Page 1


No 147 October 2012

EDITOR’SDESK

Soaring high EDITORIAL Editor-in-chief HH Sayyid Tarik Bin Shabib Group Editor Mayank Singh Deputy Editor Visvas Paul D Karra Senior Sub Editor Muhammed Nafie DESIGN Senior Art Director Sandesh S. Rangnekar Senior Designer M. Balagopalan Senior Photographer Rajesh Burman Photographer Basim Al Maharbi Cover concept Chanjeet Singh Production Manager Ramesh Govindaraj MARKETING Business Head Jacob George Advertising Manager Arif Abdul Bari Senior Business Support Executive Radha Kumar CORPORATE Chief Executive Sandeep Sehgal Executive Vice President Alpana Roy Distribution United Media Services LLC

O

ne of the best managed sectors, a pioneer in privatisation, proven credentials and high investor interests... these are some of the epithets often used to describe the electricity and related water sector in the Sultanate. The sector stands out for three primary reasons.

First, the unbundling of the electricity sector and the passing of the Sector Law as per the directives of Royal Decree 78/2004, brought in a new market structure. The last seven years have proven the strength of this regulatory structure which has enabled semi-autonomous companies, with the right blend of independence and responsibility, to deliver the goods. The success of this exercise may prove to be a role model for others to emulate. It is also a harbinger of the privatisation of the sector. Second, the electricity sector has seen an improvement on almost all parameters: Transmission and distribution losses are down, Customer Average Interruption Duration Index (CAIDI) has improved, state-ofthe-art metres are being installed, supply has kept pace with demand, customer service standards are better and there is more accountability and transparency. Finally, having laid a foundation, the sector is now aiming high. The capacity being added in the next two years rivals the installed capacity of the last 40 years; alternative energy sources like solar and wind energy are being tapped and an integrated regional grid may soon be a reality. OER’s cover story takes an in-depth look at the opportunities and challenges facing the electricity in Oman.

OER PRESENTATION

Published by United Press & Publishing LLC PO Box 3305, Ruwi, Postal Code - 112 Muscat, Sultanate of Oman Tel: (968) 24700896, Fax: (968) 24707939 Email: publish@umsoman.com Website: www.umsoman.com

As Muscat Finance Company completes 25 years, we speak to a cross section of its senior management to understand the reasons of its enduring success. The two examples prove a singular point – irrespective of whether it is the public or private sector a combination of commitment, hardwork and values always pays.

All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. OER accepts no responsibility for advertising content. Copyright © 2012 United Press & Publishing LLC Printed by Oman Printers Correspondence should be sent to: Oman Economic Review United Media Services PO Box 3305, Ruwi 112, Sultanate of Oman Fax: (968)24707939 Email: editor@oeronline.com Website: www.oeronline.com

2

October 2012

To read, click on link at: www.oeronline.com


Bareeq al Shatti - Al Bustan Hotel - Qurum City Centre - Showcases at Grand Hyatt Muscat - Opera Mall (Opening Soon) Website: www.galleryargan.com


EVENT

A celebration of woman power

T

he second edition of the Al Mar’a Excellence Awards will applaud, acknowledge and honour Omani women from different fields. The countdown to the most lookedforward-to annual event celebrating women achievers has begun. The Al Mar’a Excellence Awards has received a phenomenal number of nominations from women across different categories, offering a wide selection of winners to choose from this year. The event, to be held on Sunday, October 7 at The Crowne Plaza Gardens promises to be a scintillating one attended by the who’s who of Muscat. They will applaud women achievers from all fields as they are felicitated for their extra-ordinary achievements. It will also reveal the passion and inspiration of women who have aspired to attain great accomplishments in their chosen field of work. This passion will be instrumental in motivating other Omani women and increasing a commitment that will further drive the talent of today and create the leaders of tomorrow.

assessment partner, Ernst & Young. What’s a red carpet event without some dazzling entertainment? Featuring at the Awards function will be Extravaganza Show from Moscow, a group of talented and professional artistes who will perform a scintillating and enthralling light-mirror laser show.

Nominations for the awards were conducted through an online process, where women either nominated themselves or those who they felt were deserving of the awards. The Al Mar’a Excellence awards will honour women from 12 different fields and profiles. There will be two special awards for Woman of the Year and the Most Promising Woman of the Year. The awards will judge achievers according to different parameters like innovation and creativity, the impact their contributions have had in society, their leadership abilities and the goals achieved. The final ranking process will be appraised by the event’s official

The Al Mar’a Excellence Awards symbolises what Al Mar’a magazine stands for – different shades of a woman and celebrates her diverse achievements so that she becomes a role model for future generations to follow. The event is being held in cooperation with the Ministry of Social Development. We are also proud to have on board: Official Auditing Partners: Ernst & Young. Strategic Partner: Audi. Support Partners: ONIC Holding (National Life & General and Oman Orix Leasing Company SAOG), Jotun Paints, Jawahir Oman, Home Centre, Areej Vegetable Oils and Muscat Pharmacy (Givenchy). Media Partners: Times of Oman & Al Shabiba.

MAIL

CATCHING THE TECH WAVE The cover story article of OER’s September issue have rightly analysed how Oman is adapting to the latest Information Communication Technology trends round the globe.

4

October 2012

Several key insights emerge from this analysis that shed light on the impact of IT on economic development and sustainable growth. We need to catch the tech wave by stimulating the growth of high technology companies and clusters. However, success in the new economy does not depend solely upon attracting or growing high tech clusters. Traditional industries in diverse sectors of the economy need to integrate new technologies into their operations. Several international companies employ computers and computer-controlled tools to design and manufacture products, and they increasingly use web-based purchasing technologies. We cannot also gloss over the fact that across the world IT has enabled financial and

other business services firms to go global as companies are increasingly outsourcing key functions to obtain a higher level of efficiency, profitability, or competitiveness. We also need to focus more on investing in IT infrastructure, providing the right education programmes at adequate scale to meet new skill requirements of employers, supporting innovative firms with research and development programmes at universities and institutes; and assuring adequate venture capital for startup companies. Biju Pankaj, Al Khuwair Write to us with your comments/ feedback at: editor@oeronline.com


INSIDE

30 PERISCOPE

48

OVERVALUED DEBT AND CURRENCIES IN GLOBAL MARKETS

24 IN THE NEWS

SET FOR ACTION Alizz islamic bank launched its RO40mn IPO to offer 400 million shares or 40 per cent of the total share capital at 102bz per share. The subscription period will close on October 21

FACE2FACE

NEW VISTAS OF GROWTH Khalid Yousaf, Director, Islamic Finance Advisory Services, KPMG Oman, observes that by the end of 2015 Islamic finance assets will achieve roughly 20 per cent of the total banking and insurance assets in the country

Sterling, the Aussie dollar, ten US Treasury notes, ten year German Bunds, ten year South Korean notes and two year German notes are all expected to be overvalued

32 LUXURY

STRENGTHENING ITS BRAND PRESENCE Pascal Mouawad, Co-Guardian, Mouawad shares his vision and plans for the company

COVER STORY

36 A quantum leap

6

October 2012


INSIDE

71 SPOTLIGHT

POISED FOR RECOVERY Housing needs in Oman are projected to grow in leaps and bounds in the coming years

ITALIAN AUTOMOTIVE LUXURY CHECKS-IN TO OMAN

52 FINANCE

25 YEARS OF ENABLING DREAMS

66

Muscat Finance (SAOG), the pioneer of non-banking financial services in the country, is celebrating its 25th anniversary this year

SHOOTING IN THE DARK

Editorial

2

Event

4

Economy Watch

10

Business Briefs

12

Executive Movements

20

In the News

22

Interview

62

Legal

64

Environment

78

Autonews

84

Billboard

86

Market Watch

88

Gizmos

89

Management

90

Golf Update

92

INSURANCE

The insurance industry in Oman is marked by a lack of innovation, coordination and cooperation. Everyone is saying the boat is rocking, but there is no concerted effort to steer it clear

CARTOON CORNER

8

October 2012

80 AUTOMOVIVE

By Kannan Murali

The luxury Italian marque of Maserati Cars has come to Oman through a new state-ofthe-art showroom and after sales facility in Muscat


T h i n k

A h e a d

LUXGEN7 SUV

Now in Oman

6 SRS Airbags

LUXGEN Blind Spot Monitoring System

360-degree Environment Imaging System

Highly Sensitive Night Vision System

ABS TCS

EBD ESC

BAS

Intelligent Anti-thieft Seats

Intelligent Power Tailgate


ECONOMYWATCH

Renewed buying interest The month of August saw buying interest picking up on the Muscat Securities Market amidst higher market liquidity and attractive valuations. The participation from the investors improved during Ramadan which saw the benchmark index gaining 2.27 points to close at 5,480 points

Index Performance

Closing as on

MTD (%)

YTD (%)

5,358.29

2.27%

-3.8%

End August 12

End July 12

5,480.02

MSM30 Index Financial Index

6,268.71

5,894.03

6.36%

-1.8%

Industrial Index

6,794.32

6,523.19

4.16%

14.0%

Services Index

2,621.18

2,580.08

1.59%

2.1%

GCC Markets Performance 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% OMAN

SAUDI

UAE (DFM)

UAE (ADX)

KUWAIT

QATAR

BAHRAIN

MTD (%)

2.27%

3.79%

0.34%

2.21%

2.49%

2.23%

-1.23%

YTD (%)

-3.78%

11.24%

14.37%

6.63%

0.83%

-3.36%

-5.02%

Global Markets Performance End of August 12

End of July 12

MTD (%)

1,406.6

1,379.3

2.0%

DOW JONES

13,090.8

13,008.7

0.6%

NASDAQ

3,067.0

2,939.5

4.3%

AMERICAS S&P 500

EUROPE FTSE 100

5,711.5

5,635.3

1.4%

CAC 40

3,413.1

3,291.7

3.7%

DAX

6,970.8

6,772.3

2.9%

ASIA PACIFIC NIKKEI

8,839.9

8,695.1

1.7%

HANG SENG

19,482.6

19,796.8

-1.6%

SENSEX

17,429.6

17,236.2

1.1%

SHANGHAI

2,047.5

2,103.6

-2.7% Source: GBCM Research

10

October 2012


BUSINESS BRIEFS

BANK MUSCAT MONEY MARKET FUND EVOKES STRONG RESPONSE The first-of-its-kind money market fund launched by bank muscat asset management has evoked a strong response, exceeding the initial asset under management (AUM) target. The unique investment vehicle offers an alternative for corporates and financial institutions to park their shortterm cash surplus with low risk, daily liquidity and ease of operation. The open-ended fund currently invests mainly in call accounts, fixed deposits, certificate of deposits issued by strong banks in Oman and other GCC countries. “bank muscat is proud to successfully launch the Money Market Fund which serves as a safe cash management tool with higher return,” said Ali Said Ali, DGM – asset management and private banking. “The bank’s strong investment process strengthens the fund and makes available to investors in Oman a new type of instrument previously available in international markets only.”

OMAN AIR LAUNCHES SERVICE TO TEHRAN

Oman Air launched a brand new service between Muscat and Iranian capital Tehran. In celebration of the inaugural flight, every passenger was presented with a rose and the aircraft was greeted by Oman’s ambassador to Iran, Iran’s ambassador to Oman and a number of other dignitaries. A traditional cake-cutting ceremony was held at the Imam Khomeini International Airport, Tehran. The Omani delegation was received at the airport by a team consisting of HE Captain Hamid Reza Pahlevani, Deputy Minister of Roads and Housing and head of civil aviation, Iran, Morteza Dehghan IKA, director general of airport, and other high-ranking officials. Utilising Oman Air’s latest Embraer E175 regional jets, the new service confirms and strengthens the historic links between Oman and Iran.

SHELL OMAN RANKED LEADERS IN SPECIALTY BITUMEN

QUICKLOOK

Shell Oman Marketing was ranked as the leader based on their quarterly business performance in the ‘Specialties Businesses’ amongst the ASEAN/India/Middle East region, in a recent meeting held by Asia Specialties Leadership Team for Bitumen in Kuala Lumpur, Malaysia. The award was ranked by Shell Asia Specialties. The Shell Cariphalte technology has catapulted the Shell Bitumen as an ideal partner due to its compatibility with all types of roads and also due to the supply capability, the service standards and strong reputation. “The Shell Cariphalte is an advanced product based on the polymer modified binder range that was created owing to the company’s exceptional worldwide experience and knowledge,” said Said bin Mohammed Al Rawahi, commercial manager. “This range has been manufactured by blending high performing polymers and base bitumen for better adaptability, reliability and durability.” Shell Cariphalte is best suited for heavy traffic roads like the highways, roundabouts, bus lanes, airfields and the likes.

Nawras awarded ISO ISO 27001 The IT department of Nawras has been awarded the ISO 27001 certification for secure data storage and handling. The certification was awarded by Germany’s TUV Rheinland Cert GMBH, a global provider of technical, safety and certification services. As one of the first companies in the Sultanate to be granted ISO status for its entire IT department, Nawras ensures that all customer information is protected by the highest level of security.

12

October 2012

Wipro partners Qatar Airways Wipro Infotech and Qatar Airways announced a long term strategic engagement which will leverage competencies of both organisations to create greater value and more efficiency for the global airline. This strategic relationship will bring together Wipro’s experience of application development and project management and Qatar Airways’ aviation systems’ expertise to develop new solutions that create competitive advantage for Qatar Airways.

bank muscat wins retail bank award bank muscat has won the Retail Bank of the Year Award by Asian Banking & Finance. The award ceremony held in Singapore honoured the very best of the region’s banks and financial institutions. For several years, Asian Banking and Finance magazine has been recognising the best performances of banking and finance institutions around Asia. This year, the ABF awards paid tributes to key players of the banking and finance industry.

Oman Air’s training programme Oman Air has conducted a training programme at its headquarters to help young, qualified Omani students from different private and government universities and colleges to achieve their full potential. The programme was conducted as part of Oman’s national carrier’s initiative to provide trainees with the skills they need to apply for and succeed in jobs within their chosen fields.


Many Dreams Many Smiles Many Cultures Many Nations One Bank

ahlibank introduces Personal Loan for Expatriates For further information

www.ahlibank-oman.com


BUSINESS BRIEFS

SPECIAL HAYYAK FOR PEOPLE WITH DISABILITY Omantel has launched a new Hayyak package for people with disability to help them get in touch with their families and friends. The new package offers reduced rates of up to 25 per cent on mobile broadband and a flat calling rate of 29 bzs day and night. “The new package is designed to meet the special needs of disabled to help them get in touch with friends and family through different communication means,” said Saleh bin Mahmood Al Maimani, manager – core services at Omantel. “This move comes as part of the company’s commitment to provide something for everyone.” To avail of this special package, applicants should visit their nearest Omantel retail outlet and present their disability ID issued by the Ministry of Social Development, he added. Commenting on the service, Hamoud al Shabibi, director of special care department at the Ministry of Social Development said, “We are delighted with Omantel initiative which reflects the attention and care given by the company to the disabled in our society”.

OMANI FIRMS ATTEND MARMOMACC EXHIBITION Leading Omani companies participated in Italy’s famous Marmomacc exhibition, held in Verona from September 26 to 29. With over 1,500 exhibitors drawn from over 50 countries Marmomacc is considered by many as the essential business exhibition for international producers, designers and decision makers seeking success in an increasingly specialist marble and stone market. “Marmomacc is the stone industry event where fabricators, installers and distributors can experience everything from natural stone extracted from quarries around the world, to the most technologically advanced fabricating machinery to the beautifully finished product,” said Nasima Al Balushi, director general, export development directorate at the Public Authority for Investment Promotion & Export Development. “Footfall on the Omani pavilion at Marmomacc has seen a significant rise over the past few years. It’s an exhibition that attracts an impressive cross section of visitors giving Omani businesses an opportunity to meet progressive, business minded customers.”

OCTAL TRIPLES PET RESIN PRODUCTION

QUICKLOOK

OCTAL has tripled its annual production capacity of PET resin used for water, juice and soft drink bottles this month with the commissioning of two of the world’s largest vertical reactors at the company’s leading-edge PET Complex in Salalah. With a total system output of one million metric tonnes per year of PET bottle grade resin, OCTAL has firmly secured its stature in the industry as the largest PET producing site in the world at any single location. “This milestone is nothing short of incredible,” said chairman Sheikh Saad Suhail Bahwan. “What we have previously been able to produce in three years can now be achieved in only one, giving us a stronger competitive advantage to serve the growing demand for high quality and performing PET resin and sheet in emerging and transitional economies.”

HSBC holds training workshop The retail banking and wealth management business of HSBC Bank Oman recently organised a highly interactive workshop to discuss how the new banking entity will deliver a complete range of personal financial products across its national network. Held at Shangri-La’s Barr Al Jissah Resort & Spa, the two-day meet brought together more than 120 branch and district managers from all HSBC branches and regional offices.

14

October 2012

ExxonMobil, Porsche expand partnership ExxonMobil announced a multi-year expansion of their partnership with Porsche AG that includes technical support of Porsche’s return to LMP1 endurance racing in the World Endurance Championship racing series in 2014. Recognising a shared commitment toward leveraging technical innovations to deliver outstanding performance, Porsche selected Mobil 1 as its factory-fill and recommended engine oil in 1996.

Call for optimum use of mHealth As mobile health is making significant strides across the globe, the potential for advancements on healthcare mobility is now indispensable in Oman, opined the experts at a Mobile Health Seminar recently. Organised by Knowledge Oasis Muscat (KOM), the technical arm of the Public Establishment for Industrial Estates (PEIE), the seminar underlined the importance of using mHealth to strengthen health systems.

Gas Arabia Summit in December QNB Capital, an affiliate of Qatar National Bank reported that the Middle East region has around 42tcm of gas to benefit from. This December, a plethora of global and regional industry experts will convene at the 2012 Gas Arabia Summit for four days to discuss how to capitalise on the numerous opportunities that the gas industry offers. Organised by the Energy Exchange, the eighth annual summit will be held from December 2 to 5 in Muscat.


MARY BUFFET ADDRESSES OMANTEL’S CORPORATE CLIENTS

real watches for real people

Omantel has organised a meeting for its corporate clients by hosting renowned speaker and bestselling author, Mary Buffet, at Shangri-La’s Barr Al Jissa Resort recently. The meeting was part of Omantel Business Alliance, a forum that helps recognise and foster thought leadership. Omantel Business Alliance brings the company’s corporate customers closer to some of the best and brightest business minds, who have a significant impact on the world. Buffett, the guest speaker who talked about ‘Global Trends and Financial Investment Strategy,’ said investment in education will help reduce unemployment and will produce wide-spread long-term results in the economy. As many as 300 top-level finance professionals, especially chief financial officers, from Oman’s corporate sector have attended the meeting, which was held under the auspices of Eng Sultan bin Hamdoon Al Harthy, chairman of both Muscat Municipality and Omantel.

FOUR MILLION SAFE MAN HOURS FOR AL ANSARI Al Ansari Trading Enterprise recently celebrated an important milestone in the company’s history by completing four million safe man hours on the sewerage network project in Wadi Kabir and Darsait area. This figure represents the combined man-hours on the project without any incident or loss time Injury. The project spans over Aint, Darsait, Hamriya, Wadi kabir and Ruwi with over 500 people involved in the project. “This achievement speaks of our company’s commitment towards safety and our desire to operate at the highest international standards,” says Yusuf Nalwala, joint managing director of Al Ansari. He also adds that this would have not been possible without the combined efforts of the management, the project team, QHSE team, Energo Projekt (the Consultant) and the client Haya. .


BUSINESS BRIEFS

PDO INVESTS $350MN IN OMANI BUSINESS Petroleum Development Oman (PDO) has awarded a series of significant contracts to Omani businesses as part of its drive to create and secure employment by increased procurement of local goods and services. The In-Country Value (ICV) investment programme has seen the company sign seven major deals worth more than $350mn with domestic contractors across the Sultanate in the past three months alone. The recent agreements include a central and north Oman pipeline maintenance contract to Al Shawamikh Oil Services, a south Oman pipeline maintenace contract to SLCC Al Baraka Oilfield Services supported by Amal Petroleum Services as sub-contractor, a substantial deal with Shaleem Petroleum Company, initially for five years, to cover hoist service provision in PDO’s southern operations and two hoist contracts with new local companies CPDS and BOOFs who will operate three hoists executing well access and repair operations in North and South Oman. Contractor ABB Muscat has also been awarded a $100mn contract for the engineering, procurement and construction of a new condensate processing plant at Saih Nihayda with fabrication of process vessels.

NAWRAS LAUNCHES FNP SERVICES Nawras has introduced the first fixed number portability (FNP) service in Oman, giving business customers the opportunity to keep their existing numbers when joining Nawras from another telecommunications operator. The service can be used by any corporate customer using a Primary Rate Interface or PRI, which is the standard service used by most medium and large enterprises for carrying multiple calls across a network. “The launch of fixed number portability is a major milestone achievement for the telecommunications industry in Oman and an eagerly awaited development for the corporate sector,” said Adnan Zubaid Khan, product manager for fixed voice and international data services at Nawras. “Like the previous introduction of MNP for mobile lines, this new service enables corporate customers with PRI services to transfer their current fixed line numbers to Nawras, in order to start benefiting from our pleasingly different products and services.”

75% OCCUPANCY AT CORAL COMMERCIAL BUILDING

QUICKLOOK

Hamptons MENA has recorded 75 per cent occupancy at its Coral commercial building in Muscat. The high-profile tenants include government organisations, international firms and local industry leaders representing various economic sectors. Located next to Zakher Mall in Al Khuwair, Coral is developed by Service & Trade Real Estate, and features a variety of flexible office suites from 120 sq m to 450 sq m, spread over a total area of approximately 17,500 sq m. “The strong customer response to the Coral commercial building underlines the robust demand for well-executed office design,” says Benjamin Cullum, general manager, Hamptons International & Partners. “Providing built environments that suit the needs of tenants is fundamental to successful development. From the take-up rate, it is clear that the Coral building satisfies these requirements.”

Windows Server 2012 launched Microsoft Gulf has recently launched Windows Server 2012 in the Middle East. The event was attended by Microsoft’s key partners, HP and Intel, who were represented by Eyad Shihabi, managing director, HP Middle East and Nassir Nauthoa, general manager, Gulf Countries at Intel. “Windows Server 2012 is a cornerstone of the Cloud OS that provides customers with a modern platform for the world’s applications,” said Samer Abu Ltaif, general manager, Microsoft Gulf in his keynote speech.

16

October 2012

KPMG’s IFRS training The KPMG Business School has announced its training programme on the International Financial Reporting Standards (IFRS). The course will specifically prepare the professionals and students for the examination of the Chartered Association of Certified Accountants (ACCA) Diploma in IFRS and provide them with an insight into the international financial reporting standards. The programme is scheduled in two parts starting with the first part on October 13 2012 (5 days) and October 20 (5 days). The second part will start on November 10 (5 days).

Increase in Air Arabia’s passenger traffic Air Arabia announced that it has welcomed 379,092 passengers in August 2012, an increase of over 22 per cent compared to the corresponding month in 2011. The airline also reported that the average seat load factor – passengers as a percentage of total seats available – for the month stood at 83 per cent, registering an increase of three per cent over the figure for August 2011. In the second quarter of this year, the low-cost pioneer carried 1.3 million passengers, an increase of over 15 per cent.

750,000 man-hours without LTI Omran has reached another safety milestone with the completion of 750,000 manhours without any lost time injury (LTI) at the construction site of the Oman Convention and Exhibition Centre. CEO Eng Wael bin Ahmed Al Lawati says this exceptional achievement demonstrates the level of team work by each and every one on site to ensure that the highest standards of occupational health and safety management are implemented.


Think of

Think of

WIDEST RANGE OF DESIGNER SOFAS, STYLISH COFFEE TABLES, RUGS & ACCESSORIES GSM – 99254037 SHOWROOM IN WATTAYAH


BUSINESS BRIEFS

57 ENTRIES FOR NATIONAL E-GOVERNMENT AWARDS A total of 57 projects, comprising 52 from 26 government entities and five from four private institutions, have registered themselves for the Sultan Qaboos Award for Excellence in eGovernment according to a release by the Information Technology Authority (ITA). Government entities are vying to win a trophy in one of the five categories of the award: Best eContent, Best eService, Best eEconomy, Best eProject and eReadiness. Meanwhile, private sector organisations, which have been given the chance to compete this year for the first time in the award programme since it was established in 2010, are competing in the Best Public eService and Best Public Mobile Services categories dedicated to the private sector. The assessment involves several steps such as field visits for the participating institutions, public voting, eMystery shopper programme and checking for accuracy of the electronic services. “The assessment phase begins with the field visits, which will allow us to identify the strengths and weaknesses of the projects participating in the competition through preparing reports on their performance,” said Fatma Salim Al Riyami, project manager for the award.

CI AFFIRMS BANKDHOFAR’S STRENGTH RATING

QUICKLOOK

Credit rating agency, Capital Intelligence (CI), brought good news to BankDhofar recently when it affirmed the financial strength rating of the bank. The bank’s financial strength rating has been upgraded to a ‘BBB+’ standard from a ‘BBB’ standard. In its announcement, CI said that the change in the outlook was underpinned by the bank’s improved asset quality, its sound capital adequacy and its good overall operating profitability. “This is a very significant achievement for us,” said Tony Mahoney, CEO, BankDhofar. “We have presented solid financials for this year and we forecast an even stronger year ahead due to the upturn in economic activity in Oman.” The bank’s long-term and short- term foreign currency ratings are maintained at ‘BBB+’ and A2 respectively, with a support rating of 3.

Omantel, Y&R win gold at SIA Omantel’s and Young and Rubicam’s Muscat Festival campaign scored over thousands of submissions from 22 countries to win the gold award in its category at the Summit International Awards (SIA) in the US. “We believe that the higher the customers’ interaction with the brand, the greater its success,” stated Hamdan Moosa Al Harassi, senior manager-CSR and events, Omantel.

18

October 2012

Microsoft at IDOC 2012 As part of its commitment to the oil and gas sector, Microsoft took part in the international digital oilfield conference 2012 (IDOC 2012) held in Muscat on September 24 and 25. Microsoft has introduced its latest technologies and best practices related to the oil and gas industry that would help customers surpass traditional barriers to make better, faster decisions and achieve greater efficiency level.

OMRAN PROVIDES RECORD INTERNSHIPS As many as 19 students majoring in specialist fields such as civil engineering, architectural designing, urban planning, information technology and tourism management did their internship with Omran during the summer break. Omran welcomed the students from a number of recognised Omani colleges and universities including Sultan Qaboos University (SQU), The Higher College of Technology, GUTech and The Middle East College of Information Technology (MECIT). “Developing the youth of Oman is one of Omran’s top priorities and we welcome the opportunity for college and university students to grow personally, academically and professionally with us,” said CEO Eng Wael bin Ahmed Al Lawati. “We have a responsibility to assist the next generation of Omanis to reach their potential. Under the guidance of our experienced and professional mentors, Omran is providing talented students with hands-on knowledge in domestic and international tourism.”

AUTOMOTIVE PARTS MARKET TO GET A FILLIP According to a detailed study on investment opportunities in automotive sector in Oman, conducted by WS Atkins on behalf of Public Authority for Investment Promotion and Export Development (Paiped), several multinational automobile component producers have shown interest in setting up their manufacturing base in Oman, either as a joint venture or as a wholly-owned subsidiary. Speaking at a seminar on investment opportunities in the automotive sector organised by Paiped, Ahmed Hassan Al Dheeb, Undersecretary at the Ministry of Commerce and Industry, said that the government allows 70 per cent foreign ownership in automobile component sector, which can even go to 100 per cent in special cases.

Project graphics workshop In an effort to support and develop Omani youths’ skills in IT, the Information Technology Authority (ITA) with the collaboration of Adrenalin Company organised a boot camp workshop in project graphics recently at the Crown Plaza Hotel. The workshop was aimed at introducing new dimensions to graphic designers in order to assist them to bridge between their academic studies and updates in the industry.

Cancer prevention campaign GE Healthcare launched a global competition on multiple social media platforms – Twitter, Facebook and Sina Weibo – to raise public awareness about cancer prevention. GE Healthcare’s “#GetFit” campaign encourages people from all over the world to share their own health and fitness activities and what they are doing to help reduce their likelihood of developing cancer.


iOffice

8QLILHG&RPPXQLFDWLRQ &ROODERUDWLRQ

,QWHOOLJHQW &RPSXWLQJ

Canada | USA | Oman | India | UAE | Australia

ZZZLWRQFRUSFRP  VDOHV#P\LWRQFRP

communicate collaborate compete


EXECUTIVE MOVEMENTS

Sheikh Saud bin Nasser bin Faleh Al-Thani has been named as the new vice chairman of Nawras. Sheikh AlThani replaces Khalid Ibrahim Al Mahmoud who was recently appointed group chief officer, small and medium businesses unit (SMBU) of Qtel Group. Nawras has also welcomed Mohamed Jassim Al Kuwari, who has been appointed as a temporary board member until the company’s next AGM. Sayyid Amjad bin Mohamed Al-Busaidi, chairman of Nawras, said, “On behalf of the Nawras family, I would like to extend a very warm welcome to both Sheikh Al-Thani and Al Kuwari. They both bring demonstrated

Mohamed Jassim Al Kuwari

Daniel Nordberg has been appointed as the general manager of GAC Oman. Daniel, who was previously regional business controller for the Africa, Russia and Central Asia region, has gained a wide range of experience with GAC at corporate, regional and local levels, over the past 11 years. His in-depth understanding of GAC’s business areas, global exposure and Middle East experience will give him a strong grounding to drive GAC Oman’s business forward. Daniel replaces Patrik Halldén,

20

October 2012

Sheikh Saud bin Nasser bin Faleh Al-Thani

records of success and their wealth of experience will add further strength to our business. The appointments enhance our ties and our fruitful partnership with Qtel as we move full steam ahead with the next stage in the evolution of Nawras.” Sheikh Al-Thani joined Qtel in 1990. He is currently the CEO of Qtel and has served on the Nawras board of directors since 2008. Al Kuwari is currently chief corporate services officer at Qtel. He has been with the company since 2005 undertaking a variety of senior strategic roles that have ensured the company’s continued growth through improved support infrastructure and corporate quality and policy in addition to effective HR practices.

who moves to GAC’s corporate headquarters in Dubai to take over as group vice president for human resources following the retirement of Jan Farnelid, who will take on a consulting role with the Group until the end of the year.

The Qatar Financial Centre (QFC) Authority has recently appointed Shashank Srivastava as its CEO and board member. Commenting on the appointment, HE Yousef Hussain Kamal, chairman of the QFC Authority board and Minister of Economy and Finance, said, “Shashank Srivastava’s appointment as CEO and Board Member recognises the solid progress Doha made while he was acting CEO towards becoming the region’s leading financial centre. The board and I are confident that this progress will continue under his leadership.” Abdulrahman Ahmad Al-Shaibi, managing director of the QFC Authority and member of the QFC Authority board, said, “Shashank Srivastava has played a central role in the formation and implementation of the QFC Authority’s strategy of focusing on the hubs of

Travel City, Al Araimi Travel & Cargo and Travel Point have recently promoted Sunil Prabhakar as the CEO of the Travel Group. With more than 27 years of experience in Oman’s Travel Industry, Prabhakar is a pragmatic and consultative team builder with wide organisational experience under various capacities

asset management, reinsurance and captive insurance. His experience and deep knowledge will be most valuable in increasing business in all these areas and further raising awareness and understanding of the QFC Authority around the world.” Shashank Srivastava said, “I am very grateful to the minister and the board for the confidence they have placed in me. These appointments are a great honour.”

ranging from travel agency and leisure operations, product sourcing and contracting, sales and marketing, advertising (conceptualising, designing and communicating), inbound and outbound tour operations, offline airline GSA operations. He personally maintains a keen interest in IT and its usage to leverage self-potential, maximising the efficiency and effectiveness of the company. In 2008, he took over the reigns as Group general manager of the company from where he continued to achieve one milestone after another and in only four years’ time enhanced the business network from only two branches, to 38 fully operational branches spread across the Sultanate today.


INTHENEWS

MAINTAINING STEADY COURSE IN TURBULENT TIMES World Economic Forum’s Global Competitiveness Index ranks Oman as the 32nd most competitive country in the world, placing it above economic powerhouses such as India, South Africa, Italy and Turkey

W

ith the new centres of economic hope, China, India, Brazil and Russia seeing slowdown, recession in Europe and little growth in the United States, 2012 has proved to be a challenging year for the global economy. However, despite this gloomy backdrop, Oman has kept its position as the 32nd most competitive country in the 2012/13 World Economic Forum’s Global Competitiveness Index, a measure of the economies of 144 countries. This ranking places Oman in the top 25 percentile of the world’s economies and ranks it above economic powerhouses that include India, South Africa, Italy and Turkey. The Public Authority for Investment, Promotion & Export Development (PAIPED) and the Oman-based thinktank International Research Foundation (IRF), which announced details of the 2012/13 World Economic Forum’s Global Competitiveness Index, said this year’s Report is a clear testament to the success of the work being carried out by Omani government institutions in helping raise the Sultanate’s competitiveness and improve the nation’s business environment and above all to the solid economic planning and vision underpinning this. Conducted by the World Economic Forum in partnership with leading academics and a global network of research institutes, the Index calculates its rankings from publicly available data and more than 15,000 business surveys in the 144 economies.

22

October 2012

Senior representatives drawn from across Oman’s private sector gave their input to the Executive Opinion Survey, which provides the basis of the World Economic Forum Report. The survey is carried out by PAIPED and IIR who are part of the World Economic Forum’s network of over 160 Partner Institutes worldwide. Launching the Report, HE Dr Salem bin Nasser Al Ismaily, chairman, PAIPED emphasised the importance of benchmarking Oman’s competitiveness. “Benchmarking our competitive performance is an important exercise and the 2012/13 World Economic Forum Global Competitiveness Index provides government and the private sector with data that can help formulate policy recommendations that will enable Oman to achieve sustainable and longlasting competitive gain,” he said. Noting Oman’s consolidation of its position in the Report, Al Ismaily cautioned against complacency. “Oman maintains its focus on improving policies related to the labour market, education, skills and competition policy,” he said. “At the same time, we must ensure our banking system is providing an adequate supply of credit to support Oman’s thriving enterprise culture.”

Private Sector Perspective Speaking on behalf of the private sector, young Omani FMCG business owner and marketing director for Naranjee Hirjee & Co, Nikhil Sampat,

said, “Oman’s ranking reaffirms its pro-business stance and openness – both of which play a key role in helping us remain an attractive location for business and trade.” S Gopalan, CEO, Reem Batteries & Power Appliances Company remarked, “To be successful, we must continue to focus on improving our macroeconomic environment, removing any unnecessary regulatory barriers faced by the private sector. In addition, we have to work handin-hand with government to ensure policies and regulations support the ability of domestic companies to be competitive and productive on the international stage. It’s only by building such capacity and institutional policies, will we be able to move to the next stage of improving the Sultanate’s competitiveness and achieve sustained higher levels of prosperity. In this regard, we’ve made significant gains”.

Rankings As in previous years, the top 10 remain dominated by a number of European countries: in the overall ranking, Switzerland led the table followed by Singapore, Finland, Sweden, the Netherlands, Germany, the US, the UK, Hong Kong SAR and Japan. From a regional perspective, several countries from the Arab World, including Oman (32nd); Qatar (11th); Saudi Arabia (18th); United Arab Emirates (24th); Kuwait (37th); Bahrain (35th) and Jordan (64th) occupy the upper half of the rankings. 


INTHENEWS

L-R: Jamal Darwiche, Yeshwant Desai, Mohamed Al Fahim, Ahmed Alkhonji, Mohamed Ghanem and Abdullah Al Hinai

SET FOR ACTION Alizz islamic bank launched its RO40mn IPO to offer 400 million shares or 40 per cent of the total share capital at 102bz per share. The subscription period will close on October 21.

T

he Initial Public Offering (IPO) of alizz islamic bank (under formation) is now open for subscription. The IPO for 40 per cent of the share capital comprises 400 million shares and is priced at baisas 102 per share. On completion of the IPO, alizz islamic bank will have a paid up share capital of 100 million rials. The offer will close on October 21. Alizz bank is promoted by Huriah Company, an investment vehicle owned by HH Sayyid As’ad bin Tarik al Said, UAE-based Aabar Investments, Tasameem Real Estate Company and First Energy Oman, which is a whollyowned subsidiary of Bahrain-based First Energy Bank. The promoters have already contributed RO61.2mn, representing 60 per cent of the bank’s share capital at 102bz per share. The IPO is lead managed by bank muscat and has been fully underwritten by leading Omani financial institutions. Announcing the launch of the IPO on

24

October 2012

behalf of Huriah Management, Ahmed Alkhonji said, “We are very proud to be supporting the establishment of Islamic banking in Oman. The large unmet demand for Islamic banking means that alizz islamic bank is uniquely placed to become a market leader for banking products. We are delighted to have Aabar, First Energy Bank and Tasameem as our partners and the bank will benefit immensely from their considerable international experience.” Coinciding with the IPO launch, alizz islamic bank also unveiled its vision to be Oman’s leading Islamic bank that facilitates commerce and development through innovative financial solutions consistent with the principles of Islamic banking. “From a social perspective, the importance of the IPO cannot be underestimated,” said Mohamed Al Fahim, board director of Aabar Investments. “The products and services of alizz islamic bank will help support the banking requirements of people in Oman, within an appropriate cultural context for the first time. This is key to continuing the

remarkable growth and diversification of Oman’s economy.” Chief operating officer Jamal Darwiche said that the bank aims to capture a 20 per cent market share in Oman›s Islamic banking sector over the next five years. “We expect to achieve a 3.5 per cent market share in Oman’s banking sector and a nearly 20 per cent share of the Islamic market by 2017. As per our conservative projections, the bank is expected to make its first profit in the second year of operations. We aim to become Oman’s leading Islamic bank that facilitates commerce and development through innovative financial products consistent with the principles of Islamic banking.” Growth in Islamic banking has outstripped conventional banking growth across GCC markets, and is now valued at around $300bn by asset value. The promoters are confident that Oman will experience similar growth in its new Islamic banking market and that alizz islamic bank is uniquely placed to become a market leader. 


A Soaring Tribute to Excellence


Presenting the most coveted award for Omani women who have scaled the heights of success and contributed towards the development of the Sultanate. $QHYHQLQJRIFHOHEUDWLRQJRXUPHWĂ€QHGLQLQJGHOLJKWVDQGH[KLODUDWLQJ world-class entertainment graces this one of a kind red carpet award FHUHPRQ\WKDWIHOLFLWDWHVWKHVHH[HPSODU\ODGLHV

Strategic Partner

Date : 7 October 2012 L Time : 7pm - 10pm Venue : Crowne Plaza Garden, Muscat

UMS

In Association with

Support Partners

Media Partners

Assessment Partner

2IĂ€FLDO&DOO&HQWUH

Printing Partner

For further information call Ahmed Sayed 99356490 Email: ahmed.sayed@umsoman.com Fidha Saleem 99653581 (PDLOĂ€GKD#XPVRPDQFRP


INTHENEWS

EXPLORING INVESTMENT OPPORTUNITIES The second edition of Oman Investment Forum 2012 will showcase Sultanate as one of the most dynamic destinations for investment opportunities

S

ubsequent to an exceptionally successful maiden edition displaying Oman as an investment destination, the second edition of Oman Investment Forum 2012 will be held between on October 8 and 9 at the Al Bustan Palace - a Ritz-Carlton Hotel Muscat. Presented by MEED Events and their strategic event partner, the Public Authority for Investment Promotion & Export Development (PAIPED), the forum will bring together government representatives, leading industry figures and the international business community on a singular platform to discuss the growth of Oman’s economy. The forum will be an exclusive opportunity to be privy to the latest on Oman’s economy and the updated expenditures for Oman’s major sectors from 2013 to 2015. Government officials will reveal their visions, strategic roadmap and investor incentives along with providing an overview of current and new business opportunities in Oman’s projects market, currently valued at $55bn. Highlights of the event include a keynote address by HE Yahya Said Al Jabri, chairman of the Special Economic Zone (SEZ) at Duqm who will give a strategic overview on the key milestones achieved at Duqm SEZ as well as present on the upcoming infrastructure project opportunities for consultants, contractors and service providers in each of the development phases for Duqm SEZ. Ministerial representatives speaking

28

October 2012

at the event include HE Salim Al Aufi, CEO, Public Authority for Civil Aviation who will present on the latest developments and opportunities for Oman’s regional airports; HE Dr Ali Talib al Hinai, Undersecretary Planning, Ministry of Health, who will deliver an overview of Oman’s healthcare facilities construction master plan and HE Khalifa Bin Mubarak Al Hinai, Ministry Advisor, Ministry of Oil and Gas, who will give exclusive insight on Oman’s multibillion oil & gas project opportunities. His Excellency Mohammed bin Al-Zubair, Adviser to His Majesty for Economic Planning Affairs will be the chief guest for the opening ceremony on October 8, 2012. “This edition of Oman Investment Forum will be a must-attend for those interested in investment prospects in the Sultanate, as it promises to be a unique networking opportunity wherein Oman’s private sector and international investors will exchange their views on best practice strategies for running a successful business,” said Edmund

O’Sullivan, chairman, MEED Events. Other confirmed speakers at the event include Marcos Beluco, country manager-Vale; Wael Al-Lawati, CEO – Omran; Pankaj Khimji, drector- Khimji Ramdas; Qais Saud Al Zakwani, deputy executive director- Authority for Electricity Regulation, Oman; Mohamed Al Maskeri, director general- Knowledge Oasis Muscat; Angus Hindley, research director- MEED Insight and Dr Axel Goehler, honorary consul-honorary consulate of the Hashemite Kingdom of Jordan among others. Spread across two days, the conference will encompass macroeconomic trends and outlook for Oman’s economy as well as upcoming project opportunities across Oman’s tourism and real estate, transport, project funding and industrial ports and free zones on the first day. The next day, the discussions will entail social infrastructure projects including healthcare and education as well as opportunities across Oman’s oil & gas, power & water and industrial sectors. 


PERISCOPE

By Matein Khalid

Overvalued debt and currencies in global markets Sterling, the Aussie dollar, ten US Treasury notes, ten year German Bunds, ten year South Korean notes and two year German notes are all expected to be overvalued

The author is a renowned investment banker based in Dubai

30

October 2012

T

he smoke signals coming out of the central banks will determine the fate of the financial markets. Now that the ECB’s latest unlimited bond purchase plan reduces tail end risk of a Euro break up, sterling’s safe haven bid against the Euro will vanish. This means sterling will depreciate against the Euro and eventually against the dollar, as global central banks reduce their gilt (UK government) debt holdings. The Bank of England’s MPC has also opted for monetary easing, with another ₤50bn quantitative easing in July. Since the Tory-Lib Dem coalition in Downing Street will not abandon austerity as the fundamental pillar of its economic strategy, fiscal tightening will combine with monetary easing to weaken sterling. While the ultra dovish Bernanke Fed will temporarily boost the sterling this autumn, the monetary feud between the ECB and the Bundesbank, Spain’s de facto Catalan/Basque fiscal revolt and the troika’s austerity diktat on Greece will keep the European debt crisis simmering and trigger periodic sterling falls. Britain, after all, is in recession and CPI fell to 2.8 per cent in June. This means there is a zero prospect of a bank rate hike in either 2012 or 2013. The draconian spending cuts in the 2012, the budget unveiled

by Chancellor Osborne and the -2.7 per cent current account balance virtually guarantees a lower sterling. My call? Cable falls from 1.60 to 1.52 in the next six months.

Epic fall in Aussie dollar The money printing sprees by the ECB and the Federal Reserve have boosted the Australian dollar above 1.06 (and gold above $1780) but the economic metrics Down Under now reflect the end of the mining boom. GDP growth could well fall below 3 per cent, the collapse of iron ore prices in August is a shock to Australian exports and BHP Billiton has canceled a $20bn mining project. Canberra does not want or need a super-strong Aussie dollar, the reason the RBA will be forced to ease its policy rate by at least 50 basis points in the next three months. This could well trigger an epic fall in the Aussie dollar to as low as 0.98 as it is simply not priced into the global foreign exchange market. The ECB unlimited bond purchase programme, the German Constitutional Court approval of ESM and the Bernanke Fed’s permadovish monetary policies remove existential tail risk for the Euro and the historic European project. This is the kiss of death for the US Treasury debt market. Uncle Sam’s risk free(?) debt is now the most overvalued asset


class in the world. As safe haven capital flows reverse, the yield on the US Treasury note can well rise to at least 2 per cent in the next three months. Relative to equities, the CRB index, emerging markets debt spreads, housing, inflation and even PPI indices, ten year US Treasury notes are a screaming sell at a 1.65 per cent yield. GCC investors have scrambled into US Treasury debt as a hedge against Euro risk. This trade was profitable as long as US Treasury yields fell to 50 year lows. This trade will now hemorrhaging money if it is not reversed. In fact, I would buy an inverse bond index fund to make money from rising US Treasury bond yields and a steepner UST yield curve, which is hugely bullish for American money centre banks J.P. Morgan, Citigroup and Bank of America. German Bunds are a similar short. The FOMC move is extremely bullish for mortgage REITs listed on the NYSE. I expect the Japanese yen to depreciate as US Treasury bond yields rise and so does JGB spreads/US swap rates. Deflation still haunts the Bank of Japan, which will continue to pump liquidity into the Tokyo yen money market (QE, like Shakespeare’s roses, by any other name, smells such as sweet!). The Japanese yen can fall to 80 – 82 against the dollar and at least 106 against the Euro. The South Korean debt market is another overvalued niche in Asian bonds. South Korean steel exports to China will continue to fall and the won yield curve is far too flat. I expect the ten year South Korean won note to rise at least 30 basis points in the next three months. Another compelling macro trade is to short two year German government notes, which offer a negative yield of 4 basis points. The only reason investors are prepared to sacrifice a return and actually pay 4 basis points over two years for Deutschland AG is because they expect to be paid in Deutschemarks, not Euros. These expectations will be unwound as the ECB, the Reich Chancellery in Berlin and the Constitution Court has basically eliminated Euro kaput risks. I expect the German two year note yield to rise to positive 75 basis points, its level in August 2011. To recapitulate, sterling, the Aussie dollar, ten US Treasury notes, ten year German Bunds, ten year South Korean notes and two year German notes are all overvalued in my global macro crystal ball. The financial markets can and do print money making ideas in real time but the quest for value must determine every investment decision! 


LUXURY

Pascal Mouawad, Co-Guardian, Mouawad shares his vision and plans for the company in a candid interview with Mayank Singh

Strengthening its BRAND PRESENCE Mouawad has seen a generational shift recently with the fourth generation taking over the reins of the business recently. What changes can we expect to see in the business as a result of this shift? Mouawad is a 122-year-old business house which was started way back in 1890 by my great grandfather. He left his native country Lebanon and went to Mexico and the US, where he learnt the craftsmanship of watch making. He returned to Lebanon and his son Fiaz, my grandfather, took over the business. Fiaz decided to expand the business and went to Saudi Arabia,

32

October 2012

and soon became the royal jeweller for the King and Queen. He also got a Royal Decree to operate a business in Saudi Arabia as a foreigner. My father wanted to be a doctor and went to study medicine in Paris, but at the suggestion of his family he went back to Saudi Arabia to help with the business. Over 47 years, as the president of Mouawad, he was instrumental in growing the business from a two store operation to a multinational company spanning 12 countries. He took the business to Switzerland,

expanded into Asia and at one point had 35 stores in Japan. Mouawad also became a big player in the diamond market, acquiring some of the largest diamonds in the world. In 2009 he had a heart surgery and decided to retire by handing over the business to the fourth generation, that is my brother Fred Mouawad and myself. We took over the business in 2010 and it is our responsibility to take the business to the next level. We decided to call ourselves co guardians, as we are two of us and our job is to be gate keepers and to strengthen the brand till the next century.


Ten years ago my father had diversified into the real estate business and so to an extent the business was stagnant. We have decided to create a new generation store concept and have redesigned our stores. Our first flagship store opened in Dubai Mall, UAE around two years back. We opened up our regional office in Dubai and are opening a regional factory there too. We have hired a strong management team in Dubai to help grow our business. In the last year and a half we started expanding the number of our stores; we opened our second new generation store in Beirut. We have opened our flagship store in Jeddah, and are opening in Kuwait, Qatar. Our store in Oman is locating inside the Opera Mall. And later this year we will be opening in Abu Dhabi. As a part of the strategy we decided to move from being a house of brands to a brand house. Historically, we were selling about 20 brands in the Mouawad boutiques but we decided to go mono brand with the Mouawad name and we will be selling only our own brand in our stores, with multiple categories like high jewellery which are masterpieces, one of its kind expensive pieces and the collection boutiques which are more affordable. We have always been an aspirational brand, something that was sold to royalty and very wealthy people, so people looked at us and felt that we may be inaccessible. To change this perception we started advertising collections that were more affordable and available at lower price points. For example, the average price point of the boutique collection would be around $5,000 (RO2,000) and then there are the masterpieces which have a price tag of $1mn to $10mn. We are also known for our object of arts, which is the third category. We are now focussing on diamond classic, the classics and bridal jewellery. Finally, the fifth strand of the mono brand strategy is watches. In 1972 my father started a company called Roberje Geneve, and we still carry that brand, but as a part of our new strategy we are going to carry the Mouawad

The average price point of the boutique collection would be around $5,000 and then there are the masterpieces which have a price tag of $1mn to $10mn watch brand. We are introducing Little Summer, which are watches under the Mouawad name. To sum up, we are capturing multiple price points across categories, moving into a mono brand strategy and want to have a flagship store in each key city in the region. How do you plan to convey Mouawad’s new offering and changes to customers in the region? We are big believers in marketing and branding, as all customers are looking at buying a dream or brand. We have upped our marketing budget and are very active. Mouawad is amongst the top five advertisers in the region and we advertise in magazines in a big way. Lately we have started advertising on TV. Last year we did a TVC campaign on NBC and we are doing product placements in video clips. We are known as an international brand so we dress certain celebrities in Hollywood, do events and sponsorships. Our advertising budget is in the range of $5mn and it has grown considerably compared to where we were. Having gone in for a mono brand strategy, are you going to increase your manufacturing capacities commensurately? We are a fully integrated company with our own office to buy gem stones. Mouawad has done a joint venture with a diamond site holder, so we are becoming partners in a diamond site. We have offices in New York, Antwerp and Bangkok to buy stones; we have our own prototype workshops and a watch factory in Switzerland. Overall, we have a lot of manufacturing

capacity and are not concerned about capacity constraints. Why was the need felt to reinvent the brand? Was there a recognition that somewhere the brand has lost out in the last few years? The brand is very strong, but it had got a bit stagnant due to a lack of marketing activity, but now we are pulling our weight behind the brand. We are investing behind the brand and we no longer want to put our money behind other brands as we have done in the past. The market was slow in 2009-2010, but things are picking up and we are on a major expansion path, opening five stores in the next six months and there are plans to open additional stores next year. Worldwide we have 14 stores and we are looking at adding five stores every year. What makes you confident that as a mono brand you can take on stores that are selling some of the best brands in the world? I am confident that we may perhaps lose some sales in the short term, but we will win in the long term for a number of reasons. First, we do not think that other brands are better than us. We have the know-how and skill sets to make jewellery, design and sell it, so why should we sell other brands? By controlling our distribution we are also controlling our discounts; if you have your own brand you have more margins and this will enable you to advertise more. And by advertising more we will create more demand for our brands. We have had experiences wherein we have built a brand and others have taken it away from us and given it to someone else, so we don’t want to be at someone’s mercy. It’s been 122 years, but it still remains a family owned business, why have you not professionalised the company? Ours has always been a family-run business; it used to be a one man business and now it is a two man business. We are definitely thinking of institutionalising the business and possibly making it public in the years to come, but nothing has been decided as of yet, but it is definitely something to think about. 


It’s meeting time for minds...


Capital Market Authority

IN ASSOCIATION WITH

An

Is Oman future-ready?

Initiative

December

Oman has made tremendous strides forward in economic prosperity and social stability in the recent past. But is it enough? Is there a gap between good intentions and ground realities? Is Oman ready for the journey from ‘good’ to ‘better’? Oman Debate will once again bring together some of the nation’s most influential business leaders and policy-makers to debate what more needs to be done – and what can be done better.

Celebrating Excellence Oman’s top companies in 2011 will be honoured at this illustrious event.

Tim Sebastian, renowned presenter of the BBC’s HARDtalk and The Doha Debates will moderate Oman Debate 2012.

UMS

STRATEGIC PARTNER

SUPPORT PARTNER

www.omandebate.com By invitation only For partnership enquiries contact: AHMED 99356490

OFFICIAL MEDIA


COVERSTORY

A quantum leap Oman’s electricity sector stands out for its regulatory mechanism, organisational structure and clear vision. Mayank Singh reports on the step change that the sector is undergoing

Oman’s electricity (power) and water sector is going through a tectonic shift. A look at a few illustrative figures – In the last 40 odd years Oman’s Main Interconnected System (MIS) has initiated a generation capacity of 3,817 MW (mega watt), while from 2012-14, the country will add another 3,490MW of capacity – almost doubling the country’s electricity production base Electricity consumption per capita was 112 per cent higher in 2011 compared to 2000; out of this 77 per cent of the increase occurred since

2005, when the new structure of the sector was implemented with the passing of the Sector Law. Electricity consumption per account was 63 per cent higher than in 2000, with 87 per cent of the increase occurring between 2005 and 2011 The number of electricity accounts per 1,000 head of population increased from 193 in 2000 to 251 in 2011 – indicating an increase in the rate of new household formation The number of electricity customer accounts in the Sultanate increased by 49,815, or 7.4 per cent from 677,668 in 2010 to 727,483 in 2011. From 2005 to 2011 the number of electricity accounts have increased by 197,332 or 37 per cent Electricity Supply in 2011 reached 18.5 TWh (terra watt per hour), 11.4 per cent higher than in 2010 and 95 per cent higher than in 2005. Gross electricity and desalinated water production increased by 10.4 per cent and 9.4 per cent in 2011, respectively

Qais Saud Al-Zakwani, Deputy Executive Director, Authority for Electricity Regulation

36

October 2012

The structure of electricity demand in Oman is changing as supply to industrial and commercial customers exceeds that of other customer categories. Industrial and commercial customers accounted for 34 per cent of total supply in 2011, up from 23 per cent in 2005

A

growing population, increased per capita income and unchanged subsidised electricity tariffs have contributed to a higher demand for electricity. A part of the increase in intensity may also be explained by higher national and personal incomes which have led to more electricity intensive homes with more air conditioning loads and higher electrical appliance usage. Says Qais Saud Al-Zakwani, deputy executive director, Authority for Electricity Regulation (AER), “There are a number of factors that are leading to a growth of electricity demand in the country and these include the growth of the Sultanate’s economy, which mean a growing demand from various free zones and the increase in large industrial customers. Changes in behavioural patterns are also leading to the consumption of more power by customers per account.”

Structural change The passing of the Sector Law and restructuring of the electricity sector as per the directives of Royal Decree No. 78/2004 has brought about a sea change in the sector’s functioning. The Royal Decree isolated various activities related to the sector and entrusted them to individual companies operating on a commercial basis, as a precursor to the planned privatisation in future. “The Sector Law ensured a clear allocation of responsibility and accountability, for example there are clear procedures for dealing with customer complaints and the authority as the statutory regulator has a


Oman Electricity and Related Water Sector Market Structure

dfdf

Source: AER

responsibility to protect the interests of customers,� says Zakwani. The Royal Decree entrusted the AER with the responsibility to govern the water and electricity sector and all the activities related to it like generation, distribution, transmission, purchase and sale of electricity and water. The

authority assesses the appropriateness of a company and issues them licenses to carry out designated activities in accordance with certain legal and technical standards. Says Navneet Kasbekar, CEO, Al Kamil Power Company, “The power sector is one of the best managed sectors of the economy as it is well regulated and

each of the organisations carry out their roles correctly.� Similarly, The Oman Power and Water Procurement Company (OPWP) has been given the statutory responsibility to forecast electricity demand and set out plans to meet forecast demand while maintaining an agreed standard


COVERSTORY

Ahmed bin Saleh Al Jahdhami, COO, OPWP of system security. OPWP is obliged to publish its forecasts and plans, on an annual basis, for the forthcoming seven-year period. OPWP is also responsible for maintaining contracts for enough committed capacity to meet all the power needs of the country. Says Ahmed bin Saleh Al Jahdhami, chief operating officer, OPWP, “We are the

single procurer of power and related desalinated water. While laisioning with distribution and supply companies, we do demand forecasting, generation planning and decide on the timing and capacity of new power plants required to develop the forecasted demands. Once the suggested plan gets approved by the AER we liaise with the Tender Board and other agencies to implement the project.” All new power projects in the country are developed by private companies on a build, own and operate model (BOO). While the investment for power plants comes from Independent power producers (IPP’s) or independent water and power project (IWPP) companies, OPWP commits to procure the capacity based on guaranteed availability and efficiency criteria for the tenure of the power procurement contract. These contracts are typically for a period of 15 years. OPWP buys power from I(W)PPs and sells it to supply companies at bulk

supply tariffs approved by the AER. OPWP’s forecasts have been very close to the actual demand, which has seen an average growth of 8-10 per cent in recent years. In the summers of 2011 and 2012, the peak demand was forecast to exceed firm contracted capacity through existing power purchase agreements and as such OPWP ensured that this difference was bridged by contracting for temporary diesel generation. Jahdhami adds, “We have never fallen short in fulfilling customer demand. When we plan the power needs of the country, we are obliged to plan for full capacity and this includes reserve margins that need to be maintained at all times.” The power purchased by OPWP is transmitted to the distribution companies by Oman Electricity Transmission Company (OETC). Saif Abdullah Rashid Al Sumry, chairman of the Board of Directors says, “OETC is the backbone of the transportation of power. We sit in the middle of the electricity value chain, between OPWP and distribution companies. We ensure that there is enough redundancy and backup in the system. For example, if a system needs 100MW then we maintain 200MW of capacity, so if line one goes out due to some contingency, then line

Electricity Supply by Company: 2010 & 2011

Source: AER

38

October 2012


COVERSTORY

2 can take care of the demand. The effort is to ensure that customers do not experience a loss of power.” OETC has put in place best-in-class systems and has been benchmarking itself against international standards since 2010. OETC looked after transmission in Northern Oman till now, but a decision has been made to integrate the Salalah system with the MIS and work has begun on this process. Another favourable development helping the stability of the supply is the commencement of the regional grid integration. OETC has done the phase one of the grid integration between Oman and UAE, so that the excess power can flow both ways. Says Sumry, “This is very helpful during peak demand periods especially during the summer months. This became operational in 2012 and we have already established a 220KV line for transmitting upto 400MW of power. All the GCC countries will be linked in various phases.” With Sohar 2, Barka 3 and Sur IPP coming up OETC is gearing up for a step change in the sector by building infrastructure like overhead lines and

associated cables, SCADA lines and better insulation. “Topography is a huge challenge especially due to Oman’s mountainous geographical terrain, but we learn as we go along. Moreover we work with some of the best EPC contractors like BEC, L&T, Galfar, Civilco and National Saudi Company,” says Sumry. Johan Van Kerrebroeck, CEO, SMN Power Holding adds, “The power infrastructure in Oman has developed very well. OPWP and OETC have a clear vision and a well structured approach.”

Saif Abdullah Rashid Al Sumry, Chairman, OETC

Growing customer base There are three distribution companies – Majan Electricity Company, Mazoon Electricity Company and Muscat Electricity Distribution Company (MEDC) that take care of the distribution of electricity to various parts of the Sultanate. Says Ahmed bin Saif Khamis Al-Mazrouy, general manager, Majan Electricity, “We are licensed for two roles: buy electricity and sell it to customers. We have a customer base of 150,000 customers which is growing by 7,000-8,000 each year.” The company covers an area of 50,000 sq kms and is licensed to supply electricity to North Batinah, Barka and Buraimi. Commercial and industrial customers accounted for 50 per cent of Majan Electricity’s total power supply in 2011 supply, compared to just 21 per cent in 2005 and 40 per cent in 2010 – a reflection of the growing industrialisation of its operational area.

Ahmed Said Al Harthy, Senior Manager, RAECO

40

October 2012

Mazoon Electricity Company supplies electricity in Dakiliya,

Sharqiya and South Al Batinah regions. Says Zahir Abdullah Al Abri, general manager, Mazoon Electricity Company, “The company has 280,000 customers and we have been witnessing double digit growth in electricity demand in our licensed areas. In 2012-14, Mazoon Electricity will invest RO200mn in network upgradation to ensure that its infrastructure and services are in line with customer expectations.” MEDC is licensed by AER for the distribution and supply of electricity in the Muscat governorate, covering an authorised area of 3,900 sq kms. The company has unveiled a five year business strategy for the 2012-17 period. The strategy dovetails five key areas – customer service, asset management, HR, HSE and communication. As a part of this strategy MEDC is expanding its customer service outlets. The company opened an outlet in Muscat Grand Mall recently, and there are plans to open more shops in the near future. These outlets will be open till 10pm adding to customer convenience. Says Abdullah bin Said Al Badri, CEO, MEDC, “The company has also introduced pre-paid metres for the first time in the GCC region. These metres will give customers real time feedback on their power


COVERSTORY

that the T&D losses are high but they have come down substantially from 24.6 per cent in 2004 to 13.7 per cent in 2011 and we are aiming to reach 10 per cent in 2014.”

Ahmed Bin Saif Khamis Al-Mazrouy, General Manager, Majan Electricity Company

usage and help in saving electricity.” These metres have passed the trial stage and customers will be given a choice to install such metres once the trial period is over. Applicants for temporary connection can now avail of these type of metres. These metres can be reused at different sites and will come in handy for EPC companies having multiple construction sites. MEDC has also commissioned a remote metre reading initiative. This is being rolled out in 2,000 high consumption metres initially. Self service and bill paying machines for customers are also under consideration. The company has allocated RO155mn for its current three year budget (2012-2014) for reinforcement and expansion of its distribution network to meet rising demand for supply in the governorate of Muscat. According to MEDC’s 2011 annual report, the customer base of the company has been increasing by eight per cent per annum reaching 221,500 customers.

Zakwani, “We set losses targets for distribution and supply licensees in the Main Interconnected System along with an incentive mechanism wherein they are able to retain a portion of the savings from achieving the losses target. This started in 2008 and we set ourselves a benchmark against international standards. We still think

Distribution companies have been playing their part in bringing down distribution losses. In the last four years Majan Electricity’s losses have come down from 18 to 11.9 per cent. Says Mazrouy, “A majority of these losses are commercial losses, while the technical losses are four per cent, far less than the permissible seven per cent.” The company has set itself a target of bringing down commercial losses to seven per cent and technical losses down to 0.5 per cent. Mazoon Electricity has similarly brought down T&D losses from the mid 20s in 2005 to 14 per cent in 2011. As commercial losses are due to faulty metres or people tampering with the metres, these companies have stepped up the supervision and inspection of metres. The other area that distribution are working relentlessly is the Customer Average Interruption Duration Index (CAIDI). This represents the average outage duration that any

T&D losses Transmission and distribution (T&D) losses have been an area of concern for the sector in the past, but AER’s penalties and incentive scheme has brought about significant improvements in this direction. Says

42

October 2012

Zahir Abdullah Al Abri, General Manager, Mazoon Electricity Company


given customer would experience. For instance, in the case of Majan Electricity this figure is 52 minutes per customer per year. “Our CAIDI used to be 200 minutes; we have brought it down substantially and are looking at bringing it down to 10 minutes by strengthening our network and by deploying an asset management system for planned shutdowns,” says Mazrouy. CAIDI for Mazoon Electricity is 65 minutes and it is targeting to bring this down to 60 minutes. Says Abri “We have been sending our people to schools and community groups like Omani Women’s Association to educate them about the need to conserve electricity. The Public Authority for Electricity and Water (PAEW) is undertaking a study with JICA of Japan to come up with a conservation policy and we expect new guidelines to come up soon.” OETC has been lending a hand in reducing losses by increasing the transmission voltage. Says Sumry, “We are trying to increase the transmission voltage from 132MW to 220KW and then to 400 KW, and this will help in bringing down T&D losses as a certain amount of electricity gets wasted while transmitting it over long distances.”

projects for exploring the potential of alternative sources of energy in the Sultanate. Says Ahmed Said Al Harthy, senior manager, Regulatory Compliance and Corporate Services, head of Renewable Energy Team, “RAECO was assigned the responsibility of undertaking pilot projects to explore the potential of solar power and wind energy sources as these are considered to be the most feasible for Oman.” RAECO has formed a renewable energy team to cooperate with the AER. The team is studying the available technology and has zeroed in on some locations that seem to be well suited for setting up alternative energy projects in Oman.

Abdullah Bin Said Al Badri, CEO, MEDC

Alternative Energy

The studies and presentations have shown that there is good potential for solar and wind energy in Oman and there has been a huge interest from investors. “RAECO received 12 investor proposals to set up plants at 33 locations. This shows the huge interest of investors in Oman’s renewable energy space,” says Harthy.

Rural Areas Electricity Company (RAECO) primarily undertakes electricity generation, transmission, distribution, supply and desalination activities in the rural areas of Oman. The company commenced operations on May 1, 2005. RAECO operates power plants for the generation and supply of electricity to the Dhofar, Musandam and Al-Wusta governorates. The power generated from RAECO’s plants in these regions is supplied directly to customers. It also operates desalination plants in Abu Mudhaibi, Sowgrah (Al Wusta), Kumzer (Musandam), Masirah (Al Sharqiyah)and Al Hallaniyat (Dhofar). The desalinated water is sold on bulk to PAEW at an approved water sales tariff.

The initial shortlisting included six plants with 8.6MW installed capacity. Says Harthy, “Implementing such projects will serve different objectives including testing the technology under local climatic conditions like dust, humidity, assessment of fuel savings using renewable technology, assessment of carbon-di-oxide emission reduction as compared to using fossil fuel and studying the impact of using renewable energy technologies on the security of power supply etc.” The solar power plants will be in Al Wusta and Dhofar and some of them are expected to be executed within the coming few months. Two of these projects based in Masirah and Thumrait will be based on wind energy.

RAECO has also been assigned the responsibility of undertaking pilot

AER appointed a consultant to evaluate these proposals from a technical point

of view, and based on its report five projects were shortlisted. RAECO along with AER is developing a power purchase agreement on a BOO model with the shortlisted companies. RAECO is also looking at ways to synchronise these alternative energy plants with its existing diesel power plants. AER’s Renewable Energy Resources Report in May 2008 created a lot of interest but despite the obvious potential of solar energy there seems to have been tardy progress in this direction. Jahdhami explains, “The AER study considered the potential of alternative energy sources in Oman and made clear recommendations for further detailed studies in this regard. PAEW conducted a more detailed feasibility study for developing a large scale solar power plants of upto 200MW in the country. The study has been completed and is under consideration by the government but the decision on it is still pending. Two sites were selected as optimum sites for large scale solar plants and ground monitoring stations were erected, from which data is being monitored by OPWP. Zakwani adds, “The Public Authority for Electricity and Water (PAEW) is working on a renewable


COVERSTORY

per cent more gas in 2011 than in 2010, to support increased electricity and water production of 10.6 per cent and 9.1 per cent, respectively. Says Kerrebroeck, “Once in a while there have been hiccups in gas supply but nothing major that worries us. We do not think that the gas supply is decreasing. Gas was discovered by accident while looking for oil, but now companies are looking directly for gas and with better drilling technology, the prospects for gas look good.” Though the government has made it clear that electricity and desalination plants are its topmost priority and that there will be no shortfall in the availability of gas for such plants, the AER is aware of the opportunity cost of using natural gas to generate electricity and this is a prime driver of its drive to tap renewable energy sources. AER’s 2011 annual report states, “Natural gas is one of the Sultanate’s most important and valuable natural resources that has supported economic development for over 30 years and will continue to do so for the foreseeable future…The gas used to produce 7.2TWh of electricity and 52 million m3 of desalinated water in 2000 accounted for 19.1 per cent of total Oman gas use. By 2011, following increases in electricity and desalinated water production of 180 per cent and 190 per cent, respectively, total gas use had increased by 124 per cent but the electricity sector’s share of gas use was 19.5 per cent, similar to its 2000 share and indicating significant improvement in gas use efficiency.

Johan Van Kerrebroeck, CEO, SMN Power Holding energy policy and we will pursue renewable energy projects based on the policy formulated by the PAEW.” Says Kasbekar, “Alternative energy projects are taking time and the tenders for solar power plants should have come out by now. The cost of solar panels are coming down every two-three years and I am sure that it will become quite competitive in comparison to gas fired plants soon, though for now it is still an expensive option.” In 2008 the cost of per megawatt of power generated by solar power plants was eight times more than the cost of per megawatt generated by conventional gas based plants, but the gap between the two is being bridged fast. However, putting up solar projects has its own set of challenges such as dust formation on solar panels in desert conditions and the high manual or mechanical costs for cleaning and maintaining them.

Bottleneck concerns Most power plants in the country are fuelled by natural gas, and with Oman using gas for industrial clusters apart from its long term LNG commitments there have been some concerns about the availability of gas as a feedstock for electricity plants in the country. The electricity and related water sector consumed 5.3

44

October 2012

The structure of domestic gas use changed considerably between 2000 and 2011. While the electricity sector’s share remained close to 19 per cent, gas use by industrial areas and projects increased from 27.4 per cent in 2000 to 58.1 per cent in 2011. Gas use at oil fields, flared gas and other uses accounted for 22.4 per cent of total gas

use in 2011, significantly less than the 53.5 per cent share in 2000. As many as 97.5 per cent of total electricity production in 2011 was fuelled by natural gas, with diesel generation accounting for just 2.5 per cent of total electricity production. The AER believes that gas used at electricity and water facilities has a high opportunity cost. Aside from the fact that the international price of gas is substantially above the price at which gas is sold for domestic use, any increase in the volume of gas used at electricity and water facilities reduces gas available for industrial areas and projects that may generate significant national economic benefits. The Authority believes it would be sensible (in terms of fuel diversification), timely (as 3,500 MW of new MIS gas fired capacity will be commissioned by 2015) and economically beneficial to initiate the competitive deployment of renewable energy, starting with the large solar project proposed by PAEW. This would reduce the electricity sector’s reliance on natural gas, make more gas available for alternative and possibly higher value added activities, and help Oman prepare to meet future obligations arising from the successor to the Kyoto Protocol to which Oman is a Non-Annex 1 country. The authority’s renewable energy initiatives were in response to His Majesty’s direction to identify ways in which Oman can benefit from its abundant renewable energy resources and reduce its energy deficit. Despite the limited progress made to date, the Authority remains committed to working towards this goal.”

Small is beautiful Neighbouring countries like Saudi Arabia and the UAE have put up large capacity power plants while Oman has usually gone for comparatively smaller plants. A question often raised is why did Oman not set up large power plants in the past? Says Jahdhami, “Firstly, compared to some other countries in the region, the overall installed capacity in Oman has not been as huge. Secondly, when you look at the whole system, sizing


COVERSTORY

and location of new power plants are done through generation expansion modelling and in coordination with the system operator. Proximity to demand centres and system constraints are also considered in addition to economical as well as security of supply aspects. Nadeem Rizwi, CEO, ACWA Power Barka adds, “Oman has been a pioneer in the electricity sector in privatisation. The water and power sector have been managed well and they have done it at their own pace, by optimising their capacity. Too much extra capacity in the system could potentially be a waste and a financial burden.” Moreover, Oman is working on installing plants of upto 2,000MW now. Says Zakwani, “There seems to be over reliance on ensuring enough generation capacity is available on the system. Capacity is not everything; we must focus on investing in a robust network to bring that capacity to the doorsteps of customers, so there needs to be investment in the electricity infrastructure as a whole and that is happening as OETC takes steps to upgrade the transmission network and the distribution and supply licensees are working hard to upgrade their networks.”

The power sector in Oman has always had the ability to attract interest from the best of international companies and financing from local and international banks and ECAs reflecting the strength of the sector. Says Jahdhami, “Even during the global financial crisis we have been able to attract financing of planned projects because the investors’ perception of the risk of Oman is low due to a robust legal framework in the country and high confidence in the independent regulator for the electricity sector. Nadeem Rizwi, CEO, ACWA Power Barka We have been able to achieve financial closure we buy fuel from the government in a challenging environment and and sell electricity and water to the despite the fact that the government government, so the risk is very low. has stopped giving guarantees to Finally, in Oman government bodies IPPs.” OPWP is rated A by two rating respect contracts and things are done agencies, Moody’s and S&P. in a professional and legal way.” Stock market investors and institutions have always exhibited a lot of faith in power companies, reflecting the strength of the sector. In 2004, the then AES Barka offloaded 35 per cent of its stake to the public and the IPO was oversubscribed 17 times, showing the strength and faith of investors. An Initial Public Offering (IPO) of 35 per cent of the shares of Al Rusail Power Company and SMN Barka through the listing of SMN Power Holding on the MSM was floated in SeptemberOctober 2011. The IPO was oversubscribed 1.7 times.

Navneet Kasbekar, CEO Al Kamil Power Company

46

October 2012

Says Kerrebroeck, “In volatile times or uncertain times people invest in products that offer a high level of reliability and we have strong assets and a stable cash flow. Secondly

Future prospects Looking ahead, the electricity sector seems to be poised for promising growth. Says Jahdhami, “We are comfortable with Sur and Barka 2 power plants, but we are not relaxing. We are considering another project in Salalah IPP II, which will have a 200400 MW capacity and have appointed advisors for this. We are also studying the power needs of Duqm and are seeing the best way to cater for the demand.” Sumri adds, “The intent of restructuring the sector has been achieved. But it’s about time to look at a review of the business, as in any large organisational change there may be areas that are overlooked. This does not mean that we are moving in the wrong direction, but just that there is an opportunity to revisit the 2004 initiative and find the areas of improvement.” The electricity sector has come a long way since the promulgation of the Sector Law of 2004, with better efficiencies, transparency and accountability, and the Sultanate is poised to build on this strong foundation now.  


FACE2FACE

New vistas of growth The Sultanate is all set to embrace Islamic finance as the Central Bank of Oman is expected to issue a fullfledged Islamic Banking Regulatory Framework (IBRF) very soon. Khalid Yousaf, Director, Islamic Finance Advisory Services, KPMG Oman, observes that by the end of 2015 Islamic finance assets will achieve roughly 20 per cent of the total banking and insurance assets in the country. He urges Islamic finance practitioners and scholars to invest more in research and innovation to satisfy the increasing market appetite. Excerpts from an interview with Muhammed Nafie

How do you see Islamic finance/ Islamic banking shape up in Oman in the coming years? The landscape for Islamic finance has been carefully and methodically planned in the Sultanate. Whereas a robust legal environment exists already, a comprehensive Islamic Banking Regulatory Framework (IBRF) has been designed by the Central Bank of Oman (CBO) to address the regulatory requirements of full-fledged Islamic banks and Islamic windows; another set of regulatory requirements address

48

October 2012

Takaful and Sukuk by Capital Markets Authority (CMA); and changes to tax regime to ensure that Islamic banking products and services are not treated less favourably have been undertaken by the Secretary General of Taxation (SGT). This architecture of strong pillars gives the Islamic finance industry an enduring foundation which will ensure that the industry will build and flourish in a disciplined manner. The industry however, is not likely to follow the “big bang� explosive growth model. Instead it is anticipated that a steady and

moderate growth will be the hallmark of Islamic finance industry in Oman. In my opinion, the Islamic finance assets will achieve roughly 20 per cent of total banking and Takaful assets by the end of 2015 in the country. The turning point will be when the current conventional banks and insurance companies will start converting into full-fledged Islamic banks and Takaful companies to meet market demand. Subsequently, Islamic assets will take the dominant share in both banking and insurance sectors.


What will be Islamic banks’ potential for contributing to Oman’s economic development in the long run? What kind of business opportunity will it convert into? Islamic banks are likely to attract a huge deposit base from retail, SME, corporate and public sectors, giving them sufficient liquidity to finance the “capital-hungry” projects and sectors. Thus Islamic banks will bridge the gap and provide capital flows necessary for steady growth of Oman’s economy. Oman’s economy with GDP already approaching $70bn has commitments to major infrastructure projects like the new Muscat International Airport, Gas-fired power generation and road network projects costing over $30bn. These projects will require financing and Islamic banks can take the lead in private-public-partnership (PPP) initiatives to fund asset-backed transactions. Further, the markets and public at-large are displaying signs of preference for Islamic products and services and Islamic banks will offer retail, corporate and treasury products to their customer base. Although some of the customers may just be converting from conventional to Islamic, it is likely that a large segment of retail, SME and corporate customer base which has henceforth shunned conventional banking for lack of availability of Islamic products and services will take the role of new contributors to the banking sector. Their addition will provide a significant boost to Oman’s economy through the growth of banking assets, which in turn will boost the money supply through M1 and M2 factors. The CBO is expected to announce soon a full-fledged regulatory framework for Islamic banks in the Sultanate. Since there are different methodologies to follow, according to you what will be the best regulatory regime for Oman? There are currently three regulatory regime models practiced in countries offering Islamic finance products and services. The first being the “purist” model practiced by Sudan and Iran which has no room for conventional banking and the banking laws and regulations address exclusively the

regulatory requirements for Islamic banks and insurance companies only. The second model offers the “parallel” laws and regulations for both conventional and Islamic banking to co-exist, practiced by Malaysia, Indonesia, Pakistan, UAE and now Oman. The third model which is most prevalent across the globe follows the principle of “financial equivalency” whereby Islamic banking products and services are measured on the same legal and regulatory scale as their conventional counterpart. The Western world, Australia, Singapore, Hong Kong, South Korea, most other Islamic or secular countries with majority Muslim population practice this model. Draft Islamic Banking Regulatory Framework (IBRF) is a comprehensive set of rules and regulations for Islamic banks and windows in Oman. Being the latest addition to the list of countries offering Islamic banking, Oman has the advantage of evaluating and comparing similar regulations around the world and cherry-pick the best-practices. The draft IBRF which may still be subject to modification, comprehensively covers the licensing requirements; general obligations & governance; accounting standards & audit reports; supervisory powers & control; capital adequacy; credit risk; market risk; operational risk; liquidity risk and other pertinent operational requirements. Although these rules and regulations still form part of the overall banking laws in Oman, they are unique to Islamic banks and window operations. Their robust and comprehensive structure will not only give a powerful supervisory and

CBO’s draft IBRF requires every full-fledged Islamic bank or Islamic window to have a Sharia’ supervisory board consisting of a minimum of three Sharia’ scholars

monitoring tool in the hands of CBO but also give confidence and trust in the minds of general public. Islamic banks have bucked the global financial meltdown to a large extent as it did not have as much exposure to collateral debt obligations and real estate as conventional banks. Is this a major plus for it? It is true that post global financial meltdown, Islamic banks did not feel the same pain as the major conventional financial institutions around the world. This is largely attributable to the relatively small size of Islamic banks on the global scale as well as the fact that unlike conventional banks which were highly-leveraged (some had assets in excess of 100 times their equity capital), Islamic banks either had zero or very low leverage. As a result, the loan/deposit ratios in Islamic banks were very low compared to conventional banks. Global financial meltdown created severe liquidity problems for conventional banks because their assets lost value suddenly while creditors/depositors demanded payments upon maturity. Consequently, their respective governments had to bail them out financially. Islamic Banks also suffered some pain as their real estate portfolios lost value, but having little or no leverage saved them from the scale of liquidity crunch which crushed their counterparts. Two full-fledged Islamic banks and the Islamic windows of a number of conventional banks are about to start operation in Oman. Will it be difficult for them to find enough experts at their Sharia boards? This is the crux of problems facing Islamic Finance industry across the world, but even more so in Oman. CBO’s draft IBRF requires every full-fledged Islamic bank or Islamic window of a conventional bank to have a Sharia’ supervisory board consisting of a minimum of three Sharia’ scholars. The “Fit & Proper” criteria lay down strict qualifications and experience requirements; each Sharia’ scholar can have a maximum tenor of three years initially with a maximum of two consecutive terms. Also, a Sharia’


FACE2FACE

scholar cannot be a member of more than two Islamic banks or a maximum of four Islamic financial institutions like Takaful, asset manager or fund manager. Islamic finance industry has traditionally faced a paucity of qualified Sharia’ scholars, hence most noted Sharia’ scholars internationally sit on the Sharia’ supervisory boards of dozens of Islamic financial institutions. Islamic finance is new to Oman and the shortage of Sharia’ scholars will be felt even more acutely here than elsewhere. The solution lies not only in easing the regulatory requirements, but also making efforts at national level to train and develop Sharia’ scholars to meet the burgeoning demand of Islamic finance industry. How feasible will it be for conventional banks to offer Islamic banking services? Conventional banks have been quick in announcing the launch of Islamic window operations both for aggressive and defensive reasons. Given the robust demand for Islamic banking products and services, conventional banks want to gain their share in this new market as quickly as possible. At the same time, there are concerns that if conventional banks do not take immediate steps, they may start losing their customers to Islamic banks and windows. The conventional banks, therefore, wish to maintain their overall market share or improve on it. Through the opening of Islamic windows they hope not only to retain their loyal customers, but also attract customers from other banks. It is foreseen that in the early stages of development, competition between Islamic banks and windows will be quite intense and some banks or windows may even become “loss leaders” to capture the target market share. Since conventional banks are likely to lose some customers, if they do not offer Islamic banking services through window operations, their positioning through Islamic window is to counter the threat of losing customers to other competitors. Opening an Islamic window operation therefore is not only a “defensive” strategy but also

50

October 2012

Islamic finance is currently a part of the whole financial system, rather than being a parallel financial system an economic one because it requires less capital while sharing a common cost base with additional business. This strategy, therefore, compares favourably against establishing a fullfledged Islamic banking subsidiary. Given these cost advantages, conventional banks will have the capacity to offer their products and services at lower prices than fullfledged Islamic banks. They are also expected to leverage their existing brand image in the market to address new target Islamic banking customers. What are the major challenges faced by Islamic banks all over the world? Islamic finance is a baby when compared to conventional financial system. Whereas the conventional financial system has been in existence for 300+ years, Islamic finance in its present form has been in existence for just over 30 years. A lack of understanding of its underlying Sharia’ principles by governments, regulators, industry and public at large are the biggest problems facing the industry today. There are also skeptics who question the strict compliance with Sharia’ principles and consider Islamic finance as a wrap around the conventional financial products. The fact remains that being fledgling, the industry has successfully made the existing financial products and services “Sharia’-compliant” but will take some more time to develop and introduce exclusively “Sharia’-based” products and services. Hence, Islamic finance is currently a part of the whole financial system, rather than being a parallel financial system. The challenge for both Islamic finance practitioners and Sharia’ scholars is to continue to invest

in research and innovation to satisfy increasing market appetite. How will Islamic banking be appealing to non-Muslims in Oman? Islamic banking products and services are not targeted at Muslims only. They offer all features of “ethical” banking plus more. Whereas “ethical” banking shuns alcohol, adult entertainment, gambling, environment pollution and weapons of mass destruction, Islamic banking goes a step further in shunning conventional “riba-based” banking and financial services as well. Non-Muslims seeking ethical banking products are therefore attracted to Islamic banking products and services. In Malaysia for instance, 35 per cent end-users of Islamic banking products and services are non-Muslim Chinese population seeking ethical products which meet its financial criteria. Also, due to the nature of Sharia’ technique applied in house, car or other loans, the terms and conditions may be more acceptable to non-Muslims seeking those peculiar terms. In your capacity as the director of Islamic finance advisory services at KPMG, how are you looking to contribute to Islamic banking in Oman during its gestation period? KPMG wants to have a sustainable presence in Oman by being recognized as a quality service provider in the field of Islamic finance. We wish to demonstrate our continuing commitment to the country. This is why resources have been allocated and an Oman-based director has been appointed. Our mission going forward will be to promote the growth of Islamic finance through education, training & development, raising public and industry awareness, providing advisory services to clients in establishing new Islamic banks, Islamic windows, Takaful companies, asset management or Islamic funds in the country. We also aim to assist the government and regulators in bringing changes to legislation and regulations to ensure that Islamic finance products and services are not treated less favourably by the financial system. 


FINANCE

25 YEARS OF enabling dreams

Muscat Finance (SAOG), the pioneer of non-banking financial services in the country, is celebrating its 25th anniversary this year. Visvas Paul D Karra traces the history and performance of this company in this special report

M

uscat Finance (MF) is the pioneer of non-banking financial services sector in the Sultanate having established itself in October 1987, under the leadership of HE Dr. Omar Zawawi. With a small capital base, MF made a humble beginning but today boasts of having constantly created value for its shareholders by excellent performance and high profit growth every year (except 1990, the year of the Gulf crisis). MF has an unmatched record of dividend

52

October 2012

payout right from its inception enriching its shareholders by providing significant returns. As it celebrates its silver jubilee this year, MF officially unveiled a significant change to its corporate identity. The new logo embodies the dynamic spirit of the company that has pioneered the concept of hire purchase, equipment leasing and debt factoring in the Sultanate. A new tag line – ‘Enabling Dreams’ – eloquently summarises the continued promise of

being an experienced and professional financial facilitator, fulfilling the dreams and aspirations of many families and businesses over the past two decades. The new logo is an evolution from the distinctive form of an earlier one and bears testimony to the company’s pioneering status, consistency, dynamism, customer focus, improved products and the innovation that differentiates MF in this industry. The brand promise of ‘Enabling Dreams’


is a simple yet evocative phrase that captures the company’s proactive role in the improvement of lifestyle of local families as well as helping small businesses and enterprises to develop and compete in the business environment of Oman.

leasing product, equipment leasing and slowly introduced debt factoring, working capital etc. As we went on launching new products, some of the efforts which we put in to broad-base our portfolio have now become the industry norm. They get easily copied.”

Milestones

Continuing further, he says, “We were the first to launch overseas debt factoring between Turkey and India. Such pioneering efforts, process changes, system changes and a conservative and strategic approach have enabled us to deliver superior performance year after year both in terms of assets and profits.”

The major shareholders at present are the Omzest Group, Al Yousef Group and Al Araimi Group. Having pioneered vehicle financing, MF has many firsts to its credit, like being the first to venture into consumer durables financing and equipment leasing. The company was also the first in the Middle East to launch debt factoring.

Ajit Engineer, CEO, Muscat Finance

Weathering competition MF has a vision to be the most preferred finance company in the industry by consistently enhancing value to all its stakeholders. It seeks to contribute to the development of the national economy through innovations in financial products and application of new technology. The hallmark of MF operations lies in its foresight, innovation, adaptability to change and its skilled Omani and expatriate human resources who have a combined expertise of more than 850 years of experience. The company’s growth reflects the growth of all the clients whose hopes and aspirations it has helped to realise. It is a matter of great pride that it has more than 80,000 customers who have made the company what it is today. To date, it has disbursed cumulatively over RO422mn to its satisfied clientele. It has a national presence through its wide network of branches at Muscat, Sohar, Barka, Ibri, Salalah, Sur and Nizwa. Presently, the products offered by MF include corporate leasing, debt factoring and working capital finance, auto finance and corporate deposits.

Enviable track record According to Ajit Engineer, CEO, the company has been profitable from its inception and has achieved an enviable track record of uninterrupted dividend

payments year on year. The company has till date paid cumulative dividends of RO30mn, which is more than four times the original capital infusion of RO7.4mn. MF has a capital base of RO20.16mn and a net worth of RO26.84mn as of June 30, 2012. The company has always followed a strategy of remunerating the shareholders partly by way of stock dividend and partly through cash returns. This strategy of plowing back part of the profits, strengthens the capital base, provides comfort to lenders and also helps in increasing the capacity to borrow and lend. In 1992, MF had 15-16 employees with a portfolio of around RO7-8mn. Today the company has a portfolio of RO120mn with more than 115 staff members. In the early days, MF had only one branch in Barka with five more being opened at Sur, Sohar, Ibri, Nizwa and Salalah. Along the way, the company has grown its portfolio with substantial developments and changes in processes, changes in IT systems, changes in experienced staff and introducing new products. Says Engineer, “When I came in 1992, most of the business (around 99 per cent) was from car financing and remaining was the consumer durable financing (household appliances). Then we developed the corporate

Nowadays, all the banks apart from the NBFCs have got into the autoloan business as well, but MF has weathered competition since inception and managed the challenges posed by them. Over the quarter century, the company has gained substantial experience from multiple business cycles which has helped it to face competition from banks and other financial institutions admirably. “Despite the economic slowdown, the Sultanate’s prudent fiscal policies, economy’s robust fundamentals and domestic growth drivers and the regulatory authorities’ continued close vigil ensured that the economy continued on the desired growth path. These measures helped us to cope with the challenges and gain experience from the business cycles,” says Engineer. Today, MF is in an admirable position to capitalise on the opportunities of the coming years which includes the 8th Five-year Plan period where the government is expected to spend almost RO54bn. According to Engineer, a substantial part of government expenditure will be in sectors like oil and gas, health, education and non-oil activities which includes infrastructure projects. This is where a finance company like MF, which has got the required capital, finances, skilled manpower and the systems in place, can capitalise on in the next decade.


FINANCE

Cherishable achievements Muscat Finance is completing 25 years of service to the nation. Your comments on this achievement Muscat Finance is the first finance company incorporated in the Sultanate in 1987 and licensed under the banking laws as a non-banking finance company. The remarkable achievements of MF over the past 25 years are thanks to the vision of HE Dr Omar Zawawi, who is the main founder of MF and the first Chairman of the company. Our present strategy today continues based on the vision laid down by HE Dr Zawawi. On this special occasion of MF celebrating its 25th anniversary, I would like to wish HE Dr Zawawi long life and more prosperity. I also convey my warm wishes to all the shareholders including our major shareholders the Omzest Group, Al Yousef Group and Siraj Investments. My warm wishes also go to our loyal staff, loyal customers and our dealers and bankers who are regarded as our partners in our journey. Over the last 25 years, in the retail segment, we have helped individuals and local families by providing finance to own their dream car and household appliances to improve their quality of life. We have also nurtured many SMEs in achieving their business goals and growing up to be fairly large corporates. These customer relationships are what we cherish as the true achievements of serving the Omani society and economy over the last 25 years. In the coming years, what are the opportunities that your company is looking forward to? I believe MF is poised for more growth given the following factors: • Thanks to the wise policies of His Majesty’s government, Oman is one of the few countries that is expected to weather the storm of economic slowdown expected elsewhere in the world and in fact some readings

54

October 2012

MF has been known to support small entities in their growth. Your opinion on this MF has always nurtured client relationships and many of our clients have grown with us over the quarter century. We have always had a decent share of the market and with trained manpower, branch network and infrastructure, we are well positioned to capitalise on the opportunities in the coming years.

Faisal M Al Yousef, Chairman, Muscat Finance expect Oman to experience the highest economic growth in the GCC in the next two years. • We are exploring possibility of expanding our funding options, which will enable us to provide even more economic solutions to our customers, thereby improving the feasibility and cashflow of their projects. • With the rise in the government expenditure as identified in the 8th Five Year Plan, we believe that SMEs (who are the main customer focus) will benefit substantially from these projects. • Our staff and partners • The Eighth Plan Period envisages substantial expenditures of approximately RO54bn and a majority of this spending would be requiring capital assets. We would be focussing on corporates in the major areas of expenditures of the government through direct marketing and mailers and conducting business events and seminars addressed to mid-corporate SME clients as well as other segments like oil & gas, healthcare, education, infrastructure, etc

We have nurtured many small and medium enterprises (SMEs) in their growing stages by providing them finances for all their needs. And of course we will continue to maintain our relationships with the SMEs but the biggest challenge facing the SMEs is cash flow management and housekeeping. But fortunately, we have a very good management team under the CEO which helps the SME clients to study the project feasibility and establish the right funding option for them. What is your opinion about the performance of the company? If you see our ratios, the returns on equity is one of the highest in the financial services sector. Consistency is our hallmark. Not many companies in the Middle East can boast of a consistent performance year after year with an upward trajectory both in terms of growth and profitability. MF has, till June 30, 2012, generated 14.91 per cent return on average networth, which is high by industry standards. We have been paying dividend from day one and it is 25 years of uninterrupted dividends. We have distributed RO30mn of dividends since our inception. And the original capital injection including the rights issue which was done recently is around RO7.4mn. So roughly four times the capital has been returned as dividends and the current holding is also priced admirably well in the MSM.


Ex. R12345 SPACE name@email.com SEND TO 97777705

FOR BRIGHTER MUSCAT


FINANCE

What is the unique selling proposition of Muscat Finance? We refreshed our logo along with a consumer-centric tagline “Enabling your Dreams” which illustrates our focus on helping our retail, SME and corporate customers to fulfill their dreams of growing into larger and more profitable businesses leading to enhanced prosperity. Thus “Enabling Dreams” is at the centre of all our endeavours and very close to our heart. As deputy chairman, how long have you been with the company? I have been with the company for about three years. Apart from being the vice chairman, I also chair the audit committee of the company. This audit committee is responsible for clearing all the results and whatever goes to the CBO. Essentially there are two committees. One is the executive committee which is chaired by the chairman and the other is the audit committee headed by me. Each has three or four members. So the complaints, the statutory audits, whetting the quarterly results all this is done by the audit committee. Certain things, depending upon the value, require board approval. So we also participate in that. But my committee concentrates more on the back end. How is working with MF different from other companies? I am on the board of other manufacturing companies and they don’t have a regulatory regime, whereas money lending is controlled by the Central Bank of Oman and they track you. And there are a lot of rules and regulations and CBO even has inspections every alternate year and they grade you. This is unique to finance industries like banks and insurance companies. So that is what makes finance companies, banks and insurance companies different. Whereas in manufacturing you don’t have these kinds of regulations although there is competition and challenges like sourcing out raw materials.

56

October 2012

Focus on helping business clients Moreover, introducing new products and making profits and making them work are also challenges. These are some pioneering challenges. Today it is very easy to do business through a product which is already in the market. But the pains and challenges of introducing a new product is a task which we have successfully done. Many of our pioneering efforts have become the industry norms. Some new ones will keep coming, but the challenge is to rise to the occasion and swim even in difficult waters.

V Venkataraman, Dy Chairman, Muscat Finance

What are the challenges you face at MF and how do you overcome them? MF was the first to start lending. But earlier, the dealers themselves were giving credit as far as possible. Quite recently we were the pioneers in factoring which is a very good method of financing, and at the same time, it is good business because factoring loans are self liquidative. So the initial acceptance for factoring was little slow but once it caught on, people understood and saw how easy it operates for both the lender and the borrower. But we do face challenges. Firstly, competition from foreign and local banks as well as the finance companies. Secondly, the ups and downs of the economic cycles. The third is consistency in improving our performance year on year. Because you are plowing back your profits, so capital is enhanced. Then, on an enhanced capital you have to deliver superior returns and this poses a challenge. But we have surpassed all expectations.

Long-standing employee I have been with Muscat Finance for 18 years. I neither had the knowledge of what finance is nor how the corporate world would be. But ever since I joined Muscat Finance, it has been a journey of learning. The best thing that Muscat Finance has taught me is to have the right attitude and to work as a team. This is something that impressed me. With the continued growth at Muscat Finance, I have been given lots of opportunities to work at different levels and in areas with different roles and responsibilities. Thanks to the management of Muscat Finance for placing their belief in me and my potential.

Jamila Aziz Al Balushi, Officer Factoring, Muscat Finance


FINANCE

Tremendous opportunities and potential What is the split between corporate loans and car loans business? Has it changed over the years? Muscat Finance commenced operations in 1987 purely as a car financing company. Over the years, it pioneered and introduced many products to diversify its portfolio and offer a comprehensive range of financial services to our valuable customers. In line with the development of the economy under the wise leadership of His Majesty, the company also made substantial foray into corporate business. Currently our portfolio is equally divided between retail and corporate. The corporate segment primarily consists of leasing equipment. Secondly we are giving working capital financing and factoring. Over the last 25 years, we have nurtured many SMEs to become large corporates and we take pride in the fact that many SMEs started their businesses by taking loans from us. Our corporate and SME businesses are currently doing well and with the pace in the economy picking up, we see a bright future ahead in these segments. There are a number of SME success stories which have happened thanks to MF. What is your opinion about SME financing? MF is of the strong belief that SMEs play an important role and are key contributors to the economic growth of any developing economy. With substantial infrastructure development taking place in the country, there is a tremendous potential to set up new business and expand the existing ones. In view of this, we take pride in having clients who have started businesses with their first loan from MF and have grown over the years.

58

October 2012

assignments across diverse businesses covering all areas of operations. My previous assignment was as vice president and business head with a global leader in banking and financial services and prior to that as CEO of a finance company in India.

Client feedback

Mohann Khanna, Chief Marketing Officer, Muscat Finance

What are your competitive advantages? Some of our competitive advantages include the fact that we are the oldest NBFC in Oman and pioneers in hire purchase, leasing and debt factoring in Oman. Among other advantages, we have a well qualified and trained manpower and a well established and well connected branch network in all the six regions of Oman. Our brand image, a large customer base and our customer loyalty are second to none. How long have you been with MF? I am currently the chief marketing oďŹƒcer of Muscat Finance with overall responsibility for marketing. I have been with Muscat Finance for about three years and my focus is to grow the company by making it more consumer-centric. After my post graduation in marketing and finance from the Indian Institute of Management, Calcutta, I have acquired more than 25 years of experience in financial services including various senior leadership

Dealing with Muscat Finance has been a wonderful experience for more than two decades now. After all these years, we feel like a part of Muscat Finance family. Our relationship with them has been a highly personal and satisfying experience, starting from vehicle leasing to factoring, working capital, hire purchase/ lease etc. Abou Nabil has been one of the first clients of Muscat Finance. Nothing has changed– they are very professional, responsive and focused on building strong relationships. This sort of access and responsivemess distinguish Muscat Finance from other financial institutions. I admit that Muscat Finance has definitely contributed to the success of our business. On behalf of the owner Hassan Darvesh and all at Abou Nabil, I extend my warmest congratulations to Muscat Finance for having completed 25 years in the Sultanate. We wish Muscat Finance continued success as it celebrates this important milestone and we are happy to continue and expand our relationship with Muscat Finance in the years to come.

Syed Faraz Jabbar, Executive Director, Abou Nabil LLC


FINANCE

As one of the founding member of Muscat Finance, how do you feel after completing 25 years? I joined the company in 1987 as manager, administration. We have worked hard to bring up the company to the present level. When MF was established it was just for hire purchase of vehicles then we branched out into other activities like electronic and furniture financing. Since the inception of the company, I have been heading the credit and administration functions of the company.

Human resources important for us number of job vacancies and the people are hunting for those jobs. In government they may have less salary but they look at timings because they finish at 2.30 pm and then they can go and play football. And also the odd weekends are a hindrance. If they feel that they are getting better facilities somewhere else, they will not stay.

Prior to MF, I served 16 years in the Royal Oman Police as a Lt Colonel and was the Dy Commander and Acting Commander of Police Academy, Nizwa; Dy Commander of Purchasing & Supply; Commander of Hafeet Division; Commander of Seeb Division and Dy Director General of Operations. Omanisation is both an opportunity and a challenge. Your comments MF clearly recognises and accepts the fact that human resources is our most important resource and asset. This is reflected in the quality and skills of our staff which always command a premium in the market. The board of directors (BOD) formed an HR committee which reviewed the existing practices and provided directions in enhancing skills, retentions and developing the human resources of the company. In consultation with an external HR consultant, the BOD implemented the following: • Introduced employee grading structure with increase in salary, bonuses and introduction of COLA • Training and development plan for Omani nationals (two batches of 20 Omanis trained for an extensive 10-week programme at the College of Banking & Financial Studies) • Educational scholarship schemes to encourage Omani nationals to acquire a graduate degree and equip them with skills and knowledge to take managerial responsibilities • Covered all Omani nationals under medical insurance scheme • Subsidised car financing scheme and

60

October 2012

What attracts employees to MF? The most important thing is our reputation of being the pioneer in the non-banking financial sector.

Mustafa Malallah Ali, Dy General Manager, Muscat Finance increased the fuel allowance • Interest-free short term loan of a reasonable amount to meet emergency requirements such as health, education, marriage or deaths. The above initiatives and on-going welfare activities for our Omani staff have helped sharpen their skills, and improved their performance as well as ensured retention and loyalty. The company has always adhered to the directives of the regulatory authority and policies of the government to abide by the Omanisation targets set from time to time.

Long-standing employee I come from Samail, a small village in Dakhliya region and I joined Muscat Finance in 1998 as a junior debt collector and today after a few promotions, I have become the team leader responsible for my team’s performance. I am proud to be part of the MFC team and I feel that this is second home. In fact, I think that I was born here itself because of the respect and honour that I have among my colleagues and superiors. For me money is not important but gaining respect among my peers and management is more valuable to me. I have experienced good growth in my personal and professional life thanks to the friendly and supportive nature of the management.

In terms of Omanisation, we are at 78.69 per cent right now. But, from the beginning, we have aimed to keep the percentages higher than what is required by the government. When the ministry of manpower introduced green card, we were among the first to get that card, thanks to our Omanisation percentages. Do you face any challenges like employee turnover? The government has announced a

Waleed Ali Al Saeghi, Team Leader, Debt Collection, Muscat Finance


INTERVIEW

A NEW LEAGUE A special event was held in Muscat recently to mark the Middle East and Africa preview of the all-new Kia Quoris luxury flagship sedan. A report

T

he top management team from Kia Motor Corporation, Seoul, consisting of Jae Yong Chung, director - Middle East and Africa/Asia Pacific operations, Peter Schreyer, Kia’s renowned chief design officer and SoonNam Lee, director - overseas marketing group were in Muscat for this exclusive launch event. They took time out from their busy schedule to speak to OER. Excerpts: Kia is entering a new segment with Quoris. What kind of a design challenge did a car like this present? Schreyer: When you do a big luxury sedan, it is a big challenge for a designer as one needs to put in a lot of efforts. Having worked for a German company for a long time, I have the advantage of having grown up in that kind of a car culture. This enables me and my team to make cars that have the best in class designs and are on the same level as European manufacturers. Are there a certain design elements in the Quoris that you would like to highlight? Schreyer: For me it is not about the details but the overall stance of the car, when you see it on the street and the way it sits. The car exhibits dignity and sportiness and it reflects the kind of car that it is. In all cars that I design, I try to blend the exterior and interior design. The interiors of the Quoris is very good and spacy. When you sit on the back seat, it is luxurious and nice. It is not a typical chauffer driven car but a driver’s car and that’s what I like about it. The Quoris must have presented the

62

October 2012

challenge of maintaining the unity of the car with other Kia brands, while differentiating it at the same time. Have you managed to achieve this balance? Schreyer: Yes we have managed to do this successfully. It is important that the car stands out from the rest of the product range, to show its positioning as a premium luxury sedan, but it also needs to fit into the Kia family. It is the boss of the family but it is also a part of the family and that has been achieved. You have often remarked that there needs to be a balance between what a designer would like to do creatively and what should be done realistically in line with regulatory and safety standards. Does the pressure of being real go against your design aspirations? Schreyer: This is our daily work. A car is not just about design alone or engineering, it’s more about how design and engineering strike the best possible compromise. Creating a car is always about making a lot of compromises for the best possible product. One has to find solutions in various details, because

This is the first time that we have been able to create a family feel for the entire product range, you can see a homogenous, coherent product range from the Picanto upto the Quoris

at the end of the day all of us want to make a great car. Kia Motors has been doing exceptionally well in various markets. Given this scenario why was the need felt for a luxury sedan? Chung: Our 2016 vision for Kia is to become a tier 1 brand and to achieve this we needed a strategic model. If you look at our range we have the Kia Soul, and the Quoris in the premium luxury segment. Our domestic market needed an upmarket premium car and our first objective was to satisfy this demand. Secondly, in the US market we already have the Optima and Cerato and to attract customers we needed to upgrade our offering. Keeping this in mind we introduced the Cadenza first and the next step is the Quoris. That’s the reason why we developed these cars. Customers of a premium luxury sedan are usually driven by a brand name. Are you concerned that there may be few takers for the Kia Quoris at a higher price point? Schreyer: The only way to mitigate this perception is by convincing customers about the product. I remember having the same discussion at Audi, 30 years back. Audi had no value at that time and it was not seen as a premium brand at all. So you need to take that first step with a striking new product. You cannot change the badge or brand, but you can come up with a state-ofthe-art product and perceptions will start to change. Companies like Toyota and Nissan have created luxury brands like Lexus and Infinity while entering the premium


(L-R): Soon Nam Lee, Peter Schreyer and J Y Chung from Kia Motors luxury segment. Why was such a strategy not considered by Kia? Lee: Looking at the investment and benefits that would accrue from such a strategy we decided against it and planned to keep our current brand name. Where are you planning to manufacture the Quoris and what kind of numbers do you expect to sell in the first year? Chung: The Quoris will be manufactured in Korea and we expect to export 3,000 Quoris cars in the first year. This figure excludes the US market as we will start production for the US at the end of 2013. In the Middle East we are looking at selling 1,600 cars in a year or so. How is Kia Motors performance been in 2012 and have you been impacted by the slowdown in Europe? Lee: We have seen a 12 per cent growth till July 2012 compared to the seven months of last year and are on course to better our target of 9.5 per cent growth in 2012. Though Western Europe is going through a slowdown, Kia has seen a 23 per cent growth

in that market compared to 2011. Similarly, we have seen double digit growth in Middle East and Africa. In China we have grown by over 15 per cent. There has been a huge perception change towards Kia. How has Kia’s performance been in emerging markets? Lee: We have been doing very well in South East Asian countries like Indonesia, where we have doubled our volumes, and in Malaysia. Our biggest concern in Asia is that we are not in a position to give our distributors the number of cars that they demand from us. Your new design for Kia with the Tiger nose grill has been a great success. How are you going to improve upon it? Schreyer: We are a very young brand and we are at the beginning of our journey into the future. This is the first time that we have been able to create a family feel for the entire product range. You can see a homogenous, coherent product range from the Picanto upto the Quoris. We have to continue to be proud and confident about what we have achieved. We are still in a learning phase in a positive

manner. We have introduced our front grill and our face, but this is something that we have had only for 4-5 years compared to others who have had a design identity for 100 years. Of course we will surprise our customers but we are building a brand and it takes a long time. A brand needs to give customers a feel of reliability and assurance that the next car is better than their previous car. What was the inspiration for the signature Tiger nose grills that Kia cars flaunt? Schreyer: Though we called it the Tiger nose later on, the tiger was not the inspiration, we were working on a show car in 2007. I was new and was desperately thinking about making a grill that would give a good impression, hold value for the future and be something that could be used for generations of cars. The grill is a very strong identifier, even when you see it from a distance or even without the badge and it just came up during work. It was only later that I used the Tiger metaphor to give our designers a sense of how a three dimensional front should be. 


LEGAL

By James Harbridge

Commercial Agencies Law This article is the first in a series which gives an insightful analysis of Oman’s legal framework with respect to commercial agencies

U

nder Oman’s Law of Commercial Agencies (CAL) – Royal Decree 26/77 (as amended) – a commercial agency is widely defined and includes distributorship and franchise arrangements. Aside from CAL, other pertinent Omani statutes include Ministerial Decision 11/85 (as amended) and also Articles 276-313 inclusive of Chapter 5 of Oman’s Commercial Code (Royal Decree 55/90). For instance, the general statutory limitation period for filing a court case in Oman is ten years from the date when the right of action arose. However, Article 296 of Oman’s Commercial Code states very clearly that: “Actions arising from an agency contract shall not be accepted once three years have lapsed since expiry of the agency.”

Governing law/jurisdiction Article 10 of CAL is quite draconian on foreign entities, and reads as follows: “The following examples, which are not exhaustive, shall be considered an abusive exercise of rights entailing appropriate compensation:

after the end of its original period if the agent can prove that his activity has led to obvious success in the distribution or marketing of the principal’s products and that the non-renewal of he contract is preventing the agent from reaping the benefit expected from his endeavour, unless the principal can prove that the agent has committed a breach of duty justifying the non-renewal; c) The agent’s relinquishment of the agency at an inappropriate time and without reasonable excuse thus causing damage to the principal.” In consequence, an often asked question is whether the parties can agree to dis-apply Omani law in their agency contracts covering Oman. The answer is that yes, this is possible. Article 18 of CAL makes it clear that the Oman Courts have jurisdiction in respect of any dispute between principal and agent “unless the two parties have agreed to resort to arbitration”. We see time and time again in Oman that the courts will decline jurisdiction in respect of any contract where the parties have agreed that an arbitral panel will resolve the dispute. The question that then emerged is whether Omani courts would be willing to allow an arbitral panel to hear an agency dispute, where the aggrieved party was an Omani agent seeking remedies under Omani law.

a) The termination by one party of an agency contract of unlimited duration in the absence of any breach of duty or any act inimical to the agency relationship being committed by the other party;

The Omani case law shows that arbitral clauses will be upheld, even when those arbitral clauses allow for arbitration outside Oman and are coupled with a contractual reference to a non-Omani substantive law. In this way, an agency arrangement can cover Oman without it being governed by Oman law.

b) The principal’s not accepting to renew the term of an agency contract

This is, perhaps, a surprising scenario, given that in the early 1990s an Omani

64

October 2012

Court judgment determined that the entirety of CAL was an Omani public order law, in the sense that its terms are mandatory. The judgment stated categorically: “…the provisions of the law regulate the relationship between the State as sovereign power and the commercial agencies... which relates to the economic public interest in the state which makes it related to public order…” Furthermore; Royal Decree 29/2002 (as amended) – the Omani Court Procedural Law – clearly states at Article 30 that the Omani Courts have jurisdiction to hear claims against nonOmani entities where the contract in question relates to the performance of obligations within Oman. Nonetheless, the most recent case law shows that the Omani Courts have ruled that aggrieved Omani agents are bound by an arbitral clause and a nonOmani governing law, provided both are explicitly stated within the agency contract in question. The Omani Courts have stated that the parties are free to mutually choose both governing law and jurisdiction as these “relate to the respective private interests of the plaintiff and the defendant under the contract of agency.” In short, CAL can be prima facie circumvented by a contractual agreement to a non-Omani substantive law and dispute resolution via arbitration. Conversely, if an agency contract referred to, say, “English Courts and English law”, it is probable that the Oman Courts would override such a provision, and themselves take jurisdiction and apply Omani law, including CAL. 

The author is a Partner at Curtis, Mallet-Prevost, Oman


INSURANCE

SHOOTING in the dark The insurance industry in Oman is marked by a lack of innovation, coordination and cooperation. Everyone is saying the boat is rocking, but there is no concerted effort to steer it clear. A report by Visvas Paul D Karra

T

he Sultanate’s insurance industry is on the cusp of change due to the poor performance brought about by losses in the section of the underwriting business namely the motor claims. Incredibly, most insurance companies seem to be caught in a pack mentality and everyone is doing what the other is doing with slight cultural differences depending upon the company and the management. But the type of business that is available in the market and what these companies are doing is fragmented with a mixture of retail, SME segment and commercial risks.

by any company are being literally wiped out by unabated losses in the motor insurance segment. Effectively it means that insurance companies are bleeding away unless some remedial steps are taken. According to a report by Business Monitor International, Oman will likely remain home to an insurance sector that is small, fragmented and highly competitive. In recent years, retention rates are low, often well below 50 per cent. What is of interest to note is that over the last year or so, motor-related claims have been unacceptably high, notes BMI.

None of the local companies have the benefits of economies neither of scale, nor, with the clear exception of al-Ahlia which is an affiliate of global non-life major RSA Insurance, are any owned by major shareholders that have a clear competence in insurance.

Motor insurance Motor insurance has become a double-edged sword for almost all the insurance companies in the country. One the one hand, motor business seems to be occupying a fat portion of the books – actually more than 40 per cent of the total premiums – but on the other hand, it is gnawing at the bottom lines of the companies mainly due to high number of claims and the steep costs of the claims. Says Taher T Al Heraki, managing director and CEO, of Dhofar Insurance, “We have faced problems with the motor insurance but we tried to improve the way we underwrote the business within the regulatory limits. But the number of claims from minor accidents continued to rise and we are working hard to reduce the expenses by controlling the costs of the claims. But 2012 has been much better than 2011 without a doubt.” However, some costs are beyond the control of the insurers like the costs of the spare parts which is fixed by the car dealers. Another sore point for the

One of the reasons for this is the small size of the market. In India, for example, the population is touching 1.2 billion whereas the whole population of Oman is a little over a three million. The market premium in India excluding life insurance is around $13-14bn with 23 players. But in Oman, the premiums including life, just touch $700mn with the same number of 23 players. Out of this around 40 per cent is in the motor insurance. Industry experts point out the competition is too intense which means that all hands are in the same pie and the pie does not seem to be getting any bigger, atleast in the near future. To top it, the gains that could be accrued

66

October 2012

Taher T Al Heraki, Managing Director and CEO, Dhofar Insurance


innovation and training. If they don’t do that, then the industry retracts. At the same time, the percentages of Omanisation have been increased which requires a lot of investment for salaries, training and development. Then you also talk about building a certain amount of credibility in the local market. And all of that can only be addressed if the market is relatively profitable, which seems uncertain in the present circumstances.

Consolidation of market

A R Srinivasan, General Manager, Falcon Insurance insurers is the regulatory clause which stipulates that all new cars which meet with accidents in the first year have to be given to the dealer for repairs. With the increasing number of road accidents, the legal costs and the blood money have also gone up. “We feel sorry for the increasing number of people who die in road accidents but for us as a company, our main aim is to reduce the claim costs. And I believe that one of the ways to do it is create a system, a data base of insurance claims. A person who has accident claims with one insurer goes to another insurance company the next. But the other company has no history of the earlier claims. So it is important for all concerned parties, which includes the regulator, the police and the insurance companies to come together to stem this leak,” adds Taher.

“Perhaps up to the year 2008, all the companies were having investments or the other income which was hiding these kinds of losses. But it is not possible anymore and people will have to look at the core insurance business to start making money. If you have been following the market, most of the insurers have lost the support of major re-insurers as the market has not reacted to have proper technical rating in terms of premium and deductibles,” adds Srinivasan. It’s one of those situations where if companies continue to make losses, they don’t invest in future growth,

Hardening of rates “Hardening of rates is the only way forward for most companies to tide over losses which arise chiefly due to the motor business,” says A R Srinivasan, general manager, Falcon Insurance. In the post 2008-period with the global financial systems in trouble, the easy availability of capital is not there anymore and the pressure on companies to perform is increasing because the investment of returns as expected earlier is not there.

Gautam Datta, CEO, Al Madina Insurance Co

Due to the intense competition, market experts opine that the sector should see some consolidation to ensure that everyone stays afloat. But actually it has to be seen how it happens. Because, in the last so many years, except in Bahrain, no mergers have happened between local companies. The merger between Royal Sun Alliance and Al Ahlia Insurance is an exception because it was the merger of one international player with a local company. If the regulator comes with new rules to increase the capital base, that could make companies to think of consolidation as opposed to raising capital. “Most companies are deeply entrenched in the traditional methods of operations. There is a need to have vision, foresight and innovation. Most companies are thinking on a need-basis as they get comfortable with what they


INSURANCE

levels about the importance of voluntary insurance was minimal all these days but now the situation is changing. Earlier, it was only the high networth individuals, both expatriates and Omanis who used to buy insurance. But these volumes were very low. In other countries, bancassurance is the main form of insurance where people have life insurance, home insurance and other insurances and then the balance is used for daily expenses. Here it is the reverse. People think of insurance, if anything is left after all expenses.

and motor insurance are two of the fastest growing sectors for us despite strong competition. In the past, AXA had not been very active in these sectors primarily for two reasons: the insurance premium was considered low which would have resulted in our profits being eroded and secondly we were not fully geared up to provide the high quality service expected by our customers. Today, we have successfully addressed both these issues and continue to work harder to keep our service levels at international standards. I personally do not believe in selling any product unless I am confident that we can deliver the best possible solution and service to our customers at the right price.”

“On health insurance, it was surprising to note that many customers are asking Slowly there is a cultural for a very limited cover with very low shift happening within the Deepak Kamath, Area Manager, Oman, Axa Insurance limits, even as low as RO1,000! This is local population. Now as not the right way forward, which in husband and wife begin to are doing,” says Gautam Datta, CEO, Al my opinion should cover the insured work and move to the city, they see Madina Insurance Co. against the unexpected and hence, has other things happen and since both are to be significant. Nowadays, there is working, they are saving for the child’s Even though insurance is all about a lot more awareness among people education, 10 years down the line. Such dealing with uncertainty, the reason on what they need – ranging from personal savings may snowball into a why the insurance industry is risk better healthcare facilities, more bigger thing ten years down the line. So averse is because they want a certain options, higher limits, 24 hours service savings insurance is slowly gaining and amount of certainty on their balance and much more! As AXA is able to along with this, the retail insurance sheet. “And how do you bring about offer all of the above, we have grown also will gain. the certainty, by looking at the risk exposures and how the capital will be New opportunities exposed,” adds Datta. Over the last few years, especially in the Continuing further, Datta says, most last two or three years, companies are looking in the rear-view the medical insurance mirror but we need to look ahead if business is picking up we have to survive in the future. We as more companies have to prepare ourselves in terms of take medical insurance how we need to look at the risks. The for their employees. public also needs to be educated about the issues and importance of voluntary AXA Oman, part of insurance. The industry is not able to AXA Gulf and one retain its capital and what is retained of the largest nonis not put to good use. And you cannot life international put it to good use if you don’t have the insurers in the Middle sufficient skills sets and for this you East, has registered need to train people, which means the phenomenal growth. industry has to invest, and to invest the Primarily, the growth industry needs to make a profit. So it is sectors are health a Catch-22 situation.” and motor insurance. Says, Deepak Kamath, country manager, Raising awareness Niel Brand, Country Manager, Oman Insurance Company Oman, “Health According to Srinivasan, the awareness

68

October 2012


INSURANCE

investors. We will be in a far better position to declare surpluses provided we get the product pricing right and correct underwriting,” adds Datta while saying they will be able start operating from early next year as a takaful company.

Insurance intermediaries

Dr J Retnakumar, CEO, Gargash & Trade Links Insurance Services significantly on our health insurance,” Kamath adds.

Infrastructure business Companies like the UAE-based Oman Insurance Company eye the government infrastructure spending for their growth. Spending by the government on airports, roads, railways, fresh water and wastewater purification plants will continue for many years. “But economically, if you look at the industrial sector as such, the growth is slow. For example, in the manufacturing industry, growth is limited. The government is also concerned about this. Even though the drive for spending is there, the growth is slow. For us, as a company, engineering (infrastructure projects) is where we see the immediate growth,” says Niel Brand, country manager for OIC. One of the reasons why OIC is able to concentrate on the larger businesses is because of the strong capital base provided by its parent company. “We also have strong re-insurance treaties with international RI companies, so we have the capacity,” says Brand. The other growth area for OIC is the facultative business, meaning, if the company underwrites a large project in Oman, the head office will re-insure it with a large re-insurer. However, occasionally the reinsurance

70

October 2012

or coinsurance is done with local companies with a similar, strong rating. This keeps the insurance in the country itself and it is good for Oman.

Takaful Takaful is coming to Oman at long last, after almost 22 years of being present in the GCC and one of the first companies to get into this business will be Al Madina Insurance. It is expected that takaful will add depth in the financial industry and activate the industry. Despite criticism, there are many advantages with takaful. Basically, it is based on certain codes of ethics and concept of Sharia. Takaful requires transparency and this requires a high degree of ethics in terms of disclosures which means there is far more information sharing. Datta believes that there is a segment of population for whom this will be catering to their spiritual requirements. Datta adds that on the whole, the change is positive for the economy and a lot of money will come out as investments. He also disclosed that Al Madina is in the process of getting its takaful license. “Our company was set up with the concept of akaful and we are the only company in the GCC which is converting its full business to Takaful which should provide confidence to

The insurance intermediaries or commonly known as brokers have begun to play a major role in the insurance industry. And approaching the right kind of intermediary is extremely important for anyone who wants to buy insurance. “When life catches you off guard, you are sometimes left with nothing. This is why we say, get proper advice from a professional insurance intermediary regarding the right type of insurance cover, sum insured, values for insurance, limit of indemnity etc and choose the right insurer and the right insurance for your needs,” says Dr J Retnakumar, CEO, Gargash & Trade Links Insurance Services. “Individuals, businesses and organisations are exposed to various physical and financial hazards. A professional insurance intermediary will help you understand this and help advise possible measures to counter these impacts with risk management services. Insurance covers and policies evolve continuously. A professional insurance intermediary can help you in getting access to up to date insurance products and services,” he says further. Gargash & Trade Links is a joint venture between the leading National Chartered Insurance Intermediary, based in Dubai and Tradelinks Group of Oman. Recently the company opened a new branch in Sur and is expected to have a presence in the other major cities of Oman. Retnakumar says his company has plans to open kiosks in the hypermarkets and thus be closer to customers. The company also has plans to develop a special insurance package for SMEs as well as launch a new health product and another one for the low-income expatriates. 


SPOTLIGHT REAL ESTATE

Poised for RECOVERY Housing needs in Oman are projected to grow in leaps and bounds in the coming years

O

man’s housing sector is still in a nascent stage when compared to its GCC peers, despite government taking a series of initiatives to build affordable houses for its citizens. The housing sector needs not only more involvement from large developers, but also availability of ample mortgage finance from lending institutions. With more than half of Oman’s 2.7 million people under the age of 20, housing needs in Oman are projected to grow in leaps and bounds in the coming years. The Ministry of Housing had completed

2,000 low-cost housing units worth RO40 million last year, while another 2,000 low-cost houses will be delivered in 2012, making it possible for those at the bottom of the pyramid to own a house. However, this is not enough for meeting the housing needs of the entire population, which include middle income people. Apart from lack of finance for affordable housing projects, slower approval processes create a challenge for the entire residential market in Oman. Further, limited supply of land for developers who build low cost houses poses another challenge.

Government spending In an effort to boost the affordable housing segment, the government allocates RO80 million every year through different housing assistance programmes. During the fifteen month period (2011 and March 2012), 3,174 housing units with a total cost of RO60 million were offered through the Housing Assistance Programmes, besides providing interest-free affordable housing loans to 400 families with a total cost of RO7 million. The ministry of housing has been supporting and financing affordable programmes for low-income and social security families through social housing programmes.


SPOTLIGHT REAL ESTATE QUICK LOOK Muscat currently has 300,000 sqm of retail space in purpose-built retail centres RO360mn has been allocated for the Housing Assistance Programmes during the current five-year plan. Ministry of Housing completed 2,000 low-cost housing units worth RO40mn in 2011 2,000 low-cost houses will be delivered in 2012 Government allocates RO80mn every year through different housing assistance programmes 3,174 housing units with a total cost of RO60mn were offered during 15 months (2011 and March 2012) Interest-free affordable housing loans to 400 families with a total cost of RO7mn

The Ministry of Housing provides adequate housing for families through the Housing Assistance Programme, the Housing Loan Programme and the Housing Units Project. The Housing Assistance Programme aims at building and restoring houses for families of social security and low-income, while the Housing Loan Programme provides soft, free interest loans not exceeding RO20,000 for Omani families. The number of families benefited from the Social Housing Programmes since its inception and until the end of March 2012, reached 29,600 families, with a total cost exceeding RO475 million. As much as RO360 million has been allocated for the Housing Assistance Programmes during the current fiveyear plan. The ministry aims at helping more than 18,000 families during the current five-year plan period, while soft loans will be offered to more than 2,500 families in the next three to five years.

Shortfall of housing units Despite all these initiatives, there is still a shortage for affordable houses in Oman, as majority of projects developed by private real estate firms are integrated tourism complexes or luxury apartments aimed at upper middle class customers. A study in 2011 showed that Oman has an estimated shortfall of about 15,000 housing units.

72

October 2012

However, the extent of housing shortfall in Oman is the lowest among seven countries in the Middle East and North Africa (Mena) region. These countries have a combined shortfall of more than 3.5 million affordable dwellings, as the real estate industry has failed to provide sufficient housing units to meet the required demand, said Jones Lang LaSalle in a study report. Focusing on seven major markets, the report said that while governments across the region are increasing their attention on the supply of new homes, demand is far out-stripping supply as the region experiences population growth around twice the global average. With a young and fast growing population, the report estimates that there remains a combined shortage of more than 3.5 million affordable dwellings across the major markets within Mena region and that demand will continue to outstrip supply for at least the next five years. The extent of this shortfall varies from more than 1.5 million units in Mena’s most populous Egypt, to just 15,000 units in the Sultanate. The major factors that hinder the supply of affordable housing include high land values which have reduced access to affordable land and high capital costs for associated infrastructure development such as electricity and sewerage.

High-end leisure Several property developers, including major layers like Muriya, Muscat Hills, Alargan and the Wave, have massive development plans at different stages of completion in various locations spread across the country. Muriya, a joint venture between Egypt’s Orascom Development Holding and Oman government’s tourism investment arm Omran, is now developing two major integrated tourism complexes – Jebel Sifah and Salalah Beach. Muriya’s Jebel Sifah and Salalah Beach projects are part of integrated tourism complexes, which allow 100 per cent foreign ownership. Spread over an area of 6.2 million square metres, Jebel Sifah is home to luxurious freehold apartments and villas of diverse architecture and style, four five-star hotels and two marina boutique hotels, up to 200 berth inland marina and marina town, retail venues and restaurants cafes. Likewise, Salalah Beach is spread over an area of 15.6 million square metres with 8.2-km beach front. This integrated tourism complex will comprise of highend luxury freehold apartments and villas, its own shopping and retail outlets, five five-star hotels and two marina boutique hotels, an 36-hole PGA Golf Course, a 200-berth inland marina and a marina town, restaurants and cafes. Muriya recently opened a 100-berth marina at its upscale Jebel Sifah town, which overlooks the turquoise expanse of the Gulf of Oman. The inland facility was unveiled at a special soft-opening gala that also showcased Muriya’s ambitions to position Jebel Sifah as a much sought after lifestyle destination and leisure hotspot on Muscat’s shores. The new marina will serve as a vibrant hub for yachters, recreational boaters and others with a penchant for nautical adventure. Similarly, Alargan International Real Estate Company, the Kuwait-based Real Estate developer, has launched Qurm Hills project. The development, comprises of 109 plots, including road networks, service facilities and landscaped park spaces including a variety of residential units in addition


Maximising results Cluttons utilises its strong building and accounting knowledge to help best plan the operational budget for its buildings

T

he objective for Cluttons Facility and Property Management team is to create a successful working or living environment, where the client can achieve high occupancy and the tenants have a pleasant working or living environment. With Cluttons’ access to the market, not only is it easier to lease, but the company understands tenants’ preferences and concerns and can help in the design process. It has strong residential and commercial leasing teams to achieve the best rentals for your asset and thereby maximise income. Cluttons can assist in taking over a new building from the construction company and carry out the snagging process and

oversee the rectification work. It also provides a full inspection of the property at the end of defect liability period. For on-going management, Cluttons uses a fully automated and integrated accounting, asset list, help desk and planned preventative maintenance software helping to provide ‘at the touch of a button’ accounts and asset health check positions. The company utilises its strong building and accounting knowledge to help best plan the operational budget for its buildings. Cluttons will undertake regular reporting and client meetings maximising transparency for the client. This process takes the stress out of owning

property. Its well-ordered accounts for clients are available for due diligence at sale stage. Depending on the client’s requirements Cluttons can tailor different working models either as managing agent or an integrated FM team. Clutton applies strong on-going supervision of contractors and with up-to-date cost information it is able to minimise outgoings on maintenance contracts, consumables and repairs. Cluttons is experienced in managing the tendering process for soft and hard services contractors. For further information please contact Philip Paul on 24564250 or 99361534


SPOTLIGHT REAL ESTATE Setting new standards Better Homes has an extensive network of operations across the Middle East, India and Asia. It has a unique competitive advantage of a large pool of database of prospective buyers and tenants Within just 18 months of opening their first showroom in QCC, Better Homes has established itself as one of the most preferred real-estate agents in Muscat. Better Homes, founded by Linda Mahoney in Dubai in 1986, has grown by leaps and bounds and currently has a workforce of more than 450. It has franchisees in many countries including all the GCC countries. In Muscat, the head office is operated under Al Khonji Real Estate LLC, the master franchise holder of the Sultanate of Oman. It already has the largest online selection of properties to rent or buy and is supported by the highest number of letting and sale consultant in Oman. Its managing director, Qaboos Al Khonji stated that he has with him many years of experience in the construction industry, which is adding a new dimension to the services it can offer. The Better Homes (Oman) team have grown from strength to strength, under the careful guidance of its general manager Glenn Meek, who is extremely experienced in the field of marketing, sales and customer service. He is very well versed not only in achieving customer expectations but more importantly in exceeding them. He ensures his team of experts operate at an extremely high level. Better Homes Oman now not only creates the market plans for to retail, commercial and office space. The total size of the Qurm Hills project spans 164,900 sq metres with a built up area is 119,000 sq metres, consisting of 109 plus plots. The average size of the plot would be 1000sq metres. In yet another development, Al Khonji Real Estate & Development, which is popularly known as AQAR, is building

74

October 2012

developments, but also assists in the construction and fine tuning designs. Glenn is supported by Karen, the assistant general manager; she brings a wealth of lettings and operating experience to the team, along with her extensive knowledge of the local Muscat market. Karen’s guidance keeps her team at the top of their game. Qaboos Al Khonji also enlighted that Better Homes is very much focused in delivering its vision of being the first “one stop shop” in Oman that delivers what it says on the packet. Glenn is very clear that it is so important when taking a project as the idea of its owner to deliver a finished building that meets everybody’s dream, plans and exceeds the overall expectation. This can only be done with a team that share all these values and are experts in their own areas of expertise. Qaboos Al Khonji and Glenn Meek are proud of the Rimal launch in 2011 which sold 92 per cent of the 254 off plan apartment in just eight weeks. “We are always looking to learn, and you only learn by doing and trying new things,” they said. Under the strong leadership of Al Khonji Real Estate LLC, Better Homes has launched its branded fleet of cars last year, which have proved a great their newest real estate project Rimal. Once completed, Rimal will be one of the largest of its kind in Muscat covering 50,000 sqm comprising 254 apartments, high-end leisure facilities such as two private gyms, a choice of two swimming pools for children and adults, a shopping mall, climate controlled corridors and three levels of underground parking – making Rimal

success. “Over 24 vehicles now and we have just committed to a 12-months high profile campaign of press advertisements,” they informed. Taking advantage of the fact that Oman has shown a high degree of resilience, maintaining a steady rate of growth despite the global financial downturn, Better Homes continues to undertake sales and leasing in both commercial and residential segments. Apart from short term leasing, Better Homes manages properties on behalf of landlords by providing comprehensive services including an entire spectrum of tenant management, maintenance, lease management and legal and financial advices. Qaboos Al Khonji mentioned that the whole marketing team are in place to manage new project from the purchase, design, marketing, interior design and launching to market rental and maintenance.

A true one stop shop Better Homes has an extensive network of operations across the Middle East, India and Asia. It has a unique competitive advantage of a large pool of database of prospective buyers and tenants. It has a highly experienced team of professional consultants who can help buyers indentify properties best suited to their requirements. one of the most convenient places to live in Muscat. The Wave Muscat and Muscat Hills, have announced massive expansion programmes, which are expected to enhance availability of luxury homes. The first phase of Tilal complex, which mainly include the Muscat Grand Mall, residential apartments and office space,


Ideally located in Qurum City Center For all your property needs Residential Sales and Leasing

Commercial Sales and Leasing

Property Management

Land Sales

Project Sales and Marketing

Property Maintenance

For Sale

For Rent

For Rent

Rimal new 1 BR apartment from RO 41,995

Villas from RO 650 / mth

Office Space for RO 7 per square meter on the main road

View the largest selection of properties online at

betterhomes-oman.com enquiries@betterhomes-oman.com

Tel: +968 24470851


SPOTLIGHT REAL ESTATE has already opened for occupation. Developed by Al Madina Real Estate, the project is the largest mixed use development in Oman, combining a central place to live, a large shopping mall offering a host of regional and international brands, professional office space with the latest facilities, a health club, hotel apartments and underground parking – all spanning 250,000 square metres. The second phase will include a five-star business hotel with 300 rooms and forty luxury apartments, while in the third phase, plans are afoot to expand the Muscat Grand Mall.

Increasing over supply Meanwhile, the average rental values of residential accommodation have fallen and a further reduction is foreseen in the coming months in view of increasing over supply. The residential leasing market in the Sultanate has seen a decline in activity over a year. In fact, rising rental values and a shortage of residential properties up until mid-2008 led to significant development activity, which is now resulting in an over-supply of residential rental property, according to a survey conducted by Cluttons.

There is a significant supply of office space that will become available within the capital area soon, which is likely to result in further reductions in rental values. In early 2008, there was limited office availability across the market, which resulted in demand out-stripping supply. There is still considerable demand for office space in Muscat, particularly from smaller (100 to 300 square metres) space occupiers. The Cluttons survey found that Muscat currently has approximately 300,000 square metres of retail space in purpose-built retail centres.

Aqar completes largest single concrete pour in Oman Luxury development will boast 254 apartments, two swimming pools, a shopping mall and three levels of underground parking

A

qar has completed what is believed to be the largest ever single concrete pour in Oman as construction work on its luxury apartment building in the Bousher district of Muscat continues on schedule. One of the most significant achievements of the development to date has been having Al Turki Cement Products LLC pour 9,500 cubic metres of concrete over an area of 50 metres in length as part of the work to enable us to put in the first few floors of the apartment complex.

and sold by Better Homes Oman. The modern new residences are centrally located in Bousher providing easy access to the new Muscat expressway and 23rd July Street and spectacular views of the Bousher sand dunes and Muscat skyline.

Mohamed Al Khonji, Chairman and CEO of Aqar said: “We are delighted to have completed this major element of the construction process and achieved a first in the real estate sector in Oman by completing the largest ever single concrete pour.”

The new development will cover an area of 50,000sqm and is made up of 254 apartments with a range of one, two and three bedroom single story apartments as well as four and five bedroom duplex homes.

This was achieved in one continuous process to ensure the quality of the foundations and was something never before attempted or achieved in the Sultanate on such a large scale.

Rimal, which means sand dune in Arabic, will encourage modern living where residents will enjoy high end leisure facilities such as a private gym, a choice of two swimming pools, a shopping mall, climate controlled corridors and three levels of underground parking making it one of the most convenient places to live in Muscat.

“The development remains on schedule nearly a year after we commenced work on the project and the apartment complex will be completed in the fourth quarter of 2014. We are in regular dialogue with our investors through a regular newsletter and other communications with the enormously successful project, having sold 95 per cent already.”

Aqar says this is a vital part of the ongoing work in ensuring the first slab of the building is in place allowing the developer to start construction on the parking levels and then the main floors of the complex. Other major preparation work for the first two to three floors has also been completed as the construction continues to go ahead on schedule. The Rimal project is a new luxury real estate project aimed at Omani and GCC residents which is being marketed

76

October 2012

The architecture and apartment designs have been very carefully planned to combine a host of modern and traditional features conscious of its local surroundings as well as providing residents with a range of flexible layouts and spaces guaranteed to suit every home owner’s needs whether they are living alone or with their families.

“Building among the sand dunes of Bousher makes this a challenging construction project but one that we have grasped wholeheartedly and are now well underway with the completion of the vital foundation stages to ensure we complete an outstanding residential development.” He explained that the launch of Rimal was the result of extensive market research Aqar identified a gap in the real estate market for quality homes at affordable prices.


A le a d i n g property d evel oper in oman

¹ ¹ ‰ÉZ/¬/ /·Y€/ËÂ/˜/f/¸·Ên/À/z·Y Al Khonji Real Estate & Development LLC www.aqar-om.com


ENVIRONMENT

Thinking planet Rezidor’s ‘Think Planet’ is an ambitious energy-saving initiative which targets 25 per cent energy consumption reduction by 2016

R

ezidor, a member of the Carlson Rezidor Hotel Group, has launched a group-wide energy-saving initiative, ‘Think Planet’ which targets an energy consumption reduction of 25 per cent by the year 2016 in all its hotels across Europe, the Middle East and Africa. Think Planet has been developed and is driven by a specially formed, interdepartmental and cross-regional team at Rezidor – with representatives from tchnical services, operations, purchasing, finance, and responsible business. The programme’s first phase, a company-wide energy audit, has already been carried out and resulted in a general energy action plan listing the group’s top energy priorities. “‘Think Planet’ reinforces Rezidor’s position as one of the industry leaders in terms of sustainability. Many of our hotels have already introduced progressive, environmentally friendly measures – now we are spreading these initiatives into all our properties and focus on key energy-saving investments that will have the biggest impact”, said Inge Huijbrechts, director responsible business at

78

October 2012

Rezidor. “At the same time, we are currently faced with significantly rising energy costs in many countries, along with government carbon taxation. Moving forward, reducing our energy consumption will also contribute to maximising our profits”, added Wolfgang M. Neumann, executive vice president and chief operating officer at Rezidor.

Smart energy In hotel operations, Think Planet focuses on creating smart energy habits – such as switching off lights and equipment, turning heating and cooling to eco-mode, and reporting energy related issues that request attention and preventive maintenance. The basic ‘Think Planet’ tools are simple and low-cost solutions: They comprise daylight and motion sensors for lighting, condensation water recuperation from air-conditioning, and alarms on freezers. Considerable investments are made to completely move to energy efficient lighting in all hotels, install variable extraction systems in the kitchens, and optimise building management systems and heating-, ventilation- and air condition installations. “We focus on energy saving

investments with a return on investment up to seven years”, explained Inge Huijbrechts. The energy saving results are monitored and verified through monthly reports on environmental key performance indicators. A crucial factor of the energy-saving initiative is staff engagement. In line with Rezidor’s unique service philosophy Yes I Can! and with the help of the Think Planet’s mascot, the cute firefly Lumi, all 35,000+ employees participate in the initiative. Dedicated audio- and video trainings inform about smart energy saving habits in housekeeping, kitchen and meeting areas, a monthly “Lumiquiz” and a competition for the most efficient, energy saving hotel of the year ensure continuous employee motivation and involvement. Think Planet is the newest part of Rezidor’s responsible business programme that dates back to the year 1989. The group is currently present in 70 countries where 330+ hotels of the brands Radisson Blu, Park Inn by Radisson and Hotel Missoni are operated, and 100 further properties are under development. 


AUTOMOTIVE

The luxury Italian marque of Maserati Cars has come to Oman through a new state-of-the-art showroom and after sales facility in Muscat. A report

M

aserati, the Italian luxury car brand, hopes to break new ground in Oman with Alfardan Motors, the official importer of Maserati automobiles into Oman commencing operations in the country. Alfardan Motors’ latest venture in Muscat is expected to be instrumental in the ‘re-birth’ of how these exceptional vehicles are brought to market, as well as redefining customer care in the luxury automobile segment. Customers can now look forward to a luxurious experience which begins from the showroom itself, a state-of-the-art bespoke facility which offers approximately 800 square metres on two floors. The first floor can display up to eight cars simultaneously, in addition

80

October 2012

to a reception area, a consultation lounge, and the ‘configuration area’ where prospective customers can select bespoke specifications for their purchase. The second floor provides management offices and meeting rooms, which together make up what has become now the manufacturer’s latest showroom in the Middle East, designed with compliance to the highest international standards and corporate identity designs of Maserati. Alfardan Motors is a subsidiary of the Alfardan Automotive Group, renowned for its leadership within the luxury automobile sector. Based on the success it has enjoyed in its domestic market of Qatar, Alfardan Automotive Group has been awarded the status of official importer of Maserati to the Omani market. Omar Alfardan, president of Alfardan Motors, says, “We are proud of

our long relationship with Maserati. We see Oman as a promising market and we are pleased to extend our operations with Maserati here. We feel confident to deliver on our promise to provide the highest levels of customer care to Maserati owners and enthusiasts, as well as provide the latest models which customers can order to the most exclusive specifications.” Talking about Alfardan Automotive Group, Omar says over the years, the group built an enviable reputation for excellence within both sales and the after sales sectors. This is evidenced by the awards it has received and, particularly relevant here is the recognition for Alfardan Sports Motors in 2008, 2009, 2010 and 2011 by Maserati Regional Office announcing Qatar as the ‘Aftersales Importer of the Year’ for the Middle East and Africa.


Chief guest confirmed His Excellency Mohammed Bin Al-Zubair Advisor to his Majesty for Economic Planning Affairs

PART OF:

STRATEGIC EVENT PARTNER:

OMAN INVESTMENT

The Public Authority for Investment Promotion & Export Development, Oman

FORUM

LUNCH DAY 1 & 2 SPONSOR:

7 - 9 October 2012

Al Bustan Palace, The Ritz-Carlton Muscat, Oman SME FINANCIAL PARTNER:

PROPERTY DEVELOPMENT PARTNER:

HOSPITALITY PARTNER:

CONFERENCE SPONSOR:

INFRASTRUCTURE CLUB / BREAKFAST SPONSOR:

EXHIBITORS:

Key speakers include HE Yahya Said Al Jabri, Chairman, Special Economic Zone at Duqm

HE Dr. Ali Talib Al Hinai, Undersecretary Planning, Ministry of Health

HE M.Aufi, Al Hinai, HEKhalifa Salim Al Ministry CEO, Advisor, Ministry of Oil and Gas Public Authority for Civil Aviation

HE Hamood Sangour Al Zadjali, Executive President, Central Bank Oman

What’s new for 2012? ‡ Find out from government officials on their vision, strategic roadmap and investor incentives and understand how you can profit from the commercial opportunities over the coming years ‡ Contracts worth US$34bn will be awarded between today and 2014 - New projects and contractor opportunities to be announced include:

Latest Additions Amran Al Marhubi, Technical Director, Petroleum Development Oman

Dr. Mohammed Sofayan, CEO, APEX Medical Group

Marcos Beluco, Country Manager, Vale

Mansoor Talib Al Hinai, Chief Operations Officer, Supply, Muscat Electricity Distribution Company Eng. Khurram Shahid, Planning and Project Manager, Majis Industrial Services Jean Denis Bouvier, Chief Executive Officer Petrogas

- Infrastructure project opportunities associated with the Duqm Special Economic Zone - Oman’s regional airports - Ministry of Health’s hospital build programme - Omran’s tourism and hospitality project updates - Vale’s steel pelletizing plant and distribution center - Petroleum Development Oman (PDO)’s multibillion oil & gas projects ‡ Meet over 40+ international companies including investors, contractors, financiers, and legal firms over 12+ hours of networking MEDIA PARTNERS:

For more information visit www.meedconferences.com/oman


AUTOMOTIVE

“This is the kind of experience and expertise that Alfardan Motors brings to the Omani market: a great customer service through a dedicated and knowledgeable sales team, as well as our award-winning after sales service. Our service is best defined by our belief that any sale is only the beginning of what will hopefully be a long and mutually beneficial relationship with the customer,” Omar says. Umberto Cini, regional managing director of Maserati Middle East and India, is extremely pleased to partner Alfardan Motors in Oman while saying, “we are confident that Maserati is now part of a team that will give the Omani market the attention it deserves, its customers the service they expect ,and a partner that will avail itself of the massive opportunity that this market represents.” On the reasons why Maserati is confident that Alfardan Motors will succeed in Oman, Umberto says, “This is because of the relationship that already exists between Maserati and Alfardan Sports Motors in Qatar. The partnership between these two companies is a strong one, with a history of success and achievement. We feel that these gains will also be seen in Oman.” Umberto emphasises that Oman is a

very important market for Maserati. According to him, the Sultanate has shown a remarkable growth potential in the luxury car sector and since Maserati produces cars that are renowned for their exclusivity and performance, it will be able to achieve its objectives in the Omani market with Alfardan Motors, its partner. Demand for the exclusive character and refined dynamism that is so unique to any Maserati product has risen strongly in the region. As 2011 has proven, the charisma and allure indicative to Maserati cars continues to play an important role for consumers. Last year alone the company sold 2,715 examples of its flagship coupe, the Maserati GranTurismo. This represented a staggering 44 per cent of its overall sales returns for 2011, by far the highest. But interest and demand for the Maserati luxury four-door saloon - the Maserati Quattroporte - is also on the rise. With close to 1,800 units sold, the Quattroporte – a magnificent example of Italian passion and tradition – made up 29 per cent of its sales in 2011, with the Quattroporte S leading the way. The versatile and exclusive Maserati GranCabrio, once again proved to be highly desirable across the globe. A total of 1,677 units of the GranCabrio series were sold in 2011. The GranCabrio alone registered a phenomenal 85 per cent of overall sales for the model range. In total, Maserati, even during a worldwide period of financial instability, generated revenues of 588 million Euros, an 6.4 per cent improvement over 2010.

Umberto Cini, Regional Managing Director, Maserati Middle East and India

82

October 2012

Speaking on behalf of Maserati, Umberto commented, “We are pleased to have a partner like Alfardan Motors. And we are confident that Alfardan Motors will provide Maserati owners and enthusiasts alike with the true Maserati experience. My confidence is based on the relationship that already exists between Maserati and Alfardan Automotive Group in Qatar, which encompasses more than 15 years of fruitful co-operation and partnership,

Omar Alfardan, President, Alfardan Motors with a long history of success and achievement. We are certain that this quality will be delivered in Oman and the same success will be demonstrated by Alfardan Motors.” The exclusive showroom comes to life with a team of trained and dedicated sales consultants, who are pleased to welcome Maserati enthusiasts daily from 8.30 am to 1.30 pm, and again from 4 pm to 8 pm, Saturday through Thursday, while presenting the complete range of Maserati models, including the Quattroporte, the limited edition GranCabrio Fendi, the GranCabrio Sport and the GranTurismo, all of which come with the Maserati Service Package for three years or 50,000 kms, which ensures complete peace of mind and an ownership experience that is second to none. Meanwhile, the after sales team will be available to provide their technical assistance and support from within a fully-equipped workshop in the proximity of the main showroom, from 8 am to 1.30 pm and 2.30 pm to 5 pm Saturday through Wednesday, and from 8 am to 1 pm on Thursday. The after sales facility is equipped with two working bays and all required parts and accessories for Maserati models within a total servicing solution which can deal with any maintenance and repair requirements. 


We now accompany you to Greater Heights

We promise to keep you company on board Oman Air with our exclusive coverage of business, lifestyle and entertainment news. Our e-edition of information, news, interviews, expert opinions, fashion trends and beauty insights is now available at your fingertips on the Oman Air

*E-magazines will be available for passengers travelling on A330 long haul sectors.

United Press & Publishing LLC P.O. Box 3305, Ruwi, PC 113, Muscat, Sultanate of Oman. Tel: 24700896, Fax: 24707939, Email: contact@umsoman.com www.umsoman.com

UMS

In-Flight Entertainment System*.


AUTO NEWS

DHOFAR AUTOMOTIVE ANNOUNCES FINAL WINNER OF CHRYSLER 200 Dhofar Automotive has announced the winner of the third and final Chrysler 200 as their Ramadan promotion drew to a close. Mohammed Abdul Aziz was declared winner of the last Blue Box Raffle. “I could not believe that my dream had come true when I won the Chrysler 200 which is a perfect fit to my requirements,” said Mohammed Abdul Aziz, expressing his surprise and

excitement on winning the third Chrysler 200. The Blue Box offer from Dhofar Automotive was a test-drive and purchase initiative for customers throughout the holy month of Ramadan. Anyone test driving a Chrysler 200 or purchasing any vehicle in the Chrysler Group stable got an automatic entry into the Blue Box Raffle which makes them win one of three new Chrysler 200 vehicles.

DYNAMIC AUDI RS 5 CABRIOLET The Audi RS 5 Cabriolet will be launched in the Middle East in the second half of 2013. The four-seat convertible with a cloth soft top entices with a unique combination of elegance and power. Its 4.2 FSI, a high-revving naturally aspirated V8 engine, outputs 450 hp. It accelerates the high-performance sports car from zero to 100 km/h in 4.9 seconds. In the RS 5 Cabriolet, Audi dynamics takes on an especially

FUSO'S FREE SERVICE CAMPAIGN Zubair Enterprises hosted a highly successful Open Day for its customers in Dakhliya who benefited from a free vehicle inspection, oil change and also received technical advice to help them optimise the performance of their vehicle. These services were delivered by a team of professional FUSO technicians at the Nizwa and Karsha service premises between September

9 and September 11 as part of the Fuso 3S campaign. “In accordance with the FUSO business philosophy, these events are important to maintain a regular dialogue and open relationship with our customers and to ensure that they are able to maximise the benefits they receive from their vehicles,” said Mark Tomlinson, general manager of Mitsubishi FUSO.

RENAULT LAUNCHES LOYALTY PROGRAMME

Suhail Bahwan Automobiles launched their highly-anticipated Loyalty Programme recently at the Renault Showroom in Qurum. Renault Oman seeks to provide their most valued and desired customers with a unique loyalty programme that goes far beyond providing exclusive privileges and services that match international standards. The loyalty programme

84

October 2012

beautiful form in the car’s flowing side profile with perfectly balanced proportions and sharp details. Matt aluminum elements, large air intakes embedded in the distinctively shaped front apron, wedge-shaped headlights with wave-light lower edges, elegant LED light strips at the redesigned rear bumper and a lightweight textile roof give the new Audi RS 5 Cabriolet a powerful and elegant look.

rewards members with motoring perks and privileges. Members can enjoy special discount on car services and parts and avail discounted Rent-A-Car services. Members can also avail of priority service through prior appointment, enjoy low interest rates, in-house financing, and better trade-in value. They also get rewarded on referring customers to Renault.


THE ALL NEW INFINITI JX Suhail Bahwan Automobiles (SBA) has officially launched the Infiniti JX at its showroom, recently. The launch ceremony was attended by Juergen Schmitz, general manager, Infiniti business unit, Middle East; Badreiddine Mansouri, Infiniti business manager, Infiniti Middle East; Sheikh Ahmed Bahwan, chairman, Suhail Bahwan Automobiles Group and Divyendu Kumar, managing director of Suhail Bahwan Automobiles.

“The all-new Infiniti JX has been innovatively designed to deliver comfort, safety, versatility to make it a family-friendly vehicle by day, and a stylishly iconic car by night,” said Juergen Schmitz. “With stand-out compact looks, class-leading driving dynamics and an interior design offering comfort, convenience and space, the Infiniti JX is a step ahead of its predecessor – Infiniti QX.”

GEELY'S EXPORTS SURGE IN H1 In the first half of 2012, Geely Automobile has enjoyed a 4.2 per cent growth in its total sales volume. Geely has delivered excellent performance as its exports had amounted to 40,000 during the period, up 199 per cent over year-ago. In the first seven months, the proportion of exports in its total sales volume increased from 6 per cent last year to 20 per cent. “This should be partly at-

tributed to the improvement of our overall product competitiveness,” said Zhang Lin, vice president of Zhejiang Geely Holding Group. According to him, the Emgrand EC7, which earned four-star rating in an E-NCAP crash test in 2011, has become the company’s number one export model with its June sales in overseas markets hitting 13,946 units, up 69 per cent over year-ago.

918 SPYDER TURNS IN BEST TIME Recently, in test drives on the “Nürburgring-Nordschleife”, a Porsche 918 Spyder prototype turned in a remarkable best time of just 07:14 minutes for the 20.6 km long circuit. One year before its production launch, the plug-in hybrid super sports car from Porsche AG is already proving its superlative dynamic

performance potential – far surpassing all expectations placed in it. Dr Frank Walliser, overall project leader for the 918 Spyder said, “By turning in a fabulous time of 07:14 minutes, the 918 Spyder prototype has already fully confirmed the viability of its future concept after just a few months on the road.”

LUXGEN COMES TO OMAN The automotive division of Mohsin Haider Darwish has launched an entirely new range of SUVs & MPVs in Oman from LUXGEN Motor Co, Taiwan. Launched from a totally new facility in Azaiba, the range comprises the LUXGEN7 SUV and the LUXGEN7 MPV. Free from traditional thinking, the all new concept of an “intelligent vehicle” from LUXGEN has set new parameters in the automotive industry. LUXGEN upholds a spirit that transcends expectations by

providing customers with utmost privilege and gratification. The powerful intelligent system of LUXGEN provides unparalleled level of convenience, functionality, and safety protection by incorporating human-centric designs and advanced technology. The LUXGEN brand name emerges from two prime elements – ‘Luxury x Genius.’ Luxury is referring to details that transcend expectations and a spirit of service, providing people with an all-new experience of privilege.

WORLD'S MOST REFINED LUXURY SUV Land Rover has announced the launch of the all-new Range Rover, the world’s most refined and capable SUV. The fourth generation of the iconic Range Rover line, the new model has been developed from the ground up to provide the ultimate luxury SUV, following the innovative spirit of the original design from over 40 years ago. The world’s first SUV with a lightweight all-aluminium body, the new Range Rover takes the capabilities

of the marque’s flagship to a new level, with even greater luxury and refinement, enhanced performance and handling on all terrains, and significant advances in sustainability. “Launching the all-new Range Rover represents a major milestone for Land Rover, being the first exciting output from an unprecedented investment in premium vehicle technologies,” said John Edwards, Land Rover global brand director.


BUSINESS BRIEFS BILLBOARD

Gargash expands to Sur

omanoil opnes five filling stations in 2012

Gargash & Trade Links Insurance Services has opened its new branch in Sur. In a short span of two years of operation, the insurance intermediary company has established itself in Oman and is expanding to other parts of the country. “We have had a clear objective of expanding to other parts of the country such as Sur, Salalah and Sohar,” said Dr J Retnakumar CEO of Gargash & Trade Links. “We are happy to note that we are now all set to start operations in Sur. We see tremendous potential in Sur. Further, we have plans to develop a special insurance package for SMEs as well as in health sector”. Gargash and Trade Links Insurance Services (GTLS) offers professional insurance intermediary services, making it one stop shop for corporate, SMEs and individuals.

Oman Oil Marketing Company (omanoil) has opened five new filling stations and nine ahlain convenience stores across the Sultanate in 2012. Since the beginning of the year, omanoil has opened a filling station in Shinas in the Governorate of Al Batinah North which was followed by a filling station in Hajj in the Governorate of Al Wusta. New filling stations opened in Mahdha in the Governorate of Al Buraimi and Al Salaam Street and Al Dahareez in the Governorate of Dhofar, which are complemented by ahlain convenience stores. Another two convenience stores opened their doors to customers in Samayil in the Governorate of Al Dakhiliyah and Burj Al Sahwa, adding to the four stores that were introduced earlier this year. omanoil has also opened a car wash facility at the Tareef filling station in Sohar.

KR to support Go-karting champions

Shangri-La’s opens new restaurants Shangri-La’s Barr Al Jissah Resort and Spa has opened two new concept restaurants, Fairouz and Asia. Located at the Al Mazaar souk within the 124-acre resort complex, the restaurants offer distinctive and authentic cuisine prepared by experienced chefs. Legendary Lebanese singer Fairouz, whose singing prowess and songs have been embraced across generations, inspired the name of the restaurant. Very much like the singer, the restaurant is elegant and understated, making it perfect for intimate dining and entertainment. Guests can look forward to authentic Lebanese cuisine that includes a wide variety of hot and cold meze, grills and pastries. Located beside Fairouz, Asia restaurant takes guests on a culinary exploration of east and south-west Asia. Prepared in four glass-enclosed show kitchens is distinctive cuisine from China, Japan, Thailand, Malaysia and Vietnam.

86

October 2012

Khimji Ramdas Group will be sponsoring the country’s current Go-Karting champions Sanad Al Rawahi and Abdullah Al Rawahi who will participate in FIA/CIK Under-18 World Championship. The local champions who are brothers recently did their country proud by winning the junior and senior titles respectively in the Go-Karting competition held in the UAE. The brothers are confident that victory will repeat itself when they participate in the FIA/CIK U-18 World Championship. “We at Khimji Ramdas take immense pride in sponsoring the Al Rawahi brothers as they represent the Sultanate in prestigious Go-Karting competitions,” said Hritik Khimji, director, Khimji Ramadas. “The team’s victory at both the junior and senior levels is an indication of their promising prospects in Fia/CIK Under-18 World Championship.”


Endo lights come to Oman Endo Corporation, a pioneer in the LED lighting solution for the residential and professional lighting sector, has signed an agency distribution agreement with Al Hassan Electricals to distribute its lighting products in Oman. Endo Corporation plans to service Oman’s high-end market with its latest LED (light-emitting diode) lights, which are 1.5 times brighter than standard modules and uses less energy. This was announced by Endo officials during a seminar event organised jointly with their sole Oman distributor, Al Hassan Electricals, at the Intercontinental Hotel.

Omantel, Y&R win gold at SIA Omantel’s and Young and Rubicam’s Muscat Festival campaign scored over thousands of submissions from 22 countries to win the gold award in its category at the Summit International Awards (SIA) in the US. “We believe that the higher the customers’ interaction with the brand, the greater its success,” stated Hamdan Moosa Al Harassi, senior managerCSR and events, Omantel. He went on to describe how the contemporary design, attractive product displays and innovative customer engagement ideas at the Omantel pavilion made it the center of attention at Muscat Festival, attracting thousands of visitors. The continuous entertainment and events were a highlight at the festival and the Flashmob sequence on weekends at both festival venues got the audience cheering at every performance.

City Centres donate 10,500 items to Dar Al Atta Together, Muscat City Centre and Qurum City Centre celebrated the success of the annual ‘Make a Difference this Ramadan’ collection drive by Majid al Futtaim Properties, which ran through Ramadan and Eid with 10,500 useful items being donated to a local charity. The ‘Make a Difference this Ramadan’ campaign encouraged residents in the community to donate nonperishable food, reading glasses, books and mobile phones. In addition, a large quantity of other beneficial items such as clothes, shoes, toys and watches were collected. All donations will be supplied to the non-profit organisation Dar Al Atta Association, which will ultimately distribute them to disadvantaged families and individuals across the Sultanate. Commenting on the success of this year’s outstanding total, senior mall manager, Muscat City Centre, Husam Al Mandhari said, “The charitable response from visitors and locals in Muscat and Qurum has been overwhelming, reflecting the true spirit of the holy month.”

Pizza Hut introduces Cone Crust Pizza Pizza Hut’s brand new Cone Crust Pizza offers a surprising treat as the normal crust is replaced by two mouth-watering varieties of flavoursome cones. Your taste buds will be taken on a delightful gastronomic journey as you bite into the indulgent cream cheese and the delicious honey mustard chicken variants. If choosing between the two varieties is turning out to be a tough decision then you could go in for a combination of the two varieties mentioned above. “We want our customers to enjoy their pizza from the first bite till the last,” says Vivek Pande, CEO, Khimji Ramdas Lifestyle Group. “Hence we are offering the pizza lovers a chance to relish the parmesan encrusted cones filled with Philadelphia cream cheese and the sweet and tangy delight in the form of honey mustard chicken strips.” The promotion started in September will go on until the stock lasts.

Bank Sohar prepares for Al Mumayaz Draws Attractive cash bonanza awaits customers as Bank Sohar prepares to conduct its quarterly draws which gives the customers the opportunity to win RO5,000 each from every branch and the grand prize draw of RO50,000. Since the launch of Al Mumayaz Savings Scheme 2012, over 130 lucky winners have won in the RO5,000 daily draws. Further, 52 winners of the quarterly guaranteed branch draws have walked away with RO5,000 each in March and June, while two quarterly grand prize winners have won RO50,000 in March and June respectively. In addition, the exclusive prize draw winner for June added RO50,000 to his wealth. The cash prizes have changed the lives of the winners and helped them realise their dreams.


MARKET WATCH

Wearing teardrops of love Mouawad has recently introduced Larme D’Amour, a new boutique jewellery collection, across all of its stores in the Middle East. Paying homage to the romantic tears of love, Larme D’Amour is a sophisticated and colourful line of teardrop-shaped pieces realised in 18K white gold, sapphires and diamonds. “Entirely designed and realised by Mouawad’s talented jewellery masters, Larme D’Amour is the youngest addition to our repertoire,” commented Fred Mouawad, fourth generation co-guardian of the family business. “Taking inspiration from sincere and romantic teardrops of love, Larme D’Amour brings a delightful motif and exquisite permanence to those memorable moments in time when love transforms and emotion flows”. The new collection includes bracelets, earrings, pendants and rings all handcrafted in 18K white gold and set with white and black diamonds, and pink, orange and blue sapphires.

Ongoing legend Tazio Nuvolari was the greatest race driver of all time, even quoted by Dr Ferdinand Porsche as, “The greatest driver of the past, the present, and the future”. Like his legend, so is his tribute by Eberhard& Co to create a chronograph collection that lives up to his name. Eberhard& Co celebrate the 120th anniversary of his birth by presenting its brand new model, the TazioNuvolari Data. And so the legend lives on. Like the deadly Black Widow spider, the TazioNuvolari Data chronograph sports a killer black and red look to portray dominance and elegance, all in one. The 43mm polished steel casing features a black dial with perlée finish and has two small counters at positions 12 and 6 o’clock, for hours and minutes respectively. It is also the first

Enhancing the printing experience

TazioNuvolari collection to bear the

Canon Middle East has launched four compact All-In-One PIXMA

the red details on its

printers which feature comprehensive new software offerings designed to enhance the printing experience. The new PIXMA MP230, MG2250, MG3250 and MG4250 are optimised for printing documents from the internet and photo lab quality images at home. The printers are the first PIXMA models to include, as standard, My Image Garden, a one-stop platform that combines all software currently available for Canon PIXMA printers into a single, easy-to-use interface. The intuitive software also includes a range of features, such as Automatic Suggestion, Automatic Layout and Face Recognition. The printers are compatible with Print Your Days, that has been designed to make it easy to send and print photos directly from Facebook to a Canon PIXMA printer.

88

October 2012

date, to date. Like its driver, dial give it that daring, sporty and sleek look. Even the glowing Arabic numerals, the central second hand, the small hands of the counters and the driver’s initials “TN” inside the white carapace are all red.


GIZMOS

Larger than life experience Samsung Electronics recently launched its 75-inch ES9000 LED Smart TV in Oman. The best-in-class ES9000 meets the rising market demand for 60-inch and larger televisions, and delivers a unique design concept with a beautiful rose-gold-coloured finish. As part of the extra-large-screen premium TV lineup, the introduction of the ES9000 – the ultimate TV – positions Samsung to be the global TV market leader for the seventh consecutive year. “When consumers enter the premium TV market, they should not have to make any compromises when it comes to quality, functionality, features and sophisticated design,” said Vinod Nair, general manager, TV division at Samsung Gulf Electronics. “The ES9000 was designed with these high expectations in mind – making it simply beyond comparison.”

Power-enhanced K series notebooks ASUS brings its K Series notebooks, a premium but highly affordable range to the region. With a classy aluminum finish, multiple colour schemes and screen sizes, ASUS aims to bring the latest design, components and ASUS technologies to a broader user audience. The ASUS K series is more than looks alone – the thin and light K series is powered by new third generation Intel® Core™ processors and NVIDIA® GeForce® 600 series graphics giving it faster computing and smoother graphics for improved gaming and multimedia playback. The notebook comes with ASUS experience-enhancing technologies such as the exclusive SonicMaster Lite audio and IceCool technology that lowers

Latest PureView camera innovation Nokia has recently launched the first in its Windows Phone 8 range- the Nokia Lumia 920 and the Nokia Lumia 820. The Nokia Lumia 920 is the flagship Windows Phone 8 smartphone, including the latest advances in Nokia PureView imaging innovation. Using advanced floating lens technology, the camera in the Nokia Lumia 920 is able to take in five times more light than competing smartphones without using flash, making it possible to capture clear, bright pictures and video indoors at night. The Nokia Lumia 920 also comes with Nokia City Lens, the latest addition to the Nokia location suite. The Nokia Lumia 820 is a stylish, mid-range smartphone that delivers high-end performance in a compact package.

the palm rest temperature to increase typing comfort.


MANAGEMENT

SIMPA Energy Consultancy and biz-group have partnered to bring to Oman ‘Multipliers’, a novel management concept drawn from Liz Wiseman and Greg McKeown’s global bestseller. Delivered in a series of group workshops with executive coaching and various assessment tools, ‘Multipliers’ teaches a set of behaviours that can significantly increase a leader’s ability to identify, nurture and grow the potential of others. A report by Muhammed Nafie

T

he real test of a leader’s ability lies in leveraging the full potential of the workforce. Across industries and organisations, leadership is a critical force for getting the most out of the team by extracting and multiplying the intelligence of each individual. A good leader is always expected to be a genius maker bringing out the intelligence in others whereas a bad leader is absorbed in his or her own intelligence by stifling others. The former is bound to build collective, viral intelligence in organisations, while the latter is doomed to deplete the organisation of its crucial intelligence and capability.

Ushering in a paradigm shift 90

October 2012

But how can good leaders unleash the intelligence and capability in others and harness them? Leadership expert Liz Wiseman and management consultant Greg McKeown delve deep into this question in ‘Multipliers: How the best leaders make everyone smarter’. The book, published in 2010, describes good leaders as Multipliers because they inspire employees to stretch themselves to deliver results that surpass expectations; and calls bad leaders ‘diminishers’ because they are “idea killers, the energy sappers


and the diminishers of talent and commitment”. Drawing on two years of research in 35 companies spread over four continents and interviews with more than 150 executives, Weisman has identified five disciplines that distinguish Multipliers from their less enlightened colleagues (the diminishers). They are talent, culture, strategy, decision making, and execution. Multipliers can do wonders for an organisation because they look for talent everywhere and always acknowledge people not just for the things they do exceptionally well but also for things they do naturally, often without being asked and sometimes without being paid. Multipliers also take the time to understand the capabilities of each individual so that they can connect employees with the right people and the right opportunities – thereby building a virtuous cycle of attraction, growth, and opportunity.

talent gaps. “After reading the book I just adapted the concept which is relevant to this part of the world. The concept will help you to get twice as much capability out of the people in your team. It helps with Omanisation and it helps business leaders solve difficult problems. It is about asking people to do hard things; it does not put forward a soft, warm and cuddly leadership style. It is getting people to solve tough business challenges. As a leader you cannot solve tough challenges alone, but you got to use the

Elaborating on how ‘Multipliers’ can do wonder for Oman and the region as a whole Hazel said, “A lot of our research in the region has found that there are a lot of people busy but secretly bored in companies and ‘Multipliers’ is a leadership and business technique which teaches leaders how to get more out of those people and how they get the right thinking. We need to engage people more by asking them to do hard things. We spend a lot of money hiring smart people but what happens if you do not ask them to engage their brains?”

The concept was brought to the Middle East by Dubai-based biz-group, the first company outside of US accredited to deliver ‘Multipliers’ workshops and keynote speeches to c-level executives. Hazel Jackson, CEO of biz-group, has recently been to Oman to deliver a workshop on ‘Multipliers’ organised by SIMPA Energy Consultancy for CEOs and senior level executives of the leading companies here. The workshop has aroused a ripple of excitement among the participants who believe that the concept of Multipliers can have a resoundingly positive and profitable effect on organisations. Hazel Jackson who got excited after reading the book soon after it was published contacted Wiseman and got the rights to introduce the concept in the Middle East, Asia and Africa. She says this concept’s timing in Oman couldn’t be better as the country is focused on multiple initiatives for building national talent and identifying

invests heavily on building and developing its indigenous talent to grow them as leaders of tomorrow. “When I came across the concept of ‘Multipliers’ I was quite impressed. I thought this was what we were actually missing in Oman for us as we usually focus on technical and commercial skills training and this was something that we need for our clients in Oman. We started talking about introducing it here. We then selected a very exclusive number of people and companies in Oman for the first introductory session. The response was extremely positive.”

collective intelligence capability of the people in your team.” Khalifa Al Mukheini, managing director of SIMPA Energy - an Oman and UAE based energy consultancy that provides advisory, recruitment and training services - also believes that the concept holds immense potential for Oman as the country

Khalifa further believes that ‘Multipliers’ can serve as a powerful tool for growing effective Omanisation programmes and help local organisations in a number of localisation programmes. “It is very timely for Oman. It can help build competencies as employees feel more empowered in organisations to do better and at some point they may want to become entrepreneurs themselves by starting their own organisations and creating in-country value,” he said. Indeed, leaders who can identify the real competencies of their workforce and tap into their capability, creativity, talent, initiative, and resourcefulness fully can usher in a paradigm shift within any scalable firm’s corporate culture and bottom line, by utilising the latent talent. 


GOLFUPDATE

ANOTHER FIRST The inaugural BankDhofar Pro-Am Golf Tournament promises action never seen before…

T

he inaugural BankDhofar Pro-Am Golf Tournament is set to take place at Muscat Hills Golf & Country Club on Nov 7 and 8. This is the first professional golf event played in the Sultanate. A field of 25 teams of four will be led by regionally-based PGA professionals who will be joined by amateurs, entering in teams of three under company names. Over 18 professionals have already confirmed their participation. They work at some of the most prestigious golf clubs in the region, including Sharjah Golf & Shooting Club (Abu Dhabi), Jebel Ali Golf Resort & SPA (Dubai), Abu Dhabi Golf Club, The Royal Golf Club (Bahrain), Sahara Kuwait Resort (Kuwait), and Safaa Golf Club (Saudi Arabia). They will be competing for a prize fund of over RO1,000 that will be allocated amongst the first five top scorers.

All professionals arriving in Oman for the event will be accorded VIP treatment by the event hosts and the sponsors. Luxurious shuttles provided by Audi, the gold sponsor of the ProAm, will transfer the professionals to one of the capital’s most vibrant places and hospitality partner of the event, Radisson Blu Hotel, Muscat. “Our Muscat Hills team is very excited and is working hard to make this event an unforgettable experience for all participants. For two years we have been trying to find the right time and the best sponsors to allow us to organise the 1st Pro-Am golf tournament in Oman, and we have finally achieved this! It is a special event not only for us but for all professionals coming from the region because they are about to experience golf in Oman for the first time. We believe in the success of the 2012 edition and we look forward to turning the BankDhofar Pro-Am into an annual tradition“, said Muscat Hills director of golf, Ray Stopforth. 

It gives us great pleasure to be the lead sponsor of the BankDhofar Pro-Am Golf Tournament and to support the first ever professional golf event in Oman. We welcome all to the event: professionals, invited players, supporters and their families. BankDhofar is keen to support Omani player development from the grassroots level all the way up, and will soon be announcing our training opportunities for Oman's future golf stars, allowing the youth to realise their true competitive potential in the sport of golf. - Patrick Lloyd-Bradley, Head of Branding & Marketing Communications at BankDhofar

Audi has been successfully involved in golf for two decades. Technology, design and sporting performance are hallmarks of every Audi vehicle, which are reflected by the special appeal exuded by golf as well. The Pro-Am enjoys an excellent reputation in the golfing scene, and we are looking forward to accompanying this high-calibre tournament’s inception into Oman. This new commitment perfectly fits into the brand’s extensive worldwide program into golf. - Abdel Karim Awwad, National Sales and Marketing Manager of Audi Oman, Wattayah Motors

OER, as the media partner, and Signature magazine, as the luxury media partner, are excited to be an integral part of the first Pro-Am Golf Tournament in the Sultanate. Oman’s premium business and luxury magazines have identified the business values of golf which continues to be one of the most powerful business development tools. - Alpana Roy, Executive Vice President of United Media Services

We are happy to be the Hospitality Partner of the inaugural Pro-Am Golf Tournament at Muscat Hills and we believe all participants will enjoy their stay at Radisson Blu Hotel, Muscat. We thank also the Ministry of Sports Affair and the Ministry of Tourism for their continuing help to develop tourism and promote golf in Oman. - Marius Wolmarans, GM at Radisson Blu Hotel, Muscat OER is a media partner for this event

92

October 2012


oer-oct-12  

oer-oct-12

Read more
Read more
Similar to
Popular now
Just for you