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Vol. 15 Issue 2 June 2010

How the Gulf’s booming cinemas are
throwing the spotlight on local talent

Opportunities for the brave
in Sri Lanka and Taiwan

Kuwait’s mega projects
finally get under way

Saudi shrimp farm
to make big waves

Western insurers drawn
by lure of the uninsured

Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10
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The feeling is enhanced even further by BMW iDrive that allows intuitive operation of the cabin’s features.
In short, with the new BMW X5, you’ll be sitting in the lap of luxury with the outdoor backdrop of your choice.
The story of joy continues at


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Mall of the Emirates, Mirdif City Centre, Sahara Centre, Wafi)
and at select Rivoli Stores. Toll Free: 800-RIVOLI


Vol. 15 Issue 2 June 2010

High-tech Taiwan is a favourite in the
emerging markets’ shooting stars.

A precious metals boom may be
in the works today with silver the
potential winner.

Inside Track
The rationale behind investment and
the secret of its irrationality.

Emerging Markets
Peace brings savvy investors to
emerging Sri Lanka.
Big screen business
The Gulf appears engrossed by cinema, with the debut
Guest Column of the first Emirati-directed feature film in the UAE,
Agriculture is rising from the dry ongoing cinema construction, and the launch of the
sands of the Middle East as a Doha Film Institute in Qatar. But it isn’t all fun and
verdant growth sector. games, with industry insiders warning of challenges
ahead and limitations in the market.
Ensured growth
26 The Gulf’s widely uninsured
Regional Briefing population attract Western insurers. 44
Humble hopes
34 42 Hospitality in the Gulf continues
Do your homework Jumbo shrimp with its more measured growth and
With the economic upswing Little-known Saudi aquaculture budget-friendly expansions.
underway, Gulf companies must be farm aims to take global prawn
ready to gain from good times. market by storm. 50
A return to the ring
36 44 After years of fire-fighting, Kuwait
State of the art Sealing the leaks seems back on track for growth with
Christie’s is upbeat about the The trick to better sales may be in major project investment.
Middle East’s art market. better team training.
38 46 On the right track
A helpful push Computing costs Transport investments are
Dubai’s real estate woes could be Dell promises savings with data stimulating development and
eased by improving visa protocols. management systems. repositioning the Gulf globally.

June 2010 7

Editor-in-Chief Obaid Humaid Al Tayer
Group Editor and Managing Partner Ian Fairservice

Group Senior Editor Gina Johnson

Group Editor-Business Alistair Crighton
Deputy Editor Zarina Khan
Lifestyle Editor Claire Hill
Editorial Coordinator-Business Concessa D’Souza

Art Director Cris Domdom

Senior Designer B Raveendran

Special Contributors and

International Correspondents
Berlin Wolfram Bielenstein
Hong Kong Michael McKay
Johannesburg Bill Cain

70 London Robert Bailey/Karen Thomas

New Delhi Rahul Bedi
Shanghai Gordon Hu
Washington Kevin J Kelley
Hospitality Guy Standish-Wilkinson

General Manager Production

and Circulation S Sasidharan
Production Manager C Sudhakar

General Manager Group Sales
Anthony Milne
Senior Advertisement Manager
Abraham Koshy
72 Advertisement Manager
Ajay Mathews

Glenn Freeman falls to the siren
call of the 2010 Mustang GT.

62 The difference between
Close up innovation and theft is a fine line.
UAE-based film producer Tim Smythe
talks about movie making in the Gulf.
Competition 74
Books Head Office:
PO Box 2331, Dubai, UAE
68 76
Tel: +971 4 282 4060, Fax: +971 4 282 4436,
Executive Moves Calendar Dubai Media City: Office 508,
Who is moving up in the GCC 5th Floor, Building 8, Dubai, UAE,
Tel: +971 4 390 3550, Fax: +971 4 390 4845
business world. 78 Abu Dhabi: PO Box 43072, UAE,
Hotels Tel: +971 2 677 2005, Fax: +971 2 677 0124,
THE LIFESTYLE Where to stay in the GCC. E-mail:
London: Acre House, 11/15 William Road,
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70 80 E-mail:
Travel Stats & Facts For editorial syndication details,
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or e-mail
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71 Out to Lunch 22,774
Art Terry Tyrell of The Brand Union copies
A wave of theft and forgeries reveals talks advertising over brunch at June 2009
the underside of the art world. The Rotisserie. Printed by Emirates Printing Press, Dubai

8 June 2010

17th of September 1755. In the offices of the solicitor Mr. Choisy, a young
Master Watchmaker from Geneva named Jean-Marc Vacheron is about
to hire his first apprentice. This agreement is the first known reference
to the founding watchmaker of a prestigious dynasty and it represents
the establishment of Vacheron Constantin, the oldest watchmaking
manufacturer in the world in continuous operation.

Ever since this agreement, and true to the history that built
its reputation, Vacheron Constantin has been committed
to passing on its knowledge to each of its Master
Watchmakers in order to guarantee the excellence and
durability of its craftsmanship and of its timepieces.

Quai de l’Ile Day-Date and Power-reserve, Pink gold and titanium case,
Hallmark of Geneva, Self-winding mechanical movement

Sweet dreams?
Dubai Islamic Bank’s sugar-backed loan is as vague as it is unusual.

D ubai Islamic Bank’s (DIB) rollout of its

latest product last month, Al Islami Salam
Finance, reveals some of the outstanding
of Tate & Lyle aren’t going to gum up the
bank’s ATMs.
Still, questions remain. According to the FAQ,
issues that the growing field of Islamic finance the bank makes its profit by selling the sugar
still faces. on the open market. Now, unless the original
In trying to replicate conventional financial contract is designed so the borrower is buying
products – in this case, a consumer loan – his sugar at a significant premium to market
Shari’ah-compliant instruments can come rates, to offset any future declines in the sugar
over as just plain complicated. The premise of price, this looks incredibly risky. Without
Salam isn’t a simple one to grasp: at the press further clarification, some may wonder – is the
conference, the FAQ on the product appeared to bank, in effect, taking a giant, and unhedged,
contradict answers given during the conference bet on the sugar market? Hussain Hamed
itself, and the DIB team spent more time talking Hassan, the head of DIB’s Shari’ah Supervisory
up the Islamic bona fides of the product, rather Board, insisted at the press conference that
than explain how it works in the real world. analysts know the markets well enough to
And that’s the billion-dirham question (and ensure this isn’t mere speculation – which
also the amount the bank is setting aside to would be contra to the values of Shari’ah
capitalise this). Salam resembles a futures finance – while Adnan Chilwan, the bank’s head
contract more than anything else. There is of retail and business banking, said that it’s the
a real underlying asset, in this case, sugar, sugar wholesalers who will carry the risk.
chosen because of its relative in-volatility. But no analyst can reliably tell you what the
Essentially, a borrower works out how much sugar price will be tomorrow, never mind three
upfront cash he or she needs (from $6,800 to years from now – a point brought home by the
about $273,000), the bank supplies this, and slump in sugar prices beginning from January
the borrower then pays back that amount on a this year – and a billion dirhams appears to be
monthly basis – in sugar. Through the bank’s a lot to commit to a product that, ultimately,
commodity account, the physical delivery of could leave the bank with a bitter aftertaste.
sugar is not the borrower’s problem, so bags These issues must be clarified. ■


Waiting for a go
After watching its neighbours make hay, Kuwait is finally getting its time in the sun.

W AY, way back in 2006, when Dubai’s

economy was storming ahead and
infrastructure projects were being signed off
weighed down by a bureaucratic machine that
spewed a constant stream of red tape.
So, as towers rose in neighbouring counties,
left, right and centre, Kuwait’s businessmen as ports elsewhere were made deeper and
were not a happy bunch. Democracy, they larger, and as eight-lane highways cut
said, was holding them back. Indeed, Kuwait’s through bordering deserts, Kuwait stagnated,
peculiar form of democratic process was frequently in the dark as the sclerotic power
hostage to a number of factors including self- system failed to even keep up with demand
serving MPs and tribal factionalism. On top from city residents.
of that, the whole process of government was Fast forward to 2010, and contractors

10 June 2010


throughout the Gulf, still licking their wounds billion of interest on the entire consumer
after the property crash in Dubai left them debt portfolio, arguing that corporations
over-exposed and under-employed, are shifting were bailed out, so why not individuals? The
their focus to Kuwait. That same parliament government has so far resisted these populist
that was problematic a decade ago has put moves, recognising that financial stimulation
aside differences to overwhelmingly back a will require much more than cash handouts or
$100 billion development plan to fund more debt forgiveness.
than 1,000 projects – some of them very large A constricting bureaucracy remains
indeed. This includes work on an oil and gas a serious issue, and Kuwaitis still view
infrastructure, a major roads upgrade, a new government work as something as a right,
airport terminal and “Silk City” – a vast urban with 80 per cent of citizens employed in the
project destined to be second only to the public sector.
capital in size. For those companies patient enough to deal
Of course, a lot of this was scheduled to be with the red tape, however, there’s another
completed years ago, and spending isn’t going prize, just across the border. The political links
to solve all of Kuwait’s problems. The stock may be lacking, but the state’s proximity to
market remains woefully under regulated, Iraq must be seen as attractive; any contractor
and the nation needs to tackle a serious looking at taking a slice of the estimated $600
“dependency culture” among its citizens. billion in infrastructure work on the cards in
National Bank of Kuwait aside, the country’s the war-torn country would do well to look
banking sector was hit hard by the financial at projects in Kuwait as something of a dress
crisis, and remains weak, and MPs are pushing rehearsal, and, as a logistics base for Iraq
for these same banks to write off some $6.3 development work, it can’t be bettered. ■


Deal on Dubai World debt draws near

There is light showing at the end of Shindagha tunnel.

T he acceptance of the Dubai World debt

restructuring deal by 60 per cent of lenders
last month represents a significant milestone in
Dubai Holding has, according to news sources,
brought in an advisory group to pre-empt its
own much-anticipated debt restructuring, and,
the emirate’s battle to get itself out of its debt according to our figures from January this year,
crisis. For the first time in a long while, some there is still some $54 billion in short-term
positive ink was splashed around about Dubai, credit to be serviced by 2014 – and that doesn’t
with some commentators, notably the Financial include bilateral bank loans that will run to
Times, even suggesting that Greece could many billions more.
learn a thing or two from how the emirate has Still, and excuse the pun, we must give
handled the negotiations. credit where it’s due. In strictly public
But that doesn’t mean Dubai is out of the relations terms, Dubai has come a long
woods yet. Some 66 creditors are still holding way from the shock announcement of the
out for a better deal, notably, the local banks Dubai World debt standstill in November. In
that are unhappy with the low interest rate financial terms, it’s playing its hand as well as
on offer. Getting them onside – and actually – or better than – anyone could have expected.
putting pen to paper on the deal – may still be If Dubai has been fleet-footed enough to
a month or two off. Then there’s the issue of dodge the knock-out blows, there’s still hope it
other indebted government-related entities. can get itself off the ropes. ■

June 2010 11



The emerging market has a ripe contender to be the new shooting star
in the form of Taiwan – China’s overshadowed sister.

he Cinderella fairy tale is an apt metaphor One, Taiwan’s exports to China are greater than its
for the onset of a secular bull market in exports to the US, Eurozone and Japan put together. China
emerging markets. It is the moment when a will be the world’s largest PC, mobile phone, consumer
market is cheap, unloved, under-owned and electronics, plasma TV and network computing market in
even misunderstood. This was the case with India in the next decade, as the Chinese middle class surges from
2002 when the Sensex traded below 3,000, the forward 200 to 500 million people. Chinese and emerging Asian tech
valuation was a mere nine times earnings and offshore exports will lead to a double bagger in Taiwanese earnings
investors, traumatised by the recent Silicon Valley tech per share in the next two years.
meltdown, had zero interest chasing the corporate Two, political relations between the ruling Taiwan
Cinderellas of Dalal Street, even though industrial KMT (Kuomintang), ironically the party of Mao’s rival
restructuring had created an earnings explosion. Six Generalissimo Chiang Kai Shek, and Beijing have improved
years later, the Sensex soared to 21,000, a stratospheric significantly since the election of President Ma Ying Jeou.
valuation of 23 times earnings and India was the darling In essence, unlike his disgraced predecessor, President Ma
of the emerging markets. Of course, as we learnt the hard has abandoned the rhetoric of Taiwanese independence.
way in the Gulf, it is all too easy to mistake Cinderella (a This has led to the historic China-Taiwan economic
secular bull market) for the ugly stepsisters (value traps) cooperation treaty that will significantly boost the island’s
in the ballroom (a leveraged credit bubble). Amid yet financial linkage to the Mainland and incorporate a growth
another spasm of risk aversion in the premium in Taiwan equities.
financial markets, I search for the next It is all too easy to Three, Taiwan has the lowest
emerging markets Cinderella, which I
believe is Taiwan.
mistake Cinderella government bond yield in the Asian
Pacific, with ten year debt trading below
Taiwan, demonised as the “renegade (a secular bull 2 per cent. This means Taiwan’s equity
province” of the Middle Kingdom by the market) for the risk premium is excessive at its current
mandarins of Beijing ever since Chairman modest valuation. This will not last.
Mao founded the People’s Republic of
ugly stepsisters Four, Taiwan is extremely cheap
China six decades ago, is one of the (value traps) in relative to its own past trading history.
world’s true economic and political fairy the ballroom... Taiwan shares traded at 17 times forward
tales. An impoverished, pariah, dynastic earnings since the 1990s, when the
dictatorship at continual risk of invasion rapprochement with the world’s rising
from the mainland, morphed into a vibrant democracy financial superpower across the Straits of Taiwan was not
with a tech export economy in the span of one lifetime, remotely on the geopolitical agenda.
with some of the highest hard currency reserves in the Five, China’s WTO promise mean that it will eventually
Pacific Basin and a constellation of world class technology allow Taiwanese banks to open branches in the mainland.
manufacturers. However, despite being Silicon Valley’s This prospect is not priced into current bank valuations.
foundry and assembly line, Taiwan has not been valued as Six, Taiwanese blue chips TSMC, Hon Hai, AO Optronics,
a growth market by fund managers since the collapse of Wisteron, China Life, Fubon and Chinatrust are some of the
the tech bubble a decade ago. Taiwan trades at a mere 13 biggest, best managed business in the Far East.
times earnings and twice book value even though earnings And lastly, offshore fund managers and even locals are
will double in 2010 and 2011. The financial markets price underweight in Taiwan shares. Excellent. Bull markets
Taiwan as a low-end, commodity manufacturer that is climb a wall of worry. It is time investors reexamined the
hostage to the US and Japanese consumer. Taiwan is the island Cinderella on the edge of China. The Taiwan story is
Cinderella of Asian stock markets, a gem on the verge of a simply compelling to me.
significant valuation re-rating. I believe the TAIEX could Matein Khalid is a global macro trader, economics
well rise from the current 7,400 – 7,600 to 12,000 in the next professor, fund manager in a royal investment office
two years. Why? and writer in finance and geopolitics.

12 June 2010



There is an argument to be made about a repeat of the 1970s precious
metals boom being in the works today, with silver the possible winner.

t was the 1970s when we saw the last precious metals deficits due to their bailout packages and a shortfall
boom. In the later part of that decade gold prices rose in taxation from the worst recession since the Second
eight-fold and silver by a factor of 25. World War. This means a gigantic government-
Fast-forward to today and you have this columnist borrowing programme is in progress. And what follows
predicting a rise in gold prices to $5,000 as the world goes increased government borrowing? Higher. This slowly,
through something like a re-run of the mid-70s. Then, as or not so slowly, devalues the debt burden of high bond
now, a massive credit expansion produced a huge bust in issuance over time.
property and then stock prices, and governments reflated Then what happens is that bond buyers wise up and
their economies to counter the downswing. demand higher and higher rates of interest to fund
Inflation resulted after the initial price deflation, government debt. So you end up like in the late 1970s
although stock and real estate prices stayed low, and with high interest rates and high inflation. That also
bond prices fell. Even gold prices took a nasty tumble means lower bond prices as interest rates rise.
in 1976 as they did in late 2008. But then came the The result is more buyers for gold and silver to
spectacular 1979-80 blow-off in beat inflation in a tight market on
precious metal prices with gold at Note that silver is the supply side, and the price goes
$850 and silver at $50 an ounce. Is that shooting up.
final spike about where we are today, the only commodity Interest in buying silver as
only to far higher price levels? in the world not the precious metal best suited
Note that silver is the only to hedging against inflationary
commodity in the world not to have to have passed its government debt levels around the
passed its previous all-time high, and previous all-time world is growing among investors.
that was set three decades ago now. If you look rationally at 10 years of
So will history repeat itself again?
high. rising precious metal prices then the
If we look at what has happened to story to date has been one of slow
house prices and stocks (about due for another dip if but sure growth, leaving gold prices four times higher
1970s volatility is any guide) then things do look very and actually the best performing asset class of the past
similar. Governments have also been taking desperate decade, apart from silver which is up six-fold, albeit
measures to counter the financial crash, and signs of with far greater volatility along the way.
inflation are already emerging in places like China There is no 80 per cent price spike in the past 13
and the UK. months like US stocks. Indeed, the fundamental drivers
The next shoe to drop will surely be the bond market of gold and especially silver prices are still in place.
as it did over 30 years ago. Interest rates rocketed in However, life is never that easy for investors. Silver
the late 1970s and that is bad for bond prices. Today is volatile and fell by more than gold in the 2008 sell-
governments around the world need to borrow a lot of off. Will this happen again if industrial commodities
money to finance their deficits and the markets are going fall due to margin calls in a falling stock market? And
to exact a higher price for that money. it was this liquidation of the carry trade that brought
As real estate, stocks and bonds cease to be attractive precious metals down in 2008.
investments, that leaves the precious metals as a store You cannot be sure. Then again if you do not invest
of value. The silver market is much smaller than the gold now you might miss the best price levels. The market
market and in the 1970s became cornered by the Hunt cycle has moved on since 2008 and investors are not
Brothers, forcing the price through the roof until the so highly leveraged and therefore may well not have to
market rules were changed and the price slumped. dump their gold and silver in a crash. ■
All over the world governments face mounting Peter Cooper is the editor of

14 June 2010



A succession of economic bubbles disprove the myth of the rational investor.
Emotions are still at the heart of most of our stupid decisions.

t is a given in any finance class that the investor behavior. The reason for that is that greed and fear –
is rational. The investor, it is taught, makes his the two motivators behind it – are shared by all peoples.
decisions based on facts and never allows his And those emotions have contributed to making these
emotions to play a role in his actions. crises greater in magnitude. Over the last five years we
What a load of rubbish. Most people have been saw what irrational behavior on the part of the investor
taught this theory which makes no sense yet we tend can do in the long run. We saw a growth in land value
to accept it as a reality. As blood-and-guts humans, at a frightening pace, with 20-50 per cent increases
we are expected to make what is in essence a very per annum not uncommon. In fact, there was a special
personal decision – where to put one’s money – with an phenomenon happening in the real estate industry were
impersonal eye - Of course, it is nearly impossible. people were lining up to buy direct from the developer at
How did this unrealistic expectation become the exorbitant prices only to immediately sell it to another
standard that people base their investing ideas on? irrational investor at a mark up but with no added
Simple rational is easy to calculate in formulas while value. This was considered acceptable because people
irrational is not. This is why you will see that taught in were using the adage of “richer than thou, stupider
universities as well as in the many than thou” without actually knowing
books talking about investing. Financial that to be the case. Their irrational
Over the past two decades, just in behavior made it acceptable for them
the US stock market alone, we have
meltdowns keep to sell something that they did not
had three significant crashes. The on happening and actually have to someone else who
first was in 1987. The second was in
2001. The last one was the crisis that
will continue to had, in his mind, already sold it to yet
another person at a profit even though
the Lehman Brothers’ collapse set because the old nothing physically actually happened.
into motion. In that same period of adage “never again” And nearly everyone bought into
time, we have had the same people the scheme because they reasoned
investing in the market overall only applies to quite wrongly that it was a solid
with the exception being the new rational thinkers. investment. Nothing could have been
investors who had not experienced further from the truth.
these shocks. Had they not learned from these dramatic Yet these phenomena keep on repeating themselves
if not seismic shifts? The clear answer is no because time and time again. All we have to do is look back to
they all played their part in either making it happen or what the Kuwaitis called “souq al manakh” in the eighties
worsening it after it happened. Financial meltdowns and what happened there or the Saudi stock exchange
keep on happening and will continue to because the old only recently when it dropped from 20,000 points to
adage “never again” only applies to rational thinkers and 6,000, or there about, in a matter of months, wiping out
not to the people who are driven by greed or by fear. The billions of Saudi riyals that never really existed. The
only ones who will never suffer from these great shifts same could have been said for the UAE when in 1998
are those who have allowed themselves to be disciplined within a three week period the nascent stock market
enough to take themselves away from the gyrations exploded to new heights a hundred fold and then, for no
caused by either greed or fear. In other words, they train apparent reason, imploded with the same gusto. Yet these
themselves to be rational investors. This, I am sad to investors are supposed to be rational?
say, is not the norm. The old Arabs used to say that they don’t buy fish in
We too have experienced our own irrational behavior the sea. Now that is a rational investor.
in the region. Race, intelligence, religion or political Mishal Kanoo is deputy chairman of the Kanoo Group.
leanings have no bearing on this kind of irrational

16 June 2010



Amid the ruins of Sri Lanka’s civil war lie gems of stock market opportunity
and massive investment need.

egendary billionaire investor George Soros put it The decades of civil war have scared away many
best when he remarked: “the most money is made mainstream tourists, even though the fighting was mostly
when things go from terribly-awful to just awful.” confined to the north and northeast. Today, however, some
That is exactly the situation we see in Sri Lanka observers believe Sri Lanka could become the Thailand of
today. The war-torn island nation is this year’s sixth best South Asia for tourists.
performing equity market with +26 per cent return, and a As an investment theme this might attract funds into Sri
market where the trend is your friend. Lankan Hotel stocks that trade at low valuations and multi-
Sri Lanka so far was considered the emerging markets in year lows. During the first peace talks in 2005, Sri Lankan
the true sense, but last year’s peace process and the end of Hotel stocks surged +200 per cent. Now we could see a
the decades-long civil war has investors taking notice. replay of this going forward.
In 2010 the country formerly known as Ceylon is now The end of the civil war has also sped up the Sri
on top of the list as a market where things are happening. Lankan government’s negotiations with the International
Many investors increasingly believe the country’s time has Monetary Fund (IMF) for a standby facility of $1.9 billion.
finally come. An IMF agreement would provide support to reserves
The death of the Tamil Tiger’s infamous leader Velupillai and have other positive effects such as improving
Prabhakaran was crucial to ending investor confidence and support for the
the civil war. Once the mysterious and In 2010 the exchange rate.
powerful Prabhakaran was dead, the Just how much money Sri Lanka
Tamil Tiger movement collapsed, paving
country formerly in total needs to rebuild itself is still
the way for lasting peace. known as Ceylon is unknown. But just the initial investment
Sri Lanka is going to be one of the
best investment opportunities on the
now on top of the needed to fix the stalled economy in the
north and east is $5 billion, according to
planet for the next two to three years. list as a market government estimates. Roads, bridges,
Re-building after the long civil war and where things are schools, hospitals, power plants and even
record low interest rates in the developed homes have to be built afresh. So, the
world is leading to ample liquidity and happening. final tally will be several times larger.
a willingness among global investors to But the sweet spot for the foreign
increase exposure to a market that so far has been only on investor is not the war zone. The relatively peaceful
the radar screen of the most farsighted investors. Western Province, where Colombo is located, is a ready
Sri Lanka has traditionally excelled in tea, tourism, market waiting to be tapped fully. The infrastructure and
garments and rubber but the new opportunities will not a consumer economy are already there, but the war kept
be in the sectors Sri Lanka is known for. They will be away many providers of goods and services. They will come
in real estate, business process outsourcing, banking, now. The capital, Colombo, which accounts for half of Sri
timber, pepper, fisheries, education, healthcare and, of Lanka’s $40 billion economy, will be the first to gain from
course, infrastructure. peace. According to recent World Bank report, increases in
It is expected that the Sri Lankan government will soon foreign direct investment and tourism, along with improved
rebuild infrastructure, social facilities and government employment and large-scale reconstruction projects, are
offices across the northern regions which were long expected to sustain and accelerate Sri Lanka’s growth
controlled by the Tamil Tigers. The redevelopment blueprint throughout 2010. Prospects are positive.
may be modelled after the one in eastern Sri Lanka, in Next to just making money, investors in Sri Lanka know
which the government had begun construction on a series that their capital is helping a war-torn nation re-build and
of projects after the military expelled the Tamil Tigers from giving people and their families a brighter future.
their former stronghold. This is the true meaning of equity investing.
Sri Lanka’s long coastline is one of its precious resources. Michael Preiss is an investment advisor
In the past, sandy beaches attracted holiday makers and and finance professor and can be reached at:
surfers from around the world.

18 June 2010

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A flagging industry offers new possibilities for economic growth
for the Middle East and North Africa.

fter years of neglect, agriculture has re-emerged as Assess sector strengths and weaknesses: To seize the
a sector to watch. The recent surge in food demand sector’s potential, governments must put enablers in place to
and the associated rise in international food support and promote it. These include policy and regulations,
prices have revitalised agriculture. Countries that organisation and sector governance, infrastructure, research
have maintained a strong sector have benefited in terms of and technology, and agricultural services.
greater opportunities in agricultural and processed food As policymakers strike a balance between the efficient use
exports. They are also able to ensure that their own people of resources and the development of supporting enablers,
have available and affordable food. Countries with under- they should systematically identify areas of strength and
achieving or limited agriculture sectors may face an upward opportunity, as well as challenges, threats, and underlying
spiral of shortages and increasing food subsidies. causes of problems.
Recent estimates indicate that gross domestic product
(GDP) originating from agriculture is at least twice as Develop a comprehensive transformation plan: Based
effective in reducing poverty as GDP from other sectors. on the overview of the sector’s weaknesses, policymakers
These emerging trends and shifts are repositioning must develop a transformation strategy by determining
the sector for increased investment and innovation, and their strategic objectives and designing initiatives to
placing it at the forefront of government policy. As a reach them. For instance, to realise productivity gains
result, Middle East and North Africa (MENA) countries and increase scale, initiatives would include increasing
are redirecting their attention towards investments in agriculture research
the agriculture sector. Their aim is and development, revamping farmers’
to transform it into an engine for
MENA countries training programmes and incentivising
economic growth, job creation, and are encouraged land consolidation and group farming.
international trade.
MENA countries are encouraged by
by the example of Assess the plan’s economic impact: The
the example of other countries that other countries that final step is to assess how the strategy
have successfully transformed their have successfully will affect the critical macroeconomic
agriculture sectors. For instance, Brazil and sector-specific indicators.
adjusted its crop mix to better respond transformed their Estimating and communicating the
to local and international demand, agriculture sectors. impact on indicators such as GDP,
and as a result tripled its agriculture employment, trade balance, farmer
trade surplus over a period of ten profitability, productivity and foreign
years. In another example, Indonesia reformed legislation, direct investment is pivotal in securing buy-in and
infrastructure, technology and services. It succeeded in commitment from entities.
realising significant productivity gains; it also increased Agriculture’s history of low profitability, stagnant
agriculture’s contribution to national GDP while reducing productivity and rising input costs have rendered the sector
the percentage of the budget spent on it, since the sector unattractive to investors, policymakers, and the workforce.
became more attractive to private investors. It is in need of deep structural reforms. Fortunately, the
To replicate such agricultural transformation in the recently emerging global trends have triggered a major
MENA region, policymakers must first evaluate the shift in the sector’s economic potential. There are new
availability and quality of their basic resources: arable opportunities for governments and private investors to work
land, water, seeds, fertilisers, pesticides, farm labour, and collaboratively in transforming agriculture in the MENA
capital. For many MENA countries, particularly in the region. With combined public and private support and
Gulf, issues such as water shortages make it unlikely that investments, agriculture can shed its reputation as a burden
agriculture will be a viable sector for reform. on government resources and reclaim its role as one of the
For countries whose basic resources do offer a strong first and most important engines of economic growth.
basis for reform, policymakers should consider three By George Atallah (pictured) partner with Booz & Company,
critical steps to capitalise on agriculture’s turnaround. and Bisma Berti, consultant with Booz & Company.

20 June 2010


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Vol. 15 Issue 1 May 2010


It is interesting to note the intense competition between Gulf
economies in a bid to assume pole position in the region –
from the Yas Marina Circuit challenging the Bahrain Grand
Prix to the DIFC in Dubai wrestling with $1.5 billion Bahrain
Financial Harbour and now a vast $8 billion King Abdullah
Financial District brewing in Riyadh. While this might be good
for the region, it is worth weighing whether it is equally healthy.
Your article ‘A place on the stage’ (Gulf Business, May 2010)
TOP BANKS IN THE GCC raises a very legitimate concern: Bricks and mortar alone will
Mongolia the new bluechips market
Landmark’s Vipen Sethi
not establish and underpin the solid reputation for financial
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
Cityscape focuses on delivery
Gulf financial centres still struggling
dealings achieved by the world’s more mature locations.
It was just over a year ago in another article titled ‘Cluster
UAE.................. DHS 10

GB Regional cover May 2010 .indd 1 4/28/10 2:35:07 PM

clutter’ that a similar concern was noted – ‘Do industrial

cluster developments in the Gulf help stimulate innovation as
believed?’ (Gulf Business, January 2009). Only time will tell.
Gulf Business has been at the forefront of developments
in region and little wonder why it is my favourite business
magazine, providing an unbiased coverage of critical business
and management developments in the region. From your cover
pages since 2008 starting with interesting questions such as –
GCC Insurance, a pledge too far? (Gulf Business, 14-28 December
2008) To the 13th anniversary issue (Gulf Business, May 2009) on
Arab healthcare losing patience to and the big question ‘What
next for Dubai World?’ as well as possible merger activities of
regional banks ‘Do regional banks want to consolidate?’ (Gulf
Business, January 2010) – well done!
Nnamdi O. Madichie
Assistant Professor of Marketing
University of Sharjah

weekly calls from this bank or the other Lexus LS 600hl is beyond my budget, but
offering me a credit card or a loan. That’s it gives me something to aspire to. I can’t
Thank you for the comprehensive what got us ALL in to trouble last time. wait till buying something less harmful
report on banks – ‘Bottomed out’ (Gulf Give it a rest! to the environment is not a direct trade-
Business, May 2010) I hope the report Juan Mendoza, Dubai off on price. One can’t expect the car
is a lesson to the Gulf’s banks. The manufacturers to forego the novelty cost
ones that have fallen in the rankings GROWING GREEN extras that they are privy to with their
have probably done so because of poor uncommon hybrids, but I think it would
policies. The standard of service and the I am currently looking into buying a car be great if businesses and even the
integrity of investment and analysis all and have been saddened by the lack of government gave some sort of incentive
need to be raised. And perhaps the bit ‘green’ options here in the UAE. So you to buying them. It would help those of us
on non-performing loans – blamed for can imagine my pleasure in reading with green aspirations but humble bank
much of the region’s weakness in profit about a hybrid in your last car review balances to be better able to do their bit.
performance – means I’ll stop getting (Gulf Business, May 2010). I think the Teresa May Allen, Sharjah

Gulf Business welcomes your comments about the magazine or issues regarding business in the region. Please write to: The Editor, Gulf Business,
Motivate Publishing, PO Box 2331, Dubai, UAE; Fax to + 971 4 2827593; or email to: We reserve the right to edit correspondence.

22 June 2010

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[ UAE ]
Seconds to make
sense of…football Dubai World debt deal
in the Middle East
Kevin Keegan ‘is potential model for
former England manager and co-developer of Soccer Circus

How was your interactive football skills concept, Soccer

Circus, conceived and developed? Debt-rocked Dubai
The project has taken over ten years to develop and an World’s agreement with
investment of $8.7 million in research and development its core bank creditors
work in the UK. to extend maturities on
loan repayments should
Why did you decide to bring this concept to Dubai? be seen as an example
With the strong interest in football across the Middle East of how Dubai and
I can see lots of visitors enjoying the attraction. It creates a Greece could manage
place to go to live and breath football, to play the interactive their debt problems, a
games and to see what it’s like to be a professional leading banker has said.
footballer. Visitors can also compare their scores and see
how they match up to the professionals. ”They started a
process, the market
How much local talent have you detected at Soccer is favourable, it’s an indication of how things should
Circus Dubai? be done,” Henry Azzam, Deutsche Bank’s (DB) chief
Even after just three weeks we have seen some very good executive in the Middle East and North Africa told
youngsters who have talent. Dow Jones Newswires. F
Azzam said the restructuring deal could be a lesson
Who do you favour to win the World Cup and what do you for Dubai– which roiled world markets last year with
think of the chances of England? its debt crisis – in handling its total debt, which is
I am really looking forward to the World Cup. There are estimated by some analysts to be above $100 billion.
some very good teams, such as Spain, Argentina and, of Speaking at an economic forum in Lebanon, Azzam
course, Brazil. There is also the possibility of an African said: “The success of Dubai in restructuring its debt”
team doing well. England has a talented squad and I can see could also be an example for Greece, whose sovereign
them going a long way in the competition, perhaps to the debt troubles continue to weigh on global markets,
semi-finals. despite a rescue package from the European Union and
OFF THE CHARTS International Monetary Fund.
Oil spills in context ”In my personal view, the problems of Greece cannot
be solved by just giving them money to pay their
Deepwater Horizon Amoco Cadiz Exxon Valdez
deepest oil spill ever 1978: largest loss 1989: Devastating maturing debts…They need restructuring,” he said.
In a chart from of marine life due to remote Azzam added that a continued tightening of fiscal
Information location, 450,000 rich in sea life policy in Greece, through reforms, is likely to bring on
we compare barrels more social unrest.
Deepwater ”Restructuring – this is what Dubai did: admitting that
Horizon’s 1,600,000 we cannot repay on time and repaying over a longer period
estimated oil barrels of time at possibly lower interest rates,” said Azzam.
spill, to past spills. 271,000
barrels Dubai World has agreed in principle with its main
would fill creditors on restructuring $23.5 billion of debt, lifting a
900,000 cars cloud of uncertainty that hung over the emirate’s economy.
*Data from CIA Factbook, International Energy Association and press
reports – all figures estimated and rounded.
The government-owned conglomerate said it would
pay $4.4 billion of the loans in five years and another
BY THE NUMBERS $10 billion over eight years. Dubai’s government,
● In millions of dirhams, the amount Etisalat has

meanwhile, will convert $8.9 billion of its loans to
been ordered to pay an Abu Dhabi resident for Dubai World into equity.
using his invention without permission. The announced agreement accounts for about 60
● In percentage points, the estimated increase in per cent of Dubai World’s bank lenders. The remaining
Takaful premiums expected globally this year, creditors holding 40 per cent of the group’s debt still
according to the Kuwait Finance House. have to accept the deal.
● In millions of dollars, the amount of money ”Once you have 60 per cent of the largest creditors,
spent on gold in the Gulf Cooperation Council that is a good indication that others would follow,“
during the Hindu Akshaya Tritiya festival. Azzam said.

26 June 2010


Govt employees
get triple the pay
Public sector employees
in Qatar earn almost

■ three times as much as
those working in the
■ private sector, a survey
has indicated.
■ The average monthly pay
■ package in the government
compared to $18.9 million sector is $4,018 while the
for the same period last average private sector
year, it has been reported. salary is $1,480, according
This growth in revenues was to the Labour Force Sample
supported by the increase in Survey conducted by Qatar
regional and global demand Statistic Authority.
[ SAUDI ARABIA ] for steel products. Gulf nationals have
$10.6 billion in A320s to Turkish Airlines, it The company’s total invariably favoured the
announced. In a statement, production, including its public sector for its
projects approved Kuwait’s largest Islamic pipe mill and merchant bar association with shorter
Saudi Arabia has approved lender, which owns an mill, surged to 56,023 metric working hours, longer
over $10.6 billion in projects aircraft leasing business, tonnes in the first quarter holidays and lighter
in the first four months of said that its subsidiary, of 2010, as compared to workload. According to the
the year, its foreign minister Kuwait’s Aviation Lease 20,703 metric tonnes in the study, the average monthly
has revealed. and Finance Co, will run corresponding period last salary in Qatar is $2,142.
The approvals of some the leasing process on year, recording a growth of
652 projects valued at behalf of the bank. 170 per cent. [ UAE ]
$10.67 billion underscores ”KFH signed an agreement Masdar investing
that Saudi is continuing a to lease three Airbus A320- [ BAHRAIN ]
in carbon
policy of spending heavily 200 to Turkish Airlines for a Better ranking for
on infrastructure projects to period of seven years,” KFH Abu Dhabi’s clean energy
cushion its economy from said in a statement. Alafco enabling business venture Masdar has jointly
the effects of the global has previously leased five The Enabling Trade Index agreed with German power
economic crisis. aircraft to Turkish Airlines 2010 has moved Bahrain up giant E.ON to put up $140
Last year, the Kingdom and three to Turkey’s Sky two positions in its latest million for an enterprise to
spent $33.83 billion in Airlines, the statement said. results, to 22nd place, it has capitalise on reducing gas
project investment, an been announced. emissions. The project aims
amount it is now on track [ OMAN ] The index, published to end the practice of flaring
to surpass. Al Jazeera Steel by the World Economic and to lift energy efficiency
Forum, assesses countries for companies across South
doubles revenues across the globe on the East Asia, central Asia and
KFH leases Oman-based steelmaker institutions and policies Africa, said Frederic Boeuf,
Al Jazeera Steel Products they have in place to the general manager.
planes to Turkey Company generated enable trade.
Kuwait Finance House revenues of $39.8 million in The kingdom was ranked
has leased three Airbus the first quarter of 2010, as 15th globally on efficient
border administration
and 27th in availability
and use of information
and technology.
Bahrain also ranked
highly in terms of
the quality of its port
infrastructure (17th), its
airport infrastructure
(20th) and regulatory
environment (25th).

June 2010 27

Loans sweetened
for Islamic market Doha plants seeds of Dollywood
Dubai Islamic Bank (DIB)
has launched an unusual The Doha Film Institute
offering – personal loans (DFI) - Qatar’s first year-
backed by sugar. The round international cultural
country’s oldest Islamic film organisation – has been
institution is offering the launched in Cannes.
first Shari’ah-compliant The institute aims to build
personal loan in the a sustainable film industry
Arab world. in Qatar with strong
Under Shari’ah a bank links to the international
can offer financing only if film community and an
real goods change hands. education focus for the
DIB’s new product, Al Islami local community.
Salam Finance, is based Martin Scorsese’s World
on a centuries-old Islamic Cinema Foundation has
custom that gives farmers signed a three-year cultural
cash for a later delivery partnership with DFI
of dates. Instead of using to restore and preserve film finance and production. Cannes saw the launch of
dates as the underlying international films of The launch, on the other Gulf film initiatives
commodity, DIB’s financing cultural significance. sidelines of the Cannes – including the Abu Dhabi
will be based on a sugar The DFI, which is backed International Film Festival, Film Festival’s Sanad, a
futures contract. by the Qatar Investment
Authority, brings the state’s
is the latest in the Gulf’s
major investment in the
F $500,000 film fund, while
the Dubai Film Connection
various film initiatives cinema industry (see recently announced a
[ FINANCE ] under one banner, including Making movies, page 56). $120,000 fund as well.
Sukuk offerings
rise 24 per cent [ REAL ESTATE ]
Islamic bond sales are
growing at the fastest pace
Abu Dhabi Hydra issues repossession notices
since 2007 as yields on
securities complying with
the religions ban on interest
fall more than those on
emerging-market debt,
even as Europe’s debt
crisis worsens.
Offerings of sukuk
climbed 24 per cent to
$4.6 billion so far in 2010,
the most since a 50 per
cent increase in the same
period three years ago,
according to data compiled
by Bloomberg. Repossession notices are masterplan changes, local and have now been hit with
The spread between being issued to defaulting media have reported. a letter outlining Hydra’s
the average yield for the investors in Abu Dhabi Launched in 2006 and “unfettered right” over the
debt and the three-month developer Hydra Properties’ originally scheduled for unfinished units.
London interbank offered flagship project. completion in 2009, the The letter says defaulting
rate narrowed 301 basis Letters have been sent to residential community is investors are liable for a
points, or 3.01 percentage investors in the $545 million now slated for delivery charge of $136 per unit
points, to 437 basis points Hydra Village project, in 2011. per day since they first
in the past year, according which has been dogged by In response to the defaulted, according to the
to the HSBC/Nasdaq Dubai controversy over imposed delays, some investors developer, which insists the
US Dollar Sukuk Index. price hikes on properties, refused to honour their project is on schedule for
construction delays and original payment plans, completion in 2011. June 2010

Virgin Mobile
service launched Former DIFC governor released from jail
in Qatar
The former governor of other irregularities, the
British entrepreneur the Dubai International prosecution said in an
Sir Richard Branson Financial Centre has been emailed statement.
has launched his first freed from jail after paying Bin Sulaiman, who was
telecommunications venture back a total of $13.6 million detained in March in a case
in the region with the start he was accused of illegally of misuse of public funds,
of Virgin Mobile in Qatar taking as bonuses. is the most senior Dubai
in partnership with local Omar Bin Sulaiman, official to be involved in a
telecoms leader Qtel. former governor of the corruption investigation.
The new service, available financial services centre, Bin Sulaiman was not
in stores and online, will is still under investigation immediately available for
be wholly owned by Qtel, and may be implicated in comment on the case.
which licensed the Virgin
brand for an undisclosed [ REAL ESTATE ]
sum. The deal represents
the youth-oriented brand’s
first foray into the
Dubai starts to deregister properties
MENA region. Dubai investors who have
“Qatar will be the first missed payments on their
in the region to do this,” off-plan properties are
Nasser Marafih, the Qtel
chief executive said at the
being stripped of their titles
as Dubai Land Department
launch. “We are focusing starts to deregulate
on youth and the young-at- problematic properties.
heart because we believe Hundreds of letters
the Virgin brand offers fun were reportedly sent to
services.” errant investors on behalf
Serving eight countries of developers that have
and 15 million customers completed 80 per cent or
worldwide, the UK-based more of a project.
Virgin Mobile offers The release on April
pre-paid mobile service 15 of Executive Council
while piggybacking on a Resolution 6 of 2010
national network. In the US, has allowed developers,
Sprint Nextel provides the including Emaar Properties,
service’s backbone. In the Deyaar Development,
UK, it is T-mobile. Virgin Omniyat Properties, Al Fajer
Mobile Qatar officials said Properties and Al Mazaya
locals contributed to the Real Estate, to repossess the of which 200 investors been put up for auction.
look and feel of the new properties and retain 40 per were willing to have their Still, there are dozens of
brand, the outlets and even cent of their value. contracts cancelled. investors now considering
the SIM cards. Mohammed Sultan Thani, ”It’s mostly happening legal action against a
“Its about connecting the assistant director through mutual agreement ruling they consider
people not just to general of the Dubai Land ... only a few people are favours developers.
technology, but to each Department, said ”some” making problems,” Thani Nabil Ahmed, the head
other and the hottest events properties had been told local media. of research for the region
around town,” said Ed deregistered since the Seized properties will at Deutsche Bank, said the
Jennings, the head of Virgin procedure began, adding be auctioned by the Land move to cancel contracts
Mobile Qatar. that buyers were agreeing Department, with the funds and repossess properties
Virgin Mobile Qatar because they ”don‘t want to going to the developer was a last resort for
will only offer a pre-paid pay any more”. unless the sales generate developers whose profits
service initially at six outlets He referred to one a surplus, which will be had dwindled since the
across Doha. National and developer, which he declined passed on to the original financial crisis took hold
international calls will cost to name, that had issued buyers. Thani added that and it was also a way to
the same at all times. about 225 notices, out no properties had yet ”clean out” the market. June 2010

Emirates to
restart A380 to Young Lion winners announced
New York
The winners of the
UAE Young Lions 2010,
honouring advertising
professionals below the age
of 28, have been selected
and announced.
Dubai Media City,
Motivate Val Morgan and
Emirates airline announced
the competition winners,
who will be flown on an
all-expense paid trip to
Cannes to participate in the
Young Lions Competition
as part of the 57th Cannes organisation based on a partner of Motivate Group,
Lions International creative brief that outlines said: “This is the eighth
Dubai carrier Emirates will Advertising Festival. the campaign objectives. year that we have hosted
restart its A380 flights to The UAE winning This year’s charitable this event. We are proud
New York on October 31, it team comprises Ashraf organisation was Helping of the young creative
announced. The aircraft’s Majiet, art director, and Hands UAE, which provides professionals from the UAE
reinstatement on one of
Emirates’ double daily JFK
Dario Albuquerque,
copywriter from Tonic
assistance to construction
workers. The Creative
F advertising industry. Their
high quality of work is
routes comes as the carrier Communications. The duo Club comprising senior reflected in the outstanding
reported a significant was selected from the creatives from Dubai’s entries at the 2010 Young
increase in revenue for ten teams from leading advertising agencies Lions competition.”
the Americas in 2009-10, creative agencies that among other distinguished The UAE Young
representing a year-on-year participated. Each year, the panelists participated in Lions Competition was
rise of 8.1 per cent. participating teams design the judging process. supported by Gallo/Getty
Senior company officials a campaign for a charitable Ian Fairservice, managing Images and Xerox.
said the airline was
looking to add further US [ ECONOMY ]

Dubai Holding nearing

destinations to its network.
Growth in the Americas
helped steer the airline
to a net profit of $964
million, the airline said needed debt revamp: analyst
in a statement. Debt restructuring for ”We believe Dubai
Tim Clark, airline Dubai Holding is becoming Holding has roughly $15
president, added: ”We more likely due to its billion in loans and bonds organised under three main
promised to return the A380 exposure to the property but this does not include groupings: Dubai Holding
to New York as soon as sector and cash flow any off-balance liabilities Commercial Operations
demand recovered and we problems, an analyst arising from investor Group, Dubai International
have been true to our word.” has claimed. or end-user default on Capital and Dubai Group.
”Against some of The government- properties that have A debt restructuring
the toughest operating owned conglomerate is dramatically declined in of Dubai Holding would
conditions ever faced, the seen as the next subject 18 months,” Masud said. further dent Dubai’s
results for the Americas have of the emirate’s debt ”There is a clear cash reputation following the
been hugely encouraging. restructuring programme, flow risk in Dubai and I shock of Dubai World’s
This achievement reflects which started with Dubai wouldn’t be surprised if difficulties, Masud said.
our success in maintaining World in November, Saud the same holds true for Dubai Holding may
our business-as-usual Masud, head of research Dubai Holding.” struggle to service debt
approach and remaining for the Middle East and Dubai Holding holds a and keep enough working
faithful to our strategy North Africa at bank UBS, substantial portfolio of capital at the same time,
of product and service was quoted as saying by brands in the property making a debt restructuring
excellence.” Reuters Insider. and hospitality sectors, crucial, he added.

32 June 2010


Catching the wave

Now is the time for managers to ready their businesses for the opportunities and growth
of the awaited economic upturn, ZARINA KHAN reports.

ith most analysts saying
the worst of the Gulf’s
economic downturn is
over, the time has come
for businesses to ready themselves to
take advantage of the upturn lest they
find themselves left in the dust by
their competitors.
“Making the most of the possible
upturn is all about being ready. If you
wait for the upturn to be upon you, on the upturn are securing access business is critical.”
it’ll be too late by the time it happens. to finance to fund projects and With secure access to funding,
Being prepared requires a bit of expansion, the availability of quality businesses can then look to staffing
work and is not something you can staff to handle the new opportunities their projects and operations with the
do overnight,” Amanda Line, Middle and risk management. type of professionals who will help
East regional director of the Institute “One of the opportunities in this improve a business’ chances of success.
of Chartered Accountants in England part of the world is that there is “One of the good things with the
and Wales told Gulf Business. significant progress that can be downturn is that there is more talent
“I was in Asia when its massive made in simple things, like the available. We are so much aware of
crisis hit years back and saw that a quality of financial reporting. These quality today. Before companies were
number of companies that survived things can be easily improved just hiring, they weren’t fussing about
the downturn failed when the upturn which will improve investor and who they were hiring. Now they are
came because they didn’t have customer confidence.” much more conscious of what they’re
sufficient capital to complete the
projects they undertook or the right Making the most of the possible upturn
teams to lead their projects. There is all about being ready. If you wait for
is danger in a downturn and in an
upturn,” she warned. the upturn to be upon you, it’ll be too
The Gulf and the greater Middle late by the time it happens.
East and North Africa region are
expected to see improvements in A lingering and perhaps permanent spending on human resources.
economic performance this year. impact of the region’s economic You can hire better qualified people
According to the Global Outlook crisis is reduced access to finance, for the budget you have. It’s a flight
report by the Economist Intelligence particularly from banks, who have to quality.”
Unit, the region’s real gross domestic seriously tightened lending criteria. Line also said the time when chief
product is expected to grow by 4.2 “Something businesses can do to risk officers were only part of the
per cent, while Emirates NBD has position themselves is to make sure larger corporations is gone, and most
predicted growth of 2.5 per cent. they have excellent quality financial businesses can benefit from hiring or
But even the more conservative information about their company to contracting professionals to assess
estimates, like the International take to the bank. It inspires confidence and mitigate risk.
Monetary Fund’s expectation that the in your business not just with banks A recent survey by the Regus
UAE – one of the Gulf’s hardest hit and investors. Anyone who puts Business Tracker found that business
economies – will grow only 0.5 per money in a business is going to want leaders in the Gulf expect a robust
cent, is still in the black and offers to understand much more than they local economic recovery to begin in
opportunities to businesses that can did a few years ago. There are going to the first half of 2010, with 78 per
capitalise on the growth. be a lot more questions asked. Being cent of respondents predicting local
Line said that the major challenges prepared to answer those questions economic growth within a year. ■
businesses will face in capitalising with clear information about your

34 June 2010


Painting a positive picture

Though deflated greatly by the recession, the Arab art market still has some areas of vibrancy and
international auction house Christie’s is upbeat on interest in local art. By GLENN FREEMAN

Middle Eastern artist Farhad

Moshiri’s Flying Carpet.
he art market in the Gulf
is still strong despite a
recession-linked deflation in
pricing, a senior official from
Christie’s claims on the back of its
seventh Dubai art auction.
“The art market has held up basement prices.
reasonably well, as savvy investors “A lot of art collectors are very
have flocked to tangible assets in wealthy, buying artworks with “But that’s not how it works.
which to tie up their money,” said spare capital. Often – even in times The pictures hold their value.
Jussi Pylkkanen, Christie’s president – of general economic adversity – the They might decrease slightly [in
Europe and Middle East. wealthy do become wealthier, and they price] because there’s slightly less
Christie’s raised over $15 million have capital which is expendable,” demand at any one given moment,
at its Dubai auction last month, in a said Pylkkanen. “In times of pressure, but major works of art, whether
sale featuring works by prominent some collectors are also forced to sell, here at $250,000 to $500,000, or in
Middle Eastern and Western artists so some very important works of art New York…they really do hold their
including Picasso, Farhad Moshiri, can come onto the market, such as value pretty well.”
and Parviz Tanavoli. Picasso, Cezanne…it’s highly likely While the picture painted by
Among the more notable and that those with capital will chase Pylkkanen is rather of a rosy hue,
highly-prized regionally-produced them [during such times].” some attendees at the auction
works to go under the hammer were One of 500 art auctions held by expressed disappointment at its
installations such as Moshiri’s Flying Christie’s each year, the Dubai auction results. Though billed as a sale of
Carpet and Tanavoli’s Poet and Cage, marks the opening of their seas, and masterpieces, one industry source
among some 20 works from Middle as such, Pylkkanen said it is “very who wished to remain anonymous
East artists spanning the Levant and important that it succeeds.” said there was “too much new work
Gulf regions. A number of the best The day before the auction he told by artists, which should be sold
works from Middle East artists were
from the collection of Dr Mohammed The art market has held up reasonably
Said Farsi, former Lord Mayor of
Jeddah. One of the highlight sales was
well, as savvy investors have flocked
Mahmoud Said’s Les Chadoufs, which to tangible assets in which to tie up
sold for a record $2,434,500. their money.
The market’s viability then,
Pylkkanen believes, speaks for Gulf Business that: “The Dubai market by local galleries rather than big
itself. As the head of Christie’s now represents the opening race of auction houses.” Flicking through
impressionist and modern the card, if you like. And it’s very the catalogue, he listed off a few
department in Europe, he ticked off important that it succeeds and is seen highly-rated works that failed to
a number of reasons why he believes to be successful.” sell, and many others that did sell,
money has continued to circulate “Sometimes when I speak to Middle but only for the lowest estimates
within the lucrative global art East collectors…they don’t see the anticipated by Christie’s.
market. He believes that objets d’art broader context of what’s going on With 125 pieces in total, he said it
provide greater liquidity and security here. So when the markets dropped was a “weak sale” overall, with the
than property, particularly in light because of the financial problems [that margins made by Christie’s coming
of the buffeting real estate markets started] 18 months ago, when sellers from less than 10 per cent of the
took, both regionally and globally. were less confident to put things on pieces on sale. “Many collectors
Pylkkanen pointed out that tougher the market…people were concerned were disappointed, there were many
conditions also means that there that artworks wouldn’t hold value and works by key artists that didn’t sell,
have been a lot of ‘distressed’ sales that problems would undermine the and many at cost price.” ■
of high value artworks at bargain market here.

36 June 2010


Settle down, people

The answer to Dubai’s real estate woes lies in improving freehold visas, insiders say,
and they think hope is on the way, ZARINA KHAN reports.

ith no immediate changes in the law that have left
abatement to the uncertainties.
stagnant and even While last year there was some
gloomy forecasts for progress made on the issue, with
Dubai’s real estate sector, experts an amendment to article 33 of the
say the time has come for the property law allowing only those
emirate to consider improving foreigners whose property in Dubai
freehold property visa provisions. was valued at Dhs1 million ($272,242)
“We believe a key issue is the or more to be issued a six-month
residency visa situation. We would renewable residence visa – real
suggest that in order to attract estate analysts say it is not enough.
more international investment, They suggest that lengthening the
it would be preferable to have a visa term may draw more moneyed
longer visa. This will allow for more foreigners looking for a secure and
security in the market,” said Steve comfortable place to call home.
Morgan, head of Cluttons Dubai Mohammed Nimer, chief executive
and Abu Dhabi, while commenting officer of MAG Group Property
on staid market predictions. Development, is another expert in
Since late 2008, when the global with money to buy may not be favour of relaxing Dubai’s freehold
recession sapped liquidity from the sufficient to keep the market afloat. visa restrictions. Nimer, speaking
economy, the Gulf’s former boomtown And as yet, there have not been at the Infrastructure and Property
has seen a steady deflation in its significant signs of improvement Development MEA Summit, explained
former blue-chip sector of real estate, to hint that the rest of the year will that the relaxation of visa rules was a
which was noted in Clutton’s Dubai be any better. In fact, Clutton says federal issue in the UAE but it needed
property market overview, Quarter Dubai’s residential market has yet to to be consistent and investor friendly.
Four 2009. Regarding performance in
2010, Cluttons found that the average
residential rent prices in Dubai We believe a key issue is the residency
declined over five per cent in the first
quarter of the year.
visa situation... it would be preferable to
Since the recession kicked off, have a longer visa.
there has not been much new
interest in the Dubai residential real reach its bottom. The local real estate “Malaysia and Thailand lead emerging
estate market from non-resident research firm is not alone in that markets in encouraging international
investors. Analysts say most of assessment. A Reuters poll found that property buyers and as such this
the movement recorded in Dubai most analysts believed that Dubai country could learn from them,” he
property in early 2010 and late 2009 house prices and rents would fall 10 told attendees of the summit.
was mainly in the form of existing per cent more in 2010 and not recover Though no developments in
UAE residents taking advantage of until 2012. regulation have been announced in
relatively low prices to shift from But changing the freehold property the recent past, it is reported that
renting to owning. The fall seen in visa situation may reinvigorate the changes are afoot. A report in local
residential unit pricing – in some market. Currently in the UAE, media in January quoted Dubai Land
developments as high as 50 per cent foreigners are barred from purchasing Department sources as saying six
– had also attracted not only Dubai and owning land, save for those pieces of legislation were being looked
residents who had been renting, but in specially zoned ‘freehold’ at this year.
also those who had been residing in developments. Originally the law “We definitely need some further
the more affordable neighbouring stated that, upon purchase, freehold regulation and I feel like we’re on the
emirates. But that shift-based properties provide the foreign owner verge of that regulation being put into
growth is not sustainable. The with a six-month renewable visa. place,” Morgan added.
available supply of UAE residents However, there have been ongoning

38 June 2010


Ensured growth
Stagnating growth and a crowded insurance market in the US and the UK is drawing Western
insurance companies to the ever-evolving Gulf economies. By GLENN FREEMAN

he growing need for interesting segment of the market,”
insurance in the Gulf is said Waterfield, though he highlights
attracting Western firms that “they have a different savings
looking to diversify their culture. The key to this market
services away from the fairly stagnant is education.”
and oversaturated American and The awareness – or education - of
British markets. the consumer is one of the challenges
“The UK market is very competitive, to popularising insurance in general
very difficult at the moment…there’s in the Gulf. Waterfield says there
no growth…whereas overseas, is also a lack of “drivers” such as
even in a place like this, which has taxation breaks and legislative
had a slow-down, it has wonderful imperatives. In markets such as the
opportunities. We’re very bullish UK and US, the tax-deductibility of
about our overseas business,” said in here,” Matthews said, adding that life insurance and income protection
Trevor Matthews, chief executive they will also be introducing a locally insurance premiums is an additional
officer of well-established British based team of underwriters to their incentive for clients. For corporations
insurance company Friends Provident. UAE operations soon. in these regions, the legally mandated
While health insurance in the Being first and foremost a provision of pension schemes
West has been around for decades conventional insurance business, for employees, which often also
and coverage is widespread, the Gulf the UAE forms the core of their incorporate insurance elements, also
region’s still developing economies focus in the Middle East, given the works in favour of companies such as
and modernising policies mean favourable population demographics, Friends Provident. Within the GCC,
that there are still many uninsured with over 80 per cent of residents penetration of life insurance only
residents and many insured ones still being expatriates. Particularly among amounts to around 1 per cent of gross
looking for better options. Companies western expatriates, individuals are domestic product, compared to 9 per
like Friends Provident, which already
gets over 50 per cent of its revenue Even in a place like this, which has
from its overseas operations, are had a slow-down, it has wonderful
now eyeing the UAE, Qatar and
Saudi Arabia in particular, with opportunities. We’re very bullish
great interest. about our overseas business.
According to Matthews, the demand
for conventional insurance from already well aware of the benefits of cent in more developed markets.
within the UAE, and the greater Gulf insurance in protecting wealth and the While there have been reports
region, offers significant potential for livelihoods of family members. among the local UAE media that
them. He believes that the business In addition to westerners living Friends Provident will be moving
model adapted and refined by Friends in the UAE, non-resident Indians into Islamic insurance products such
Provident over its 178-year history also hold huge potential, as they as Takaful, Waterfield hosed down
– which he describes as a ‘hub-and- are the largest single expat group in such speculation by saying that
spoke’ model utilising the outsourcing many Gulf countries like the UAE. currently it is only in the idea stage
of non-core activities – works Additionally, there are expatriates and is being researched.
extremely well in this region. from other parts of the Middle East, The plan is to grow the scale of
“Other companies with operations whom Friends Provident Middle East their operations in the UAE first, with
in different countries are trying and Africa general manager Matthew the aim of then branching out further
to adopt this model we’re using. Waterfield believes represent a huge into other areas of the Gulf – though
The model is quite good, and quite part of the UAE population. “About this also depends largely on whether
unique. We can get the best ideas 23 per cent of the population here they decide to introduce Shari’ah-
from different places and plug them are Arab expatriates, which is a very compliant products. ■

40 June 2010


Prawns in the game

A little-known Saudi shrimp farm is doubling its massive capacity to provide premium
seafood to gourmet tables across the world, ZARINA KHAN reports.

t can perhaps be considered one raised antibiotics diet and wild-caught
of Saudi Arabia’s better-kept environmental exploitation issues.
secrets: in a marshy corner of “One of our big pushes is to
the Saudi Arabian desert there increase the consumption of prawns.
is a high-tech facility growing some We have to educate the consumer.
of the highest quality edible prawns They should know our prawn is a
available around the world. premium product. We fly it to London
The image may seem a bit sci- four times a week, to individual
fi Hollywood, but it is true. Just chefs, Harrods, Waitrose, etc. In
south of Jeddah exists the National addition to that, we offer the only
Prawn Company’s (NPC) 250-square warm water farmed prawn that
kilometre farm – the world’s largest can be eaten raw. It is sushi grade,
fully integrated prawn farming which is a very high standard. The
facility and the only one that grows to come at its own cost in the quality fact that you can eat our prawns raw
the high-end white prawns known as of the seafood produced. But the is a testament to the fact that we
penaeus indicus. NPC has developed a way of growing have not put anything unsavoury in
The NPC has been quietly producing prawns that are also of the highest them, and that our processing is very
premium seawater shrimp since it food standards. fast. We also keep up to speed with
turned its 18 years of research into “Where we are different from accreditation for standards. We’re
a commercial project in 2000 – a fact other prawn farms is that we’re EU approved – and possibly the only
seemingly known only to a handful of in the desert but raise our shrimp guaranteed food exporter in Saudi
chefs and supermarkets around the entirely in fresh saltwater piped who is,” Cook explained.
globe. But that is set to change, as in from the sea. Currently we’re And while NPC’s communications
the privately owned Saudi company producing about 14,000 tonnes of director takes his show on the road,
works on doubling its capacity with white prawns [per annum]. When with participation at Gulf Food and
a total of $799 million in investment. we complete our current expansion other trade shows, work is underway
It wants the region and the world in 2012, we will be producing to double the extent and production
at large to know the proud fact that
they have pioneered a way of growing Where we are different from other
prawns that promotes food security, prawn farms is that we’re in the desert
sustainability and corporate social
responsibility – while also making it but raise our shrimp entirely in fresh
easier to get some of the best tasting saltwater piped in from the sea.
prawns in the world.
Wild-caught shrimp are captured up to 45,000 tonnes [per annum],” capacity of the Saudi farms. NPC
through trawling – a damaging and said Laurence Cook, corporate is also planning to branch out into
inefficient way of combing the seabed communications director of NPC. other products – farmed fish, sea
in hopes of capturing the bottom- That is, to put it simply, a massive cucumbers and even phytoplankton.
dwelling animals. The shrimp fishing amount of prawns. Which is why “We produce 60-70 tonnes of
bycatch – meaning other species NPC has shifted gears from simple prawns a day. But when we finish
captured in the trawling nets – ranges production over the last 18 months, our second phase of expansion, we
from 5-20 pounds per 1 pound of to include marketing. Saudi Arabia, will be producing up to 180 tonnes.
shrimp. While shrimp trawl fisheries unsurprisingly, is not known as It means we can’t just be a trader.
only represent 2 per cent of the global a producer of premium farmed The focus has to be on developing
fish catch, they reportedly produce seafood. And the Gulf consumer the market. Our view is to be the
over one-third of the world's bycatch. does not yet have the sophisticated largest niche marketer in the world,”
Shrimp and prawn farming is taste to appreciate the quality and said Peter Fraser, NPC director of
considered to be an alternative to the sustainability of prawns grown in commercial business. ■
high intensity wild fishing, but tends seawater but free of the usual farm-

42 June 2010

g y
rm ato lo gy
Dentis try
Endoc o rin
Intern M a l
g y
ro lo g y
Neurosurg d Gynaecology
s te tric s an
ae d ic s
a lm o logy y
Op h th eonatolog
s and N
Paediatric ry
Plastic S
ia tr y
U ro lo g y ehabilitati
io th e rapy and R
M.O.H: No: 903/2/5/31/7/10

Covered by major national and international insurance companies.

Tel: +971 4 345 4000 Tel: +971 4 273 3333

Sealing sales leaks

Companies wanting to improve their efficiency need to look more carefully at their sales teams,
a UAE-based company tells ROCEL FELIX.

fficiency is a catch-word to
be heard in the corridors in
most companies today, in this
post-recession environment.
And in the Gulf, the efficiency of
sales teams is often one of the most
problematic parts of a business.
MaxSale Solutions offers businesses
a service to help them increase
their sales teams’ productivity and
professionalism. The company says
the Gulf still has much to adapt
to in the new economic reality –
particularly with regard to sales. healthy,” says Heredia. Raising the combined key activity areas. We then
“In the old world of good times level of productivity of sales people is ensure these areas of shortfall are
in the UAE, especially in 2007 and good business sense, not just in boom focused on and our payment structure
2008, it wasn’t necessary to focus times, but even more so in a recession, guarantees these improvements,”
on the skills of sales people. The Heredia said. Heredia explained.
business came to companies, it was “The pie is smaller, there is less “The solutions that we offer make
a matter of demand, but suddenly business, but people are still buying. companies more effective in their
the tide has gone out,” said Peter The biggest challenge now for corporate planning, they become
Heredia, managing director of SMEs is to get business from their better in managing opportunities.
MaxSale Solutions. competitors because the market is Our programmes also help companies
MaxSales Solutions, which Heredia not growing. That’s the big difference become better at identifying and
co-founded, offers sales automation and that’s why sales efficiencies have targeting new businesses, as well
systems, targeting small and medium to be improved.” as helping them decide to get rid of
enterprises (SMEs) in the Gulf. The
recession, he said, has exposed glaring In the old world of good times in
ineptitudes in the sales teams of many
companies operating in the region.
the UAE, especially in 2007 and 2008,
“The SMEs are the ones really it wasn’t necessary to focus on the
hurting from the recession. They do skills of sales people.
not have the tools to measure the level
of efficiency of their sales force. There Unlike some companies that sell deadwood, or to simply relegate them
is no measure of their performance online automation tools, MaxSales temporarily, as future opportunities.”
other than the typical route of the Solutions are extensive, running a In the UAE, raising sales efficiency
number of deals that get closed.” 12-week sales excellence program of through sales automation tools
In improving its clients’ sales workshops, training and one-on-one is still a novel concept, although
performance, MaxSale Solutions management support. it is catching on. Since it started
helps SMEs identify the most critical “It is important to look at every operations in the UAE 18 months
activities that will have the biggest aspect of the sales activity. Once the ago, MaxSale Solutions’ clientele
impact on sales. These activities are key activities are defined, it is easier to has grown. However, even efficiency
then incorporated into a custom manage and monitor the sales team’s service providers are feeling the
automated sales process that provides performance. Every day, a sales person recession pinch, with fewer businesses
clear performance visibility. logs in to the system and reports having the present funds to take
“The key thing is to improve sales all of the activities done for the day. on such system studies. Still, the
efficiency and the core of this pursuit The information that is captured is enthusiasm for good service and
is to raise the output of sales people, important because it tells managers profitable sales has not wavered, but
especially for SMEs in the region, how close or how far off they are from with the uncertainty, SMEs are buying
if they are to keep their bottomline their targets by the progress of the time. ■

44 June 2010

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Co-operating costs
A new data management system – built on existing hardware – may be just what the doctor
ordered for companies hungry to make savings, Dell tells ZARINA KHAN.

rue system efficiency is data. Dell’s officials say they can help a
not just about how quickly company reduce its IT operating costs
new IT networks access by 30 per cent.
information, but also relates Saving time and resources on data
to how they are created, with Dell is no longer optional for companies.
being among very few solution Now that the recession has begun to
providers who say that they can wane, many are actively working to
work with existing and competitor strengthen their competitive edge.
hardware and software to come up “Customers are telling us today
with better systems. that they’d held off on upgrading their
For organisations mindful of the systems or taking on new IT services
fiscal conservativism that is the because they’d been uncertain about
heritage of the recession, throwing the economy. But now customers
out functional hardware and are preparing for growth. There
software so a new system can be is significant pent up demand for
installed from scratch is no longer a upgrading aged systems, bringing in
realistic possibility. unified communications convergence.
According to Anthony Dina, Dell’s There are lots of opportunities
director of solutions marketing, their out there in businesses to improve
Intelligent Data Management solutions communication and decrease
are open and untethered, meaning operational cost,” Dina said.
Anthony Dina, Dell’s director of solutions
they are compatible with other marketing. “An IT organisation that is spending
software and hardware. As such, they less time on janitorial work can focus
do not require a complete razing and IT network of an organisation becomes on more important services. Being able
reconstruction of an organisation’s like a tangled web, full of time- and to fix your own problems doesn’t, to
data management system. “There is a energy-consuming detours and dead the eye of the customer, differentiate
culture of tear and replace in IT right ends to getting information. one company from another, but its
now. We just don’t think that’s viable. “In IT spend, two thirds goes to operational speed does.”
Use what you have. Increase at your paying for labour. That means 80 per Dell is also offering Data Archiving
own pace,” said Dina. cent is just the routine maintenance Consulting, Cloud Infrastructure
The new range of management
solutions claim to help customers There is a culture of tear and replace in
facing challenges in storing and
managing data, which in its commonly IT right now. We just don’t think that’s
unmanaged and unstructured state, viable. Use what you have. Increase at
is a huge drain on organisations’
resources and time.
your own pace.
“Some 11-17 per cent of a of systems – ‘keeping the lights on’ as Solutions and Intelligent
company’s IT budget tends to go we say. There are a lot of IT janitors Infrastructure and Management
into data management. And the out there, fixing and cleaning the products that all potentially
cost of it is increasing. Of data in a networks, repairing a deployment contribute to the $200 billion of
company, we believe that 90 per cent that’s gone wrong,” he added. inefficiency out of the $1.2 trillion in
is unstructured, and 95 per cent is Dell is offering Gulf organisations total IT spend each year, as promised
never looked at again. We think we its new object storage solution, which by chief executive officer Michael Dell
can save 50 per cent on the cost of addresses the attachment of metadata last October. Dell’s visiting officials
storage through our tier method – to a file, which then stores the object said the Gulf could see a significant
where we file data according to how in an enormous, flat address space – portion of that saving, as the region’s
often it needs to be accessed, to put creating a sort of tag-based data filing young business community tightens
it simply,” Dina explained. system, which takes into account the up their operations to edge out the
When the data is unstructured, the importance of access to a piece of competition. ■

46 June 2010

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Room at the inn

The recession has taken some of the shine off the Gulf’s glitzy hotels,
yet launches, expansions and diversification continue, albeit at a
somewhat more humble pace, GUY WILKENSON reports.

espite taking some undeni- Of some 80 hotel chains surveyed, 55 are in addition to a further 33 projects
able hits, the Gulf’s hospital- confirmed future GCC projects, with 19 with as many as 9,000 rooms that were
ity sector is in relatively good chains each declaring more than 1,000 cancelled outright last year in the first
form, with this year’s pipeline rooms under development, compared to throes of the recession,” says Wilkin-
of new hotel rooms confirmed as being 23 in 2009 and 20 in 2008. son. “These include projects that could
the second largest on record, according obtain no financing due to the current
to Gulf Business’ 12th consecutive sur- DEFINITE DELAYS debt freeze, or have lost their financing
vey of the sector. However, as a direct result of the cur- due either to overly optimistic balance
Conducted by Dubai-based hospital- rent economic conditions, the number sheet structures, or the developers’
ity consulting specialists Viability, the of hotel projects delayed has increased need to allocate available funds to more
annual survey of chains active in the significantly since last year. “Almost pressing ventures. Other losers include
Gulf Cooperation Council (GCC) con- half (48 per cent) of the confirmed ho- hotel projects in poor locations, for ex-
firmed 283 planned hotels with 83,604 tels that were also contained in the ample, on remote green field sites or in
rooms as of May 2010, compared with 2009 research have been delayed by secondary and over-supplied markets;
325 properties and 92,026 rooms at the between one and four years, compared and those associated with new brands
same time last year (reductions of 20 and to 38 per cent in 2009, and as many as with little or no track record in the re-
19 per cent respectively) and 295 hotels 29 per cent of the 2010 projects were gional market.”
with 82,357 rooms in 2008 – which was
itself an all-time record year. Those figures are in addition to a further
US chain Marriott Hotels & Resorts
squeezed out Accor to top the rankings 33 projects with as many as 9,000 rooms
for both hotels and rooms, up from that were cancelled outright last year.
third and fourth places respectively
last year, with 29 properties and 9,572 behind schedule by a year,” explained ROBUST PIPELINES
rooms under development. Accor’s Viability partner, Barbara Wilkinson. Despite reports from all the chains in
pipeline comprises 23 hotels with 6,433 These delays exclude any that were al- the survey regarding delays and can-
rooms under its Sofitel, Pullman, Novo- ready reported last year, meaning that cellations, some were less affected than
tel, Mercure and Ibis insignia. a number of projects have experienced others. The mighty InterContinental
Other chains in the top ten places several revisions in their programmes. Hotels Group (IHG) experienced only
were, in order of their confirmed-room There were also 42 other hotel three cancelled projects out of almost
pipelines, Rotana, InterContinental, projects with more than 11,000 rooms 50 in the Middle East and North Africa
Millennium, Fairmont, Movenpick, that were declared ‘on hold’ with no over the past year.
Rezidor, Starwood and Golden Tulip. firm recommencement date and a fur- Another chain that remains highly
Each of these companies also has mul- ther 25 projects with more than 5,400 bullish about its regional pipeline
tiple brands, and each reported a pipe- rooms had been cancelled altogether is Starwood, which recently opened
line of between 3,000 and 5,500 rooms. since the 2009 rankings. “Those figures its 1,000th property worldwide and

48 June 2010


Future chain hotel rooms in GCC, declared ‘on hold’ or ‘cancelled’, 2010 vs 2009
2010 2009
2,599 7,582 5,421

1,255 Saudi 970

Saudi Arabia Arabia 220

Qatar Qatar
650 1,030

672 833
Oman Oman 1,072

1,324 285
Kuwait Kuwait

Bahrain Bahrain 720

2,000 4,000 6,000 8,000 2,000 4,000 6,000 8,000

Source: Viability Management Consultants (05/2010) On hold Cancelled

Confirmed future chain hotel rooms in the GCC, 2010



6,000 5.5 64 1
5,1 5
4,9 08 9
4,5 4,23 ,225
4 55
4,000 3,6 ,285 7
3 0 8
2,9 2,85 91
2,5 ,100
2 08 0
2,000 1,6 1,46 ,331 277 57
1 1, ,0 41
1 9 96 06 51 28 24 5 0 4
7 7 7 7 7 71 65 64

tt or a G m nt k or d ip n m h ia ki ia x aj s e H ia n rn oi al k s rs
rio cc otan IH niu rmo npic zid woo Tul Hiltodha eira lor ins var yma T son ame QN Lay n Su ste ber J roc Rixo the
ar A R n i e e r n n m G p a i t e a R r e O rd O
M ille Fa öv R ta de
S ol y u
W J Ke
m B C S he W Ha
M M G o ur o ut est
Source: Viability Management Consultants (05/2010)

June 2010 49


Summary of totals Confirmed hotel projects

in GCC by progress status
No. Chain Hotels Rooms No. Chain Hotels Rooms
1 Marriott 29 9572 26 JAL 2 715
Delayed 4 years,
2 Accor 23 6433 27 Hard Rock 2 650 3,1%
Delayed 3 years, Ahead 1 year,
3 Rotana 17 5509 28 Rixos 2 644 11,4% 6,2%
4 IHG 16 5164 29 Swiss Belhotel 4 653
5 Millennium 14 4951 30 City Seasons 2 529 Delayed 2 years,
6 Fairmont Raffles 8 4508 31 Banyan Tree 3 506 39,14%
On schedule,
7 Rezidor 15 4225 32 Rocco Forte 2 427 142,50%
Delayed 1 year,
8 Movenpick 12 4239 33 Hyatt 2 459 81,29%
9 Starwood 14 3655 34 Coral 3 441
10 Golden Tulip 13 3285 35 ADNH 1 436
11 Hilton 9 2907 36 Tamani 2 421
12 Wyndham 9 2858 37 Dusit 1 401 Ahead 1 year Delayed 2 years
13 Jumeirah 9 2591 38 Rosewood 3 486 On schedule Delayed 3 years
14 Gloria 2 2100 39 Hamra Hotels 1 348 Delayed 1 year Delayed 4 years
15 Kempinski 5 1608 40 Baccarat 1 362 Source: Viability Management Consultants
16 Bavaria 4 1460 41 Shangri-La 1 272
17 Citymax 3 1331 42 Oetker Hotel Coll. 1 250
ties lie, as IHG’s Kasselis comments:
18 Taj 5 1277 43 Viceroy 1 250 “As a global company, we are constant-
19 Four Seasons 4 1057 44 Premier Inn 1 242 ly updating our assessment of what we
term ‘head-room for growth’ and ac-
20 Ramee 6 941 45 Gulf Hotels Group 1 237
cordingly if we see one region slowing
21 QNH 4 796 46 Auris 2 230 down and another region picking up,
22 Layia 3 706 47 Park Plaza 1 220 then that influences how we deploy our
23 Southern Sun 3 751 48 Sunland 1 215 resources for development.”
On the other hand, despite having the
24 Best Western 4 728 49 Sonesta 1 198 largest pipeline, Marriott’s assessment
25 Oberoi 3 724 50 Anantara 3 178 of the region is somewhat downbeat. “I
believe the entire GCC market has been
will debut in its 100th country later percent,” HMH chief executive officer, affected by the slowdown,” says Aboudi
this year. Abu Dhabi-based Rotana, Michel Noblet, told Gulf Business. With Asali, vice president of international
ranked number three in the survey, new properties recently opened as far lodging development. “However, we are
claims to have been overwhelmed with afield as South Africa and Sudan, the still seeing some new development in
management opportunities. “We have company claims 55 hotels signed, with Bahrain, Saudi Arabia and Abu Dhabi.”
turned down 35 so far this year alone, a target of 100 by 2012. By contrast, Marc Dardenne, chief ex-
compared with 108 in 2009 and 105 in ecutive officer of the Emaar Hospitality
2008,” states Makram El Zyr, the chain’s HOT SPOTS Group and Emaar Hotels & Resorts,
director of development. HMH’s incursions into Africa are symp- operators of Dubai’s five upscale ho-
Even local operator Hospitality Man- tomatic of a new geographical focus by tels of the The Address brand, believes
agement Holdings (HMH), owner of the the region’s operators, who are increas- the opposite: “We see positive trends
Coral brand is optimistic. “2010 is set ingly looking beyond the traditional throughout all GCC countries. In fact,
to be a landmark year for our group and now highly competitive GCC mar- The Address Hotels & Resorts launched
with a hotel opening practically every kets, to less developed markets such as and built its portfolio during the thick
three weeks across our four brands. those of North Africa and Syria. of the financial crisis.”
We have 17 new openings lined up this Different chains, however, have Overall the UAE remains the epicentre
year, taking our existing portfolio of 33 widely differing perspectives on the of hotel development in the GCC, with
to 50 – thus increasing the group’s to- local markets. The big international 163 confirmed hotel projects containing
tal number of rooms by more than 40 chains simply go where the opportuni- almost 52,000 rooms, equivalent to 58

50 June 2010


per cent of the total planned GCC hotels Confirmed future chain hotels in GCC
and 62 per cent of the rooms. The ma- by state, 2010 vs 2009
jority of these properties are coming up
in Dubai, although Ras Al Khaimah and 200
especially Abu Dhabi are also gaining 193
in prominence. However, many consid- 180
er Dubai to be now dangerously over- 160
supplied, with the worse still to come,
while Abu Dhabi and Doha – both now 140
among the current ‘hot markets’ in the
Gulf – could also soon reach saturation 120
point, especially at the 4- and 5-star
level, as they grow rapidly from a very 100
low base, although the mid-market will 2009
remain attractive.
Nevertheless, Dubai still has many 60
fans. Christophe Landais, managing 52
director of Accor Middle East echoes 40 29
a shared sentiment of many: “Dubai is 24 27
20 16 18
and will remain in my opinion a stra- 10 13
tegic place as the regional hub for UAE
and a centre of expertise in the GCC with
Bahrain Kuwait Oman Qatar Saudi Arabia UAE
so many companies being based there.
Source: Viability Management Consultants (05/2010)
The satisfactory occupancy rates in all
our hotels are evidence of the resilience
of Dubai, especially in comparison with We have turned down 35 management
other international destinations.”
The region’s operators are unanimous offers so far this year alone, compared
in their aspiration to grow in Saudi Ara- with 108 in 2009 and 105 in 2008.
bia, which is perceived to hold enormous
potential due to its large and growing only undertaken successfully by Golden brand available for the first time in the
population, continuing economic prow- Tulip and Wyndham’s Ramada brand. region, and already reports strong in-
ess and strong, self-contained domestic According to Landais, the French op- terest from investors.
travel and tourism market. No less than erator will franchise its Mercure brand In Dubai, the first of a new midscale
20 of HMH’s 33 hotels are in the King- on hotels of 100 rooms or less, includ-
dom, while Golden Tulip plans to in- ing conversions of existing operations,
crease its Saudi portfolio from 15 to 30 which previously had been non-viable ABOUT THE SURVEY
hotels in the next few years. for the big chain.
Indeed, most operators perceive t12th continual year of survey.
MID-MARKET POTENTIAL mid-market and economy brands to tAll chains active in the GCC are
“Saudi Arabia is a market of huge po- represent the next great opportunity canvassed directly.
tential,” agrees IHG’s Kasselis. “We for hotel development in the GCC. Star- tRanking based on numbers of rooms
have been there since the 1960s so wood, which had some years ago been and suites only.
we know the market well. Some of the active solely in the luxury segment, is tRanking includes only chain hotel
investors there are becoming less fo- this year pushing its so-called ‘select projects that are firmly committed.
cussed on 5 stars and recognise the service’ brands – Aloft, Element and Excluded:
potential for mid-scale hotels – and Four Points by Sheraton. Louvre Ho- tAll rumoured projects.
that’s where Holiday Inn is ideally po- tels, owned by Starwood Hotels & Re- tAll unsigned projects.
sitioned right now, as well as Holiday sorts offshoot Starwood Capital, will tAll projects for which opening dates
Inn Express. The GCC in general has soon be rolling out its economy brands have yet to be confirmed.
made a major shift from 5-star pal- Campanile and Premiere Classe via an tAll single owner-operated properties.
aces, as investors are becoming more alliance with Flamingo Hotel Manage- tAll serviced and residential
savvy and return-focused.” ment, the Middle East representatives apartments, chalets and villas
In a bold move, Accor has also decid- of Golden Tulip, which was recently (but any true ‘all-suites’ hotels are
ed to introduce franchising for the first purchased by Louvre. Even Marriott included).
time in the region, a formula previously is making its midscale Residence Inn

June 2010 51


Future chain hotel projects in GCC, declared ‘on hold’ or ‘cancelled’, 2010 vs 2009
2010 2009
27 26

5 6
Saudi Arabia 2 Saudi Arabia 6

4 0
Qatar 4 Qatar 2

5 3
Oman 5 Oman 5

0 6
Kuwait 3 Kuwait 0

1 1
Bahrain 2 Bahrain 1
0 10 20 30 0 10 20 30
Source: Viability Management Consultants (05/2010) On Hold Cancelled

Confirmed future chain hotels in the GCC, 2010


30 29

25 23

17 16
15 14
15 14 13
10 9 9 9
5 5
5 4 4 4 4 4
3 3 3 3 3 3 3 3

tt or a G or m d ip k n h m nt e ki aj ia rn s H el x ia n oi e al d ra rs
rio cc otan IH zid niu woo Tul npic Hilto eira dha rmo ame ins T var ste son QN lhot yma Lay n Su ber Tre Cor woo nta the
ar A R e n r p a e a t n
M n
R ille ta lde öv e m
Ju Wy Fa
n i R m B W Se e
B C i
r O ya se Ana O
M S Go M Ke e st our i ss o ut an Ro
B F Sw S
Source: Viability Management Consultants (05/2010)

brand called Citymax, part of the suc- be better,” states the company’s general ket and economy hotels have proven
cessful Landmark Gulf Group retail manager, Michael Weyland, who claims themselves resilient in times of eco-
empire, is opening imminently beside that his budget has altered little since nomic turmoil.”
the Mall of the Emirates with two more he first drafted it three years ago, on A number of the chains surveyed re-
properties coming up soon in Bur Du- the basis of an average room rate well ported remaining on target with
bai and Sharjah. “The timing couldn’t below $100. “It’s a fact that midmar- their regional or global expansion

52 June 2010


plans, regardless of the economic

conditions. For some operators, the MANAGEMENT CONTRACT TRENDS
only way to beat the recession is
to take on ever more management
contracts. Take Singapore’s Banyan
Tree chain, for example: “As part of
our diversification strategy, we are
already managing properties across
the globe – in the Middle East, Asia
Pacific and the Americas – and with
close to 40 more projects in the pipe-
line, we fully expect to be on track to
fulfil our global aspirations,” states
Ho Kwon Ping, the company’s execu-
tive chairman.
HMH’s Noblet explains: “It takes a
few years to develop a new property
so you cannot afford to slow down
the pace of expansion. Rather you
have to accelerate to boost your port-
folio and stimulate your business.”
Others take a slightly different ap-
proach, like Neil George, vice presi-
dent of acquisitions and develop-
ment at Starwood EMEA, who says:
“We do not believe in expansion for
M ost branded hotels in the
region are operated under a
management contract. Effectively,
Nevertheless, most operators,
including the major international
chains, admitted to becoming more
the sake of it. Our growth is deliber- the operator runs the hotel for the flexible with regard to performance
ate and thoughtful. We will grow in owner, incurring costs and generating provisions and geographical protection
the right places, with the right part- revenues and profits on his behalf, in areas. The provisions range from
ners and the right properties.” return for management fees typically accepting sliding scales of incentive
equivalent to about 7 to 8 per cent of fees (dependant on profit levels) to
GETTING BACK TO GOOD? total revenues. accepting an ‘owner’s priority return’,
Most operators were cautiously opti- Gulf Business asked operators meaning they get paid their incentive
mistic about future growth prospects, whether the recession had affected fees only after owner commitments
although few were prepared to state their bargaining position when such as loan repayments are first
exactly when growth would resume. negotiating contracts. The larger honoured. Geographical protection
“We believe that pipeline growth will chains admitted to devoting a lot more areas are defined as regions in which
return once the markets have settled, time to their hotel owners, not least in the operator is prevented from opening
new supply is absorbed and some vis- helping them get troubled projects off a hotel of the same brand. Most
ibility on macro-economics returns,” the ground, but not to lowering their operators prefer to accept them only
says George of Starwood. “Debt mar- fees or charges, as Accor’s Landais for a limited period, which is known as
kets need to come online again for the comments: “The brands as well as all a ‘burn-off provision’.
pipeline to re-start and that may take the support systems of Accor have a On the flip side, the larger operators
some time yet.” value, a real cost, as they represent like IHG felt that their services and
Many, however, were resigned to an upstream investment for the ‘value added’ had come into sharper
playing the waiting game, while ac- hospitality group and as such must focus during the recession. According
knowledging that the hotel sector of be remunerated at their right value.” to Kasselis, IHG also feels able to
the Middle East as a whole has been Banyan Tree’s Ping also speaks for demand termination provisions
less impacted than many other re- many when he says: “We have always favouring them in the event of an
gions, and remaining cautiously opti- sought to align our interests with owner not performing or complying
mistic about future potential. ■ our owners for the long term, and with its brand standards (as can
because of this, a specific short-term happen when costs are being cut),
Guy Wilkinson is a partner of Viabil- event such as a recession, a natural and also when it becomes clear that a
ity, a specialist hotel and real estate disaster or health epidemic, does not particular development is not going to
consulting firm in Dubai. affect our management terms.” be completed.
Email him at

June 2010 53


Trains, planes
and automobiles
The Gulf’s long road to better logistics continues, though there will be
a few detours along the way, ROBERT BAILEY reports.

riven by the need to market before a modest recovery in demand jor new capacity with King Abdullah
its hydrocarbon and petro- will return and not until 2012-2013 Economic City’s Port at Rabigh. When
chemical products and satiate before most regions see their through- completed the port is planned to have
development and import re- puts regain pre-recession levels. a handling capacity of up to 10 million
quirements the Gulf has invested more In spite of recession, investment TEUs a year.
than $40 billion in ports and related in- decisions are being made on a long- Jebel Ali has long-term plans to ex-
frastructure in the last decade. term basis. pand its container handling capacity to
The multi-billion dollar spending US management consultant Booz and 50 million TEUs by 2030. However, plans
spree has stimulated extraordinarily Company estimates that the Middle to build a third container terminal to
rapid development but it also reflects East transport and logistics market will raise capacity in the medium term from
the region’s advantageous location on be worth $27 billion by 2012 compared 11 million to 15 million containers are
the Europe-Asia transport lane as a to $18 billion in 2008 much of it ac- being reviewed.
stopover for air cargo, sea freight and counted for by projects in the Gulf. Abu Dhabi’s new Mina Khalifa Port is
sea-to-air cargo conversion.
However, the region’s transport and
logistic industry remains heavily de-
Middle Eastern ports experienced an
pendent on the global economy and average drop in volumes of between
trade flows. Last year was bleak, with 5-10 per cent in 2009.
the World Bank estimating a 9.7 per
cent contraction in global trade vol- Even during the worse of last year’s being developed over five stages. The
umes, the worse decline since the Sec- downturn expansion projects still went target is for the new facility to handle
ond World War. ahead on schedule. These included Bah- up to 15 million TEUs and 35 million
Middle Eastern ports experienced rain’s new $362.5 million Khalifa Bin tonnes of general cargo by 2030. An
an average drop in volumes of be- Salman Port officially opened in late adjacent 51 square kilometres indus-
tween 5-10 per cent in 2009. Dubai, November 2009. trial zone is also being created on a
for example, saw handling volumes After the opening of its third con- site 35 kilometres north east of Abu
decline 6.1 per cent. tainer terminal, Jeddah Islamic Port is Dhabi City.
There continues to be severe pres- already planning a fourth with a feasi- Qatar is pushing ahead with plans for
sure on margins for every player in the bility study already submitted by PSA a new Doha port on a 20-square-kilome-
sector and few believe there will be an Singapore. The expanded port would tre site with four container terminals
early return to the sort of double-digit then be able to handle up to 11 million able to handle 2 million TEUs.
growth seen in recent years. containers by 2020 compared to 7 mil- Kuwait’s Bubiyan Island container
London-based shipping consultant lion twenty-foot equivalent unit (TEUs) terminal is also moving forward. The
Drewry expects there will be little or no at present. port’s initial 1 million TEUs annual ca-
growth this year and that it will be 2011 The kingdom will also have ma- pacity is planned to increase to 2.5 mil-

54 June 2010



lion TEUs by 2016 when a total of four with throughput up 14 per cent to 3.5 tres GCC-wide rail network planned
container terminals will have been com- million TEUs at the port, which has to connect Kuwait, Saudi Arabia,
pleted. The port could play a significant an annual handling capacity of 5 mil- Oman, the UAE, Qatar and Bahrain by
role in Iraq’s reconstruction. lion containers. the end of 2017.
Oman too is set to continue on a path An important element for Oman and Railways will generate new economic
of ports development. Minister of Na- the GCC is the introduction of rail- opportunities as a result of improved
tional Economy Ahmed bin Abdulnabi ways. Tenders are expected this year capacity and faster transport chains
Macki recently confirmed that the Sul- for the initial phase of a Gulf-wide along the Gulf coast and a strong trans-
tanate’s new port at Duqm, 700-kilome- railway system. An early phase in- Saudi Arabia transport flow.
tres south of Muscat, would include a volves construction of a 574-kilometre Each state has its own national rail
crude export terminal and dry dock and line from Ghuweifat, on the borders of strategy and Saudi Arabia’s is ep-
will be ready by 2012. Later stages will Saudi Arabia and Abu Dhabi to Jebel och-making. The Kingdom’s planned
see a free zone complex and an airport Ali port in Dubai. east-west line will enable shippers to
developed nearby. The new UAE railway, budgeted at avoid the long sea route through the
Oman’s southern port at Salalah between $6-8 billion will be a signifi- Gulf of Aden, delivering cargo instead
bucked the regional trend in 2009 cant part of the planned 2,000 kilome- to ports such as Dubai and Dammam,

June 2010 55


venture of Australia’s Barclay Mowlem

and Japan’s Mitsui.
The track’s primary purpose is to
transport phosphate and bauxite for
processing at Rasa Az Zour. The line
will link mines at Al Jalamid and Al Za-
bairah to Rasa Az Zour via Al Jawf, Hail
and Al Zubairah. Later stages envisage
passenger and general cargo services
and an extension of the line to the Jor-
danian border.
Both the Haramain link and north-
south minerals railway were first
planned as a build-operate-transfer
projects but this financing model had
to be abandoned and the projects tak-
en under the wing of the Ministry of
Finance’s Public Investment Fund.
Elsewhere in the Gulf, rail projects
are also being mobilised. Last Novem-
ber, the state-owned Qatari Diar Real
Estate Investment Company and Deut-
There has been serious thinking sche Bahn International established a
joint venture, Qatar Railways Develop-
towards mass transit in the Gulf and ment Company (QRDC), to build a na-
broader Middle East region. tional rail network.
The German concern has a 49 per
to be delivered to western ports such as of the UK’s Railway Consultancy. cent stake in the venture, which will
Jeddah for onward shipment to Europe. The Landbridge and other major develop 650 kilometres of track and 98
The biggest problem is how to fund planned rail schemes in the region are stations. Later stages allow for a rail
the projects. Originally conceived as a huge undertakings and some question link with Bahrain across the proposed
50-year build-operate-transfer scheme, whether the targeted delivery schedules 45-kilometre causeway between the
financed mainly by debt, the east-west are feasible. two Gulf states.
Landbridge project has not proved to Perhaps the most positive factor is Oman has invited bids for the first
be bankable. the fact that every Gulf state has a stat- phase of its planned rail network. This
Last year the Saudi Railways Organi- ed intent to develop railways. involves a 260-kilometre long line link-
sation finally acknowledged the private “It is not only on paper, these are ing Barka with Sohar Port and the UAE
sector’s lack of appetite and announced projects that will see the light. There border at Khatmat Alhar. A rail net-
that the estimated $7 billion project has been serious thinking towards work of some 2,000 kilometres is en-
would be funded by the Public Invest- mass transit in the Gulf and broader visaged, that will eventually link Sala-
ment Fund and re-tendered as an engi- Middle East region,” says Ramiz al lah on the Sultanate’s southern coast
neering, procurement and construction Assar, senior transport analyst at the with Kuwait’s border with Iraq.
(EPC) contract. World Bank and advisor to the GCC on The region’s rail strategy is ambi-
The problems have yet to be fully its railway strategy. tious and progress may be slow since
resolved and the tender process has Some big schemes are already moving some railways make no sense in terms
lurched from one state of paralysis to ahead. The main civil works package for of pure profit and have very little at-
another with bids and re-bids, a pre- the 444-kilometre Haramain high-speed traction for private investors.
ferred bidder announced only to be rail link has been awarded to Al Rajhi But there does seem to be commit-
suspended and then merged with the Alliance involving France’s Alsthom and ment to a strategy that will have con-
reserved bidder. China Railway Engineering. The $5 bil- siderable strategic benefits for the wid-
“When you have a project that costs lion link is designed to connect Makkah er economy, from encouraging trade to
$1 billion or more, the smallest change and Medina via Rabigh and Jeddah. linking regional economies and creat-
in your calculations can cost millions. Meanwhile work on the first phase ing jobs. Such benefits may seem obvi-
It is hardly surprising that schemes in of the Kingdom’s north-south railway ous but the economics of these schemes
the region have taken so long to build,” is proceeding at about one kilometre a will take time to become clear. ■
says Nigel Harris, managing director day under a contract awarded to a joint

56 June 2010

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Back on track
With mega-projects on hold across the GCC, how is Kuwait, until recently
a byword for stagnation and corruption, finally managing to get its own
ambitious plans off the ground? ROBERT BAILEY reports

here is a growing sense that Kuwait also has vast sovereign funds had been some input from former Brit-
Kuwait’s big ticket projects are and assets available. According to Ran- ish Prime Minister Tony Blair who was
firmly back on the agenda. Op- da Azar Khoury, chief economist at the recently revealed as being a consultant
timism has taken hold follow- National Bank of Kuwait, these amount on “sound governance” to the Kuwait
ing agreement on a $102 billion nation- to $500 billion. government for a fee of $1.5 million.
al development plan that was approved The most intractable problem has Nevertheless a daunting challenge
in February by a 95 per cent majority in been the country’s political infight- still lies ahead even though most of
the National Assembly. ing. This has reflected administrative the necessary moves are pretty obvi-
Sheikh Ahmed Fahad Al Sabah, depu- weaknesses, not the least of which is ous. Fundamentally, there needs to be
ty prime minister for economic affairs the state’s inability to deploy its plen- a change to the way the country is run
and minister of housing and adminis- tiful funds to deliver long-promised which has nothing to do with elections
trative development, has even dubbed improvements in social and physical and personalities.
2010 as the year of the mega projects. infrastructure and projects to diversify Kuwait’s government is bloated with
The plan includes many familiar, the economic base. bureaucrats. Eighty per cent of the
but delayed schemes, such as the The turning point came in May 2009 working population is employed by the
Subiya causeway, Silk Road City, Bu- when the country’s parliament took on a state. There are perhaps 300,000 on the
biyan seaport, a metro system and different shape, including the inclusion state payroll, by some estimates at least
railway network as well as major in- of women members for the first time. five times more than required. Many
vestments in new residential areas,
hospitals and roads. Kuwait’s government is bloated with
Mustafa Al Shamali, the finance
minister, has said that the govern-
bureaucrats. Eighty per cent of the
ment could increase spending to as working population is employed
much as $52 billion in the 2010-2011
budget alone.
by the state.
The plan embraces up to 1,100 Rola Dashti, one of the women MPs, civil servants reportedly owe their po-
projects, many of them very large scale. says: “There is no question that people sitions to social or clan affiliations,
Significantly, it represents the first de- want to see the country move forward. rather than to skills or abilities.
velopment plan agreed to in almost Progressives have won the vote to chair Part of the cure requires the private
25 years and is part of a longer-term committees and we will vote through sector and an end to the population’s
programme, designated Kuwait Vision new legislation which I think will give dependency culture. In the wake of
2035, which is to be executed in five- the country the momentum it needs.” the collapse in stock and real estate
year phases. The much improved atmosphere was values many so-called ordinary citi-
In truth many of the projects should shown when Prime Minister Shaikh zens burned their hands while spec-
have been long completed. Money Nasser Al Mohammed Al Ahmed Al ulating on the country’s stock mar-
has never been the problem. Kuwait Sabah agreed to face parliamentary ket. The latter incredibly still lacks
had a budget surplus of $20 billion questions last December. This was the the independent regulation that has
in 2008-2009, marking the tenth con- first time in the GCC that a Gulf leader been in place in other parts of the re-
secutive year of multi-billion dollar had agreed to address open criticism gion for decades.
budget surpluses. from elected politicians. Perhaps there Apart from a consistently robust

58 June 2010

June 2010 59


V irtually every aspect of Kuwait’s

transport infrastructure is scheduled
for major development in the coming
term. At Kuwait International Airport
expansion involves building a new
terminal building and extending the
existing two runways by 600 metres each.
A third runway is to be built as well
as new hangars and access roads.
Contracts for electrical infrastructure
have already been awarded to
Germany’s Siemens.
Road schemes are also a critical part
of Kuwait’s development plan. Roads
in Kuwait City are heavily congested
and links to neighbouring countries
need upgrading.
A trans-Kuwait national highway wider highways to the rest of the GCC, involving four lines across Kuwait City
network is planned which will run from cutting transport times. including 60 kilometres of them built
the Iraqi border to Saudi Arabia. The plan Studies are also being reviewed on underground.
is to build four or five main segments a proposed rapid transit system linking A new national railway system is also
each of about 100 kilometres, according Kuwait City to outlying areas of the capital. projected to extend 518 kilometres and
to Glen Thorn, regional head of transport This is expected to be implemented be integrated with the GCC’s planned
for Halcrow, the UK consultant that is on a build-operate-transfer (BOT) 2,000 kilometres long railway system.
working on the feasibility study for the basis through a shareholding company Kuwait’s tracks are planned to connect
first phase of the project. where the public will own 50 per cent, with the Saudi Arabia border in the
Improved roads will enhance Kuwait’s a strategic investor 26 per cent and the south and the border with Iraq to the
ports sector. Goods unloaded at the twin government 24 per cent. north as well as linking communities
ports of Shuaiba and Shuwaikh will reach Work on the metro will involve east and west. The project will cost
their destinations quicker with faster, construction of a 171-kilometre network around $6.2 billion.

performance by the National Bank of

Kuwait, the country’s largest financial
Family businesses in the Gulf may be
institution, the banking system in gen- driven to greater corporate governance
eral has remained weak in the after-
math of the 2008 global credit crisis
due to increased wariness by banks and a
limiting its ability to help businesses resulting greater scrutiny on finance.
or individuals.
Assembly members have called for moral hazard of total debt forgiveness cial sector’s crisis is over. A bill has
the government to buy up the entire this in turn could prove divisive since been passed creating an independent
consumer loan portfolios of local banks a significant number of Arab Kuwait Capital Market Authority. The planned
and cancel $6.3 billion interest on mon- residents do not have the qualification five-member committee will supervise
ey owed by consumer borrowers. of full citizenship granted only to those listing and trading on the Kuwait Stock
They argue that a financial stability with documents proving continued res- Exchange, which is oldest bourse in
law, decreed after parliament was dis- idence since at least 1965. the Gulf.
solved in April 2008, helped large cor- Inevitably the emirate’s broader A crucial element in attempts to ac-
porations but not struggling individu- progress will be measured by practi- celerate development is encouraging
als. The government, so far, has resisted cal actions to stimulate the economy increased public participation in the
these demands. and institutional reforms rather than economy. The government aims to kick-
Some think that a compromise solu- handouts. start this through five new publicly-
tion may involve a cash handout to all After a troubling 18 months there is listed companies.
Kuwaiti citizens. While avoiding the now greater confidence that the finan- Each firm will develop a different

60 June 2010



T he new found consensus in Kuwaiti

public life may have positive
consequences for the country’s vital
hydrocarbons sector both up and
downstream. This year is very much a
year of decisions.
The Kuwait Oil Company is planning
investment of up to $2 billion to raise
pressure levels in its giant Burgan Oil
Field in southern Kuwait. The project
is one of the largest planned in the
region’s oil industry and will require a
water treatment plant, water storage
tanks, pumps and a 700-kilometre
pipeline network linking the field to
northern oil fields.
Much more problematical is the fate
of the emirate’s planned downstream
ventures to develop new refining and
K uwait’s hugely ambitious Madinat
Al Hareer “Silk City” project is
expected to become the emirate’s
which is pivotal to the new city’s
The causeway, designated the Sheikh
petrochemicals capacity. second biggest urban community. Jaber Al Ahmed Al Sabah Bridge, will
In December 2008 the country’s Located in Subiya in northern Kuwait cross Kuwait Bay, linking Kuwait City
Supreme Petroleum Council the 250-square-kilometre project will see with the Subiya promontory and Bubiyan
cancelled a $17 billion joint venture four principal areas developed involving Island, where major residential and port
with US petrochemicals major Dow hotels, retail and recreational facilities as projects are proposed.
Chemical Company after pressure well residential areas. A financial district Danish consultant COWI has
from parliament. Unless there is an will be a prominent feature. completed a feasibility study for the link
out of court settlement, international One of the centre pieces is intended which would half the travel time by road
arbitration on a $2.5 billion to be the “Burj Mubarak Al Kabeer”, between the area and Kuwait City.
compensation claim by Dow is due to competing to be the tallest structure ever Bids are expected from local
take place in London this summer. built. An Olympic size stadium is also contractors in consortium with a number
Plans for a 615,000 barrels-a-day planned. The target date for completion of foreign companies. These include
refinery at Al Zour have also been has been put at 2023 when Silk City will Germany’s Bilfinger & Berger as well as
scuppered. The project was derailed have a planned population of 750,000. Hochtief, France’s Bouygues and Vinci,
after National Assembly critics Kuwait’s Public Works Ministry is South Korea’s Hyundai Engineering &
questioned the way five earlier EPC inviting contractors to bid by June 8 for Construction Company, Denmark’s MT
contracts had been drawn up. a deal to design and build the long- Hojgaard, Japan’s Obayashi Corporation
discussed $3.7 billion Subiya causeway and the Saudi Binladen Group.

sector of the country’s economy, with care in addition to banking. These are
the government starting the process in designed to act as part of a wider plan
the banking sector. In September 2009, to use public-private partnerships to
the creation of Warba Islamic Bank was develop the country’s economy and at-
announced. tract foreign investment.
The bank’s start-up capital of $349 Adopting the build-operate-trans-
million is being provided from the sov- fer (BOT) model will allow the private
ereign wealth fund, with the Kuwait sector to become more involved in the
Investment Authority retaining a 24 ongoing development of Kuwait. The
per cent shareholding. The remaining government is said to be examining
shares will be distributed among Ku- regulations to permit more flexibility in
wait’s estimated 1.1 million citizens. awarding concessions from the initially
There are to be companies for pow- envisaged 20-year timeframes.
er developments, construction of real International consultant firms are
estate and housing, ports and health- waiting for decisions on their bids to

June 2010 61



I n spite of the severe power cuts

experienced since 2006, the Ministry
of Electricity and Water has so far been
S eparated from the mainland by
the Subiya channel, Bubiyan is the
largest of the offshore Kuwait islands.
slow to implement vitally needed new Together with Al Warba island it lies
schemes. Projects in the pipeline involve in a strategic position at the mouth of
new power plants in Al Zour, Al Subiya, Iraq’s port of Umm Qasr opposite the
Al Jalai’ah and Al Shuaiba in addition Faw peninsula.
to developing existing facilities and Plans to develop a major new
building new water desalination plants. seaport and associated facilities on
The most ambitious project is the the 530-square-kilometres Bubiyan
long-delayed Al Zour North Power and island have been on the drawing
Water Project. However, a tender has board for several years.
been issued on the basis of a design- The project calls for a commercial
build-operate and maintain for the first seaport to be built on the island in five
phase of development to provide 1,500 phases with the government financing construction of a container terminal,
MW of power and 102 million gallons- the building of infrastructure and the port, four berths and a 1,300 metre long quay,
a-day of desalinated water. dredging works and land reclamation plus port buildings and utilities. A further
Subsequent developments could as well as roads and bridges, port tender is due this year for dredging work
result in a further tripling of power infrastructure and ground improvements. at the port.
and desalinated water output from the When completed the port is expected In addition to the seaport, various
proposed plant. have a handling capacity of 2.5 million tourism ventures are also planned for
A number of consortiums have containers a year. Bubiyan as well as Failaka Island,
been pre-qualified. These include the A number of international groups 20-kilometres off the coast of Kuwait.
US’ General Electric with the local together with local partners have been Al Mal Real estate Company has
Abdulaziz Abdulmohain Al Rashed linked with the project. They include already embarked on plans to build a
Sons Company, Japan’s Mitsui South Korea’s Hyundai Engineering 100-room luxury hotel, chalets, sports
with Thuwainy Trading Company, & Construction Company, Turkey’s facilities including golf course and health
Germany’s Siemens, the local Tadamon Company and STFA Marine, spa on Failaka Island.
Matajer Al Khaleej United Trading & and Belgium’s Jan de Nul, Geneva- Observers believe that Failaka, with
Construction Company, Saudi Arabia’s registered Archirodon Construction its heritage of Hellenic and Dilmun era
Allied Technical General Trading with Services and Egypt’s Arab Contractors. antiquities, could eventually become one
Spain’s Iberdrola, and the local Heavy The Public Works Ministry has of the Gulf’s best known tourist areas as
Engineering Industries & Shipbuilding already tendered marine works for the plans for hotels, marinas and other visitor
Company with Canada’s SNC Lavalin. new port which involve the design and attractions are taken forward.

assist the Finance Ministry’s Partner- pation owed to Kuwait as well as long increasing role in regional trade and
ships Technical Bureau to oversee BOT standing disputes over the two coun- development.
projects including the emirate’s first in- tries land and sea borders. While major projects will take time
dependent water and power project. But not everybody is looking to the to evolve, the coming months are
The government is keen to develop past. Kuwait is the logical and viable likely to see the green light given to
public-private partnerships. However, route for the massive reconstruction projects to enhance oil production,
experience elsewhere shows these are effort that Iraq desperately needs. build infrastructure and improve ed-
very difficult to implement in practice Jasem Al Sadoun, chairman of Alshall ucation, health care as well as build
and participants from the private sec- Investment, believes: “We should try more homes.
tor are going to need real incentives and to be the gateway into Iraq. Iraq will Both the government and the Nation-
a strong legal framework to take part. not continue to be a mess forever, and al Assembly want to be credited with
Kuwait faces more than just inter- given its economic potential and oil re- achieving results. As a result spend-
nal challenges with Iraq still viewed serves it could in the future be the larg- ing on medium-sized capital projects
with suspicion. est Arab economy.” during 2010-2011 is likely to speed
There are simmering tensions with There is a growing sentiment in Ku- up because they are likely to have the
Baghdad principally concerning Iraqi wait that there is going to be change most immediate impact on boosting
requests for a write off of $24 billion of for the better and that planned mega the economy and employment after the
outstanding reparations for the occu- projects will allow Kuwait to play an recession. ■

62 June 2010


Making movies
With the region’s film making beginning to take off, Gulf Business
examines the infrastructure, investment and interest in local cinema.

fatal taxi accident on Du- population growth. Figures from UK- split between other foreign-language
bai’s Sheikh Zayed Road; a based Dodona Research show that films. Other Gulf markets have their
troubled Emirati youth and number of screens has grown to more own demographics, with Mitchell gen-
a tempestuous relationship than 200, up from just 140 in 2003. eralising that the bulk of Kuwaiti audi-
between an air hostess and an adver- Gross box office revenue has also ris- ences are Arabic, along with a smaller
tising executive: all sub-plots of City en rapidly year-on-year. From a base mix of Indians and Westerners, with a
of Life, the first locally-produced of $22.8 million in 2003, this climbed similar breakdown in Bahrain.
feature film directed by an Emirati, to $49.2 million in 2006 and pushed Given the relative youth of the UAE
Ali Mostafa. beyond $71.3 million in 2009. as a nation, and the still-emerging
Following its May debut the film has Driven by a number of factors, in- economic centres across the GCC, the
been attracting strong interest locally. cluding overwhelmingly young demo- significant opportunities are offset by
This is the first large-scale production graphics across the region and a cli- a number of difficulties. One of these
of its kind for Dubai and it could be mate that forces most people to seek is the uneven playing field. Along with
just the first drop of a waterfall, as in- indoor entertainment for much of the wealth, much of it comes down to wasta
vestment in films and the screens they year, cinemas form a large part of the – an Arabic word that is most closely
show on builds momentum across the modern lifestyle for both the local and interpreted as ‘influence’ in English.
Middle East. expatriate populations. Powerful, well-connected, highly-
Massive investments are being
poured into establishing some sem-
blance of a local film industry, with Abu Along with wealth, much of it comes down
Dhabi’s ImageNation the most notable to wasta – an Arabic word that is most
of these. The all-important infrastruc-
ture for this industry has gone through closely interpreted as ‘influence’ in English.
interesting times in the last few dec-
ades, particularly within the last 18 According to Cameron Mitchell, gen- capitalised local family corporations
months. Cinemas and the distributors eral manager of the UAE’s well known trading on reputation and financial
that deliver the films to their customers entertainment provider CineStar, in clout still dominate the business.
are now jostling for position in what terms of audience nationality demo- So says Gianluca Chakra, managing
has been a tough environment. graphics, all the GCC countries have director of Front Row Filmed Enter-
Films – even without a highly de- their own unique make up, “but I think tainment (FRFE), a Dubai-based film
veloped film-making sector – are big the UAE is definitely the most diverse... distributor concentrating primarily
business in the region in the form with the most content and the most on independent cinema. A fast-talking
of cinema viewing. In the UAE, the film releases.” Lebanese-Italian with an American ac-
cinema market has grown rapidly In the UAE, around 70 per cent of films cent, Chakra has been based in the UAE
in recent years, fuelled by a boom shown are Western, 15 per cent Hindi, for years and has carved out his own
in shopping mall construction and 10 per cent Arabic and the remainder niche within the local film industry.

64 June 2010


A still from newly-released film City of Life.

But it hasn’t come easily. Chakra According to Chakra, the business East. Sitting alongside Grand Cinemas,
speaks frankly about the early situa- relationship between Grand Cinemas, which concentrates on the distribution
tion of the film business in the Middle the UAE’s first and largest cinema com- of western blockbusters, are its whol-
East, particularly the Gulf countries pany, and dominant distributor Gulf ly-owned subsidiaries Phars Film and
and more specifically the UAE. Talking Films, effectively controlled which films Al Nisr Cinema and Film distribution,
about what he describes as a monopoly where shown in which cinemas. Of the which cover the distribution of English
situation, he says that a tie-up between UAE’s screens, Grand Cinemas operates and Hindi ‘Bollywood’ titles within the
trail-blazing regional distributor Gulf 133, CineStar 40, Al Massa Cinemas 34 UAE and broader Gulf region.
Film and Grand Cinemas created some- and the remaining 32 divided among As the dominant player, Chakra says
thing of a vacuum for those seeking to smaller, independent. that Gulf Films had access to first
operate within the local cinema indus- Gulf Film, a partnership between Ah- screening nights for Hollywood block-
try. “It lasted for quite a long time. I’ve mad Golchin and Salim Ramia, has been busters, which are the highest-ticket
been here for seven years now and trust operating in the region for around 30 sellers in this market. “The rest of the
me, releasing a film is a constant bat- years. It also owns Grand Cinemas, the films were then left for the other dis-
tle,” he says. largest chain of cinemas in the Middle tributors and exhibitors,” he says.

June 2010 65


able to create a more tenable situation

in this market, but it is still difficult.
“In the US for example, there are
anti-trust laws that prevent an ex-
hibitor from distributing titles in his
cinema [only], as it would not favour
competition. This is a major point
that the US government has taken
into consideration, giving everyone a
chance to compete.”
“Unfortunately, the UAE and GCC
governments [and] the National Me-
dia Council do not know this, and I
don’t think they will ever give it con-
sideration,” he says.
Though difficulties continue, Chakra
believes the situation here has im-
proved since the entry of CineStar
which in 2006 heralded a more open
and competitive environment. CineStar
in the UAE is a joint venture between
Australian cinema giant Greater Union
and Majid Al-Futtaim (MAF), a local
company with an extensive portfolio
of companies including some of the
biggest malls across the Gulf. MAF
owns a 51 per cent stake in the ven-
ture, but Mitchell emphasises that it
is managed by Greater Union, “and
we pay market rent, we don’t get any
favours.” He alludes here to MAF’s
ownership of Mall of the Emirates
and the newly opened Mirdif City
Centre, two of CineStar’s main UAE
revenue centres.
From the group’s newest cinema in-
side the palatial retail development,
Mirdif City Centre, Mitchell spoke
Emirati director Ali Mostafa on the set of City of Life. generally about the cinema industry,
and more specifically about the op-
portunities and challenges within the
A lot of cinemas in the UAE lose money…It Middle East.
is very much a low-margin business. If you “We have massive costs and over-
heads…it is tough, without food and
don’t get to a certain level, you lose money. beverage, cinemas wouldn’t be feasi-
ble,” he says. “A lot of cinemas in the
The difficult business environment mation, KNCC owned all the cinema UAE lose money. Sixty per cent of box
Chakra encountered in the UAE prompt- screens in Kuwait. Chakra says this office revenue goes to film distributors,
ed their 2005 alliance with Kuwait Na- relationship enabled his company to you’re paying massive rent, with mas-
tional Cinema Company (KNCC). Kuwait wrest back some control of the UAE sive overheads in regards to electricity
has the second-largest film industry in film industry from Gulf Films, using and water. It is very much a low-margin
the Gulf, after the UAE, with the small its influence in the Kuwaiti film mar- business. If you don’t get to a certain
Gulf country bordering Iraq accounting ket to offset that of its UAE competitor. level, you lose money,” he says candidly,
for around 45 per cent of movie ticket By bartering access to Kuwait cinemas but concedes that, “overall, the right cin-
sales in the Middle East. in exchange for similar access to more emas, matched with the right mall in the
At the time of the partnership for- UAE cinemas, Chakra says they were right area, they make a bit of money.”

66 June 2010


Though costs across the board

continue to increase – the price of elec-
tricity and water alone have risen six-
fold in the last few years – ticket prices
have remained at the same level for over
a decade, at around $8 for adult admis-
sion to a film. “If you look at anything in
the UAE, what’s the same price [today]
as it was 11 years ago?” asks Mitchell.
However, this is both a curse and a
blessing. The relatively low cost has
meant that the entertainment industry
has, in some ways, weathered the reces-
sion better than others. Mitchell makes
the interesting point that, during the
recession, the travel and aviation indus-
try’s losses have been the cinema indus-
try’s gain. When people choose to either
spend their holidays at home or to trav-
el domestically, they are more likely to
visit cinemas and shopping malls.
The spacious floor plans of the UAE’s
malls provide an ideal environment for
cinemas. According to Mitchell, this en-
ables them to continually ramp up their
offerings to stave off the ever-present
threat of home cinema technology and
film piracy. “We need to constantly re-
vise our offering to ensure we offer
an experience above and beyond what
people can get in their own lounges: the
drinks, the digital surround sound, the SHOOTING THE GULF
snacks and so forth,” he says, mention-
ing its various packages including Pre-
mium Gold Class and executive class
and standard seating.
W hile local film production slowly
gathers pace and the cinema
sector continues to play whatever
Dubai, but ultimately approvals were not
granted. Instead, the desert scenes from
the film were shot in Morocco, which
The danger of an over-abundance of it can, wherever it can, the greater were referenced as Abu Dhabi.
cinemas in the UAE is another threat Middle East is seeing its popularity as a “What Dubai has been holding out
Mitchell raises. Drawing comparisons backdrop for international films rise. for is the right film to promote the city…
with the effect of residential property Over the past few years a number of they’ve always wanted the James Bond-
oversupply on the local real estate mar- films have shown stories taking place in type film to be associated with Brand
ket, he describes the potential impact the Gulf, with some of the more notable Dubai,” says Tim Smythe, who produced
if too many cinema screens flood the recent films being Syriana (2005) maiden Emirati feature film City of Life
market in the UAE. and The Kingdom (2007). Both films after much difficulty. “That’s one of the
He says that if some developers had were shot in various Middle Eastern main reasons Dubai has really held
followed through with plans in 2007 locations, including Morocco, Abu back on permissions for a lot of films,
and 2008, at the height of the boom, Dhabi and Oman. because they didn’t feel the calibre or the
“they would have killed the business There have also been a number exposure would be big enough.”
here. We had developers coming in say- of stillborn attempts of international Smythe, who is also chief executive
ing they were going to build individual producers attempting to film in the and executive producer at Dubai’s
cinemas with 200 screens.” region. The most notable example Filmworks, estimates that the
The flip side of that glut situation can of this was the multi-million dollar international exposure a film like Sex
be found just next-door in Saudi Arabia. Sex and the City 2 film. According to and the City 2 generates would be
The largest and most populous of the various sources, scenes of the film worth at least $100 million in above-
GCC nations, with a population pushing were originally going to be filmed in the-line promotion.
beyond 28 million, is unusual in that

June 2010 67


there are no commercial cinemas, with

the display of films forbidden by the
Kingdom’s religious authorities.
So far it seems that reality is un-
likely to be changed any time soon. A
trial run of film screening last Novem-
ber did not go down well. A limited
screening of Menahi, a locally-made
comedy about a young Saudi Bedouin
who moves to the city, saw an angry
reaction from conservatives. Though a
poll of Saudi nationals showed some
90 per cent were in favour of the open-
ing of movie halls in the Kingdom, the
screening of Menahi evoked an outcry
from some clerics who issued fatwas
against watching the film, claiming
it would lead to forbidden activities,
such as the free mixing of men and
women, and listening to music.
Given such opposition, industry in-
siders have mixed feelings on the fu-
ture of cinema in Saudi Arabia, despite
CAPITAL FILM INVESTMENT persistent rumours that it will one day
allow the opening of cinemas. Mitchell

A bu Dhabi’s tilt at building a film

industry in the UAE, ImageNation,
has gradually gathered momentum
imperative to build a local film industry
is a driving force.
“We’re doing this through co-
is non-committal, referring to specula-
tion that Saudi Arabia may soon move
away from the strict ban, but airing
since it launched two years ago. A investments with international uncertainty as to whether it will ever
well-funded initiative entirely owned production companies in Los Angeles, eventuate. However, he does mention
by the UAE capital’s media giant, but also India and Singapore. Through that most of the new malls built there
Abu Dhabi Media Company, has the this, we’re looking at increasing the have the construction ‘shell’ necessary
raison d’etre of working with directors exposure of those industries in this for cinemas to be added at a later date.
and producers to boost both locally- region, paired with local talent,” Chakra is less optimistic when
produced and international film says Brunner. speaking about the future of film in
production in the emirate. “We take our responsibility to focus Saudi Arabia. “It’s doomed,” he says.
ImageNation’s first project was on the local film-making industry He feels that although Saudi Arabia’s
announced at the end of May, during very seriously, so we try to maximise demographic does represent so much
the Cannes Film Festival. This is an those local elements and pair them, potential, with the strict censorship
Emirati film called Sea Shadow, from where necessary, with the international and religious aspects counting against
directorial debutante Nawaf Al Janahi. expertise we’ve acquired through it, there will never be a film indus-
A coming-of-age story, it revolves our partnerships.” try there. “I’ve been hearing it will be
around two friends growing up Through this approach, he says they opened up for about five or six years,”
together in a small village, and it is due are looking to facilitate three or four he says, but doesn’t place much stock in
to shoot in October/November 2010. locally-made movies per year, and six these rumours.
According to Stefano Brunner, to eight international productions. He For neighbouring Bahrain, however,
chief operating officer, ImageNation, stresses that they aren’t looking at big- Saudi Arabia’s lack of cinemas seems to
their two-pronged approach is scale Hollywood productions, instead works in its favour. According to vari-
weighted towards encouraging the eyeing mid-sized, independent films, “but ous sources, one of the reasons Bah-
grass roots growth of local films, if we can help bring parts of production rain’s cinema market is so strong is
but it will also look to bring more into the region, and produce them here, that Saudi Arabian nationals can drive
foreign, independent films to Abu we’re happy to do so. Very often, we’re across the causeway into Bahrain to
Dhabi. “Everything we do, we do just looking at the commercial side of watch films. And for the rest of the Gulf,
with generating revenue in mind,” he these projects. Sometimes it makes the interest, and thus the investment
says, but stresses that the cultural sense, sometimes it doesn’t.” potential, of film remains strong. ■

68 June 2010


Screen test
UAE-based film producer Tim Smythe talks about the country’s maiden
English feature film and the challenges of the country’s movie business.

n his 25 years in the film business, and through his company, Filmworks, in 14 to 15 hour days, which for him
Tim Smythe, founder and chief Smythe has worked on a number of big started before sunrise and often didn’t
executive at Filmworks Dubai, budget films while in the Middle East. end until late in the evening.
has worked on feature films, These include Syriana, which starred “Normally, if I’d budgeted that film
television productions, commercials George Clooney and Matt Damon and as I would for one of the Hollywood
and everything in between, across The Kingdom, whose cast included films we’ve worked on, I would have
the Middle East, South Africa and the Jamie Foxx, Jason Bateman and other had double the budget, and two to
United States. notable actors. three weeks more shooting time. What
After 12 years in Dubai, Smythe has On City of Life, Smythe worked that comes down to is how much
just wrapped up the emirate’s first closely with the 28-year-old Emirati you have to fill the day to stay on
big-budget feature film directed by a director Ali Mostafa, who made schedule,” he says.
UAE national – City of Life. Lauded by his directorial debut with the film. Smythe explains that the goal for
audiences and critics for its honest Though he describes Mostafa as being most Hollywood films is to shoot two to
and multi-faceted look at life in the “remarkably confident” given it was three minutes of ‘screen time’ – which
glitzy emirate, City of Life is the only his first feature film, Smythe says he refers to edited footage – per day. The
significant film catering to a global was on hand to provide the necessary actual amount of film produced per day
audience to come out of Dubai. encouragement and input throughout is necessarily many times bigger than
With some describing the film production. this, with much of it ending up on the
as a Middle Eastern melange of US “I’ve worked with quite a number cutting room floor. For City of Life, they
blockbusters Crash and Babel; City of first-time directors, and Ali’s quite needed to shoot at least five minutes
of Life opened in late April to mixed
reviews. Its plot revolves around three For a first time director, it was a very
intersecting lives – an Indian taxi
driver with Bollywood ambitions, a ambitious film. It had 80 actors [and was
Western couple and a young Emirati filmed in] 42 locations, which is massive
man from a privileged background.
“For a first time director, it was a
for a first-time film.
very ambitious film. It had 80 actors a confident young man. But [with of screen time per day, which put the
[and was filmed in] 42 locations, which producing you have to] give advice, director, producers and whole crew
is massive for a first-time film. Not support, encouragement, make under considerable pressure.
only with the cast and the locations, suggestions, criticise at times, bounce However, it seems that Smythe
but also the three different stories ideas around. It still weaves, and you’ll thrives in this type of intense
happening at different times – it’s one try different things, different camera environment and enjoys keeping busy.
of the most complex schedules I’ve ever angles and so on.” Having grown up in South Africa’s
worked on,” says Smythe. Filming on the movie – which was largest city, Johannesburg, Smythe
This is a significant statement, given written by Mostafa over a four-year explains how his career trajectory
some of the high-profile films, directors period – took place over a 15-week was initially quite different. Before
and production companies Smythe schedule. According to Smythe, on most breaking into the film industry, he
has worked with. Both as a freelancer days, he and other cast and crew put worked in organisational consultancy,

70 June 2010

June 2010 71

assessing client’s companies against the world have taken, he eventually

productivity and other benchmarks. decided not to give up on working in
“I basically was in management. this region.
My younger brother, who’s now one One of the main reasons for his
of my partners and is a director of frustration was the last minute
photography [with Filmworks], went cancellation of permission for the
into the film industry and he kept prominent Ridley Scott production,
trying to lure me into it,” says Smythe. Body of Lies, by the Abu Dhabi
“I was 28 years old and had been government. Having worked for six
promoted as high as I could be, before months in attracting Scott to film in
you begin to backstab your boss, and the region and on all the preparation
I just didn’t like it…it was giving me When asked why he has chosen to this involved, Smythe was left feeling
financial returns, but no rewards. So focus on the film industry here in the deflated by the experience.
I joined the film industry and had to Middle East rather than his home “That’s when I felt that there was
start at the bottom, as a production country, Smythe explains that he just no future in the industry [here]…
assistant, and then just worked my way doesn’t see the same opportunities in having worked so hard, having had a
up. I was quite lucky that I could work the African continent. However, that’s feature film division set up for three
my way up reasonably quickly.” not to say he hasn’t faced difficulties years, with 40 projects coming across
In South Africa, he worked primarily working in film here. our table, we just managed to do
in filming for television, including “When I opened here…I thought one, City of Life,” says Smythe. “The
commercials and features, but soon I could really change the landscape potential to get a lot of those other
found his work as a freelance producer here. The first thing I did was shoot a projects done all existed, but they
was taking him to parts of the Middle pilot version – an Arabic version of a were either not allowed, or there was
East. Once his career began to take programme similar to friends,” says no tangible interest in attracting the
off, he moved his base of operations to Smythe. With a multi-national cast film [to the region].”
Dubai 12 years ago, and soon after he of characters including a Kuwaiti, He is much more upbeat these days,
established Filmworks. a Saudi Arabian, a Pakistani and with encouraging signs coming out
At the time, there were around five an Emirati, all making fun of each of the UAE, particularly Abu Dhabi,
or six other production companies in other, the UAE television channels which has now also established a film
the UAE, “a combination of Lebanese, Dubai TV and Abu Dhabi TV loved the commission – a move Smythe believes
British and some Emirati – it was programme. But constraints inherent is crucial in building a local industry.
a real mixture,” says Smythe, who in the television industry here “Abu Dhabi has been more proactive
when it comes to film. There are a lot
I was 28 years old and had been of positive signs. I no longer want to
move. I can see a resurgence of film,
promoted as high as I could be, before because eventually, there are levels of
you begin to backstab your boss, and I support that are going to help develop
just didn’t like it... film and allow film to come into the
country, so I’m quite positive about the
spotted the opportunities available eventually scuppered what was an next few years,” he says.
in this market. “Generally, production extremely promising concept.” With the UAE’s first locally-produced
standards were low and there was His frustrations with the local feature, City of Life, achieving
a common belief that you couldn’t industry almost prompted him to leave strong ticket sales locally and set to
produce good work in Dubai. Because just before the financial crisis. “I’ve had show at Cannes, Smythe’s renewed
of the standard of the work we a number of job offers from Hollywood, optimism seems well-founded. He
produced, we grew very quickly.” and nearly moved to Santa Monica just hints at further reasons for his more
Defining what he means by the term before the crunch, and the reason for positive outlook on film here, referring
‘production standards’, Smythe says: that is because, after we had all these somewhat cryptically to a current
“Really, it’s about the approach you films blocked, I got to the stage where Filmworks project as “another big
have to production and the type of I didn’t think there was ever going to Hollywood production that’ll come out
people you employ to execute it. It’s be a film industry here. So I set up an later this year.” However, in true show-
the skill-sets you keep around it – the office in Santa Monica and was about business fashion, he refuses to ‘spoil
cameraman, the type of video editor to buy a house there.” the ending’ by giving further details.
– all the visual ingredients you put Somewhat fortuitously, given the We will just have to wait and see. ■
behind the production.” battering real estate markets around

72 June 2010




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the appointment of in the Middle East, has announced the appointment
seasoned Bahraini banker of Anan Fakhreddin as chief executive officer of the
Jamal Ali Al Hazeem company. He is also a member of the Board of Directors of
as its new Bahrain chief Damas International. Recently, Fakhreddin served as the
executive officer. BMI is the Dubai-based managing director for the Middle East and
Bahrain-based associate of Turkey at the World Gold Council.
BankMuscat – the largest
financial services provider Nicolas Kahale has joined DB Advisors – Deutsche Bank’s
in Oman. In reporting to global institutional asset management business – as
Andrew Bainbridge, who head of the Middle East, Africa and Central Asia. Kahale
becomes the group CEO, Al has more than 16 years of relevant experience and will
Hazeem takes on the responsibility of overseeing the banks be responsible for introducing institutional investors in
expansion plans and its international operations. the Middle East, Africa and Central Asia to DB Advisors’
global investment capabilities, and for creating investment
National Bonds solutions for clients across the regions. In his previous
Corporation has announced roles he covered sovereign wealth funds, central banks,
the appointment of Omar government organisations and other institutions in the
Subhi as its chief financial Middle East, Africa and Central Asia.
officer. Subhi fills this newly
created post following a DNV, a classification and certification company that
distinguished career in focuses on managing risk, has appointed Antony DSouza
finance spanning more as its regional manager for the Middle East and Indian
than 13 years. Prior to this Subcontinent. He will lead the strategic direction for
appointment, Subhi was DNV’s efforts in the expanded region Middle East and
executive director, finance Indian Subcontinent.
and treasury with National
Bonds Corporation.
TECOM Investments has
Building on the recent successful announced the appointment
launch of its mobile telephone of Badr Al Gergawi as the
service, Wataniya Palestine new chief executive officer
has announced the appointment of TAMDEEN, its specialist
of Dr Bassam Hannoun as its firm in technical project
new chief executive officer. Dr management and a member
Hannoun brings to this role of TECOM Investments. Al
strong regional and international Gergawi was formerly the
experience. His experience in the chief operating officer of
mobile industry cuts across 2G TAMDEEN and played a key
and 3G systems, both in technical role in its foundation and
and commercial capacities. growth.

At Gulf Business we try to keep you up to date on the region’s movers and shakers. If you know of any new faces or company reshuffles, please write to The Editor, Gulf
Business, Motivate Publishing, PO Box 2331, Dubai, UAE; fax to +971 4 2827593; or send an email to We reserve the right to edit material.

76 June 2010


one with
Finding a holiday
destination that has not
been ruined by over-
development can be
tough, which is why
simple Belize offers so
much charm.

elize is not on the beaten path The reef comprises an 82-square the back of Long Caye. The island has
for nature-loving travellers, mile shallow lagoon surrounded its own dive centre for those who wish
but perhaps it should be. For by deep waters of the open sea. to discover the underwater world.
starters it has a long barrier reef, Within this there are more than 700 The resort at Long Caye is as rustic
vast areas of unspoilt rainforest, pristine patch reefs brimming with as it gets and there are cabanas
a friendly, English-speaking the richest variety of marine life in available for hire – although don’t
population, stable democratic the Caribbean – from the delicate expect luxury here. It’s fairly simple
government and exemplary fan coral and spiny urchin to the and unpolished with its solar-powered
conservationist approach to its colourful stoplight parrot fish and water pumps, no maid service, no air-
natural and Mayan cultural heritage. elegant southern sting ray. conditioning and no flush toilets – this
In particular, the waters around Snorkellers and divers are often is a place to be at one with nature.
Glover’s Reef at Long Caye, Belize enchanted by the spectrum of sea For wildlife viewing, the June-July
are thought to be some of the most life, in particular ‘The Wall’, which is period can be the best time because the
stunning the country has to offer. known as a world-class dive site off fresh rains bring out the wildlife after

Embers Al Muna, Al Samadi Cafe and
The Address, Dubai Mall Jumeirah Beach Hotel Sweet Shop, Downtown
When a hard This international Burj Khalifa
day’s shopping restaurant has an A new flavour
leaves your Arabic decorative is being offered
feet weary and style with beautiful to the popular
your stomach details and culinary business lunch
hungry, why not options that range format with Al
skip the food from traditional Arabic fare and extend Samadi’s Franco-
court? With direct access from to the rest of the world. Watch the world Lebanese cuisine. The restaurant’s
Bloomingdales, ‘Ember’, is the Address go by from an expansive outdoor seating location on The Boulevard in Downtown
Dubai Mall’s signature restaurant, which area that overlooks the harbour on which Burj Khalifa makes it a convenient
unapologetically exudes style. The open busy abras (water taxis) transport guests location for a working lunch. Relaxed, yet
kitchen serves grill cuisine (Japanese around the complex. Lovers of seafood elegant, Al Samadi offers customers a
robatas, seafood, Australian ribs, vintage flock to the restaurant on Wednesdays for quiet atmosphere at lunchtime in which
beefs, rotisserie) and in keeping with the the Seafood Harvest Night while oriental they can also entertain clients – the
design, the food is sophisticated and foodies enjoy over 40 dishes from regions underground car park makes the venue
interestingly constructed. such as Malaysia to Japan every Thursday. very accessible.

78 June 2010


The dark arts

Recent thefts from museums and collections have brought the darker side
of the art market into the spotlight again.
In May this year there were high profile cases with the multiple thefts
from the Museum of Modern Art in Paris and from a collection in Marseilles
the following day. The works were by Pablo Picasso, Henri Matisse, Georges
Braque, Amedeo Modigliani and Fernand Leger and had an estimated
market value of $150 million.
The problem is not contained
to Europe. The continued looting
of treasures from Iraq and
Afghanistan has been noted
by the US Federal Bureau of
Investigation as being carried
out “on a massive scale”.
And then there are forgeries
of Middle Eastern modern
masters. We have lately
witnessed the appearance of
several highly-questionable
modern pieces. Two forged
works by Dia Al Azzawi were
the stifling heat of May. discovered, one on
During the rainy season, a in the US and the other at a
‘mauger’ which translates to London Gallery. The work from
‘little dry’ occurs but due to the the US made its way to the Gulf
fact the overall precipitation only and was dealt with there. The other piece was dealt with by Scotland Yard.
varies a little between the seasons, Here in the region one continues to see questionable works in private
Belize can be seen as a year-round collections, galleries and art fairs. During Art Dubai, for a second year
destination. Only avoid September running, a London Gallery displayed problematic works by the Egyptian
and October when the hurricane artist Adam Henein.
season can strike. Maliha Tabari of Artspace Gallery, noting the problem, called a meeting
with John Martin, Henein and Salma Feriani of Le Violin Bleu/ Salma
Feriani Gallery. There Tabari raised the issue that Henein’s sculptures, being
sold by Le Violin Bleu Gallery, were signed by someone other than the artist.
Henein confirmed on site that they were not signed by him.
Left Bank, Feriani has confirmed to me that the questioned works were signed by
Souq Madinat, Dubai employees of the Bocqeul Foundry in France, where the sculptures were
Set amongst the cast and not signed by the artist, as the artist could not hold the electric
swish Madinat pen to sign the work. But Henein has no problem signing his works at his
Jumeirah, this venue studio in Cairo, which puts the provenance of the sculptures in question.
has a beautiful The gallery has told buying clients that the works are signed by the artist,
waterfront location. although they have now been proven not to be. If they had said the works
Billed as a chic were signed by the foundry on behalf of the artist then there would be no
lounge, bar and restaurant – it’s a lively spot issue, but since they did not, that is an issue.
at the weekends. With its funky décor, it’s This brings to light the need for more due diligience when it comes to
ideal for an intimate dinner for two, special buying high value items. I suggested to Ben Floyd of Art Dubai the need
occasions or a night out with friends. for a vetting committee at fairs here in the Gulf, like they have in Europe
The new menu offers some mouth- and North America, giving patrons more security. He agrees. With regard
watering dishes such as meat skewers, to works by Middle Eastern modern masters, there are so few experts
juicy lamb cutlets with tomato and onion and resources available that one can rarely investigate a work and its
salad and crumbled feta and the pea and provenance thoroughly. At Meem Gallery, with the Al Noor Library, we have
leek risotto. During the day, it’s the ideal 8,000 titles and in excess of 20,000 images in the picture library, making the
setting for business lunches, dinners and job at hand a little bit easier. ■
even corporate events.

June 2010 79


that hustles
Quick enough to outrun
the fastest margin call, the
2010 Ford Mustang GT
puts a smile on the dial,
writes Glenn Freeman.

ith its striking bright blue
paintjob, a broad, muscular
stance and a gloriously
guttural V8 roar, there’s a lot to love The predominantly straight the most intuitive I’ve used, after a
about this vehicle. Sliding into the roads of Dubai provide the perfect few minutes of head-scratching and
black leather driver’s seat, twisting playground for the ‘stang. Its hefty button-pressing, it’s not too hard to
the key and revelling in the sound 1611.16 kg bulk and 1877 mm width, figure out.
of the 315 horsepower engine, one paired with a steering system with Another more handy feature is
can’t help but smile. a little too much play for my liking, the reversing camera. Cleverly inset
It doesn’t even matter that the mean that, as always, the Mustang within the drivers’ rearview mirror,
2010 model of Ford’s pony-car is is still mainly a vehicle for straight this gives you a clear perspective on
slightly down on power compared line fun. The brakes, which are what’s happening behind you when
to some others in its class, adequate but don’t quite provide backing up. Given the postage-stamp
including the 2011 Mustang. enough bite, also add to its slight size of the rear window, this is a very
While the 2010 model I drove had aversion for corners. welcome addition – though it has no
a 4.6L V8, next year’s release has a Inside, the 2010 Mustang gets the sensors, just the camera.
new 5.0L V8 that produces 540- SYNC entertainment and navigation If you’re looking for a sporty two-
horsepower. But that knowledge did system rolled out across other new door and bang for your buck, the 2010
nothing to dent my enthusiasm. model Ford vehicles. Though it isn’t Mustang is hard to go past. ■


Reinvention too far afield Wentworth is by no means alone

in a modern era where golf course
architects are continually fighting a

here’s a joke from British comedy this English institution into a course losing battle against ever-improving
Only Fools and Horses that that is unrecognisable from the classic technology but surely things have gone
strikes a relevant chord in golf track first laid out by Harry Colt in too far down in Surrey.
today. Dopey Trigger tells Sid that he’s 1926. According to Els, the goal was Like famous historical buildings
just received a medal for using the to make it a test-worthy of hosting and landmarks, classic golf courses
same broom for the past 20 years. “That what he refers to as the tour’s ‘fifth are institutions that should be
old broom’s had 17 new heads and 14 major’. “When players learn to master protected from the whims of
new handles,” he announces. Sid looks this golf course they will have a lot of experimentally creative owners. As
confused, and replies: “Well how can confidence going forward into events Paul Casey pointed out in one of
it be the same broom then?” After its like the US Open,” he insisted. the more damning criticisms of the
radical overhaul, you could ask the But in achieving this aim, the new Wentworth, “Ernie Els owns
same of Wentworth’s West course. charming old West course now looks that house by the 16th hole, but that
The most famous inland course like it belongs on the PGA Tour – doesn’t give him the right to paint it
in Britain was at the heart of such a with its raised greens, enormous pink and put a tin roof on it.”
heated debate at last month’s BMW bunkers and made-for-TV water If Caring wanted a ‘US Open’ course
PGA Championship that it was hazards. “Wentworth has lost its perhaps he could made one elsewhere.
difficult to focus on the golf. Ernie English feel,” said Chris Wood, one As it is, the world of golf has lost a
Els and Richard Caring, the wealthy of a number of players to publicly Colt classic and introduced a worrying
Wentworth owner, have transformed criticise the changes. precedent for the future. ■

80 June 2010


Hot stuff

Theft or innovation?
Sony Walkman A845 Did you ever see the film, Pirates of
$215 Silicon Valley? It ranked quite high on the
Sony makes some fantastic-sounding geekometer for some. For those who didn’t
media players. Pity then, that most in its make the docudrama leap though, here’s
range have been dwarfed by Apple’s market- the gist: young Steve Jobs and young Bill
busting iPods. Still, it soldiers on, this time Gates go through life building, coding and
with a new Nano-baiting A845. With a 2.8in somewhat stealing their way to the top.
OLED screen, 16GB of memory and noise- But my opinion on a semi-decent film does
canceling EX headphones it has everything not a good column make. And it wouldn’t be
but an Apple logo. worth bringing up in this world of blue-
clad aliens and CGI effects, except for this
one scene. In it, Jobs and the rest of Apple
has just discovered that Bill Gates has been
ripping off the original Macintosh software
for what would become Microsoft’s DOS. A
deplorable act of thievery of course, that is, if
Apple had not already nicked it from Xerox.
It’s this theme, some call it borrowing
(others say piracy) that echoes throughout
the film, and dare I say it, our tech trade
Asus N61 in general. It comes from a quote of Pablo
from $900 Picasso’s “good artists copy, great artists
It might look like your steal.” Of course, where do you draw the
bog-standard lap-friendly line? Every car in the world has a steering
PC from the outside, but wheel, yet no manufacturer claims it’s theirs
stick a microscope at its alone. Move that analogy into the gadget
insides and you might spot world, and you might say every touchscreen
a few differences. It’s one of mobile has an on-screen QWERTY keypad,
the first computers to sport but no one can say that something so generic
super-speedy USB 3.0 tech. How is theirs (although most do try).
speedy? Well it will shoot through Right now, some of the biggest names in
a typical MP3 song in a flash 0.1 technology are currently sat on this fine line.
seconds or a 25GB Blu-ray in just When the iPhone became popular, a host
over a minute. of iPhone-clones appeared, from the illegal Chinese knock-offs to the legit handsets.
And we’re on the cusp of another gadget
revolution with the iPad. This hugely popular
bit of tech is still outselling demand in the
states, let alone the rest of the world where
it hasn’t even been properly released. Give
it a few months, and there will be a host
of look-alikes, similarly-specced tablet PCs
looking to cash in on Apple’s popularity.
Philips Of course, Apple’s design philosophy lends
itself well to copycats. Its products are unlike
Sound any other. But don’t think that makes Steve
Sphere Jobs and Co. any less likely to jump on a
MCi900 digital bandwagon.
Whether or not these tech companies steal
$1,385 is without question. What you should be
You won’t find a more high-tech hi-fi than this. They promise asking, is whether that makes them a good
100W of wide-open sound for your tunes, whether that’s from the artist, or a great one. ■
MCi900’s removable 160GB hard disk, USB input, CD/DVD player, net Thomas Shambler is the features editor of Stuff
radio or streamed from a Mac or PC. They even look snazzy too. Magazine Middle East.

June 2010 81


Free or easy?
This month Gulf Business examines the viability of the free content model and
explores the serious organisational renewal needed to ride out the recession.

C hris Anderson’s
first book, The
Long Tail, explained
At the heart of Free is the
idea that, while marginal
costs of creating new copies
the manager in a crisis. Chock full of
diagrams, case studies and practical
suggestions – it would seem that by
how retail businesses of something are essentially pulling no punches – beginning with
would be transformed zero, the costs of making the a detailed cause-focussed narrative
by online models content are still the same; on the global recession, then moving
that cut the cost and in the online world, in for a closer snapshot on the
of inventory and the initial investment in specific impacts it has had on the
distribution to near servers and computers and culture and psychology of business
zero and allowed infrastructure can be very, and management, to the structural
companies to reap very high. That’s where the weaknesses the crisis exposed on an
fortunes from niche difficulties start. Of course, individual business level – the authors
interests. nothing is free. A Facebook are very methodically attempting to
Free: the Future of a Radical Price user doesn’t pay an annual fee, but fix problems from the bottom up.
(Hyperion) is the same, but different. their opinions, interests and friends As the jacket reminds us – after the
Still looking at how online models are still a valuable commodity as turmoil of the recession, there is no
have caused a seismic shift in the information to be sold on. Recent return to business as usual.
economics of inventory management criticisms of Facebook’s privacy Viable and successful entities
and distribution, Anderson argues that policy reveal that for some, those in today’s economic reality need
the new price point for many goods costs are just too high. It remains to be Purposefully Self-Renewing
and services is a revolutionary one: to be seen just how much privacy Organisations – the core focus of
nothing at all. The book, out for a year consumers are willing to barter for the book. The authors lay out what
now, garnered lukewarm reviews on their ostensibly free entertainment they believe senior managers need
publication, with the Free concept and news, and this book as an to do to help their employer become
he espoused being criticised as too essential read for anyone looking at that through renewal, correction and
compromised. However, many critics a digital model for a new or existing strengthening of their organisation’s
are reassessing it now, especially business. business models, foundations and
in the wake of the newspaper operational structures.
“paywall” arguments and the fact
that laws outlawing music sharing
are being criticised for criminalising
B eyond Crisis –
Achieving Renewal in
a Turbulent World (Wiley)
Beyond Crisis is
potentially a life-
changing book for a
mainstream consumer behaviour. is the book for the serious senior manager, one that
While perhaps not as fully formed manager seeking to lead prompts the examination
as The Long Tail, Free is better as his organisation out of the of every layer of his
the concepts Anderson discusses recession stronger. Written organisation’s functions,
are still ongoing: free content isn’t, by three strategists – Gill its goals and its actual
as yet, a done deal, but it’s certainly Ringland, Oliver Sparrow output. As such, it is also
where we’re headed. Anderson offers and Patricia Lustig – it at times an exhausting
a vague roadmap to where this will is unsurprisingly a very read and not one that
end up, and it’s increasingly clear technical read but one can be adequately done
that even a vague map is better than that aims to provide real without a good amount
no map at all. answers and direction to of time and introspection.

82 June 2010


Exhibitions, conferences & seminars

Gulf Business presents a comprehensive listing of business-related exhibitions,
conferences, events and seminars in the GCC for the forthcoming month.

EVENT DATE LOCATION ORGANISER Bahrain Society of Engineers,

HR in Healthcare Jun 01-02 DIEC, Dubai IIR The on tel +973 17727100,
fax +973 17729819
Beauty World Middle East and Wellness & Spa Exhibition Jun 01-03 DIEC, Dubai Epoc Messe
BME Global on tel +442075119582,
Hospital Build Exhibition & Congress - Middle East Jun 01-03 DIEC, Dubai IIR fax +442070221722
Saudi Brand and Communications Summit Jun 05-08 Marriott Riyadh Hotel, IIR Datamatix on tel +9714 3326688,
fax +9714 3328223.
Anti-Money Laundering Conference Jun 06-07 Hyatt Regency Dubai, Dubai Marcus
ECS (Expo Centre Sharjah)
WEPOWER 2010 Jun 06-08 Dhahran International Exhibition Centre BME Global on tel +9716-5770000,
China Sourcing Fair Jun 08-10 DIEC, Dubai Global sources fax +9716-5770111.

Future Museums Congress Jun 07-09 ADNEC, AbuDhabi Turret EPOC Messe Int’l on tel +9714 3380102,
fax +9714 3380041.
Middle East Desalination Summit Jun 07-09 Abu Dhabi Fleming Gulf
Fleming Gulf LLC on tel. +971 4 390 2764,
Cityscape Jeddah Jun 07-09 Jeddah Center for Forums and Events IIR Fax: +971 4 366 1048
2nd GCC Job Localisation Challenges and Jun 08-10 Dubai Datamatix Global Sources on tel +65 65472800,
Talent Management Conference fax +65 65472888
Façade Design and Engineering Saudi Arabia Jun 12-15 Radisson Blu Hotel, Riyadh, Saudi Arabia IQPC IIR Middle East on tel+9714 3365161,
fax +9714 3352682.
Cost Effective Sustainable Design and Jun 12-15 Hilton Garden Inn Riyadh Olaya, Riyadh, IQPC
Construction Saudi Arabia Summit Kingdom of Saudi Arabia IQPC ME on tel +9714 3602800,
Fertilisers MENA Summit 2010 Jun 13-15 Hilton Hotel Abu Dhabi, United Arab IQPC fax +9714 3631938.
National Security Summit Middle East 2010 Jun 13-16 Le Royal Meridien, Abu Dhabi, UAE IQPC on tel +603-2723-6604,
fax +603-2723-6699
Gas Processing MENA Jun 13-16 Beach Rotana, Abu Dhabi, UAE IQPC
Turret ME on tel ++9712 4446011,
Energy & Water Conservation Expo 2010 Jun 14-16 BIEC, Bahrain BSE fax +9712 4443987
Submarine Networks MENA 2010 Jun 20-23 Arjaan Rotana Hotel, Dubai, UAE IQPC Terrapinn on tel +44 20 72421548,
fax +44 20 72421508.
Marine & Coastal Engineering Middle East Summit Jun 20-23 Millennium Hotel, Doha, Qatar IQPC
Gulf Business and Motivate Publishing
4th Annual Click Digital Marketing Summit Middle East Jun 20-23 Grand Millenium Hotel, Dubai IQPC accept no responsibility for errors and
omissions, date and location changes or
14th Annual Compensation & Benefits Forum Jun 20-24 Dusit Thani Hotel, Dubai IIR cancellations.
Customer Service Forum Jun 21-24 Park Rotana, Abu Dhabi IIR Please contact the organisers directly for
further information.

If you are organising or know of an event taking place in the GCC, please send full details to: Exhibitions, Gulf Business, Motivate Publishing, Box 2331, Dubai, United Arab Emirates,
or fax to +9714 2827593, or email

WEPOWER 2010 National Security Summit 14th Annual Compensation

WEPower 2010 will bring together the Middle East 2010 & Benefits Forum
biggest clients in the water and power The theme this year for the summit is As corporations struggle to navigate the
industries under one roof, combining an Counter Terrorism & Border Security. current economic storm, compensation
industry-led conference and exhibitors The event offers a comprehensive professionals are challenged with
from across the globe showcasing their agenda to address the emerging developing reward philosophies that
latest products and services. Water threats and critical strategies that will support corporate strategy but at the
continues to be a basic need and one overcome the barriers to information- same time contain costs. The 14th
that attracts major investment in the sharing between government agencies Annual Compensation & Benefits
Gulf. This event is an opportunity for and international security agencies. Forum will address those challenges by
sector players to become a part of The agenda will also identify the latest focusing on ‘Managing Your Employee
Saudi Arabia’s developing water and technologies and solutions for border Expectations By Keeping Benefits
power industries and will be a good security and control and how you can Innovative In A Changing And
networking event for professionals in enforce these cutting-edge measures Cost-Contained Environment’. Sector
water and power sectors. within your organisation. professionals are invited to attend.

84 June 2010



Abu Dhabi Sheikh Zayed Road, Dubai Al-Barsha, Dubai Al Barsha South-TECOM Jeddah, Saudi Arabia
Al Raha Beach Hotel, created to Offers 301 luxuriously appointed guest Offering 161 furnished units ranging Located in the heart of Dubai’s new The hotel situated in the heart of the
provide the very best of traditional rooms and suites, nine restaurants and from 81 sqm to 160 sqm, 3 dining business hub and opposite Dubai Media business centre offers 211 rooms, 17
Arabian hospitality. This unique jewel bars, health club and spa, tennis and venues, 3 multi-purpose meeting City and Internet City the Media Rotana suites and 25 apartments. 5 meeting
of luxury and tranquility, offering squash courts and outdoor swimming. rooms, recreation facilities & a Dubai has 460 rooms, suites and deluxe rooms and 2 reception rooms to
magnificent services, awaits you for Tel 00971 4 3438888 majestic landscaped area around the hotel apartments, 5 award winning accommodate up to 350 people.
an unforgettable visit to Abu Dhabi. Fax 00971 4 3438886 temperature-controlled pool. dining venues and 15 meeting rooms. Tel 00966 2 6602000
Tel 00971 2 50 80 555 Email: Tel 00 971 4 437 78 88 Tel: 00971 4 4350000 Fax 00966 2 6604145
Fax 00971 2 50 80 429 Fax 00 971 4 437 79 99 Fax: 00971 4 4350011
Email: Email:


Khalifa Park area, Abu Dhabi Sheikh Zayed Road, Dubai Dubai Marina Ras al Khaimah Riyadh, Saudi Arabia
Conveniently located adjacent to Khalifa This 394-room hotel boasts 10 dining This hotel boasts 240 units, including The Acacia Hotel is a superbly designed The first 5 star Holiday Inn hotel in the
Park, the property offers 318 luxurious and entertainment venues a superb studios, 2 or 3 bedroom units, and four star hotel complete with Al Nakhla Kingdom, with 289 new and trendy
rooms and suites, 6 world class dining spa and unrivalled meeting facilities. penthouses. There is also one restaurant. a restaurant, the stylish Flamingo bar, the accommodations, huge lobby with W-Fi
venues, 6 meeting rooms and spacious Tel 00971 4 3325555 health club, indoor and outdoor swimming vibrant Club Acacia, a pristine pool serving access, outdoor pools, sauna, Jacuzzi
ballroom with day light access and Fax 00971 4 3324555 pools and 5 meeting rooms. as a backdrop to varied and exciting and health club. Also has state-of-the-art
outdoor terrace. Email: PO Box 215855, Dubai, U.A.E Theme Nights, the luxurious O-Zone Spa, meeting rooms, 24-hour business center
Tel 00971 2 6573333 Tel 00971 4 3992500 and high-energy Oxygen Gym. with professional secretarial support.
Fax 00971 2 6573000 Fax 00971 4 3993225 Tel 00971 7 2434421 Tel 00966 1 4505054
Email Email Fax 00971 7 2434429 Fax 00966 1 4505056


Sheikh Zayed Road, Dubai Doha, Qatar Doha, Qatar Jeddah, Saudi Arabia
Jumeirah Emirates Towers is a sleek Situated in the West Bay area, yet Located on the Corniche Road, opposite Located a 10-minute drive from the
architectural masterpiece of steel located near the city. With its various the Museum of Islamic Art, the hotel Jeddah International Airport. Offers over
and glass. It redefines the business dining options, 24 suites, 234 rooms, offers 154 rooms and suites, a business 414 rooms including 46 suites. 10th
hotel category, seamlessly combining private beach and state-of-the-art centre and meeting rooms. Recreation and 11th floors are Executive floors
form with function, high technology gymnasium, it is an idyllic setting for facilities are also available. addressing all the needs of a modern-
with unparalleled luxury and elegance business and leisure. Tel 00974 4291111 day businessman.
with efficiency. Tel 00974 4844444 Fax 00974 4291100 Tel 00966 2 659 0000
Tel 971 4 3300000 Fax 00974 4839555 Fax 00966 2 658 2489


To become one of Gulf Business’ Preferred Hotels and benefit from exposure to the extensive readership of Gulf Business throughout the GCC
contact Circulation Department on 00971 4 2052497

Gulf Business magazine is available in all of these GCC hotels

86 June 2010



Deal Value ($m) Bidder Company Target Company Deal Description
2150 Qatar Holding LLC Harrods Limited Qatar Holding LLC, the Qatar-based investment arm of Qatar Investment Authority, the Qatari
sovereign wealth fund, has acquired Harrods Limited, the UK based operator of the upper market
department store Harrods, from Mohamed Al Fayed, the UK based businessman, for a total
consideration of $2.15 billion.
1300 TPG Capital LP American Tire Distributors Holdings Inc TPG Capital LP has agreed to acquire American Tire Distributors Holdings, Inc from Investcorp SA,
Berkshire Partners LLC, and Greenbriar Equity Group LLC for an enterprise value of approximately
$1.3 billion.
American Tire, the US-based company headquartered in Huntersville, NC, is a replacement
tyre distributor. TPG Capital, Berkshire Partners, and Greenbriar Equity Group, the US based
companies headquartered in Fort Worth, TX, Boston, MA, and Rye, NY, respectively, are private
equity firms. Investcorp, the listed Bahrain based company headquartered in Manama, is
an alternative fund manager.

7 Astra Polymers Constab Middle East Polimer AS Astra Polymers Compounding Co Ltd, the Saudi Arabia-based producer of masterbatch additive
Compounding systems, thermoplastic compounds and liquid based or paste colourants, and a subsidiary of Astra
Co Ltd Industrial Group, the listed Saudi Arabia-based Conglomerate, has agreed to acquire Constab Middle
East Polimer AS, the Turkey-based producer of masterbatch, additive and thermoplastic compounds,
for a total consideration of $7.37 million.
- MIC STME Limited MIC, the Saudi Arabia-based investment house, has acquired, STME Limited, the Saudi Arabia-based
provider of advanced enterprise IT solutions, for an undisclosed consideration. This acquisition
compliements MIC’s operational strengths and other investments. Post acquisition, MIC will add STME
to its current ICT portfolio.
- Tamin Telecom 3G License (Iran) Tamin Telecom, the Iran-based telecommunications company, has been granted the 3G mobile license
ownership, from the Iranian government, for an undisclosed consideration.Tamin Telecom becomes
the third mobile operator in Iran to offer 3rd generation mobile services.
- Qatar Electricity AES Ras Laffan Operating Company Qatar Electricity & Water Co QSC, the listed Qatar-based power and desalination company, has agreed
& Water Co QSC WLL (70% stake); and Ras Laffan Power to acquire 55 per cent stake in Ras Laffan Power Company Limited QSC, the Qatar-based owner of an
Company Limited QSC (55% stake) independent power and water desalination plant and 70 per cent stake in AES Ras Laffan Operating
Company WLL, the Qatar-based operation and maintenance service provider, from AES Corporation,
the listed US-based company engaged in power generation, distribution, supply and other
intermediaries, for an undisclosed consideration.
Notes: Based on announced deals, including lapsed and withdrawn bids. Based on geography of target, bidder or vendor being Middle East. Based on period betwewen 20 April 2010 and 19 May 2010. Includes all
deals valued over USD 5m. Where deal value not disclosed, deal has been entered based on turnover of target exceeding USD 10m. Activities excluded from table include property transactions and restructurings
where the ultimate shareholders’ interests are not changed. Data correct as of 20 May 2010. Source: mergermarket

FROM 2004 TO MAY 19, 2010 *
Leisure Business Services
14,000 60 12.5% 12.5%
Value [$m]
12,000 Volume Energy, Mining & Consumer
Utilities 12.5% 12.5%
Number of deals

Value [$m]


Media & Telecom
0 0 50.0%
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q109 Q209 Q309 Q409 Q110 Q210*

FROM 2004 TO MAY 19 , 2010*
30,000 250
Value [$m]
19.3% Technology,
Volume Media & Telecom
200 80.7%
Numbers of deals

Value [$m]



0 0
2004 2005 2006 2007 2008 2009 YTD 2010*
Mergermarket tracks all M&A deals of more than $5m where the target, bidder or parent is a Middle Eastern company. For further details, call +9714 4376482.

88 June
May 2010

All things to all men

GLENN FREEMAN gets a peek into future changes in the advertising and branding
sectors with Terry Tyrrell of The Brand Union over a buffet at The Rotisserie.

raditional advertising agencies Dubai office, having helped them re-create
are being left behind by multi- their visual identity for the region.
service agencies that are hybrids He conceded that the economic slowdown
of marketing, branding, advertising has impacted their offices globally and
and business consultancies. So says Terry in the UAE, where they shed a number
Tyrrell, global chairman of The Brand Union, of staff amid shrinking marketing and
over breakfast in the plush surrounds of The advertising spend from local companies.
Rotisserie, in the Arabian Court at Dubai’s The However, Tyrrell’s outlook for the future of
One and Only Royal Mirage. the branding business in the Middle East is
In town for The Brand Union’s annual extremely upbeat.
general meeting – their first held in this In particular, he believes that The Brand
region – Tyrrell took some time out for a Union’s association with the behemoth that
chat about his branding agency and the is WPP – the world’s largest communication
Terry Tyrrell business in general, which is extremely services group – stands them in good stead
bullish in its approach to the entire Middle relative to smaller competitors with fewer
East/North Africa. friends in such high places.
While waiting for our coffees to arrive, “One of the good things about being part
before we ventured over to the buffet, Tyrrell of the global WPP group is that we can
spoke about his vision for the future of the tap into the different national offices,”
branding business. Tyrrell explained. While he accepts that
“Now, the brand and business strategy are clients are no longer committed to working
becoming more closely linked…brand sits with any particular company purely on
in the boardroom now. And that’s great for the strength of their reputation – pointing
us, because more and more, we are dealing to the failures of such venerable banking
not just with the marketing guys, but with names as Goldman Sachs and Merrill Lynch
the CEOs,” he said, just as a smiling waitress as prominent examples – it certainly doesn’t
arrives with two steaming cappuccinos. hurt to be associated with a brand like WPP.
“It means that we’re no longer seen as “Being part of a stable, international
second-cousins to the ad agencies…we’re all group actually helps us enormously. We
that they are, plus the strategic umbrella,” can go into a business as little old Brand
he said. “I can see that in 18 months to two Union – we’re not a big business at all – but
years, The Brand Union will become a sort of to say we’re part of WPP is a tremendous
hybrid between a management consultancy competitive advantage. It says to the client
and what used to be called a brand agency, ‘these guys are going to be around for a bit,
because increasingly we’re being asked to they’re not going to disappear overnight’.
solve business problems through the lens of Particularly during a period where many
the brand.” companies have severed ties with existing
Having piled our plates with a selection from marketing agencies, or held off on hiring
the buffet – I had pancakes with maple syrup, them, due to budgetary constraints, they
glazed, fruit-filled Danish pastries and still- have been able to leverage this partnership
warm miniature croissants – our conversation to their advantage. “Now that we’ve been
turns to The Brand Union’s operations within living through difficult times…we’ve been
the Middle East. using the WPP ‘glue’, if you like, more
The branding company has two offices prominently than we have in the past,”
in the UAE – one in Dubai, which opened in Tyrrell said.
2002, and another that opened in Abu Dhabi Such glue could come in handy for many
in 2008. Motioning around the room, Tyrrell more businesses across the UAE, as they
points out that The One and Only Royal look to pick up the pieces following the
Mirage was among the first clients of its global economic downturn. ■

90 June 2010