).



raditionally, the Gulf has a poor record when it comes to sustainable development, but things have changed quickly in the last decade, driven by regulation and leading examples set by government clients. In future, sustainable design techniques and active technologies, such as renewable and water recycling, are set to become more commonplace,

providing a boost, not just for environmental statistics on construction sites, but also for economic growth in new technologies. While developers are free to use any methods they choose to meet the standards laid down in new regulations, Abu Dhabi developers are encouraged to use the region’s first sustainable development rating system, which will

see buildings earn ‘pearls’, depending on their green credentials. Projects to be assessed under the Pearl Rating System fall into three categories – buildings, communities or villas. Each assessment is split into design, construction and operational phases. The rating system itself is voluntary and falls within the government’s wider ‘Estidama’ development system.

December 2010gulfbusiness



And according to US energy secretary Steven Chu, Saudi could emerge as a major exporter of solar energy, which might reach the current level of the kingdom’s oil exports. Speaking earlier this year in Riyadh, Chu said: “The kingdom’s drive to invest a portion of its oil revenue on scientific and technical research will enable it to strengthen diversification of energy sources and promote renewable energy programs.” Khaled Al-Nabulsi, a professor at King Abdulaziz University in Jeddah, added that studies have proved Saudi could become the largest exporter of solar energy in the world. The country has the capability to produce large amounts of solar energy due to its great expanse of open areas exposed to direct sunlight, he said. In Bahrain, the World Trade Building, which opened in 2008, was the world’s first sky scraper to use wind turbines in its design. The project has received a number of awards including the Arab Construction World for Sustainable Design Award. Plus, the Sabah Al Ahmed International Finance Centre in Kuwait is a 40-storey tower able to generate its own energy from a photovoltaics (PV) system and roof mounted wind turbines. PV is a method of generating electrical power by converting solar radiation into direct current electricity using semiconductors. Finally, in Qatar, the Energy City utilises the latest green building

The World Trade Building.

technology to house a modern business and residential facility occupied by a diverse mix of energyrelated companies, commercial tenants, customers and suppliers. Lindsey McDonald, a consultant at the information and communication technologies practice for the MiddleEast & North Africa at Frost & Sullivan, said: “The Musanada project in Abu Dhabi is a global example of how sustainability can be achieved. Generally, it’s gratifying to see that in the last year there have been more environmental initiatives in the region than previously. This is all the way from community environmental clean-ups to the launch of businesses focused on recycling not only paper, but electronic products and the like.” Musanada is an Abu Dhabi government initiative established in 2007 that develops and manages services to improve interaction



n an ambitious project known as the Desertec Industrial Initiative, a consortium of companies from Europe and North Africa plans to build a network of solar power plants in the Middle East and North Africa that would be connected by a super grid of high-voltage, direct-current transmission lines to Europe. The consortium is led by Germanybased Siemens and Munich Re, which

72 gulfbusiness December 2010

hopes to obtain above-market prices for the energy they would export to Europe. Desertec plans to invest $550bn by 2050 in the project, which it says would produce $3trn worth of energy and supply 15 per cent of Europe’s electricity. The plants would use concentrated solar power, a technique whereby the sun’s rays are focused by curved mirrors to heat liquids that turn generating turbines.”

between state entities. The objective is to make Abu Dhabi one of the five top places in the world to live, work and do business. One major aspect of the project is providing support for creating sustainable buildings in the capital, from design, construction to facility management. However, McDonald added that progress in the region on going green has only been successful to a point. “The challenge and progress both lie in legislation and regulation. At present in the Middle East, while it is clear that there is a push towards the promotion of green practices, most countries do not have comprehensive legislation in this regard, and in those instances in which there is regulation, it is not always effectively enforced. “This is the main area in which progress can be made – when companies are compelled by law to take concrete action on behalf of the environment,” said McDonald. The development of some of the most ambitious sustainable projects in the Gulf comes as the definition of what is green widens. Previously, sustainability focused on shorter term solutions such as recycling, perhaps contributing to environmental efforts using monetary methods and so on. But companies are realising that there are far more ways in which a business can achieve sustainability.If the projects that have been built so far are anything to go by, the future of green initiatives in the region looks promising. ■


Hotels go green GCC hospitality firms are upping the eco stakes to capture the increasingly lucrative green tourist, writes RYAN HARRISON.


rom simple recycling to the more creative solar water heaters, all methods are being deployed as hoteliers attempt to limit the damage their businesses have on the environment. And because hospitality is a pillar of all Gulf economies, it will be uplifting for tourist authorities to see action taken, particularly given the spending power of green travelers. According to the World Tourism Organisation, sustainable tourism today is estimated at 11.4 per cent of global consumer travel spend It’s also estimated that buildings use one third of the world’s energy resources to run their lighting, heating and air-conditioning systems. Within the region, buildings’ consumption

74 gulfbusiness December 2010

of energy is estimated at 40 per cent of total energy used, and they are estimated to produce over 50 per cent of all waste. At the very least, environmentalists say that for hotels – which are massive consumers of both water and electricity – there’s a lot of room for improvement. One of the routes taken by four star hotel Qamardeen, near Dubai’s Burj Khalifa, was to simply raise awareness. It recently took part in the annual Clean up the World initiative organised by Dubai Municipality, an effort that also involves providing handbooks from the Dubai Electrical & Water Authority to new members of staff and guests. Park Hyatt has taken a similar approach, also taking part in clean-up campaigns at Dubai Creek and teaming up with the Emirates Wildlife Society

to produce a booklet that will detail all the birds that live on the Creek. For these hotels, the debate has moved on from basic activities, such as using lower energy usage light bulbs and the recycling of materials and segregation of plastics and glass. It’s now more about convincing tourists and local authorities that green is part of the culture of the hotel. For instance, Park Hyatt Dubai upgraded its light fittings and airconditioning units to an economy mode that can be applied to each of the four wings; it installed a composting programme; and a Treat Sewage Effluent plant used to power cooling towers and for external irrigation. There are plans to use that water for its laundry at some point in the future. Meanwhile, the Hyatt Regency said that in the last year its Gulf hotels

saved 15 per cent in total energy. Part of this was achieved by stemming the chronic loss of energy through the poor insulation of the old glass. The hotel looked at ways of recovering this energy by putting a film on top of the glass. Even more effective was the approach to lighting. Because LED lamps use five watts of power but give the brightness of 50 watt halogen lamps, Hyatt Regency replaced its lighting with LED bulbs in all corridors and in 50 per cent of galleries. Technology giant Philips is particularly active in this space, and in recent years has launched a number of tailored products for a local hotel industry that is starting to cater to the green awareness of its clientele. The firm linked up with the InterContinental and Crowne Plaza Dubai Festival City to save approximately 80 per cent of their energy costs incurred on lighting.

Philips replaced the interior and exterior façade with dynamic architectural LED lighting. In total, it meant covering 35,000 light points in hotel rooms, suites and public areas. Meanwhile, Philips has been installing solar powered water boilers in hotels across the Gulf. The method has traditionally proved more popular in Western countries but is picking up in the region. The rationale for hotels is that a 20 per cent cost saving on energy bills from these solar water heater can be passed on to the consumer. Philips’s argument is also that for buildings to go green, the incentive could be a deduction or percentage discount on their power bills. And until now hotels have been penalised for consuming more, but instead they should be pushed to save more. In Saudi, backing the move to more sustainable hotels, the newly-formed



arlier this year the Dubai Department of Tourism and Commerce Marketing announced its top environment-friendly hotels. The awards were based on hotels that had boosted their green credentials in the last year. Judges based their decisions on factors such as waste recycling, energy conservation and environmental awareness campaigns. For the 5 Star Hotel Category, Park Hyatt took first place, Grand Hyatt ranked second, and Al Qasr Hotel Madinat Jumeirah secured third place.

In the 4 Star Hotel Category, Qamar Eddine Hotel took first, Rotana Towers Hotel ranked second, Marriott Court Yard Hotel, Investment Complex secured third place. For the Three Star Hotel Category, Regal Plaza Hotel took first place, Virzales Hotel ranked second, and Princess Hotel secured the third place. Finally, in the Hotel Apartment Category, Savoy Crest took first place, Grand Hyatt ranked second and Marriott Executive Dubai Creek secured third place.

Al Qasr hotel, Dubai.

Grand Hyatt hotel, Dubai.

Saudi Green Buildings Forum recently proposed several recommendations for government and property developers. The recommendations, based on two days of intense discussions by experts and officials, were proposed at the end of the first Saudi national conference exclusively dedicated to sustainable buildings. One of the key recommendations urged Saudi municipalities to offer incentives and rewards to use ecofriendly alternatives in coordination with electricity and water ministries. Meanwhile, the Abu Dhabi Tourism Authority (ADTA) has pledged to cut hotels’ energy use by 10 per cent, their water use by 20 per cent and reduce the amount of hotel waste going to landfills by 20 per cent as a first step in its environmental programme. As part of the initiative ADTA launched a new pilot scheme which will see four hotels in the emirate built according to strict new green guidelines. Plus, plans were recently announced to build the emirate’s first five-star green hotel in the Al Ain Wildlife Park and Resort. Finally, with tour operators now offering more and more responsible tours with activities like kayaking through mangroves, low-impact desert safaris and operating far more efficient versions than the five-star deluxe that the region is known for, the support system for greener hotels is definitely there. Fundamentally, Gulf hotels are seeing a thriving commercial element through introducing green schemes. It may still be some way off the West in the development of these practices, but there’s no denying the huge groundswell in the region.. Regardless of the size of the initiative, it’s clear that doing something sustainable is doing something savvy. In fact, going green properly, which experts say is not just cynically jumping on the green bandwagon, will drive the sort of behavior which will add to your bottom line profitability and therefore shareholder delight. ■

December 2010gulfbusiness



Turning tides


ast year, hundreds of seafarers were afforded the luxury of visiting tourist spots in the UAE as their vessels lay idle in the port of Fujairah. “There was nothing to ship,” recounts Manuel Atienza, a Filipino seafarer whose ship was kept idle for eight months. “It was a blessing in disguise though. I could visit my friends and relatives in the

76 gulfbusiness December 2010


After two slow years, the regional shipping industry is confident that the worst of the stormy waters has passed, writes KAREN REMO-LISTANA.

UAE twice a month.” Their ship arrived in the UAE waters in July 2009 to fuel up. But with no orders, the vessel had to stay there until March this year. At a rate of $30,000 per day, that translates to losses of around $5.4 million. But that case was just a drop in the ocean. Globally, the recession cost $15 billion to $25 billion losses in the shipping and port industry, estimates Waleed Al Dawood, chief operating

officer, United Arab Shipping Company (UASC). As it was more cost-effective to have the vessels idle than have them sail with less than 50 per cent utilisation, shipowners pulled significant capacity out of the trade and shed thousands of jobs to remain afloat. But the sector, a macro-economic barometer, seems to be on its way to recovery. Atienza and his crew, along with many others, have sailed back to

Nabil Bourisli, chairman, Kuwait Oil Tanker Company.

Shaikh Daij bin Salman Al Khalifa, chairman, GOP.

of 233 ships or 11 per cent of the current fleet. In terms of tonnage, the Middle East is slated to take delivery of 21 million dwt over the next two years, or 37 per cent of today’s capacity. The UAE tops the list with 107 orders on top of its 679 fleet, followed by Iran with 64 on top of its 329 fleet. Tonnage-wise, the UAE will see a 40

per cent incremental growth from 16.7 million dwt to 23 million dwt while Iran is set to increase tonnage capacity by 34 per cent from 16.8 million dwt to 22.5 million dwt. “Over the past year, we have seen demand improving,” says Woon Khoon Kee, global head of structured finance, Standard Chartered Bank. “However, the continued introduction

The continued introduction of capacity implies some short-term volatility, but in the medium to long term, the outlook of the shipping industry is positive.


the international waters for normal operations. The Philippines, which supplies 30 per cent of all seafarers on international trading vessels, has witnessed the companies’ recruitment freeze policies begin to thaw. “We have touched the bottom and there’s nowhere to go but up. There is no way we’ll go further down. It’s impossible,” Al Dawood told the Seatrade conference in Dubai. UASC, which last year received a $2 billion capital boost from its shareholders, is now forecasting more than 20 per cent year-on-year growth. Al Dawood says UASC is on track to increase capacity by 37 per cent from 1.17 million 20-foot equivalent unit (TEU) in 2009 to 1.6 million this year. And with new vessels coming online, the capacity will further go up to two million TEU in 2011 and 2.7 million in 2012. UASC is not the only big shipping player with expansion plans. Kuwait Oil Tanker Company (KOTC) has six new very large crude carriers (VLCCs) on order and is planning to order 10 more medium range crude carriers next year. These orders, worth $1.6 billion, will add nearly two million TEUs of capacity by 2011. Even against the background of banks’ reluctance to lend, Nabil Boursili, chairman and managing director of Kuwait Oil Tanker Company (KOTC) says he is not worried. “All our needs are financed by our parent, Kuwait Petroleum Company, so there is no need to access the banks,” he says. Currently, the Middle East has a fleet of 2,040 vessels with combined deadweight tonnage (dwt) of 57.3 million. The tanker sector takes the biggest share (62 per cent) followed by bulk vessels (15 per cent), dry cargo (11 per cent) and gas (eight per cent), according to Doll Shipping Consultancy analysis of IHS Fairplay data. However, there is a concern surrounding oversupply as shipowners take delivery of new ships. The region has an orderbook

December 2010 gulfbusiness


One Vision. One Mission. Cedar is a different kind of consulting firm. We recognize clients are in a state of motion, and our assistance should not disrupt their business cycle, but accelerate it. That clarity of direction is critical. That companies are not built in a day. That the devil is in the detail, and in the execution. That people are important, but not at the cost of progress. Since 1999, we have been serving clients in the Middle East, both with our minds, and our hearts. For our financial services, real estate, retail, manufacturing, trading, and government clients,

We make strategy work

Strategy, Balanced Scorecard, Process, HR & Business Technology Consulting Abu Dhabi Brussels Chicago Dubai Johannesburg London Mexico Mumbai Munich New York Paris Sao Paulo Shanghai Singapore Tokyo


General Organisation of Sea Ports (GOP) in Bahrain saw a 33 per cent net profit increase in 2009 over 2008.

of capacity implies some short-term volatility, but in the medium to long term, the outlook of the shipping industry is positive.” The jury is still out, but the general outlook is that of cautious optimism. Experts admit that the world’s economy is still volatile. July earnings, for example, dropped after a better than expected first half of the year. Figures from EA Gibson show that VLCC earnings on the A/G Japan route in July average-15e worst since October 2009. KOTC’s Bourisli is nonetheless positive the forecast increase in oil demand will save the industry from another dip. “The present fundamentals are strong enough,” he says. “OPEC forecasts the global GDP rate to expand 3.4 per cent over 2010 with Asian economies leading the growth. This is good news for the shipowners and shipbuilders. Everyone agrees demand for OPEC crude will increase.”

The Middle East has a fleet of 2,040 vessels. The tanker sector takes the biggest share followed by bulk vessels, dry cargo and gas. Per Wistoft, CEO of Gulf Navigation Holding, calculates that a 1.1 millionbarrels incremental capacity means an additional need for 36 tankers. He shrugs off the issue of oversupply, saying financing issues have either cancelled or delayed a significant number of orderbook. “I have no fear whatsoever,” he said. “I strongly believe that the orderbook today is much over described. There are a lot of things happening on cancellations and slippage, hence the amount of ships to be delivered over the next few years will be substantially reduced. Any ship today where the keel has been put down is being renegotiated. “Now the shipowner can only obtain 60 per

cent on the market value, not on the contract price, and the market price versus the contract value has dropped 30 per cent,” Wistoft explains. “Instead of coming up with $30 million per ship, the shipowner now has to come up with $85 million per ship. It’s a serious issue.” Among those who have cancelled orders are National Shipping Company of Saudi Arabia, recouping $95 million from its Korean shipbuilder, and Gulf Navigation, which also cancelled orders for two chemical tankers with SLS Shipping and was repaid $70 million. Shippers are able to cancel contracts because many shipyards took on more orders than they could possibly fulfil December 2010 gulfbusiness


To celebrate the

25th Anniversary

of Arabian Heritage Books Motivate Publishing announces a

NATIONWIDE COMPETITION Are you a budding amateur photographer or perhaps a professional with an extraordinary photo library? This is your chance to have your photographs published in a superb quality coffee table book.

N E K A T R E V E S H P A THE BEST PHOTOGR ! S E T A IR M E B A R A OF THE UNITED In celebration of 25 years of book publishing, Motivate Publishing is looking for the best culturally iconic images celebrating the history, heritage and diversity of the UAE. Each successful contributor will be credited and receive a complimentary copy of the hardback book worth Dhs 245. If we feature your image on the cover of the book, you win US$1,000! Visit for competition guidelines and entry forms.

Submission guidelines SUBMIT IMAGES TO: Submission deadline: 20 February 2011 Image size: 300 dpi, 280 x 280 mm Maximum 5 submissions per person



in the boom years, analysts said. There are much cheaper ways to expand fleets, such as buying used ships. Meanwhile, ports are also back to growth and expansion mode. The General Organisation of Sea Ports (GOP) in Bahrain, which saw a 33 per cent net profit increase in 2009 over 2008, is pushing ahead with its expansion plan. GOP chairman Shaikh Daij bin Salman Al Khalifa says the second phase of Khalifa Bin Salman Port expansion is on track, increasing capacity from 1.1 million TEUs to 2.5 million TEU. “I do not foresee any serious oversupply situation with regard to port capacity, especially as the region is fast becoming one of the most dynamic global ports and maritime centre,” he says. “This process is assisted by the fact that the global economic equations are changing drastically with the economies of several Asian nations growing by over eight per cent per annum.” DP World, which witnessed 14 per cent growth in consolidated

throughput, is also on track to meet its $2.5 billion capital expenditure programme. The global port operator spent $411 million in the first half and plans to spend $589 million in the second half. The remaining $1.5 billion will be allocated for 2011 and 2012 investments. Gulftainer, a Sharjah-based port operator, has registered a 23.75 per cent growth in traffic in the first five months of this year and is bullish of a double-digit growth in container volumes for 2010 over the 2.75 million TEUs handled in 2009. “We are outlining $100 million capex this year,” says Gulftainer managing director Peter Richards. “For us, we don’t just jump into the boom. Our strategy is to look at niches which we can afford and where we can see good returns on our investments.” The common consensus in the region’s shipping industry is that as economic recovery spurs another wave of expansion, moderation will be the key. Double-digit growth may still be achievable but it must be driven by well-structured business plans. ■ December 2010 gulfbusiness


Phil Mickelson The Masters Champion 2010

Martin Kaymer USPGA Champion 2010

THIS ISNâ&#x20AC;&#x2122;T BIG. ITS MAJOR. 20-23 January 2011

Graeme McDowell US Open Champion 2010

Louis Oosthuizen The Open Champion 2010

For advance ticket sales please visit


Aerial ambitions The launch of Dubai’s first satellite has spurred a raft of local space-endeavours, writes MARTIN MORRIS.


ormerly the preserve of the major economic powers, the space industry in recent years has seen an opening up to new players looking to match their ambitions – more usually in the field of scientific research. The UAE is proving no exception. Central to its space ambitions is EIAST (The Emirates Institution for Advanced Science and Technology). Set up in 2006, the organisation’s

84 gulfbusiness December 2010


four-fold agenda includes promoting advanced scientific research/ technology innovation in Dubai and the UAE; creating an internationally competitive base for human skills development; positioning Dubai and the UAE as a science and technology development hub; and establishing international collaborative links and joint projects with industry and research organisations. EIAST focuses on four main scientific programmes: space, astronomy, energy and environment and water research.

It is also spearheading the Dubai Space Programme, including the DubaiSat series of satellites. DubaiSat-1, launched from the Baikonur Cosmodrome in Kazakhstan in July 2009, is the UAE’s first remote sensing satellite. Images of Earth relayed back to a ground station in Dubai are being used by the UAE government to help plan future land development programmes. Meanwhile, in October, EIAST and the Institute for Community Engagement (ICE) of Zayed University (ZU) formally agreed to pursue

Virgin Galactic

collaborative research in science and technology and provide access to each other’s facilities, data and equipment for facilitating the research. EIAST will share its DubaiSat-1 images and other resources to support applied research at Zayed University. Further afield, an agreement between NASA and the RAK-based Arab Youth Venture Foundation, which is sponsored by Mubadala – the Abu Dhabi government’s investment arm – recently saw the first UAE nationals participating in a student internship programme at NASA’s Ames Research Center in Moffett Field, California. Previously only open to US citizens, the deal will see up to 12 UAE students participating each year for three years. Shamma Al Qassim, 19, Hazza Bani Malek, 20, and Hamad Rajab, 21, formed the first intake, having been selected for the NASA education initiative to work with top scientists on a variety of projects, including the space shuttle and International Space Station, deep space missions, solar system exploration and aeronautics research. Al Qassim, a computer engineering major at the American University of Sharjah, will be applying her studies in satellite thermal data analysis to predict earthquakes through the detection of stresses in the Earth’s crust. As NASA Ames Center Director Pete Worden puts it: “Under this programme, the goodwill generated by students working side by side with our NASA scientists and researchers will serve as a bridge between the USA and UAE, opening doors for future collaboration in scientific research.’’ As the UAE becomes increasingly engaged in the academic sphere, so it also aims to be at the forefront in the commercial sphere as Sir Richard Branson and his Virgin Group looks to make the businessman’s dream of putting ‘tourists’ into space a reality. Indeed, space tourism in the Middle East took a major step forward in July 2009 when Abu Dhabi-based

Bill Richardson (left) and Sir Richard Branson (right), Virgin Galactic.

Aabar investments – the non-energy investment arm of state-owned International Petroleum Investment Company (IPIC) – announced it had taken a $280 million, 32 per cent stake in Virgin Galactic – previously a wholly-owned subsidiary of Branson’s Virgin Group established as a space tourism company in 2004 to develop sub-orbital spacecraft with US partner Scaled Composites. As part of the deal, Aabar said it planned to build a spaceport in Abu Dhabi and would have rights to all Virgin Galactic traffic in the region. While there is yet no timeframe for when the spaceport will be built and become operational, Virgin confirmed

America in Upham, New Mexico – the world’s first. In December 2009, Virgin Galactic unveiled the first commercial passenger spaceship – SpaceShip Two, set to propel tourists into space (and zero gravity) within two to three years. Designed by US-based company Scaled Composites and legendary aircraft builder Burt Rutan, SpaceShipTwo evolved from the smaller SpaceShipOne rocket plane that won the $10 million Ansari X Prize in 2004 for becoming the first commercial manned rocket to reach an altitude of 100 kilometers, or 62 miles. While SpaceShip Two is still seen in many quarters as a big gamble

As the UAE becomes increasingly engaged in the academic sphere, so it also aims to be at the forefront in the commercial sphere. Aabar’s infusion would be sufficient to fully fund the company through to when it commences commercial space tourist operations. Aabar also announced it was setting aside $100 million to build a small satellite launching facility, suggesting the team plans to use the spaceport as a base for scientific research as well as space tourism. Virgin Galactic’s principal operations, however, will be run out of the recently opened Spaceport

on the commercial viability of space tourism, there has been no shortage of paying customers, with 370 wouldbe astronauts – including around 20 from the Gulf–signing up. The first 100 passengers have already paid the necessary $200,000 up-front and booked their rides into space. To get into space the VSS Enterprise, attached to its mother ship White Knight 2, will climb to 50,000 feet before detaching. Its rocket motors will then ignite, taking December 2010 gulfbusiness


SPACE Virgin Galactic timeline

it to nearly 70 miles above Earth at three times the speed of sound. The engines will then shut off, leaving passengers in a state of zero gravity weightlessness for a period of around five minutes, prior to it gliding back to Spaceport America. The overall journey itself will take around two and a half hours. The first piloted gliding flight of VSS Enterprise was successfully completed in October when it was released from the WhiteKnightTwo mothership at an altitude of 45,000 feet above California’s Mojave Desert. The next step is to fit Enterprise with rocket motors to take it into space, followed by test flights, which should happen in 2011. Not surprisingly, Sir Richard has already booked a flight on behalf of himself and his family. Will Whitehorn, the president of Virgin Galactic, has indicated the company’s first ‘tourists’ could be going into space within two years. Weighty matters indeed for those looking for the ‘weightlessness’ experience. At EIAST meanwhile, it is full steam ahead as the organisation continues to put the UAE on the space technology and research map. Commenting after the first anniversary of the launch of DubaiSat-1, Ahmed Al Mansoori, director general, EIAST, said: “The achievements by EIAST highlight the UAE’s success in leveraging the advanced technology sector and underscores the capabilities of young Emiratis to actively participate in new and advanced realms of technology. “The success of DubaiSat-1 during the first operational year is testament to EIAST’s ability to translate the strategic direction and overall development plans to drive the knowledge-based economy. “We will continue to develop EIAST as an internationally recognised institution and a national icon in science and innovation,” he added. ■

86 gulfbusiness December 2010

1996 – Original plans for the Ansari X prize announced. $10million prize for the first non-government human space flight. 1999 – The name Virgin Galactic is first registered as Virgin begins discussions with several fledgling private space ventures with a view to investment in the sector.

September 27, 2004, Sir Richard Branson and Burt Rutan announce plans or the world’s first commercial manned space operator – Virgin Galactic September 29, 2004 – Mike Melvill pilots the first successful X Prize qualifying flight reaching 330,000 feet.

2001 – Ex-Microsoft founder Paul Allen’s vision leads to the creation of SpaceShipOne by aviation designer Burt Rutan.

October 4, 2004 – Brian Binnie pilots the final X Prize flight reaching a record 368,000 feet. The X Prize is won and Virgin Galactic is born.

June 21, 2004 – the first manned space flight by a private, non-Government programme – Mike Melvill flying SpaceShipOne

To date only 450 people have been to space.

DubaiSat-1: facts Satellite operator DubaiSat-1, operated by EIAST (The Emirates Institution for Advanced Science and Technology), was launched on July 29, 2009, into a 680kilometre (420 mile) sun-synchronous low Earth orbit by ISC Kosmotras, who used a Dnepr-1 carrier rocket.

Satellite mechanics DubaiSat-1 consists of two segments: space and ground. The space segment comprises the development, design and manufacture of satellite equipment and components of the measurement and imaging. The ground segment includes the mission control station,

image receiving and processing station, antenna and RF subsystem. DubaiSat-1 gathers information and images from space for use by UAE government agencies in infrastructure development and rural/ urban development planning, as well as the management of natural disasters and the provision of accurate maps.

Future launches EIAST has begun work on the specifications for its third satellite, DubaiSat-3, even as work on DubaiSat-2 continues at full pace for its potential launch by end-2012.


Hey spender The Gulf’s appetite for luxury brands survived the recession and double digit growth is expected by 2012, writes ALICIA BULLER.


he latest round of global austerity cuts couldn’t be further from mindset of the luxury consumer, according to the latest figures. After two slow years, the world’s well-heeled sheppers are digging deep into their pockets once again for high-end goods. While the sector experienced an eight per cent slump in 2009, sales of expensive leisure goods are now set to grow by four per cent this year up to $191 billion, according to an analysis of 220 global luxury goods firms by consulting firm Bain & Company. The general consensus is that the future of bling – from clothes, to accessories, to cars – is a glittering one.

88 gulfbusiness December 2010

In this region alone, the luxury market continues to grow and is now worth over $10 billion annually, while the number of millionaires now totals around 400,000. “Our long-term growth prognosis is good. The UAE’s development will also positively impact the luxury watch industry. One of the effects of globalisation is that trends are no longer predominantly considered a local issue. Even though there are particularities which will remain unique to a single region, the trends are now similar from one country to another,” says Jean-Marc Jacot, CEO of luxury watchmaker Parmigiani. “The recession has impacted our industry worldwide. In the Gulf, the area that most suffered was Dubai. We believe that the next two years will allow the region to bounce back, and that the global situation will improve. Parmigiani has an advantage because our brand only recently entered the UAE and our business was not hit as strongly.”

me-up defence against the misery of bleak economic times. President and CEO of The Luxury Marketing Council Middle East T.B. McClelland says: “While there was a dip in purchasing of fashion, other sectors increased remarkably, such as cosmetics, lipstick and perfumes. Even though consumers we not able to purchase the high priced products they did before – or not as many as they were able to in previous years – they still dressed up, made up and smelled nice. They still craved the ability to go out and enjoy life despite the financial situation.” Home-grown UAE luxury retail chain Paris Gallery, purveyors of perfumes, cosmetics and accessories, witnessed similar trends. “In the fourth quarter of 2008, we started to feel the slowdown and this continued into 2009, but perfumes and cosmetics were the least affected,” says the firm’s CEO Mohammed Al Fahim. “We were about 30 per cent down in 2009 in the high-end sector, although this has rebounded somewhat in 2010.

The regional luxury market is now worth over $10 billion annually, while the number of millionaires totals around 400,000. The growth rate for luxury shopping in Asia overall is estimated to be 15 per cent this year. In North and South America four per cent growth is expected and in Europe, three per cent, according to the Bain & Company report. As the region slowly recovers from the recession, it’s evident that during the economic crisis some luxury players fared better than others. Labels with strong brand equity were hardly dented and some brands even posted growth. Meanwhile, true to form, ‘the lipstick index’ rose – in a recession, cosmetics purchases generally increase as a cheer-

High-end watches are set for a record year in 2010.

We won’t reach 2008 levels until 2012, but with economic stability the market should rebound.” While the high-end was impacted at Paris Gallery, well-established brands with a good image and high awareness, such as Burberry and Cartier, actually kept growing in sales during the recession. But one area that was particularly hard hit was luxury watches. “Timepieces were impacted negatively. The mid-market did well [watches of around $500 on average]. Affordable watches did fine. Owing to the recession, the watch industry actually got smarter, more fashionable and affordable,” Al Fahim says. According to McClelland, demand for luxury goods never really went away, but the cash for purchasing did. As the money flows back into the system, luxury goods will be one of the first recipients. “Aspirational shoppers only slowed discretionary spending while high net worth shoppers continued supporting their lifestyles. Big ticket items such as yachts and private jets are already coming back. For instance, GulfCraft is now manufacturing and selling bigger yachts. “Demand is growing, consumers are looking not only for the products but also the experience of ownership, and brands must take that into account when selling to clients and customers,” McClelland adds. In another indicator, the MasterCard Consumer Confidence Index dipped by 49 per cent in 2009, but has now returned to a healthier 69 per cent. MasterCard has taken advantage of this upturn in optimism by segmenting its credit cards into the Titanium, Platinum and The World lines. “We continue to see growth in spending – 64 per cent up on 2009. The premium sector was the most unaffected. We witnessed purchasing December 2010gulfbusiness



of lots of luxury items. There has been no slowdown in that sector from consumers. There is a renewed optimism” says Basel Eltell, vice president and regional manager, Levant, MasterCard. As tourism numbers to the Gulf continue to increase, the level of luxury spending is expected to rise in tandem. Well-heeled shoppers from emerging markets that are experiencing exponential growth, such as China and India, are already upping their spend quotient in the Gulf, according to McClelland. “Tourism is growing, particularly of high net worth travellers, and they are looking for gold jewellery, precious stones and experiential travel. One of The Luxury Marketing Council’s newest members, Precious Jewels LLC in the Dubai Mall, reported extraordinary sales of high-end jewellery over the last six months, at the very same time as the economic forecast was still unsettled globally,” he says. “The economy in the Gulf is already showing signs of recovery – higher crude oil prices are stimulating some of it – and demand by tourists is escalating. Chinese visitors to the Gulf shop for luxury watches, for instance, while Russians look for jewellery and fashion.” Al Fahim agrees that the Gulf states are better positioned to take advantage of the demand for luxury goods than the West. Paris Gallery stores in Abu Dhabi and Qatar only felt ‘minimal effects’ as they are still growing.”Because of the high purchasing power of Gulf countries, Majestic yacht from GulfCraft.

90 gulfbusiness December 2010

Mohammed Al Fahim, CEO, Paris Gallery.

the region was not as affected as the rest of the world,” he says. The Paris Gallery boss adds that Saudi Arabia, however, proved to be a testing market in the slowdown. In a time of economic crisis, access to markets and promotions are vital and the Kingdom is restricted. “Saudi Arabia is difficult as there’s less options for communicating with the audience and the women are not as free to shop,” he says. “We are looking forward to the new younger generation coming through as they reach their 30s.” While the region’s growing GDP will help bolster luxury retailers’ pockets going into 2011, companies are also increasingly eyeing Asian markets. The East accounts for the bulk of the growth in luxury spending and this trend is only expected to become more marked as the emerging market middle classes increase their spending power and aspirations.

Crucially, while luxury and over-consumption defined the pre-recession mood of Western nations, ‘flashing the cash’ is no longer in vogue. Job losses and tight credit have dampened double digit luxury growth for the foreseeable future in developed markets. Al Fahim says global demand for high-end goods has been fuelled by access to information and social media tools, such as Twitter. “It’s feeding demand. We’re looking at growing into China and India – we’re only touching the surface with the demand there. We have ambitions to grow in the East. We’re home-grown but we want to go global.” Parmigiani is also set to make its mark on China very soon. “Apart from the West, our target markets are Latin America, the Middle East and Asia – particularly China,” says Jacot. “In China, and Shanghai and Bejing in particular, Parmigiani will mark its arrival with the opening of the first ‘Atelier Parmigiani’ – a showcase in which we place haute horlogerie tradition and knowledge.” After a slow two years, the luxury goods sector, fuelled by globalisation and celebrity, is very much on the world’s agenda. Now represents a crucial time for brands to hone their strategies to take advantage of exponential growth opportunities. “Each sector brings unique characteristics to the industry, and brands must be prepared to satisfy their needs as the recession recedes,” concludes McClelland. ■

LET’S TALK ABOUT TOMORROW Reach tomorrow’s markets today. Kizad’s outstanding transport infrastructure offers easy access to regional and international markets by sea, rail, road and air. That’s 2.4 billion people within 4 time zones. This is Kizad. This is the industrial zone of tomorrow. Talk to Kizad

an ADPC company


Everlasting beauty talks to president of Clarins Group Middle East, Osama Rinno, about the rise of luxury skincare.

consumers get influenced by and adopt. Consumers in the Gulf have adopted the luxury lifestyle from quite sometime and will continue adopting it as long as their financial situation is not adversely affected. The availability of brands and how they are displayed, especially with the enormous retail space they occupy, continues to attract consumers which triggers demand.



uxury skincare and make-up brand Clarins first put its Parisian roots down in the Middle East in Dubai in 2000. Osama Rinno was charged with establishing a full operations hub and eventually converting all the GCC countries from distributor representation to a servicing agents representation, giving Clarins Group Middle East (CGME) control of the day-to-day operation of their brands in the markets. How much of Clarins’ business is based in the Middle East? Although the Middle East is less than 10 per cent of the global turnover of the group, it is still considered an emerging market for Clarins Group. Sales have grown five times in 10 years since CGME started in 2000. The market has not yet reached maturity and that is why there is great growth potential once the financial crisis is completely over. How did the recession affect the skincare and cosmetics sector in the region? In early 2009, retailers and agents stocked minimum quantities and that has affected all brands. Things started to improve gradually by the end of 2009 and today we are in a much better situation. On the other hand, consumers were divided

92 gulfbusiness December 2010

in their actions: some reduced spending on all categories, some switched to more affordable brands, and some kept purchasing only essential items. What do you see as being the main upcoming trends in the Gulf skincare and cosmetics sector? The main changes will be the continuous growth in skincare as more people are aware of products and enter into their daily beauty habits. Therefore, all businesses related to skincare and SPA treatments will become stronger year by year. For example, in Europe skincare represents roughly 35 per cent of the cosmetics business while make-up does not exceed 15 per cent. In the Middle East, the trend is the opposite. Do you see the Gulf as a growing market for luxury products? Using luxury products is a lifestyle that

Is it true that ‘beauty’ is a recession proof business? I agree with this. Before the global crisis, I would have had my doubts. Today, this crisis has taught us that brands that have done their work properly and have invested over the years in building a solid foundation are not affected. Furthermore, I am sure that you have heard of the Lipstick index. Lipstick sales could be an economic indicator, in that purchases of cosmetics tend to be inversely correlated to economic health. The speculation was that women substitute more expensive purchases like dresses and shoes for cosmetics in times of economic distress. What is your upcoming product strategy for Clarins ME? Based on the sales figures that major brands share with each other every year, Clarins is number one in the luxury skincare sector. However, we are still not number one for skincare in every door we are in. This is a target for us. We also intend to be the leader in foundation in the industry. Based on our expertise in skincare, we have great complexion lines. In terms of make-up colours, and also perfumes, we are now developing more and more products especially suitable for the Middle East. There are several initiatives that we are evaluating now and will hopefully start implementing next year. ■


Designs on Beirut Luxury brand Louis Vuitton has launched its first Lebanese store and is looking to expand its regional footprint, writes NICK COOPER.


iving in the lap of luxury isn’t bad, except that you never know when luxury is going to stand up,” said Orson Welles. Perhaps this could have been regarded as a prescient insight into what should have happened to the luxury goods market when the downturn arrived. Except that it didn’t. Spend on luxury goods during 2010 in the MENA region saw only a minor downward adjustment, in comparison to much greater slumps witnessed in other retail sectors. Tentative spend projections for the Middle East upscale retail market put growth at around eight per cent for 2011, and while it is not an astronomical rebound, it does herald a return of consumer confidence at the upper end of the socioeconomic spectrum. Ironically then, luxury may be thought of as a necessity in the high-spending MENA market. Take Louis Vuitton, for example. The Paris-based brand – part of the LVMH group – is confident that its opening of a store in Beirut in July of this year was certainly the right move. Valerie Chapoulaud, president of south Europe for Louis Vuitton, said that the opening was part of a “quite aggressive” strategy the group has in mind for the region. “If Lebanon goes well I’m sure we are going to add additional space here in Beirut very soon, in the coming two or three years. We have some plans in other countries, tomorrow it could be Kuwait or it could be Qatar, or it could be Abu Dhabi. If there is a good opportunity and we consider that we need to bring more service and more stores to our clientele we will do it. So, we’re extremely reactive and flexible,” she says.

94 gulfbusiness December 2010

All well and good, but Lebanon’s GDP is only a fraction of those countries that make up the GCC, normally considered a more luxuryfriendly environment. How can this translate to market demand in a country that is not only getting over the worst of its economic woes, but has also suffered major political upheaval in recent years too? Damien Vernet, general manager Middle East & India for Louis Vuitton, says that the Beirut opening was a long-term project and that the brand had been looking at potential and

benchmarking Lebanon before taking the plunge. “We have been tracking our overseas Lebanese clients all over the world for years and years and we saw very encouraging numbers there. We know that this is a market where people are very fashion aware, very fashion savvy and quite sophisticated – they buy in Dubai, they buy in Paris and they buy in London – so we already knew the potential was there,” he says. Vernet points out an interesting statistic that there are four times more Lebanese people living outside of Lebanon than there are in Lebanon itself and he believes this global diaspora provides a very big reserve Switch of customers forbowling Beirut. centre, With anpool hall. estimated 12 million Lebanese spread throughout the globe, cultural nuances can play a part in the brand’s success. The overseas Lebanese are generally friends and family-oriented and like to visit home often, providing a steady stream and rich vein of clientele to the firm’s Beirut outlet. So, does the brand’s focus on the MENA region, and to some extent the emerging BRICs, signify a turn against its more mature and established markets like Europe and the US? Chapoulaud disagrees this is the case. “We have a lot of projects in key mature markets like Italy, which is a big market for the south Europe region, and we have key projects in Damien’s market in the Middle East, so it’s always a balance. I think we’re not going in one direction over another, it’s on the same path and we have to do it in parallel.” So, the future looks both bright and busy, then? “Oh yes,” says the Milanbased Chapoulaud vehemently. “As we say in Italy, there is a lot of meat boiling at the moment!” ■

Better thinking. Together.

True diversification begins with a difference of opinions. With so many industry-leading thinkers at our affiliates, there’s no shortage of opinions on any investment issue. We make the most of them, bringing together experts from firms like Loomis, Sayles & Company, Aurora Investment Management, AlphaSimplex Group and Gateway Investment Advisers. Their ideas frequently drive the markets, and we value their different perspectives and insights. Out of their exchange of viewpoints come new investment strategies for our clients. It’s a process we call Better thinking. Together. And you’ll experience it when we work with you.

X Call us at +971 4 365 8066 or visit to see how our intellectual capital can sharpen your thinking.

This communication is provided in and from the Dubai International Financial Center (DIFC) by Natixis Global Associates Middle East. It is only available to persons who have sufficient financial experience and understanding to participate in financial markets within the DIFC, and qualify as Professional Clients as defined by the Dubai Financial Services Authority (DFSA). This communication should not be delivered to or relied on by any other type of person. Natixis Global Associates Middle East is the trade name for Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is duly licensed and regulated by the DFSA. Registered office: PO Box 118257, 5th Floor, Building 8, Gate Village, DIFC, Dubai, United Arab Emirates. Natixis Global Associates Middle East is a business development unit of Natixis Global Associates, the global distribution organization of Natixis Global Asset Management, the holding company of a diverse line-up of specialized investment management and distribution entities worldwide, including the investment managers referenced herein. The investment management subsidiaries of Natixis Global Asset Management mentioned in this communication conduct any investment management activities only in and from the countries in which they are licensed or authorized. This communication is for information only and does not constitute an offer of financial services, nor a recommendation or offer to purchase or sell shares in any financial instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing. ADINT169-1010


Stepping up profits Ten per cent of Italy’s high-end shoes are exported to the UAE. How are suppliers putting their best food forward, asks DOROTHY WALDMAN.

Riva del Garda Fierecongressi


lthough China is the world’s largest supplier of lower-end footwear with a 60 per cent market share, the upper end of the market – shoes with a leather component – is dominated by the Europeans, with Italy boasting a 30 per cent market share, according to Dubai Trade Statistics. In 2009, approximately 1.5 million pairs of shoes, valued at $79 million, were imported into the UAE from Italy. With an average price of $50.5 per pair, this represents 21 per cent of Italy’s exports in terms of quantity and 15 per cent in terms of value. Throughout the Middle East, there continues to be significant demand for Italian shoes, which are known for their high styling and quality


million pairs

The number of Italian shoes exported to the UAE in 2009

craftsmanship. Saudi Arabia imported over one million pairs with a median value of $25.5 last year, according to the Istituto Nazionale di Statishca (ISTAT). Though this was a 20 per cent decrease in volume from the previous year, there was an 18.5 per cent increase in the median price per pair. Lebanon, Jordan and Iran all

showed significant increases in the number of pairs and the total value of Italian shoes imported, although the median price per pair only increased in Lebanon. This may indicate that instead of buying the highest-priced designer or bespoke shoes, consumers are lowering their sights somewhat but, unwilling to forego Italian quality, purchase from less expensive lines. Iraq posted a lofty 180 per cent increase in the number of pairs imported, which translates to a 94 per cent increase in the value of its Italian shoe imports. Although, in monetary and volume terms its numbers are still quite small, these numbers indicate that this is an economy to watch. Recognising what

29.5% 94% Increase in Italian children’s shoes imported into the UAE last year

Increase in Italian shoe imports into Iraq in 2009

December 2010gulfbusiness


Riva del Garda Fierecongressi


Roberto Pellegrini, president of the Riva del Garda Fierecongressi organising body.

appears to be a movement in some sectors away from the higher priced shoes in this region, as well as the rest of the world, attempts are being made to entice shoe buyers out of their doldrums and to focus on the price-point associated with the volume market. With biannual exhibitions in Riva, located along the shores of Lake Garda in northern Italy, Expo Riva Schuh specialises in being the first venue to present the new designs for the following year. The show in June introduced the spring/summer 2011 offerings from about 1,200

manufacturers, with a third from Italy and the remaining two-thirds from 40 other countries. Approximately 5,000 buyers from 100 countries – including the UAE, Jordan, Saudi Arabia, Kuwait Lebanon and Syria among the 11 countries in the Middle East – came to see the new collections. Buyers from the Middle East included Mohammad Ghaddar, chairman of Golden Home in Oman, Denise Hage of Domino Shoes, who has shops in malls throughout Dubai, and Abdul Salam Alryes of Trend in Abu Dhabi, all of who made purchases for their stores.

In the Middle East, there is significant demand for Italian shoes, which are known for their quality craftsmanship. 98 gulfbusiness December 2010

A number of the exhibitors reported that lingering economic uncertainties seemed to make some buyers cautious about placing large orders for next year. Perhaps another reason buyers tended to proceed cautiously is they know that there will be a later opportunity to obtain those styles that sell particularly well. In addition to showing new styles for 2011, Riva Schoh is also an opportunity for buyers to restock for the coming fall/winter 2010/11 season, with a number of companies designated as “quick producers” because of their ability to fulfil new orders in 30-60 days, which, due to the complexity of shoe construction, is considered quite fast. “In this sense we can say that Expo Riva Schuh is two events in one,” says Roberto Pellegrini, president of the Riva del Garda Fierecongressi organising body. “We allow participants to act ahead of time, as it is the first presentation that tests collections and we also permit orders to be completed with fewer risks, thanks to quick production.” The next edition of Expo Riva Schuh, to be held in January next year, will see the first introduction of the autumn/winter 2011/12 collections, while also offering a last opportunity to place new orders for the upcoming spring/summer 2011 season. Another major Italian exhibition that draw buyers from this region is the Milan Shoe exhibition MICAM, in late September and again in March held. In addition, Who’s Next, an exhibition of handbags, jewellery, shoes, hats and other accessories will be held at the Dubai International Exhibition Centre from October 1921 and Motexha, the Middle East’s largest garment, textiles, footwear and fashion exhibition, will be held in Dubai in March next year. Whether or not these attempts by the Italian shoe industry at wooing back the Middle Eastern buyer to precrisis levels is successful remains to be seen. The prognosis is for a gradual recovery that may take some years to match previous highs. ■


AHEAD OF THE TIMES Step into the new year in style with an up-to-the-minute timepiece that makes a bold statement.

CHRONOMAT 01 Dhs18,350 The leading model in the Breitling collection is distinguished by the powerful character of its case. Its bezel is engraved with original numerals adding to its distinctive blend of strength and elegance.

THE SUBMARINER Price upon request The Oyster Perpetual Submariner, which is water resistant to 300 metres, is the ultimate reference chosen by professionals with a taste for style and deep water. It is simply the best diverâ&#x20AC;&#x2122;s watch.

ROTONDE DE CARTIER ASTROTOURBILLON Price upon request Featuring an 18-carat gold case set with a sapphine cabochon, the Astrotourbillion also has a strap made of alligator skin.

SEAMASTER PLANET OCEAN LIQUIDMETAL ECO-DRIVE DOME Dhs10,000 The multi-layered transparent dial plays a crucial role in absorbing light and conveying its energy. The EcoDrive Dome is of titanium and features radio controlled time keeping.


gulfbusiness Decemberr 2010

Dhs17,500 A striking ceramic diving bezel whose numbers and scaling, which are made of the Liquidmetal alloy, appear in stunning silvery contrast to the black ceramic background.

El Toro Patented Perpetual Calendar. Self-winding Movement. 18 ct rose gold case with ceramic bezel. Water-resistant to 100 m. Also Available in Platinum. Limited to 500 pieces. W W W. U LY S S E - N A R D I N . C O M



WORK AND PLAY SMART The latest laptops that combine rugged performance and lightweight casing.

VAIO Z SERIES Dhs6,495 - Dhs10,995 Count on Sony’s VAIO Z Series to get any job done faster and more effectively, freeing more time for personal interests and entertainment.

APPLE IPAD Dhs2,499 - Dhs4,099 Designed and developed by Apple, the iPad tablet is marketed as a platform for audio and visual media such as books, periodicals, movies, music and games, as well as web content.

TOSHIBA PORTÉGÉ R700 Dhs5,130 Designed for executives on the move, the Portégé weighs only 1.38kg, can run up to eight hours on one battery charge and boasts a 3D sensor for hard disk protection against drop and shocks.

HP PSG PAVILION DM4 Dhs4,099 Fusing fashion and efficiency HP’s Pavilion is thin and light and is powered by an Intel Core processor, ATI Radeon HD5450 GPU and 500GB hard drive.

102 gulfbusiness December 2010

Pullman Dubai Mall of the Emirates Your new business hotel in Dubai

Be connected to the Mall of the Emirates with over 500 shops. Discover 481 rooms and suites featuring trendy amenities. Get closer with chic dining experiences and spa treatments. Experience successful functions with our Co-Meeting promise.

New attitude hotels for business travelers. Your loyalty program**

For further information, please contact us: +971 4 702 8000

porsche design Engineered luxury by Porsche Design: a blend of conceived functionality and aesthetics. Combining durable premium materials with perfect quality. The result: timeless classics that accentuate the personality. Anytime. Anywhere.

Dubai Mall +971 4 4341415 | Mall of the Emirates +971 4 3410899 Deira City Centre +971 4 2957652 | Mirdif City Centre +971 4 2843640 | Atlantis Hotel +971 4 4220311 Also Available in Dubai Duty Free +9714 2162453


DEVIL IS IN THE DETAIL A collection of stylish high-end accessories for business, travel and leisure.





PRICE UPON REQUEST Vincent Wulveryck

These Santos de Cartier cufflinks made from sterling silver with palladium finish and synthetic blue spinel say style and sophistication.

Featuring a Stainless steel cap, black composite body, palladium finish details, sapphire blue coloured resin cabochon, an 18 carats solid gold nib and rhodium plated this is the ultimate in high-end pen design

Dhs3,299 Boasting a 14.2 mega pixel CMOS sensor, this is Nikon’s second-highest pixel-count DSLR after D3X and the first in its class to offer HD movie recording.

SAMSONITE PRO-DLX3 Dhs1,527 - Dhs2,115


Samsonite’s third generation of soft luggage is made from high-density nylon and includes a removable suiter system with hanger, wet pocket and laundry bag and dual-tube trolley handles.

Dhs1,699 Sony Gulf claims the DSC-TX9 and DSC-WX5 are the world’s first 3D digital still cameras in the Cyber-shot T and W series range. Both models incorporate background defocus and superior auto shooting modes. Decemberr 2010 gulfbusiness



SUIT YOURSELF Nothing says you mean business more than a well-made, well-cut suit. RALPH LAUREN PURPLE LABEL FALL 2010 PRICE UPON REQUEST This tailored suit embodies stylish luxury in a modern silhouettes with bursts of berry, evening blue and lavender.

PAUL SMITH AW10 Dhs3,584 The authentic traditional British look is given an edge of modernity, combining a sophisticated dark colour palette with luxury wools, silks and cashmere.


gulfbusiness December 2010


Jacob & Co. Dubai Mall • Tel: +971 4 434 1448 BinHendi Jewellery, Mall of the Emirates • Tel: +971 4 3410711 Also Available in Dubai Duty Free

Hotel Collection Gulf Business Hotel Collection members offer guests complimentary copies of the GCC’s premier business magazine Gulf Business. United Arab Emirates AL RAHA BEACH HOTEL

Abu Dhabi Al Raha Beach Hotel, created to provide the very best of traditional Arabian hospitality. This unique jewel of luxury and tranquility, offering magnificent services, awaits you for an unforgettable visit to Abu Dhabi. Tel 00971 2 50 80 555 Fax 00971 2 50 80 429


Khalifa Park area, Abu Dhabi Conveniently located adjacent to Khalifa Park, the property offers 318 luxurious rooms and suites, 6 world class dining venues, 6 meeting rooms and spacious ballroom with day light access and outdoor terrace. Tel 00971 2 6573333 Fax 00971 2 6573000



Al-Barsha, Dubai Offering 161 furnished units ranging from 81 sqm to 160 sqm, 3 dining venues, 3 multi-purpose meeting rooms, recreation facilities & a majestic landscaped area around the temperature-controlled pool. Tel 00 971 4 437 78 88 Fax 00 971 4 437 79 99




Al Barsha South-TECOM Located in the heart of Dubai’s new business hub and opposite Dubai Media City and Internet City the Media Rotana Dubai has 460 rooms, suites and deluxe hotel apartments, 5 award winning dining venues and 15 meeting rooms. Tel: 00971 4 4350000 Fax: 00971 4 4350011

Sheikh Zayed Road, Dubai This 394-room hotel boasts 10 dining and entertainment venues a superb spa and unrivalled meeting facilities. Tel 00971 4 3325555 Fax 00971 4 3324555



Our Location

Sheikh Zayed Road, Dubai Jumeirah Emirates Towers is a sleek architectural masterpiece of steel and glass. It redefines the business hotel category, seamlessly combining form with function, high technology with unparalleled luxury and elegance with efficiency. Tel 00971 4 3300000


Mall of the Emirates, Dubai Discover a new attitude hotel directly linked to the region’s ultimate shopping destination amidst Dubai’s sophisticated metropolis. Elegant 481 guestrooms complemented with chic dining experiences awaits both leisure and business guests. Tel 00971 4 702 8000 Fax 00971 4 702 8001


Doha Situated in the West Bay area, yet located near the city. With its various dining options, 24 suites, 234 rooms, private beach and state-of-the-art gymnasium, it is an idyllic setting for business and leisure. Tel 00974 4844444 Fax 00974 4839555

Sheikh Zayed Road, Dubai The truly unique and exciting five stars hotel features 393 rooms, suites and chalets together with Mall of the Emirates shopping centre and Ski Dubai’s alpine themed indoor snow resort. Tel 00971 4 3410000 reservations.malloftheemirates@

Sheikh Zayed Road, Dubai Located in the centre of Dubai’s business district and just five minutes away from DIFC, Jumeirah Beach, Burj Khalifa and Dubai Mall, this 500-room hotel offers you a convenient access the must see and must go places in the emirates. Tel 00971 4 323 0000 Fax 00971 4 323 0003

Al Qusais, Dubai Conveniently located nearby Dubai International Airport Terminal 2. Offers exceptional levels of comfort with 232 rooms & suites, three dining options, temperature-controlled swimming pool and state-of-the-art fitness center. Tel 00971 4 233 44 44 Fax 00971 4 233 44 45




Ras al Khaimah The Acacia Hotel is a superbly designed four star hotel complete with Al Nakhla restaurant, the stylish Flamingo bar, the vibrant Club Acacia, a pristine pool serving as a backdrop to varied and exciting Theme Nights, the luxurious O-Zone Spa, and high-energy Oxygen Gym. Tel 00971 7 2434421 Fax 00971 7 2434429

Doha Located on the Corniche Road, opposite the Museum of Islamic Art, the hotel offers 154 rooms and suites, a business centre and meeting rooms. Recreation facilities are also available. Tel 00974 4291111 Fax 00974 4291100




Jeddah Located a 10-minute drive from the Jeddah International Airport. Offers over 414 rooms including 46 suites. 10th and 11th floors are Executive floors addressing all the needs of a modernday businessman. Tel 00966 2 659 0000 Fax 00966 2 658 2489

Riyadh The first 5 star Holiday Inn hotel in the Kingdom, with 289 new and trendy accommodations, huge lobby with W-Fi access, outdoor pools, sauna, Jacuzzi and health club. Also has state-of-the-art meeting rooms, 24-hour business center with professional secretarial support. Tel 00966 1 4505054 Fax 00966 1 4505056

Jeddah The hotel situated in the heart of the business centre offers 211 rooms, 17 suites and 25 apartments. 5 meeting rooms and 2 reception rooms to accommodate up to 350 people. Tel 00966 2 6602000 Fax 00966 2 6604145


Sheikh Zayed Road, Dubai Offers 301 luxuriously appointed guest rooms and suites, nine restaurants and bars, health club and spa, tennis and squash courts and outdoor swimming. Tel 00971 4 3438888 Fax 00971 4 3438886

Saudi Arabia

Membership information:, Tel: 00971 4 2052290



Destination nostalgia Enjoy Europe from the unique vantage point of the Orient Express train journey from Istanbul to Venice, writes Adrian Mourby.


oud music hits us as we arrived at Istanbul’s Sirkeci railway station. A janissary band in vivid red and gold uniforms was creating a welcoming din on the platform. Inside a huge, high-ceilinged waiting room, unchanged since it was built in 1890, my wife and I checked-in and deposited our luggage. We were offered glasses of tea but we were keen to get to the platform. There it stood. Immaculate is hardly the word. In its polished navy blue, gold and white livery, the new Venice Simplon-OrientExpress ( VSOE)is the most cherished train in the world. At the door to every carriage stood bright-faced young men in blue and gold uniforms ready to help passengers on board, although most of their time was taken up being photographed. A lot of locals had turned out to see this legendary train on its visit to Istanbul. We found our compartment. Like all the carriages that run on this annual journey, it was an original from the 1920s and wonderfully restored. In the 1970s the VSOE company tracked down rolling stock across Europe and rebuilt them, recreating in exact detail all the brass and leather fittings, the marquetry, mahogany and lacquer decorations. It’s like taking your seat in a film set. Each compartment had a small sink discreetly hidden behind the panelling and the fitted sofa converted into bunk beds. We discovered this was always done while guests were at dinner. That faint smell of woodsmoke turned out to be the original woodburning boilers that provided our hot water, hidden at the end of each carriage. There was a bucket of iced champagne waiting in our compartment so we settled ourselves for the afternoon journey out of Istanbul. What we hadn’t expected was the attention that this train receives. The VSOE runs regularly from Calais to Venice and now has routes heading up through Germany in the direction of Russia but the annual journey from Istanbul to Venice is the star route. People lined the tracks and waved from railway bridges as we left Istanbul. As we passed through fields of sunflowers and sheep, locals clustered at the tiny stations. On the Bulgarian border the station master got out his trumpet and played as the Orient Express trundled through. And we were just as excited. We were in a mobile five-star hotel, eating well and about to get a unique perspective on Turkey, Bulgaria, Romania, Hungary, Austria and Italy. It was time to get dressed for dinner and listen to the pianist in the bar. Yes, the train really does have its own grand piano and resident pianist! ■

108 gulfbusiness December 2010

Checklist BUCHAREST In Bucharest the Orient Express party stays in the Athenee Palace Hotel which featured in Olivia Manning’s Balkan Trilogy of novels. After a tour of the city that takes in the Palace of the Patriarchate, a formal dinner is held at the former royal palace of King Michael, now the National Museum of Art.

Clockwise from top: The train passes through Switzerland; the on-board restaurant; the janissary band send off; the on-board staff includes a porter and a pianist; the sumptuous Orient Express bar.

SINAIA Heading north through Romania, the train stops at the village of Sinaia where a uniformed brass band greets the party just as it used to greet King Carol when he visited Peles Castle, the royal summer palace. Lunch is held in a hunting lodge followed by a tour of the castle.

BUDAPEST A night in Budapest means that Orient Express guests have the chance to see this spectacular city from the river. After the boat cruise and a tour of the castle district, dinner is held in the Hungarian Academy of Sciences, a splendid 19th-century palace overlooking the Danube.

VIENNA An afternoon stop in the Hapsburg capital means a tour of the city in a traditional horse-drawn fiacre followed by coffee and Sachertorte in one of Vienna’s many cafés. Free time is allowed for shopping or visiting the Albertina museum then it’s back to the train for a last dinner before Venice.

The Venice Simplon-Orient-Express runs once a year on the celebrated Istanbul to Venice route. Cabins cost from $6,633 per person. (

December 2010 gulfbusiness




Refined roar Glenn Freeman tests the new high-performance sedan from Lexus


ooks can be deceiving. At first glance, the Lexus IS-F appears to be little more than a rather refined sedan, but underneath its exterior beats the heart of a firebreathing, high-performance vehicle. Before hitting the start button, one of the few visible clues to its massive 420-hp powerplant are the stacked quad-tailpipes of the dualexhaust system and the oversized, curved bonnet. The guttural tone of the exhaust is immediately apparent when firing the engine into life, but becomes meaner still once underway. Accelerating hard from a rolling start, once the tacometer climbs to just under 4,000 rpm, the driver is rewarded with a grin-inducing low rumble – something I did a lot of during my two days with the IS-F. Another standout design feature is the larger front overhang and bonnet – which makes room for the massive

110 gulfbusiness

December 2010

Five-litre V8 engine, which propels the Lexus from 0 to 100km/h in around 4.8 seconds. In handling the ample torque this generates, the eight-speed sport direct shift transmission is paired perfectly with the engine, providing smooth, direct upshifts under both cruising and more spirited driving condition. The transmission offers two modes – D and M. The former is a standard automatic mode, while the latter provides a clutchless manual operation, either via the stubby shiftstick or the steering wheel-mounted paddle-shifters. Inside, the cockpit is very well organised and uncluttered, with allleather seats featuring colour-coded stitching or the choice of a two-tone leather interior trim. A quality soft-touch dashboard combined with touches of chrome and carbon-fibre look trim (unfortunately not the real deal) also add to the

sporty appeal. One minor gripe is the speedometer, which is somewhat-confusingly a small round dial next to the visiondominating tacometer, along with a smallish LED readout. Keeping an eye on this is crucial patucularly on the speed-camera intensive roads of the UAE. The dearth of rear seat space is another small criticism, but it would be fine for transporting children or vertically-challenged adults. Though I didn’t test it, the boot space also looks to have room for your golf clubs. Priced at $81,400 for the base model, or $84,400 for the two-tone leather option, the IS-F isn’t exactly cheap, but it delivers a decent bang for your buck. A highly-specced variant of the popular IS series, the F – named after Japan’s Fuji Speedway where it was developed – marks the first such vehicle from Lexus. Hopefully it is a sign of similar things to come. ■


Beyond the canvas It’s been a non-stop season for Islamic art. The latest round of auctions offered success and scandal in equal measure, writes Charles Pocock

A whirlwind season As forecasted in the October edition of Gulf Business, the Jawad Salim sculpture Mother and Child sold for in excess of $300,000 at Bonham’s (I was the under-bidder). The work by Moustafa – whom the auction house labeled as Egypt’s premier artist, an appellation which many would disagree with, particularly in Egypt where few have ever heard of him – exceeded its recognised market value. The sale at Bonham’s was disappointing since a large amount of work was unsold (around 40 per cent of the sale). This reinforces the feeling in the market that one should buy at Bonham’s and sell at Christie’s. Additionally, combining the sale with used cars and jewellery was an error as the room emptied out at certain stages, affecting the overall atmosphere, a must for a successful sale. The Bonham’s sale was followed by the Sotheby’s auction, which included the glorious nude, L’Endormie, by Mahmoud Said that sold for $380,000, and a work by Sepehri that went for $650,000. Both works exceeded their estimates and were the highest sales of the auction, as I predicted in my October column, proving that exceptional works will reach exceptional prices Twenty-nine modern Iranian works from the Christie’s sale were withdrawn prior to the auction, with action carried out by the corporate litigators Withers, as reported in The Financial Times. The resignation of the department head William Lawrie followed shortly after. The scandal did not affect the performance of the sale when it came to modern Arab art, with

Wounded Soul, Dia al-Azzawi.

Qatar’s welcome addition Mathaf: Arab Museum of Modern Art in Doha has its preview on the December 14, 2010 and will open for the public on December 30. At launch, the museum will feature two exhibitions: Interventions, which is curated by Dr Nada Shabout and exhibits the work of Arab modern masters Dia Al-Azzawi, Ibrahim El Salahi, Farid Belkahia, Ahmed Nawar and Hassan Sharif. While the museum’s second exhibition of contemporary Arab art, curated by Sam Bardouil, will include the work of Adel Abidin, Ahmed Alsoudani, Ghada Amer, Abdelkader Benchamma, Steve Sabella and many others. Noteworthy events in Munich Haus der Kunst, The Future of Tradition; The Tradition of Future, held 100 years after the exhibition Masterpieces of Muhammadan Art, this exhibition will run until September 16, 2010 – January 9, 2011.

The Woman, The Bird and the Pomegranate, Ibrahim el-Salahi.

Said’s The Whirling Dervishes reaching $2,546,000. A painting by Zenderoudi, catalogued as a work from 1971 and exhibited the Tapie show, raised serious questions since the original catalogue displays a marginally different piece, highlighting common concerns related to the artist’s work. Needless to say, this has led to limited interest from buyers and the work being unsold. The finale of the auction season was the Paris sale on November 9. The final part of the Farsi collection was offered through Christie’s, with Said’s nudes generating disappointing results for the auction house’s Paris office.

Museum of Ethnology, The Aura of Alif The Art of Writing in Islam until February 20, 2011. Bayerische Staatsbibliothek, The Wonders of Creation Manuscripts of the Bayerische Staatsbibliothek from the Islamic World, until December 5, 2010. The Mandarin Oriental Hotel in Munich is the hospitality partner for the exhibition projects, organising visits and guest stays for VIPs, making one of the most important exhibitions of Islamic Art held in Europe for a decade, essential and truly memorable. A must for all. Charles Pocock runs the Meem Gallery, Dubai. ■ December 2010 gulfbusiness






he Yas Hotel, Abu Dhabi, is one of the main architectural features of the ambitious Yas Marina development. Sitting on Abu Dhabi’s Grand Prix circuit, this distinctive hotel has hosted several global events from fashion to sports. It offers 499 luxurious guest rooms, international cuisine in seven restaurants and pioneering design and architecture. Visitors will be initially struck by the engineering feat behind the incredible Gridshell, a 219-metre expanse of sweeping steel and 5,096 diamond shaped glass panels, providing a ‘veil’ that drapes over the two hotel towers. The optical effect is stunning, reflecting thousands of coloured lights against the surrounding sky, sea and desert landscape. The lobby utilises a modern interpretation of the Arabian mashrabiya, where lightweight white latticed walls give defined private zones within an otherwise flowing space. The Deluxe and Executive Suites feature floor-to-ceiling glass panels which change from scarlet to indigo to create definition between the entrance and the bedroom, while the Marina Executive Suites offer exceptional views of the Marina and Grand Prix circuit from their wraparound balconies. The Yas Presidential Suite showcases original contemporary artwork and exclusive furnishings, including custom-made beds. The suite, which is the largest in the GCC, can accommodate up to 16 people dining, is serviced by a private lift, a full chef’s kitchen, dining room and a private lap pool on the large terrace.

112 gulfbusiness December 2010




Win a two-night stay in a Yas Suite including complimentary daily breakfast and a dinner for two in Kazu restaurant.



W I N:

To enter, log onto competitions and answer the question below.

What is the name of Abu Dhabi’s most futuristic lounge bar, located on the rooftop of The Yas Hotel? a. Moonlight b. Skylite c. Heavens Terms and conditions: This voucher cannot be redeemed in cash. Reservations are required and subject to availability.

For a comfortable and safe drive.

New The sensational new SP LM703 is here. The new generation Digital Rolling Simulation technology answers your need for a quiet and comfortable sedan ride, without compromising on grip and safety. That's Dunlop Tyre Technology for you.

Data monitor Compiled by Karen Remo-Listana


Mergers & acquisitions Public equity offerings Public debt offerings Private placements

118 GCC ECONOMIC INDICATORS Real and nominal GDP Fiscal balance and public debt


Economy: QE to push oil prices to $100 Retail: UAE tops coffee market growth


OIC: Market leader eyes 10 per cent growth Gargash Insurance: Call for consolidation

December 2010 gulfbusiness





Deal Description


Entekhab Industrial Group Co

Daewoo Electronics Corp.

Entekhab Industrial Group, the Iran-based manufacturer of home appliances, has agreed to acquire a 97.5 per cent stake in Daewoo Electronics Corp., the South Korea-based manufacturer of home appliances and multi-media products, from KAMCO, the South Korea-based government agency collecting public funding by resolving non-performing loans acquired by financial institutions, for a consideration of KRW577.7 billion ($522.3 million) including debt.


Sintonia S.A.

Atlantia S.p.A.

Sintonia S.A., the Italy-based infrastructure holding of the Benetton family, has agreed to acquire a 3.22 per cent stake in Atlantia S.p.A., the listed Italy- based company engaged in the construction and management of toll motorways and tunnels, from Aabar Investments PJSC, the United Arab Emirates infrastructure holding company, for an offer price of EUR16 per share for total value of EUR309.6 million. The transaction will increase Sintonia’s stake in Atlantia from 39.025 per cent to 42.245 per cent. The payment and delivery of the shares is expected to occur on November 5, 2010.


Waha Capital PJSC

AerCap Holdings N.V.

Waha Capital PJSC has signed a definitive agreement to acquire a 20 per cent interest in AerCap Holdings N.V. AerCap Holdings N.V., a listed company headquartered in Schipol, North Holland, a global leasing aviation company. Waha Capital PJSC, a UAE-listed company headquartered in Abu Dhabi, is an investment holding company with interest in companies providing aircraft industry, leasing services, financial services and maritime services. The transaction will be financed via $105 million in cash and the remaining portion of $271.374 million will be financed with Waha Capital PJSC’s 50 per cent interest in AerVenture and a 40 per cent interest in Waha Capital PJSC’s 16 aircraft portfolio.


Omega Pharma SA

Laboratoire de la Mer

Omega Pharma SA, the listed Belgium-based manufacturer and distributor of healthcare products, has acquired Laboratoire de la Mer, the France-based company engaged in the transformation of seawater and recovery of marine serums for therapeutic treatments, from CH Pharma, the Lebano- based holding company engaged in pharmaceutical and cosmetic activities and portfolio of TCR Capital, the Franc- based private equity firm, for a cash consideration of EUR69 million. Laboratoire de la Mer has generated revenues of EUR25.6 million and employs around 70 people in 2009.


Majid Al Futtaim Group LLC

MAF Greater Union LLC

Majid Al Futtaim Group LLC, the UAE-based real estate developer, has agreed to acquire 49 per cent stake in MAF Greater Union LLC, the UAE-based company operating Cinestar cinema circuit, from Amalgamated Holdings Limited, the listed Australia-based company engaged in operating entertainment, hospitality, and tourism and Leisure businesses, for a consideration of Dhs283 million ($77.06 million). MAF Greater Union has been a joint venture between Amalgamated and the Majid Al Futtaim Group since 1997. The acquisition aid Amalgamated Holdings to generate a book profit of AUD60.6 million. The transaction is expected to complete on October 25, 2010.


Arab Company for Investment and Development

Omar Effendi S.A.E

Arab Company for Investment and Development (AICR), the listed Egypt-based investment company having interest in infrastructure, real state and industrial sectors, has agreed to acquire 85 per cent stake in Omar Effendi S.A.E, the Egypt-based company that operates department stores, from Anwal United Trading Company, the Saudi Arabiabased retailer, for an undisclosed consideration. Omar Effendi got privatised in 2006 for about $103 million.

Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between October 20, 2010 and November 18, 2010. Based on announced deals, including lapsed and withdrawn bids. Where deal value is not disclosed, the deal has been entered based on turnover of target exceeding $10 million. Activities excluded from the table include property transactions and restructurings where the ultimate shareholders’ interests are not changed. Source: Mergermarket

12,000 10,000



Value ($m)


Value Volume








2,000 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3







Value ($m)


15,000 10,000


5,000 0



Business Services 1.5%

Leisure 4.2%








Construction 5.5% Real Estate 25.1%

Agriculture 0.2% Industrials and Defence Chemicals 10.8% 1.1%

Financial Services 26.1%


Transport 1.7%

Pharma/Medical/ Biotech 5.8%

Construction Real Estate 3.5% 6.7% Agriculture 0.8%

TMT 21.7%

Defence 2.5% Energy/ Mining/ Utilities 6.7%

Industrials and Chemicals 16.7% Consumer 7.5%

Business Services 5.8%

Mergermarket tracks all M&A deals of more than $5m where the target, bidder or parent is a Middle Eastern company.

116 gulfbusiness December 2010

Pharma/Medical/ Biotech 3%


Number of deals


Transport 7.7%

Consumer 1.8%


Value Volume

Leisure 4.6%

Energy/Mining/ Utilities 3%



TMT 9.5%


Financial Services 16.7%

TOP PUBLIC EQUITY OFFERINGS Value ($m, Historical rate)


Transaction Status

Transaction comments


Omani Qatari Telecommunications Company (NWRS)


Initial filing date was on August 8, 2010. Omani Qatari Telecommunications Company or Nawras had set the price range for the IPO to be OMR 0.702 to OMR 0.902.The offering was open for subscription on September 15, 2010 and the offer closed on October 21, 2010.The IPO was reserved for individual or retail investors for up to 70 per cent and the remaining 30 per cent was for institutional investors. About 70 per cent of the offering was open to Category I investors, and 30 per cent was open to Category II investors who can participate in the book building process. Category I investors could apply for a minimum of 500 shares in multiples of 100 up to a maximum of 500,000 shares, and Category II investors could apply for a minimum of 500,100 shares up to a maximum of 26,037,700 shares. After the IPO, all the selling shareholders, with the exception of Nawras Development, continued to retain a stake in Nawras, including TDC-Qtel MENA Investcom BSC, which is controlled by Qatar Telecom and the pension funds of the Diwan of the Royal Court, the Ministry of Defence, the Royal Office, the Internal Security Service and the Sultan’s Special Force.

Transaction: IPO or Follow-on Equity Offering; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, or UAE; All transactions announced date (Including Bids and Letters of Intent): [10/21/201011/20/2010]; Source: Capital IQ.

TOP PUBLIC DEBT OFFERINGS Value ($m, Historical rate)


Transaction Status

Transaction comments


QNB Finance Ltd.


The guaranteed notes, issued in USD, have a coupon rate of 3.125 per cent and will mature on November 16, 2015. The bonds are ated A+ by S&P and Fitch, and Aa3 by Moody’s.


Abu Dhabi Islamic Bank (ADIB)


The sukuk is rated A1 by Fitch and A2 by Moody’s. The Islamic bonds issue was oversubscribed by 4.8 times and will mature in November 2015. Financial Advisors are Barclays Capital, HSBC Holdings, Liquidity Management House for Investment, Nomura Holdings and Standard Chartered.


The Saudi British Bank (SABB)


The five-year fixed rate senior unsecured bonds were issued in USD with a coupon rate of three per cent, maturing on November 12, 2015. The notes are a part of Euro Medium Term Programme. The bonds are rated A by S&P and Fitch.




The 4.5 per cent notes due 2015 were issued in USD and will mature on October 28, 2015. It is rated A- by Fitch and A3 by Moody’s. The notes are a part of series number three, tranche number one of the Euro Medium Term Note Programme. Interest is payable on April 28 and October 28 in each year, commencing on October 28, 2010.


Gulf General Investment Company (GGICO)


The notes are unconditionally and irrevocably guaranteed by GGICO’s main subsidiaries Emirates Lube Oil Company Limited and Gulf Prefab Houses Factory. The notes, issued in USD, will mature in 2015 and are rated B1 by Moody’s.


The Commercial Bank of Qatar (CBQK)


The corporate bonds, with three per cent coupon rate, were issued in CHF and will mature on December 7, 2015. The bonds, which will be used for general corporate purposes and working Capital, was rated A1 by Moody’s.

Transaction: Fixed income; Geographic locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date (Including Bids and Letters of Intent): [10/21/2010-11/20/2010]; Source: Capital IQ.

TOP PRIVATE PLACEMENTS Value ($m, Historical rate)



Transaction Status

Transaction comments


International Petroleum Investment Company


IPIC announced a private placement of notes for gross proceeds of $2.5 billion on November 10, 2010. The notes will be issued in two tranches pursuant to Rule 144A. Bank of America Merrill Lynch, Goldman Sachs, HSBC, National Bank of Abu Dhabi, RBS, and Standard Chartered Bank will act as the joint bookrunning managers to the company in connection with this transaction. The transaction is expected to close on November 15, 2010.


Axis Bank Ltd., DIFC


Axis Bank Ltd., DIFC announced a private placement of senior unsecured notes due 2016 for gross proceeds of $498 million on October 26, 2010. The notes will be issued as per Rule 144A and Regulation S at 99.5990 per cent of $500 million resulting in proceeds of $497,995,000. The notes have coupon of 4.75 per cent payable semi-annually and mature on May 2, 2016. BofA Merrill Lynch, Citigroup, Inc., Deutsche Bank AG, JPMorgan Chase & Co., and The Royal Bank Of Scotland Plc served as joint bookrunning managers for the transaction.On November 2, 2010, Axis Bank Ltd., DIFC closed the transaction. The transaction saw participation from United States and European banks and pension funds.


Polarcus Limited


Polarcus Limited announced a private placement of 73.4 million shares at NOK5.30 per share for gross proceeds of NOK389,020,000 on November 18, 2010. The issue of shares was done through a bookbuild process. The shares will be subsequently listed on The Oslo Borse. The placement was managed by ABG Sundal Collier Holding, DnB NOR Markets, ASA, Pareto Securities, and SEB Enskilda.On November 18, 2010, Polarcus Limited closed the transaction.


Gmmos Group


Gmmos Group announced that it has raised $60 million in funding on November 11, 2010. The company issued a convertible loan in the transaction. The loan has tenure of four years with an initial coupon of six per cent per annum.Gmmos Group will use the proceeds to fund further expansion of its offshore marine business Stanford Marine and to take advantage of the expected recovery in the offshore market. On November 11, 2010, Gmmos Group closed the transaction.

Transaction Types: Private placement; Geographic Locations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or UAE; All transactions announced date: [10/21/2010-11/20/2010]; Source: Capital IQ.

December 2010 gulfbusiness




BAHRAIN Real GDP (%yoy) Nominal GDP ($bn) GDP per capita ($) Fiscal balance (GG, % GDP) Public debt (% GDP) Gross ext. debt ($bn) Gross ext. debt (% GDP)

08 6.3 21.9 28,097 7.7 15.2 34.6 158

09E 1.8 20.6 19,817 -4.8 21.6 7.2 181

10E 2.4 22.0 27,118 0.4 20.3 33.6 153

11E 2.8 23.4 28,247 1.7 18.0 33.9 145

08 5.5 148 42,995 26.9 9.9 60.6 40.9

09E -2.2 98 27,835 23.0 9.8 53.1 53.9

10E 2.5 111 30,784 20.0 10.8 46.4 41.8

11E 3.1 120 32,343 23.0 10.8 45 37.5

08 12.8 60 21,649 22.6 4.2 12.5 20.7

09E 3.8 46 15,996 -0.8 4.9 13.2 28.7

10E 4.6 53 18,650 3.6 4.1 13.5 25.6

11E 4.5 58 20,219 5.6 3.6 15.5 26.9

08 25.4 111 76,43 11.4 6.8 60.7 54.8

09E 9.0 98 59,99 13.0 8.4 65.9 67.0

10E 11.3 124 72,64 8.0 11.0 60.3 48.8

11E 11.2 145 80,74 9.0 10.1 54.3 37.3

08 4.2 477 19,157 32.5 13.1 83.3 20.3

09E 0.6 376 14,745 -6.1 18.0 99.8 26.5

10E 3.2 427 16,313 1.1 14.9 103.0 24.1

11E 4.0 468 17,457 1.4 13.2 99.0 21.2

08 5.1 254 53,388 21.7 14.5 162 63.6

09E -1.4 224 45,615 5.4 17.3 155 69.3

10E 1.2 241 47,600 9.6 14.5 156 64.9

11E 2.3 255 49,039 12.1 12.5 158 62.0

KUWAIT Real GDP (%yoy) Nominal GDP ($bn) GDP per capita ($) Fiscal balance (GG, % GDP) Public debt (% GDP) Gross ext. debt ($bn) Gross ext. debt (% GDP) OMAN Real GDP (%yoy) Nominal GDP ($bn) GDP per capita ($) Fiscal balance (GG, % GDP) Public debt (% GDP) Gross ext. debt ($bn) Gross ext. debt (% GDP) QATAR Real GDP (%yoy) Nominal GDP ($bn) GDP per capita ($) Fiscal balance (GG, % GDP) Public debt (% GDP) Gross ext. debt ($bn) Gross ext. debt (% GDP) SAUDI ARABIA Real GDP (%yoy) Nominal GDP ($bn) GDP per capita ($) Fiscal balance (GG, % GDP) Public debt (% GDP) Gross ext. debt ($bn) Gross ext. debt (% GDP) UAE Real GDP (%yoy) Nominal GDP ($bn) GDP per capita ($) Fiscal balance (GG, % GDP) Public debt (% GDP) Gross ext. debt ($bn) Gross ext. debt (% GDP)

Source: IMF, IIF, National statistics, Haver, BofA Merrill Lynch Global Research

118 gulfbusiness December 2010

QE to push oil prices to $100 per barrel The GCC countries continue to lag behind the broader emerging markets (EM) but the Fed’s new round of quantitative easing may support the six-nation pack’s faster path to recovery. This is according to Bank of America Merrill Lynch (BofAML), which remains cautious on the GCC recovery given the global double dip concerns. In its MENA Quarterly report, the investment bank says the GCC not only lags the global business cycle historically but also this time suffers from similar problems of the developed countries, namely troubled real estate and banking sectors. However, the recent quantitative easing may support the GCC, although to a much lesser extent than rest of the EM, through a weaker US dollar, lower interest rates, higher commodity prices, higher asset prices and access to cheap and abundant capital. Because the US maintains a fiscal stimulus and aims for higher inflation and inflation expectations with the second round of quantitative easing, the US dollar is likely to weaken against major currencies. In the GCC, Dubai is best positioned to benefit from dollar weakness thanks to its service-based economy. In addition BofAML believes that oil prices will move higher as QE weakens the US dollar. RETAIL

UAE tops coffee market growth The UAE is the fastest growing coffee market in the world with a compound annual growth rate in volume sales of 12 per cent over the 2009-2014 period, according to Euromonitor International study. Despite a thriving tea tradition in the country, the coffee market managed to grow thanks to the increasing number of specialist coffee shops fed through into higher on-trade volume coffee sales, which grew by 17 per cent in 2009. Spending in cafes increased by 119 per cent from 2005 to 2008 reaching $454 million. The emergence of shopping centres and coffee culture prompted the rise of local coffee chains such as Blends & Brews. However, the abundance of international café chains such as Starbucks, Costa, Coffee Bean & Tea Leaf and Seattle’s Best Coffee, Barista staved off the development of domestic ones. In addition to emerging café culture, the trend of premiumisation reigned in 2009, beating earlier estimates that the economic


And as the second and third round effects – namely higher asset values and lower interest rates – come into motion, oil prices will likely touch $100 per barrel next year. With the average budget oil breakevens for the oil exporters in the region around $65 to $70, oil price at $100 per barrel means a higher oil windfall, increased reserve accumulation, stronger money supply and credit, and stronger economic activity for oil exporters. However, as the recession has weakened the link between money supply and credit in the region due to deteriorated asset quality and deleveraging, it is expected that the impact will be less expansionary compared to the 2005-2008 boom. Albeit bank lending in the region remain relatively muted overall, more accessible external funding will facilitate rollover of maturing liabilities, especially in the UAE, and ease, but not eliminate, de-leveraging strains. GCC  BUDGET BREAKEVEN OIL PRICES Breakeven oil priceOfficial 2010 budget


Breakeven oil priceBofAML 2010 budget


Oman Insurance

Market leader eyes 10 per cent growth Oman Insurance Company (OIC), the largest insurer in the UAE, expects to finish the year with 10 per cent growth in net profit, its chief executive told Gulf Business. “This year we will see 10 per cent and thereafter we expect to see 10 to 15 per cent growth year-on-year,” Abdul Muttalib Mustafa Al Jaidi, said, noting that this growth is muted compared to the 30 to 40 per cent growth seen prior the crisis. “We used to grow in high doubledigits for more than eight consecutive years,” he said. “However, increased competition dragged down rates so to be able to make 10 per cent growth, you have to produce more than 30 per cent of last year’s premium.”

The Dubai-based firm posted an eight per cent increase in the first half of 2010 to Dhs154 million from Dhs142 million for the same period last year. In a statement to Dubai Financial Market, OIC said gross written premium for the first half rose five per cent to Dhs1.43 billion. Despite a highly saturated insurance market, Al Jaidi said the company can still grow by offering new products. In October, OIC introduced property owner’s association package insurance, with multiple covers such as property insurance, third party insurance, office bearers’ liability insurance, fidelity guarantee insurance and machinery breakdown insurance.

Oman Insurance Company


In Millions of Dhs, except per share items


For the Fiscal Period Ending

12 months Dec-31-2008A

12 months Dec-31-2009A

Last 12 months Jun-30-2010A

Total Revenue Growth Over Prior Year

1,216.2 (6.8%)

1,298.2 6.7%

1,368.6 23.9%

Gross Profit Margin %

394.4 32.4%

394.5 30.4%

440.1 32.2%

EBITDA Margin %

258.8 21.3%

205.2 15.8%

220.7 16.1%

Net Income Margin %

250.2 20.6%

189.6 14.6%

201.6 14.7%

BH KW 20









Source: IMF, national official data, EcoWin, BofAML Global Research estimates

slowdown would hamper its development. Last year, a number of premium brands such as Illy, Whole Earth Organic, Lavazza Dek and Twinings Coffee Blendswere launched. Although premiumisation is expected to slowdown through 2011, there are still a handful of opportunities for multinationals. “Coffee sales do not appear to have been significantly affected by the economic downturn and continues to increase,” the study says. “Coffee shops are perceived as a cheap alternative to dining out and as a venue for socialising, especially among younger people.” Consumers were also increasingly exposed to various ways of preparing coffee. In May 2009, Nestle Nespresso opened its first store in Dubai, marketing coffee machines and coffee blends. Unit prices reflected the lower cost of materials in 2009, with the International Coffee Organisation composite average declining to 116.4 US cents Key stats per pound down from 124.25 Fresh coffee Instant coffee 2008 2009 2008 2009 in 2008. The decline was Saudi Arabia 239.4 258.1 38.2 40.6 not initially factored in by UAE 33.2 36.6 15.3 16.8 suppliers and retailers hence Qatar 2.4 3.2 8.2 10.6 the ministry of economy Kuwait 8.5 10.2 5.8 6.8 Oman 15.9 17.2 4.9 5.2 intervened during Q1 2009 to Bahrain 4.5 5.1 1.4 1.5 prevent manipulators from Source: Euromonitor from trade sources and national statistics maintaining old prices.

Source: Capital IQ

Gargash Insurance

Consolidation need of the hour Gargash Insurance expects a 15 per cent growth this year and plans to expand in two more GCC countries by end of next year. “While the UAE insurance market may have grown only by five per cent in 2010, we are expecting a growth in excess of 15 per cent for this year, as a result of our strategic thrust and initiatives,” Mustafa O. Vazayil, the company’s managing director, said. Vazayil said the number of insurance firms is “far larger than what is required” hence a consolidation is necessary. “Insurers here need to build their reserves and increase their retention capacities. This will avoid cut-throat

competition in pricing, which eventually results in inferior products and services to the customer,” he added. In May, the Dubai-based company had its first foray outside the UAE though a joint venture with Omani insurance broker Trade Links and hopes to have its footprint in at least four GCC states by 2011. “There have been some green sprouts but construction engineering and motor insurance still lags behind,” Vazayild said. “Apart from those we have grown on all classes. We were, to start with, not hit by bad debts and we have been able to increase the client base by over 15 per cent in the last two years.”

December 2010 gulfbusiness



Media and Marketing Show Dubai Exhibition Centre, December 13-15 Media and Marketing Show is one of the world’s must-attend networking and educational resource platforms for media and marketing professionals. More than 60 exhibitors from marketing and publishing firms from across the region will participate in the 2010 show. It offers business and networking opportunities, and a platform for all the key players who are shaping the future of the industry.

UNITED ARAB EMIRATES Abu Dhabi December 07-11 08-09 12-13 12-15

Abu Dhabi International Motor Show Abu Dhabi Sponsorship Forum World Architecture Festival Middle East 5th Annual Security for Energy Infrastructure Summit Middle East 2010 Middle East Government Contact Centres Summit 2010 Integrated Building Process Control Summit 2010 Anti-Trafficking and Border Control GCC Summit ROTATE 2010 Seyaha – Holiday and Travel Show The National Fair for SME 2010

Abu Dhabi National Exhibition Centre The Yas Hotel, Abu Dhabi The Yas Hotel, Abu Dhabi

Le Royal Méridien, Abu Dhabi

Yas Island Rotana Hotel, Abu Dhabi Park Rotana, Abu Dhabi Park Rotana, Abu Dhabi Millennium Hotel, Abu Dhabi Abu Dhabi National Exhibition Centre Abu Dhabi National Exhibition Centre

Madinat Arena, Dubai The Sevens, Dubai Dubai Int’l Convention & Exhibition Centre Airport Expo, Dubai www.mother,

Dusit Thani Hotel, Dubai

Dubai Int’l Convention & Exhibition Centre

Dubai Int’l Convention & Exhibition Centre

Dubai Int’l Convention & Exhibition Centre

Dubai Int’l Convention & Exhibition Centre


EPEX Expo Dubai Rugby 7s Mother, baby and child show MEBA – Middle East Business Aviation 2010 16th Annual Middle East Maintenance Management 2010 25th International Autumn Trade Fair 2010 6th International Fashion Jewellery and Accessories Fair 2010 Dubai Drink Technology Expo 2010 The Small and Medium Enterprises (SME) Expo and Conferece Media & Marketing Show 2010

Dubai Int’l Convention & Exhibition Centre


Oman International Motor Show

Oman Int’l Exhibition Centre

Aramco’s Heavy Lift Safety Conference The Gulf Africa Investment Forum 2010 The International Conference on Water Resources and Arid Environments (ICWRAE) Riyadh Motor Show 2010 Saudi Autoshop 2010 Saudi International Boat Show Balanced Scorecard Forum Saudi Arabia Cityscape Riyadh ESTATEX 2010

DOC Building, Saudi ARAMCO InterContinental Hotel, Riyadh

King Saud University (KSU), Riyadh

Riyadh Int’l Exhibition Centre Riyadh Int’l Convention & Exhibition Centre Al Furusya Marina & Yacht Club, Jeddah Radisson Blu Hotels & Resorts, Riyadh The Four Seasons Hotel, Riyadh Dhahran Int’l Exhibitions Centre

12-15 12-15 12-15 12-15 16-18 16-19 Dubai December

02-03 02-04 02-04 07-09 12-16 13-15 13-15 13-15 13-15

OMAN December


04-05 04-05 05-08 05-09 05-09 08-11 11-15 12-14 12-15

120 gulfbusiness December 2010


Driven by passion Fiery UK chef Gordon Ramsay opens up to ALICIA BULLER about the two things he loves most – cooking and driving.


or a man reported to have lost a large chunk of his wealth in the last two years, Gordon Ramsay is in a chipper mood. Contrary to his media monster image, he’s more affable than irascible. “I’m only going on your back page?” he jokes, extending a suntanned hand and a very white smile. Ramsay is in the UAE to launch Chef’s Table at his Verre restaurant in Hilton Dubai Creek Hotel. Already a familiar phenomenon in London, the close-up experience is being launched in tandem with the overall revamp of the eatery. “It’s a unique experience where we go off-piste and cook a little more avant-garde, a little more dangerous. Cooking for six guests is a lot more fun than cooking for 60, so we can become a little more adventurous. Between courses the customers can come down and cook, so it’s a masterclass and chef’s table combined. It seemed an added bonus to come back with the chef’s table option. It’s a nice revenue stream, too, for obvious reasons,” he says. Verre launched in 2001 and was Ramsay’s first venture outside of the UK; the famous chef runs the Dubai eatery on a licence and consultancy basis. It’s a model he wishes he’d replicated for his other international ventures, which lost him around $12.9 million after writing off loans to restaurants in the US and France and closing businesses in Prague and Cape Town. “We provide the top tier management at Verre but we don’t fund the day-to-day running of the restaurant and we don’t own it. We should have done that from day one abroad,” he says. “It hasn’t put me off expanding internationally or in the Middle East, but I would change the conditions for obvious reasons. I suppose I should have looked at that in a broader spectrum, but you know we’re ambitious, we’re young and you learn by your mistakes. I’ll never do that again, next time we would do it with less risk.” I ask him if he’s worried about the recession and its negative affect on celebrity restaurants. ‘“Do I look worried?” he says, as if I’d just burned his favourite dish. And to be honest, he doesn’t. Not at all.

122 gulfbusiness December 2010

The chef says he is a fan of Dubai and can find London dreary but he admits that the service culture can be challenging in the UAE. “It’s hard with service, you have to be careful to respect cultures. The hierarchy can make everything stifled. In Europe, we have more buoyancy in the service and it’s a bit more energised and personal, which is not happening yet here,” he says. Throughout the interview, Ramsay has been rather earnest; just when I’m thinking that the chef’s infamous hotheadedness might have been batted down by financial woes, he ushers over a terrified waiter at Verre restaurant and asks: “I love your little smile, you know that, but I want to find out who designed that waist-coast, because he needs shooting. Honestly, it’s like your grand-dad’s pajamas top with the arms cut off.” Ah, that’s more like it. Later in the day, Ramsay offers to take me for drive at the Autodrome Dubai because the only thing he loves more than cooking is driving. He revs up for a heart-stopping spin in his favourite Audis (TTs and R8s). After screeching around the track to demonstrate the route and pulling some handbrake turns, he turns casually to me and says “You got that? It’s your go now.” Needless to say, he wasn’t too impressed when I went the wrong way and dragged all the cones off the track. Ramsay says he is a driving freak. “Racing is just like cooking. It’s edgy and dangerous. When you start off in this business and get your butt kicked in the kitchen and you’re in debt, you dream about becoming an amazing chef and getting to the stage where you don’t have to travel by the tube and own a Ferrari.” Ramsay’s dream came true when he achieved his third Michelin star and treated himself to his first Ferrari (he’s reported to own six). But as he relaunches Verre restaurant and the Chef’s Table, his mind must now be on shoring up more cash after a painful period, despite recently raking in $6.6 million profits to cover losses in the last year. “It’s been tough trying to get customer confidence back in the market. It has taken some of the arrogance out of the industry and put chefs back in the kitchen, which needed to happen, to be honest.”





Al-Futtaim Motors is the exclusive distributor for Lexus in the United Arab Emirates Dubai: Dubai Festival City (04) 206 6600 Sheikh Zayed Road (04) 310 6666 Abu Dhabi (02) 419 9888 Al Ain (03) 721 0888 Sharjah (06) 503 0555 Fujairah (09) 222 4157 RAK (07) 235 1542 Ajman (06) 711 3333

rotonde de cartier CENTRAL CHRONOGRAPH 9907 MC



Gulf Business | December 2010  

The Business Magazine for the GCC

Read more
Read more
Similar to
Popular now
Just for you