Money

Saudi Arabia and US debated oil reserve swap before OPEC meeting

2011-06-17T19:50:00.000-07:00

By JEFF MASON AND RICHARD MABLY

REUTERS WASHINGTON

It was to be a swap felt around the world -- a plan privately discussed by the world’s largest oil exporter and the globe’s biggest consumer to take the heat out of $120-plus oil prices.

In the weeks leading up to the failed June OPEC meeting in Vienna, the United States and Saudi officials met to discuss surprising the market with an unprecedented arrangement: exchanging urgently-needed high-quality crude oil stored in the US emergency reserve for heavier, low-quality oil from Saudi Arabia, according to people familiar with the plan.

The idea involved shipping some of the light low-sulphur, or “sweet,” crude out of the US Strategic Petroleum Reserve (SPR) to European refiners, who needed it after the war in Libya cut off shipments of its premium crude varieties coveted for making gasoline and diesel.

In return Saudi Arabia would sell its heavier high-sulphur or “sour” crude at a discount back to the United States to top up the caverns that hold America’s emergency stocks.

It was a striking suggestion, one that would have demonstrated Washington’s readiness to put the SPR to extraordinary use and Riyadh’s willingness to work creatively with consumers to quell high prices.

But it did not make it past the drawing board, four sources familiar with the talks confirmed. The sources disagree on which country proposed the plan. Two said it fell apart because Riyadh was not willing to subsidize European or US customers by discounting its crude prices below market value.

The swap idea illustrates a recently deepening engagement between Saudi Arabia and the United States on oil affairs under President Barack Obama, and shows how high the stakes were ahead of the meeting of the Organization of the Petroleum Exporting Countries on June 8 in Vienna.

With gasoline prices topping $4 a gallon in many parts of the United States, Mr. Obama was seeing his support ebb in opinion polls, just as the White House was beginning to focus on the 2012 election.

The Saudis were concerned about the health of the global economy with oil prices surging above $100 a barrel. Riyadh knew that high prices, while good for short-term income, would cut fuel demand over the longer term.

Washington had pressed Saudi Arabia to boost oil production at least twice ahead of the OPEC meeting that ended in failure, sources told Reuters.

After war broke out in Libya and its oil output fell, the Saudis complied with the initial request, but they weren’t happy when European refiners didn’t jump to buy their crude, even a “special brew” of lighter quality, an Arab official said.

“We need someone to take our crude. We don’t just want to store it,” the official said.

Industry sources described a “difficult” Riyadh meeting that a US delegation held about a month ago with Saudi Oil Minister Ali Al Naimi.

“They were told, ‘If you’re going to find us extra refineries that are asking for demand, we’ll supply that,’” the Arab official said.

Deputies from the US Energy and Treasury departments also visited Riyadh to make the case for stepped-up oil production, a source close to the Saudi government said, although the timing of this meeting was unclear.

One of the officials who attended that meeting was Jonathan Elkind, Principal Deputy Assistant Secretary for Policy and International Affairs at the Energy Department, a source told Reuters.

Within days, Mr. Elkind was flying to Paris for a regular meeting of the board of governors of the Paris-based International Energy Agency (IEA), which speaks for 28 industrialized oil consumer countries.

After that meeting, the governing board released an unusually blunt statement urging OPEC to raise output and announcing that it would consider using “all the tools” at its disposal -- a clear reference to emergency reserves.

The US State and Energy Departments would not comment on whether the meetings took place or offer other details, while the White House has acknowledged regular talks with producers without being specific about their content.

Set up in 1974 to protect oil consumers after the Arab oil embargo, the IEA has held an open and cordial dialogue with OPEC ever since the Gulf War in 1990-1991, one of only two times it has authorized a global release of strategic stocks.

But the May 20 missive suggested a new cooling in the relationship between the world’s big oil consumers and producers, and provoked a backlash from some in OPEC.

“Strategic reserves should be kept for their purpose and not used as a weapon against OPEC,” OPEC Secretary General Abdullah Al Badri told the Reuters Global Energy and Climate Summit on Tuesday.

“We never interfere in the IEA and really we don’t want them to interfere in our business. They should do it in a professional manner. We should not talk to each other through the media,” he said.

Washington appears to have mostly heeded that comment, and kept quiet about its engagement, in contrast to previous administrations.

In April, President Obama -- who has several times blamed speculators for the run-up in prices -- made a rare public call for world oil producers to boost production.

“We are in a lot of conversations with major oil producers like Saudi Arabia,” he said in a Detroit television interview.

The tension within the cartel boiled over last week in Vienna, when seven members of the group balked at a Saudi-led plan to increase production. While ministers said the breakdown was caused by differing views over the market outlook in the second half of this year, Iran blamed unspecified “consumer countries” for influencing the debate.

“What happened shows OPEC is an independent organization,” OPEC governor Mohammad Ali Khatibi told Reuters. “If one wants to exert pressure to make the others give up -- no.”

The kingdom declared it would go it alone. Sources say Saudi Arabia is raising production in July by nearly 1 million bpd to around 10 million bpd, although Brent crude oil prices have continued to press higher, reaching a five-week peak of more than $120 a barrel on Tuesday.

Saudi Arabia has the world’s highest concentration of super-rich households

2011-06-03T16:26:00.001-07:00

By DINA AL SHIBEEB

Al Arabiya with Agencies

Saudi Arabia, the Arab world’s largest economy, has the highest number of super-rich households worth more than $100 million in the world.

The Boston Consulting Group said that other Gulf countries such as Qatar, Kuwait and the United Arab Emirates also ranked among the 10 nations with the highest density of ultra-high net worth individuals (UHNW).

The BCG study said that it measured Saudi Arabia UHNW per 100,000 households, at 18, while Kuwait had 8, Qatar had 6 and the UAE had 5.

“Given the demographics and overall wealth of these petroleum-rich countries we would expect a higher proportion of UHNW households than in other parts of the world,” said Sven-Olaf Vathje, partner at BCG Middle East. “Growth in assets under management also reflects the strong fundamentals of the region, driven by continuing strong petroleum prices.”

BCG’s report showed that the wealth of the oil-rich Gulf countries is also growing at a rate unmatched elsewhere.

Bolstered by high oil prices, wealth in Middle East and North Africa grew 8.6 percent to $4.5 trillion in 2010, and is expected to reach $6.7 trillion by 2015, BCG said.

In order to tap into the region’s growth wealth, BCG said international and local banks are pushing for investment in the Gulf.

“You see a lot of banks in the UAE but also the other GCC countries that are investing actively into wealth management. It’s pretty clear why that’s the case [as] it’s a very stable source of revenue if you do it right,” said Markus Massi, partner at BCG Middle East.

“Many banks have seen their investment banking revenues and corporate banking revenues go through some roller coaster over the last couple of years so the desire to participate in this global business is very strong,” he said.

Wealth managers are also targeting the women in the six Gulf States, who hold around 22 percent, or $0.7 trillion, of the region’s wealth.

But the Gulf countries’ rankings for millionaires are not lavishly the same.

Singapore topped the rankings with a 33 percent rise in its number of millionaires. The US had the most $1 million-plus households, with 5.2 million, followed by Japan and China.

It is estimated that the ranks of millionaires swelled by 12 percent in 2010 on a global level.

Global assets under management rose by 8 percent to $121.8 trillion in 2010, beating the study’s previous peak of $111.8 trillion in 2007

(Dina Al Shibeeb, an editor at Al Arabiya English, can be reached at: dina.ibrahim@mbc.net)

Moody's downgrades various government-related issuers in Dubai

2009-11-05T18:24:00.000-08:00

Edited by George Haddad
Moody's Investors Service has downgraded various government-related issuers (GRIs) in Dubai, concluding a review initiated on 4 August 2009. The ratings remain investment-grade and are substantially above those that would be based on the entities' stand-alone credit quality. This rating uplift reflects the strategic importance of the GRIs to the government, which makes it likely that the government would extend them support, should such support be needed.

However, the downgrades reflect recent disclosures that reveal the increasing conditionality under which support may be provided.

Ratings affected by today's action are the following:
- DP World issuer and debt ratings were downgraded to A3 from A1;
- Dubai Electricity & Water Authority (DEWA) issuer and debt ratings were downgraded to A3 from A1;
- DIFC Investments (DIFCI) issuer and debt ratings were downgraded to A3 from A1;
- Jebel Ali Free Zone (JAFZ) issuer and debt ratings were downgraded to Baa1 from A3;
- Dubai Holding Commercial Operations Group (DHCOG) issuer and debt ratings were downgraded to Baa1 from A3;
- Emaar Properties issuer ratings were maintained at Baa1.

The ratings outlook for DP World, DEWA, DIFCI and JAFZ is negative, reflecting ongoing economic pressures. The ratings of both DHCOG and Emaar have been maintained on review for downgrade, pending the completion of Moody's ongoing assessment of the impact of the proposed merger of Emaar with DHCOG's real estate operations.

The downgrades follow recent disclosures of increased conditionality around when support could be provided to these GRIs. This includes the specific criteria that will be considered by the recently established Dubai Financial Support Fund when assessing whether financial assistance should be provided. Among these criteria are whether the GRIs are able to demonstrate sustainable business plans, the on-going support of their existing financial creditors, and realistic prospects of fulfilling their repayment obligations.

The government also reiterated that GRI debt obligations not benefiting from a guarantee are not regarded as obligations of the government and that the government is under no obligation to extend support to any such GRI either directly or through the Support Fund.

Moody's is therefore making a greater distinction between its view of the creditworthiness of Dubai's GRIs and that of the Dubai central government, which is itself viewed by Moody's as benefiting from support from the UAE federal government (rated Aa2, stable). The UAE federal government continues to be seen as an important source of support for Dubai and for funding future increases, if required, to the Dubai Financial Support Fund.

Moody's views the liquidity profiles of four of the six rated GRI's (DP World, DEWA, JAFZ and Emaar) as fairly robust, with only moderate maturities until 2012. Moody's notes that DIFCI and DHCOG are understood to have already received liquidity support and will likely require additional liquidity support in the future.

Moody's assumes that the second USD 10 billion tranche will be funded imminently to further prop up the gradually depleting Support Fund.

Dubai's recent successful government bond issuance is also likely to be supportive to Dubai's liquidity profile and alleviate some of the pressures that would arise from further bail-outs, although the use of proceeds has not been specified.

In terms of stabilizing the outlooks, an overall upturn in economic activity and sound liquidity management are key factors for the majority of the rated GRIs, particularly those with sound underlying business models. Those companies in more vulnerable sectors (real estate) may potentially remain under pressure over a more prolonged period.

For a more in-depth assessment of today's rating action, please also refer to our Special Comment "Dubai Inc Credit Environment Update and Outlook", as well as individual Credit Opinions on the six rated GRI's, which will be published shortly on moodys.com.

The last rating action on Dubai's corporate GRI's was on August 3, 2009, when Moody's placed all ratings on review for downgrade. Today's rating action concludes that review.

Global Arab Network

Kuwait Financial Forum due on November 1-2

2009-10-04T04:10:00.000-07:00

Posted by John Short
Kuwait Financial Forum, planned in coordination with Kuwait Central Bank and the business and economics group (Al-Iktissad Wal-Aamal Group), would be held here at start of November.

The event will be under the patronization of His Highness the Prime Minister Sheikh Nasser Al-Mohammad Al-Ahmad Al-Jaber Al-Sabah.

A total of 600 leading financial personnel will participate in the forum which will be held at the Sheraton Hotel on November 1-2, "Al-Masaref" magazine, issued by the Union of Kuwaiti Banks, said in its latest edition.

The magazine described the forum as the first comprehensive Arab, public and banking forum to analyze the global financial impacts on the economy, banks and stock markets in the Arab world.

The forum was greatly welcomed in the region and finance ministers, and governors of central banks and Islamic banking institutions would take part in the major event.

The magazine included a report with statements by a number of economic experts who said local banks' performance was "better than what they expected." The report included an exclusive interview with the Chief Economist at Dexia Asset management Anton Brender, plus other reports and news updates about banks and financial institutions.(KUNA)

Global Arab Network

Qatar: CI affirms commercial bank international's foreign currency ratings

2009-09-30T16:27:00.001-07:00

Edited by Sami Kasam

Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Commercial Bank International’s (CBI) foreign currency ratings at BB+ long-term and B short-term with a ‘Stable’ outlook. The ratings are underpinned by the likelihood of support from the federal government and from major shareholder Qatar National Bank (QNB) in case of need. The support rating has been raised to 3 from 4, reflecting the shareholding by QNB.

The financial strength rating has been reduced to BB from BB+ in view of the deterioration in asset quality in H1 2009. The slowing local economy has increased credit risks, and higher provisioning requirements are likely to impact future earnings. However, there are plans to increase capital, which could provide some cushion against external shocks. The outlook for the financial strength rating is Stable.

Commercial Bank International has had frequent changes in management over the last ten years. Although strategies were laid down some years ago outlining its transformation into a modern-day commercial bank, CBI has yet to realise its full potential. A new CEO and new heads for major business groups were appointed over the last year. Credit underwriting standards have improved. New branding and corporate identity campaigns have been launched, the product range has been widened and the IT area is being substantially strengthened. Unfortunately, CBI’s transformation has coincided with the downturn in the local economy, presenting the new management with serious challenges.

One of the main problems facing the bank is the deterioration in asset quality this year. Non-performing loans (NPLs) have increased. While the capital adequacy ratio strengthened at end June 2009, capital remains impaired by a high level of unprovided NPLs. CBI’s profitability ratios declined in H1 2009 due to high loan-loss provision charges. Net profit could come under further strain in the second half of the year, particularly if NPLs rise.

Liquidity had deteriorated towards end 2008 with the contraction of customer deposits, reflecting the tight conditions in the financial markets at that time. However, the bank was able to raise a considerable amount of interbank funds. CBI also received deposits from the federal government under its liquidity support programme for the banking sector.

CBI is one of the UAE’s smaller local banks, with total assets of USD10.9 billion at end 2008. QNB acquired a 16.5% stake in CBI last year and has two seats on the board as well as representation on the executive committee, audit committee and advances committee. QNB provides support in the treasury area. CBI has not entered into a management agreement with QNB. CBI is primarily a corporate bank with a growing retail banking business. Trade finance continues to be its mainstay and customers are still mainly small and medium-sized companies. The bank is expanding its corporate banking business to include larger companies and public-sector entities. Treasury activities are being substantially upgraded. The bank operates a brokerage subsidiary.

Global Arab Network

Fitch: UAE Banks Face Increased Impairments in Tough Environment

2009-09-28T16:27:00.000-07:00

By George Haddad

Fitch Ratings says today in a special report that the eight largest UAE national banks continue to face rising impairments and other challenges, but can absorb higher impairments as capitalisation has improved and they have a high level of sustainable revenues.

"The first half of 2009 has been challenging, with a rapidly slowing economy, liquidity pressures and rising impairments restricting new lending and profitability," says Robert Thursfield, Director in Fitch's Financial Institutions team. "While the situation has eased somewhat and with the help of some capital injections bank capitalisation has improved, the outlook remains challenging for the UAE's banks."

Results for the first six months of 2009 (H109) show the eight largest national banks reporting still adequate levels of profits (combined net income of AED8.8bn), although it will be difficult for them to repeat this level in H209, in Fitch's view. Cost growth is also likely to slow as banks become more cautious in their expansion plans, although with the average cost/income ratio of the eight banks a fairly low 33.2%, the capacity to absorb slightly higher costs remains.

Asset quality ratios are under pressure but most of the banks' non-performing loans remain around 2% of total lending at end-H109. "However, this is a lag indicator and remains artificially low given the rapid levels of loan growth over the last few years and is likely to rise as growth has slowed significantly and as the existing portfolio loan book seasons." Thursfield added. Real estate related impairments are likely to rise given that the fallout from the significant real estate crash across the UAE has not yet been reflected in banks' financial statements.

Fitch has conducted a sensitivity test on asset quality and capital ratios and believes that all of the eight banks could absorb 100% and 220% increases in impaired loans over the next two years and still maintain minimum Tier 1 ratios of 12% and 8% respectively. Increases in impaired loans of this magnitude are feasible given the challenges faced by the market and as a consequence, despite recent improvements Fitch expects ongoing pressure on capital ratios. Most of the eight banks received direct injections of tier 1 capital from their respective emirates' governments.

Funding and liquidity pressures were significant for all banks during Q408 and although these have eased in H109 with the UAE Ministry of Finance (MoF) placing AED50bn of deposits into the banking system, the imbalance between loans and deposits persists. Competition for customer deposits remains high and with debt capital markets remaining unattractive to date in 2009, funding costs rose. The UAE Federal Authorities have sought to address this by issuing a guarantee on all bank deposits and planning to do the same for bank debt issuance, although no detail on either guarantee has yet been forthcoming.

Global Arab Network

BAB launches the first banking magazine in Bahrain

2009-09-13T00:38:00.001-07:00

Edited by George Haddad
The Bahrain Association of Banks (BAB) announces the launch of the first banking magazine in the Kingdom of Bahrain - The Bahrain Banker.
The magazine will include articles, interviews and features demonstrating thought leadership for business today. Key contributors will include Bahrain's senior banking professionals, economists, legal and compliance professionals, senior management from the Central Bank of Bahrain (CBB), as well as specialists on important financial topics such as Islamic banking.

The inaugural edition of The Bahrain Banker will be published at the end of November and distributed at the World Islamic Banking Conference in December. Thereafter, it will be published quarterly, with editions in the spring, summer, autumn and winter.

"We are very proud to launch such a high quality, focused magazine in Bahrain and believe it has a winning formula to engage the banking sectors, members of The Association and all service providers to the sector. It is the right time to launch The Bahrain Banker as we all plan 2010 strategies and rebuild the industry to make it stronger, leaner and more efficient. No other publication like it exists in Bahrain today," said Mayank Malik, Chairman of the BAB and CEO Citibank Bahrain.

"This will not be a trade magazine. It will be thought-provoking, with articles and features contributed by professionals in Bahrain's banking sector. We will, therefore, offer a better quality read than is currently available. We plan to demonstrate the sector's professionalism and maturity, given that the Kingdom of Bahrain has the longest and most advanced history in banking in the region" said Robert Ainey, CEO of the BAB.

The main aim of the magazine is to promote Bahrain's banking sector worldwide in a cost-effective way through alliances with the Economic Development Board as well as other international banking associations. The publication will focus on leaders in the industry to generate a greater awareness, among other things, of Islamic banking - its principles and practices - world-wide. The Bahrain Banker will also discuss key Government initiatives such as Vision 2030, Tamkeen, the reform of the labour market and the role of Mumtalakat.

The BAB has employed an expert team to create this unique publication. The team's editorial coverage will be managed by Abdullah Jonathan Wallace, the former publisher of MEED magazine (Middle East Economic Digest), and Nigel Gibson who previously worked for The Economist newspaper and is author of Al Hilal's The Guide to Islamic Banking & Finance. The design and advertising sales team comes from Metaphor, a boutique agency, which currently handles communications for the BAB.

'The global economy has been through a shattering downturn and one of the challenges facing the banking sector is trust. The Bahrain Banker will strive to build that trust between the Kingdom's banking sector and key local, regional and international partners. Bahrain has many good news stories to tell and we will provide the ideal medium to deliver them,' said Wallace.

The Bahrain Banker is to be distributed through every Bahraini embassy, key Ministries, the Central Bank of Bahrain, the Economic Development Board, the Bahrain Institute of Banking and Finance, as well as overseas banking associations, conferences, airlines and airport lounges and selected retail outlets. We will also offer subscription opportunities for commercial organizations which service the banking sector and professionals who are serious about doing business with the banking industry. Over 5,000 copies will be distributed each quarter.

Global Arab Network

Irregular future for CMBS issuance in the Middle East

2009-09-03T18:04:00.000-07:00

Edited by Hannan Taha
New issuances of commercial mortgage-backed securities (CMBS) in Europe, the Middle East and Africa (EMEA) are expected to remain sporadic, says Moody's Investors Service in its H1 2009 Review and H2 Outlook report for the sector. The full year issuance volume has been revised upwards by Moody's to €20 billion, levels still substantially below the volumes seen in 2005 to 2007. Moody's notes that there is some investor demand for credit-tenant-lease CMBS.
"In the first half year of 2009, issuance volumes were well above the full year of 2008 volumes. That was mainly driven by three retained transactions amounting to €11.4 billion compared to the total issuance volume of €14.7 billion for the first half year of 2009 and total issuance volume of €6.3 billion for the full year of 2008," says Alexander Zeidler, a Moody's Assistant Vice President -- Analyst and co-author of the report. Irrespective of the volume increase compared to last year's levels, Moody's notes that most of the CMBS transactions were retained and not placed with investors.

The biggest reason for still low open market issuance volumes in H1 2009 was the ongoing concern about the economies and the real estate markets in EMEA. "In H1 2009, the commercial property investment market showed limited activity, the occupational market was weak with reduced tenant demand and banks continued to hold real estate lending activities at very low levels," says Jeroen Heijdeman, a Moody's Analyst and co-author of the report.

The commercial property markets across all European countries and property types experienced continued value declines in the first half year of 2009. The value decline was most pronounced in the UK in the first quarter of 2009, but other main CMBS markets like France and Germany also experienced value deterioration.

The value declines were not only driven by yield widening, but also rental value declines. The trend of widening yields slowed towards the end of the second half year for selected prime commercial properties in the UK that feature strong lease profiles. Moody's expects the trend of declining rental values to continue in H2 2009 and that most EMEA commercial real estate markets will show some improvement in 2010. Moody's expects moderate property value increases from 2011 onwards. A material recovery of commercial property values over the next five years is unlikely, in Moody's view.

The rating agency believes that the focus in H2 2009 will remain on the performance of existing transactions and predicts that the adverse loan performance trend will accelerate, depending on the state of the economy and the availability of capital to refinance commercial real estate loans.

Moody's expects new retained CMBS issuances in H2 2009 and expects continued interests from investors for credit-tenant-lease securitisations as seen towards the end of H1 2009. Looking beyond 2009, Moody's expects that the capital markets will still play an important role in financing commercial real estate. This is needed in order to close the financing gap arising from significant loan refinancing volumes due over the next years while banks are reducing exposure.

The future shape of CMBS transactions will not be decided soon, but investor demand will likely focus on single-loan CMBS and granular CMBS transactions that are less complex.

Global Arab Network

Stable Outlook- Fitch Affirms National Bank of Egypt at 'BB+'

2009-09-02T17:42:00.001-07:00

Edited by Jihad Taki

Fitch Ratings has today affirmed the National Bank of Egypt's (NBE) Long-term Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook. NBE's Short-term IDR is affirmed at 'B', the National Long-term rating at 'AA(egy)', and the National Short-term rating at 'F1+(egy)'. The Outlook on the National Long-term rating is Stable. Fitch has simultaneously affirmed the bank's Individual Rating at 'D/E', Support Rating at '3' and Support Rating Floor at 'BB+'.

NBE's Long- and Short-term IDRs and National ratings reflect Fitch's view of the support that would be provided by the Egyptian authorities in case of need, based on the bank's systemic importance, its 100% government ownership, and significant retail deposit franchise. NBE's Individual Rating reflects the strength of the bank's domestic franchise, its stable funding and strong liquidity. It also takes into account NBE's weak performance and still substantial level of non-performing loans, although these are largely legacy NPLs and do not reflect current performance. NBE's capitalisation remains on the low side, although management has stated that the bank recently received a USD400m subordinated government loan that boosted its Tier II capital.

Following the appointment of a new chairman and deputy chairman in 2008, there has been a marked shift in the pace of the bank's restructuring with a number of new appointments made at all levels. There have been improvements in all major divisions, including risk management, and a strengthening of reporting and monitoring systems and controls. The composition of the board was also substantially changed during 2008, during which six of its present eight members were appointed, to broaden the board's business background and to ensure support for NBE's restructuring. The bank is increasingly run on commercial lines with pricing of both assets and liabilities adjusted to market rates which is expected to improve the bank's performance going forward.

NBE continued to report weak profitability in the year to June 2008 and the six months to December 2008. The slight strengthening of net interest and fee income was offset by some losses on the bank's securities portfolio and ongoing loan provisioning charges. In the year to June 2008, NBE booked an exceptionally large provision charge in a bid to boost reserve coverage. The expense was largely funded by the sale of AFS securities, mostly to the bank's wholly-owned subsidiary, Ahly Capital. NBE still has a large proportion of non-performing loans and these increased in the year to June 2008. However, management has stated that virtually all of the increase was due to a reclassification of legacy NPLs that had not previously been recognised. The reclassification occurred as part of a review of NBE's loan book following the improvement in the bank's reporting systems and controls.

NBE is wholly-owned by the Egyptian government. It offers a wide range of retail, wholesale and investment banking services through its extensive domestic branch network. NBE is still Egypt's largest bank by assets by far, accounting for about a quarter of the system's total. Funding is one of NBE's main strengths and reflects the bank's extensive domestic franchise. It is funded by its large deposit base, almost three quarters of which are retail deposits.

Global Arab Network

Abu Dhabi Economic Vision 2030 - Project financing into growth sectors

2009-08-30T23:59:00.000-07:00

Edited By Rami Al-Ali
International banking and financial institutions will be introduced to numerous investment prospects within Abu Dhabi's diverse economy during the 2009 Abu Dhabi Conference to be held from November 10 to 12, 2009 at the Emirates Palace Hotel in Abu Dhabi. Organised by the Abu Dhabi Department of Economic Development (DED) in coordination with MEED Events, the Conference will serve as a business networking platform complementing Abu Dhabi Economic Vision 2030, a series of continuous reform programmes aimed at diversifying the Emirate's economic base.
Prominent figures within diverse economic sectors will lead discussions and debates on project finance challenges, opportunities and strategies across key sectors such as oil and gas, power and water, real estate, aviation, transport, tourism, financial services and manufacturing during Abu Dhabi Conference 2009.

"Abu Dhabi's long-term success strategy involves a comprehensive vision of a diverse economy outside its core energy sector. Developments into infrastructure and industrial projects are key to Abu Dhabi's economic diversification and will be underpinned by its development of the already strong energy sector by introducing gas production. This kind of business environment offers various investment opportunities to financial service providers," said Edmund O'Sullivan, Chairman, MEED Events.

"Abu Dhabi conference will be an opportunity to highlight our strategic economic priorities, and to emphasize on the economic direction of the Emirate within the vision 2030. It will send a clear message about the resilience of our economy, in the context of prudent business as usual", according to Mohamed Omar Abdulla, Undersecretary, Abu Dhabi Department of Economic Development.

Abu Dhabi Conference 2009 will feature various panel sessions, presentations, discussions, interactive debates and informal meetings with over 50 speakers who will provide valuable insights on business trends and strategies .aiming at enhancing the performance of critical business sectors such as domestic banking, a fundamental component of Economic Vision 2030. Experts will review the state of Abu Dhabi's banking and finance industry as well as local investment strategies already in place to transform the emirate into a regional financial services hub benefiting from international standards and best practices .,.

"We welcome the additional help of the regional and international financial services sector in further diversifying Abu Dhabi's economic activities. This present period of correction has allowed our industries to redirect their business vision and reorganise for further growth. Abu Dhabi Conference 2009 will provide an excellent vehicle for the emirate's potential partners to determine the right investments and the right approaches to securing them," added Rashed Al Baloushi, Deputy CEO, Abu Dhabi Securities Exchange.

"The global financial community recognizes that the downturn has also opened up opportunities in more resilient economies such as the UAE. We are joining this conference because we are impressed by Abu Dhabi's diversified approach to growth and would like to gain a strategic position in its lucrative projects sector," concluded Moriyuki Aida, Chief Representative, Japan Bank for International Cooperation.

The 2008 edition of the Conference welcomed over 350 prominent regional and international government and business personalities while more than 400 attendees are expected this year, around 65 per cent of who will be senior-level executives. This year's Conference will comprise six specialized networking events, two interactive master classes, and a new VIP breakfast meeting.

The Abu Dhabi Conference 2009 will be supported by the Department of Economic Development - Abu Dhabi, with Abu Dhabi Water & Electricity Authority (ADWEA) as Associate Sponsor; HSBC as Gold Sponsor; Emirates International Investment Company (EIIC) and Metito as Silver Sponsors; Orient Planet as PR Partner and CNBC as Official Arabic Broadcaster. In addition, supporting organisations include British Embassy UKTI, American Business Group and Royal Institution of Chartered Surveyors.

Global Arab Network

* Capital Intelligence affirms the ratings of Saudi Arabia's Al Rajhi Corporation ARB

2009-08-27T22:37:00.000-07:00

Edited by George Haddad
Capital Intelligence (CI), the international credit rating agency, announced that it has affirmedthe ratings of Saudi Arabia's Al Rajhi Banking & Investment Corporation (ARB). The long-term foreign currency rating of A+, the short-term foreign currency rating of A1 and the financial strength rating of A+ are all unchanged, as is the support rating of 2. All ratings carry a Stable outlook.

ARB, whose principal owner is the Al-Rajhi family (44%), and 46% of whose shares are held by the general public, is Saudi Arabia's third-largest bank by total assets with a market share of about 13%. It ranks second by capital funds, and continually ranks as the kingdom's most profitable bank. For many years ARB was Saudi Arabia's only fully Shari'a-compliant bank, but others have joined it in the past decade.

Historically a retail bank, the Bank is currently expanding its corporate business. By virtue of its strong retail base, it has one of Saudi Arabia's least concentrated balance sheets, on both the asset and the liability sides. The expansion of its corporate business has not resulted in neglect of its retail business, which continues to grow, and which the Bank is supporting by means of a renewed branch expansion programme.

Strong capital ratios include a robust CAR, which helps to offset an otherwise tight liquidity profile. While some changes in SAMA's method of calculation of CAR have limited the opportunity for ARB to grow that figure, it remains the highest among Saudi banks. The liquidity position has improved in 2009, and any concerns about it are further mitigated by the size, breadth and stability of its retail deposit base.

By virtue of write-offs, recoveries, and large loss provisioning against its Islamic Financing Facilities (IFFs) in 2008, the Bank greatly improved its asset quality, which had weakened in 2007. Both the absolute amount and the share of non-performing IFFs were reduced substantially and coverage increased almost to a factor of two. While exposure to financially troubled Saudi corporates is estimated to be minimal, the possibility exists that the need to provide for that exposure could affect the Bank's 2009 earnings. However, it is CI's estimation that the Bank's strong earnings power and capital position would make that provision easily manageable.

ARB's ongoing reputation is that of Saudi Arabia's most profitable bank, with an ROAA well ahead of that of its nearest competitor. Profitability is driven by a high investment income differential as a result of the Bank's large pool of non-interest bearing deposits.

ARB's control of expenses has continued, but despite that control it has managed to improve the visual appeal of its sizeable branch network and to add such attractions as VIP rooms for HNW clients at many branches.

ARB was established in 1987, as the successor to a family-owned money-changing operation which had existed since the 1930's. Since the accession of the current CEO to the position vacated by his father, the Bank has expanded technology, conducted a revamping of its branch operations and rapidly expanded its corporate banking operations.

Global Arab Network

*HSBC Bank Middle East - Financial strength rating downgraded

2009-08-25T19:30:00.000-07:00

Edited by George Haddad
Moody's Investors Service has today downgraded the bank financial strength rating (BFSR) of HSBC Bank Middle East Limited (HBME) to C from C+ and its long-term local currency debt rating and foreign currency deposit and debt ratings to Aa3 from Aa2. The rating outlook is now stable. Today's rating action concludes the rating review initiated on 17 March 2009.

HBME is a wholly owned subsidiary of HSBC Holdings plc, registered in the Channel Islands, with operations in the Middle East. The new BFSR of C maps to a Baseline Credit Assessment of A3. The three-notch uplift from this Baseline Credit Assessment to the Aa3 long-term debt and deposit ratings reflects Moody's continued assessment of a very high probability of support for HMBE from its parent in case of need.

Today's downgrade reflects Moody's expectation that HBME will encounter pressure on its asset quality and profitability in the countries in which it operates and especially in the United Arab Emirates, which accounts for the majority (around 70%) of the bank's operations. They also take into consideration the recent deterioration in HBME's loan book, both in its corporate loans and in its weakening retail banking exposures. Moody's has also stress-tested the loan book for further delinquencies over the next 12-18 months.

"Our stress tests show that HBME's BFSR of C should be able to withstand the deteriorating credit cycle. No further downgrades of this rating from the C level are therefore expected over the next 12-18 months except in the event of continued large corporate defaults that could cause higher-than-anticipated rises in the bank's non-performing loans and loan loss provision expenses," says John Tofarides, Analyst at Moody's Middle East and lead analyst for HBME.

Following today's downgrades, the ratings of HSBC Bank Middle East Limited are as follows:

The bank's short-term local currency and foreign currency debt and deposit ratings remain unchanged at Prime-1.

The ratings of HSBC Bank Middle East Limited (UAE Branch) were also downgraded to the following:

- Global local currency deposit ratings: Aa3

- Foreign currency deposit ratings: Aa3

The bank's short-term local currency and foreign currency deposit ratings remain unchanged at Prime-1.

The last rating action on HSBC Bank Middle East Limited was on 17 March 2009, when Moody's placed its BFSR and long-term ratings -- as well as the long-term ratings of its UAE branch -- on review for possible downgrade.

Global Arab Network

Gas price drops to its lowest in seven years

2009-08-23T11:52:00.000-07:00

Tamsin Carlisle
US natural gas prices have fallen to their lowest in seven years as storage facilities fill up ahead of the winter heating season.
A government report signalling lacklustre demand from the housing industry for manufactured goods also helped push the futures contract for September gas as low as US$3.05 per million British thermal units (Btu) on the New York Mercantile Exchange (NYMEX) on Wednesday, a level last seen in August 2002.

NYMEX gas futures have fallen 45 per cent this year, even as crude has rallied. They are about 77 per cent off the peak of roughly $13.50 per million Btu reached in July of last year and could fall further, analysts said.

“The bearishness for gas has increased because there’s nowhere left to put it,” Tom Orr, the director of research at Weeden and Company in Connecticut, told Bloomberg.

“Brimming storage remains a problem,” Michael Fitzpatrick, a vice president for energy at MF Global in New York, said in a research note. The amount of gas stored in underground caverns in the US had surpassed 3 trillion cubic feet, a level not usually reached until late September, he added.

Jim Hackett, the chief executive of Anadarko Petroleum, which is one of the largest US gas producers, predicted storage facilities would be full this autumn, forcing some producers to shut down wells.

A surge in output from large gas shale deposits and falling demand for gas for industry and power generation have combined to create a glut of the fuel in the US.

That is likely to mute the commodity’s response to any imminent threat to Gulf of Mexico gas installations from hurricanes.

Hurricane Bill, the first of the Atlantic season, is forecast to become a major hurricane with winds of up to 180kph as it heads towards the US from the eastern Caribbean.

But meteorologists in the National Hurricane Center in Miami were not expecting it to enter the Gulf of Mexico.

With ample storage, investors have not felt the need to buy gas as a hedge against supply disruptions.

“It will take a huge disturbance to get natural gas to take off,” Cameron Horwitz, an analyst at Sun Trust Robinson Humphrey in Miami, told Bloomberg, adding that storage levels were 600 billion cu ft higher than a year ago. “That’s a lot of gas to burn off.”

Wednesday's NYMEX gas price was equivalent to a crude oil price of about $18.30 per barrel.

In New York yesterday, crude fell back below $69 per barrel, after climbing above $70 following the release of industry data suggesting a bigger than expected drop in US oil stockpiles.

Global Arab Network

Tamsin Carlisle, Copyright The National, this article first appeared in The National on (August 19. 2009 ).

Outlook - Egypt's sovereign ratings from negative to stable

2009-08-21T01:27:00.000-07:00

Edited by Andy McDonough
Moody's Investors Service has today changed the outlook on Egypt's sovereign ratings and ceilings back to stable from negative. This affects Egypt's Ba1 local and foreign currency government bond ratings, its Ba2 country ceiling for foreign currency bank deposits and its Baa2 country ceiling for foreign currency bonds.

"Today's rating action was primarily motivated by the easing of inflation in Egypt since its peak in August 2008, the government's efforts to contain fiscal pressures, and the relative resilience displayed by Egypt's economy and banking system in the face of recent global economic turmoil when compared with rating peers," explains Tristan Cooper, Moody's Head Analyst for Middle East Sovereigns.

Concern over the adverse social and economic consequences of soaring inflation had previously prompted Moody's to place Egypt's sovereign ratings on negative outlook in mid-2008. Such concerns have been allayed as inflation has receded somewhat and also because the bout of double-digit price growth over the past 18 months does not seem to have caused serious social or fiscal dislocations.

The Egyptian government's wide deficit was contained over the most recent fiscal year (June 2008 to June 2009) at around the previous year's deficit despite considerable upward pressure on expenditures, particularly on wages and subsidies, and the implementation of a stimulus package. Although the deficit is expected to expand this fiscal year as tax revenues decline, Moody's does not expect this to cause a large jump in the government's debt ratios, assuming that nominal GDP growth stays buoyant. The government does not face difficulties in financing its wide deficit as local banks, its main creditor, have a large appetite for government paper.

In general, Egypt's economy has been less affected to date by the global economic crisis than many rating peers. This can partly be explained by the country's moderate level of economic openness, solid external position, well-diversified economy, and stable, if rather underdeveloped, banking system that has been restructured in recent years and has limited foreign exposure. Moody's maintains its stable outlook on Egypt's banking sector.

"Despite today's outlook change to stable, Moody's continues to have credit concerns. Chief among these is the weakness of Egypt's public finances, with a substantially wider fiscal deficit and higher public debt burden than most rating peers," cautions Mr Cooper. "Furthermore, although Egypt's inflation rate has eased, it remains elevated. This, combined with slower growth and rising unemployment, continues to present challenges in light of the country's poor social indicators." he adds.

The last rating action on Egypt was June 23, 2008, when Moody's changed the outlook on Egypt's ratings and country ceilings to negative from stable and lowered the government's local currency bond rating from Baa3 to Ba1.

Global Arab Network

Qantas shares defy profit plunge

2009-08-19T01:10:00.000-07:00

Article from: Dow Jones Newswires
Under pressure: Qantas chief executive Alan Joyce. Picture: AFP
Australia’s largest airline by revenue and passengers carried couldn't say if it expected to remain profitable this financial year given global economic conditions.

But the carrier plans to cut costs by $1.5 billion over the next three years, starting with a target of $500 million this financial year.

Net profit for the year to June 30 plunged to $117 million from $969m a year earlier, missing market forecasts centred on $131.5m.

A breakdown of the results showed Qantas recorded a loss in its second half, in line with International Air Transport Association forecasts of global industry losses in 2009.

To read Steve Creedy's analysis, click on Profit crash beats a loss at Qantas

As it juggled capacity in the volatile environment and in a further knock to Boeing's 787 program, Qantas also said it would lease four extra Airbus A330 aircraft for six years for its discount carrier Jetstar because of the delay in delivery of the 787s.

Through its mainline, Jetstar and regional airline operations, Qantas controls roughly two thirds of Australia's domestic commercial aviation market, where it operates in a virtual duopoly alongside rival Virgin Blue.

Qantas also controls about 30 per cent of international passenger movements in Australia.

Profit before tax for the year fell 87 per cent to $181m from $1.41 billion, after Qantas said in April that it expected this measure to be between $100m and $200m.

Shares of Qantas rose as much as 6.5 per cent to $2.77 and by late morning were up 5.4 per cent at $2.74, outpacing a 1 per cent gain in the benchmark S&P/ASX 200 index.

Citi analyst Phil Campbell said Qantas had produced a "good result in a very difficult environment".
"The outlook is still uncertain but leading indicators such as domestic business confidence are exhibiting a V-shaped recovery," said Mr Campbell in a note to clients.

The broker rates the stock a buy.

After Qantas had first-half pre-tax earnings of $288m, the full-year result means that the airline posted a loss before tax for the second half of the year of $107m, its first loss since 2003 when it was combating the aviation slowdown from the Asian SARS epidemic.

"There has never been a more volatile and challenging time for the world's aviation industry," said chief executive Alan Joyce.

"Through unprecedented and significant shifts in operating conditions and demand we have remained financially strong."

The airline said that passenger volumes appeared to have improved and profitability yields have stabilised at the levels experienced in the second half of fiscal 2009.

But high levels of volatility in the economic outlook, industry capacity, passenger demand, fuel prices and exchange rates meant it was not possible to provide any profit guidance for this year.

Mr Joyce told reporters that while passenger demand had started to improve, "we haven't seen any yield improvements as a consequence yet, and who knows how long that will take".

"We've seen a stabilisation (in yields),…we haven't seen it getting worse," he said.

The group's results were propped by record earnings from its Frequent Flyer loyalty scheme and Jetstar, which mr Joyce said would continue to grow.

From October, Jetstar will commence five daily flights between Sydney and Melbourne's Tullamarine airport, replacing some of its services to Avalon airport outside Melbourne, and will use the leased A330s from late 2010 across Australia, South East Asia and Asia Pacific.

Jetstar Asia, the Singapore-based airline 49 per cent-owned by Qantas, also said today it would increase capacity by 46 per cent this year, adding three more A320 aircraft to its fleet.

"B787 program delays means we have had to consider medium-term options to support new long haul market opportunities for Jetstar," Mr Joyce said.

In June, Qantas cancelled orders for 15 Boeing 787-9 aircraft and delayed by four years delivery of 15 smaller 787-8 aircraft. The airline remains one of the biggest customers for the new Dreamliner aircraft with 50 firm orders with the first 15 planes due to arrive from mid-2013.

Full-year group revenue fell 6.9 per cent to $14.55bn from an adjusted $15.63bn and the airline did not declare a final dividend after paying 17 cents a year ago.

Additional reporting: AAP

The Australian

Bahrain office market: Undergoing a period of transition

2009-08-13T15:59:00.000-07:00

Edited by George Haddad

In Bahrain, Office space is split into 3 categories: Class A, B & C. In Bahrain, as the market is undergoing a period of transition, it is difficult to define what constitutes Class A space and which areas should be considered ‘premium’ locations.

- Problem is main office space - Central Business District (CBD) is located in Diplomatic Area, but this is so unpopular with tenants that Class A space in this area is achieving lower rental rates than in buildings of a lower standard in Seef District.
- Some buildings in Seef are not even office buildings. Including residential apartment developments converted post completion and offering poorly organized spaces with wholly inadequate formal parking arrangements.
- Seef District is marginally qualified as a ‘business district’ – entire area was reclaimed from the sea less than 20 years ago and until recently considered a reasonably sustainable mixed-use environment.

Change of Use

- Increasing rents has caused a shift in uses and almost half of all quality apartment properties are now being leased for office use.
- This causes problems related to parking and access – and no effective long-term planning is likely to exacerbate problem.

Sustainable Development

- Government is considering a Light Rapid Transit system (costing several billion Dinars) when the solution to traffic problems can be resolved through a rigorously enforced planning system.
- If the built use of properties in Diplomatic Area were to be enforced, a high degree of sustainability could be achieved at a stroke.
- Parking and circulation would be quickly ameliorated as residents could walk to work, peak traffic periods would flow and evening activity would return to restaurants and coffee shops.
- A premium is being paid for Class B office space in accessible locations that offer formal and informal parking opportunities.
- For example, Class B buildings in Seef are achieving rental rates similar to World Trade Center on the corniche.

Occupancy Rates by Quality Category

- Almost half of all Class A office space is contained within two projects: Bahrain Financial Harbour and World Trade Center.
- These two projects entered the market in 2007/2008 and have not yet been fully absorbed.
- The projects are located in areas not considered easily accessible nor do they have generous parking allocations.
- If these two ‘international Class A’ projects are taken out of the aggregation of space calculations, the market is currently 92% occupied in the ‘Bahrain Class A’ category.
- Given that in a normal and stable market the occupancy rate should be somewhere between 85%-90%, Bahrain Class A market is effectively undersupplied at present while the International Class A market is oversupplied.
- However, there is likely to be significant growth in supply of quality space until end 2011 and during this period little likelihood of a significant increase in demand.
- Market may be facing period of consolidation and it would seem that those properties offering good parking ratios in easily accessible locations will fare best.

Management & Locational Variations

- Given the small size of the market and the varied quality of office buildings in Bahrain, rental rates are typically building-specific within the context of their location and subject to variations arising from the competence of the building management, parking, access, age, maintenance record and so on.

- In Dubai competent and professional building management is almost a given, but in Bahrain this is not yet the case.
- In terms of local ‘prime office’ space, broadly speaking the supply of office space in Seef District is the newest and this is reflected in the top end rental rates which are currently around BD11/m²/pm, compared to BD8/m²/pm in Diplomatic Area and BD8/m²/pm on Government Avenue.

Global Arab Network

This article is an extract from report (Property Insight from Bahrain ---Q2 2009 Office MarketView---) With Mike Williams, Senior Director – Research & Consultancy, CB Richard Ellis Middle East

Islamic bank ratings remain stable despite rapid growth

2009-08-11T14:28:00.001-07:00

Edited by Andy McDonough
Moody's Investors Service says that the ratings of entities in the fast-growing Islamic banking sector are stable, largely thanks to their ample liquidity, high profit margins and conservative leveraging. Nevertheless, Moody's cautions in its latest report on the sector that future upgrades may be constrained by issues relating to Islamic banks' under-utilised excessive liquidity, inadequate corporate governance and weak risk management, particularly in terms of the handling of asset-liability maturity mismatches.

Moody's new Special Comment, entitled "The Liquidity/Leverage Trade-Off for Islamic Banks", evaluates the liquidity and leverage trade-offs for Islamic financial institutions (IFIs) in a changing environment and assesses the impact that this exchange will have on their ratings. "IFIs have traditionally demonstrated low leverage for religious reasons, but also because of their very profitable assets, cheap deposits and high levels of core capital. However, the resulting reliance on concentrated short-term liquid assets to finance liabilities means that Islamic banks' balance sheets are deficient in medium- to long-term funding instruments," explains Anouar Hassoune, a Moody's Vice President -- Senior Credit Officer Analyst.

The Moody's-rated Islamic banks that are based in Gulf Co-operation Council (GCC) typically have C to E+ bank financial strength ratings (BFSRs) and A1 to Baa1 global local currency deposit ratings. The relatively low BFSRs reflect the banks' strong dependence on qualitative, or non-financial, factors, the scores for which capture the IFIs'unsteady operating environment, constrained risk positioning and weak franchise value in comparison with those of peers.

IFIs AWASH WITH CASH AND LIQUID ASSETS
"IFIs benefit from abundant liquidity, which is a very positive factor in an economic downturn. However, if such excessive liquidity is left underutilised, the lack of an innovative range of assets could slow growth during an economic boom," says Mr. Hassoune. In the context of Moody's ratings, liquidity is usually a credit strength because it provides a financial institution with surplus cash to use as a shock absorber against potential future shortages relating to obligations and investments.

Most IFIs in the GCC region have been able to use their surplus liquidity to aggressively boost deposit volumes and thus swell their market shares by growing lending volumes, while also maintaining their focus on the retail and corporate sectors. Moody's notes that securing funding has been relatively easy for IFIs because of the market perception that they will be more resilient to the global credit turmoil than their conventional peers, largely because Shari'ah supervisors forbid investment in highly leveraged structured instruments or global investment banks' shares.

However, the ample liquidity of Islamic banks is not without its drawbacks. IFIs are grappling with risks associated with liquidity, balance sheet management and overall risk monitoring, all of which represent constraints on their ratings. Most IFIs have been unable to introduce new products to help them handle their high liquidity levels and address the asset-liability discrepancies on their balance sheets. Moody's regards the latter issue as especially crucial in today's capital markets because of the rising frequency of asset write-downs.

"This awkward situation is largely due to the fragmentation of the Islamic finance industry and the varying opinions among Islamic scholars on the legitimacy of Shari'ah-compliant products, although there are some efforts underway to introduce new offerings to clients, especially in rapidly developing countries like Malaysia and Bahrain," explains Mr. Hassoune.

LIQUIDITY RISK ISSUES WILL PERSIST
Moody's expects most IFIs to survive the decline in property prices and to rebound with the help of government support and the resurgence of global markets.

However, the liquidity-related issues will likely persist unless they are addressed with innovative solutions such as the introduction of a range of Shari'ah-compliant instruments and the management of asset-liability mismatches, which originate from the shortage of long-term funds. Moody's regards progress in this area as essential because the IFIs' underdeveloped funding portfolios are not nearly sufficient to maintain their performance and allow them to develop into a dominant regional financial industry.

Global Arab Network

Somalia - Desperate water shortage in Somaliland

2009-08-05T13:51:00.000-07:00

Posted by Maha Karim

The self-declared republic of Somaliland has been gripped by a drought that has left thousands of families and their livestock in desperate need of water, officials say.

"The first thing people ask you is for water, because both the people and their animals [are] seriously weak and cannot reach water wells in the remote areas," Said Ahmed Du’alle Bullale, MP for Saraar region, told IRIN on 2 August.

The parliamentarian, who recently visited Saraar, Sool and Sanag regions, said many water wells had dried up. Those that still had water served very large populations.

"About 100,000 [people] from Togdheer, Sool and Sanaag regions were displaced by the recent drought and no one is supporting [them]," he added.

The worst-affected areas included the main Saraar plains between Sanaag and Togdheer and Ba’ade, between Sool and Sanaag.

"Most people have moved to places where some Gu’ [long] rains were received, such as the mountains of Sanaag near Erigavo and the southeast district of Togdheer," the MP said.

The mayor of Ainabo town, Khalif Ismail Saleban, said about 35,000 pastoralist families had moved from other regions in search of pasture for their livestock to areas between Qori-lugud and Buhootle, where some long rains had fallen.

This had increased the number of displaced people in the town, which is the capital of Saraar region. "We have more than 400 families who lost their animals in the drought," he told IRIN.

A local chief in Ainabo, Ibrahim Isse Hassan, said the drought had also cut the market value of livestock. The highest price for sheep, for example, was down to US$38 from $42 a few weeks ago, yet the price of rice was still $36.

On 22 June, the Famine Early Warning Systems Network (FEWS Net) warned that the drought in Somalia's central region had extended north into the key pastoral areas of the Sool plateau, Nugal valley, and Hawd livelihood zones.

The situation threatened more than 700,000 pastoralists and a significant number of urban households, whose income and food sources are strongly linked to livestock marketing and trade.

"Emergency assistance is required in order to prevent severe deterioration in food security," FEWS Net said. The situation had resulted from cumulative effects of four consecutive seasons of below-normal rainfall, it noted, adding that pasture and grazing conditions had deteriorated to an alarming degree. (IRIN)

Global Arab Network

Libya and Canada sign nuclear power deal

2009-07-30T20:03:00.000-07:00

Edited by Mark Newton

Libya and Canada have signed a memorandum of intent on nuclear power, the fourth signed by Tripoli in the past two years, a Libyan official told reporters.

The memorandum provides for the promotion of Libyan Canadian cooperation in the field of excavation, extracting, transforming and transport of uranium, enhancing radiation technology for the prevention and treatment of diseases, development and management of water desalination technology that is used in nuclear energy and other beneficial applications.

The memorandum also provides for prioritizing nuclear safety, protection of environment and economy, and nuclear non-proliferation in accordance of laws and policies of both countries as well as their international commitments.

The Secretary of the Management Committee of Libya Atomic Energy Institution emphasized that the signing of the memorandum represents a progressive step in the relations of both countries, and opens new doors for cooperation in the area of promoting nuclear energy developmental programs.

The Secretary said the peaceful use of nuclear energy includes the various pillars of development, including health and diagnosis of treatment of incurable diseases as nuclear technologies have made a major success that had exceeded conventional treatments.

It also includes industry, blights, management of water resources and protection of environment.

"The signing of the memorandum would provide for the cooperation of concerned Canadian companies with atomic energy institution in Libya to activate the role of peaceful use of nuclear energy in Libya to include other areas such as power generation and desalination of sea waters.

Notable, Libya declared its intention during the general conference of the International Atomic Energy Agency in 2006 to introduce nuclear energy in power generation and water desalination and urged several specialized international companies to present their technologies.

The memorandum foresees cooperation between the two countries in research and the mining, processing and transport of uranium, as well as its use in medicine and desalination projects.

Since July 2007, Libya has signed another three similar agreements with France, Russia and Ukraine.

OPEC member Libya is also the African continent's third largest oil producer after Nigeria and Angola, pumping nearly two million barrels of crude oil per day. It hopes to increase production to three million bpd by 2013.(AFP, JANA)

Global Arab Network

Qatar Airways celebrates the opening of the new office in Houston

2009-07-29T19:27:00.001-07:00

Edited by George Haddad
Qatar Airways has offered thanks to the people of Houston for helping make the airline’s first route launch of 2009 a huge success.
A Qatar Airways delegation has been in the heart of America’s energy capital city celebrating the official opening of the airline’s brand new office in Houston Pavilons, a newly-constructed multi-million dollar retail, dining and business centre.

Attended by airline officials and a host of local VIPs, including Harris County Judge Ed Emmett and Qatar Counsel General His Excellency Yousef Al-Khater, the opening comes just four months after Qatar Airways extended its global reach and award-winning Five Star hospitality to Houston with the launch of direct daily services to Doha, its operational hub.

At just under 17 hours, the non-stop flight is the longest in Qatar Airways’ international network and has been seen as a big boost for energy-related companies with business interests at both ends of the route.

The Houston launch into George Bush Intercontinental Airport marked Qatar Airways’ entry into the southern United States, connecting two major global energy capitals. Qatar Airways also flies daily to both Washington Dulles International Airport and John F. Kennedy International Airport IN New York using its state-of-the art Boeing 777 aircraft.

On the second leg of a USA tour for new office openings in all three cities, Qatar Airways Chief Executive Officer Akbar Al Baker said that the Houston route had grown from strength to strength since its launch.

“In March, I was privileged to be here in Houston for our inaugural route launch celebrations and was touched by the warmth and hospitality of Houstonians,” he said.

“I am delighted to say that we have enjoyed a good rapport with the people of Houston, the business and leisure community and the airport authority for fully welcoming and supporting Qatar Airways.

“Since then, Qatar Airways has been honoured with a visit to Doha by a high-level business delegation from Houston led by Deputy Mayor Anthony Hall. Business links between our two cities have grown and we look forward to building on what is already an extremely fruitful relationship with Houston.”

Al Baker added that the new Houston office demonstrated Qatar Airways’ commitment to excellent customer service both on the ground and in the air. The office location will make it easier for business and leisure travellers to book their flights to South Asia, the Middle East, Africa and the Far East.

“We made the decision to strategically locate our office in the central business district of Houston to make it easily accessible for business and leisure passengers to make their travel arrangements,” he said.

“All our offices are staffed by trained, dedicated and courteous professionals who are prepared to help with any travel request. Our on-the-ground customer service experience is as remarkable as our award-winning inflight Five Star experience which means excellence in all that we do with exceptional attention to detail.”

Following a brief visit to Dallas to meet officials from Sabre, the global distribution system, he concludes his trip in New York City to open the carrier’s new Manhattan office in the luxurious Trump Tower.

The office openings come against a backdrop of cost-cutting by many airlines across the United States and around the world.

“We are completely committed to growing our presence and raising the service bar, not only in the United States, but throughout our global network. This means continued investment in people and in infrastructure as we are seeing in our new offices across the US,” said Al Baker.

“The American travelling public is demanding and deserving and, rest assured, we deliver what we promise, being focused on delivering best levels of service.”

With a growing fleet – more than 220 aircraft on order worth over US$40 billion – and a rapidly developing route network that will top 120 destinations in five years’ time, together with the construction of a brand new international airport in Doha, Al Baker stressed that the Middle East region had been enjoying double digit growth in recent months.

“While many of our industry peers are scaling back in every area of their operation, Qatar Airways is doing the exact opposite. We remain cost conscious, but in no way will we compromise on service and excellence that we have been focused on over the past 12 years since our launch.

“What is happening now in the world around us is a short-term situation. What our industry peers are doing is reacting quickly to economic conditions that are either in, or out of, their control. At Qatar Airways, we are not a short-term operator that makes radical changes to business practices because of market conditions. Qatar Airways is in it for the long term, continuing to grow with a realistic, aggressive expansion plan.

”We look forward to the next few months with further expansion that will see new aircraft joining the fleet at an average of one a month and new routes added to our growing network,” he added.

The Houston launch was the first of a huge expansion programme in 2009. A further six new routes will be launched over the next few months, including the Indian cities of Amritsar (October 11) and Goa (October 25); Melbourne (December 6) and Sydney (date to be confirmed) in Australia Subject to Government Approval; and a further two, as yet, unannounced routes in Europe.

The addition of Amritsar and Goa will raise Qatar Airways’ capacity in India to 64 flights a week spread across 10 cities – Delhi, Mumbai, Ahmedabad, Chennai, Hyderabad, Trivandrum, Cochin and Kozikhode.

“Here, in Houston and surrounding areas, there is a wealth of travellers to the Gulf and beyond, particularly to South Asia and with our flights across India, including Amritsar and Goa, we believe our services will appeal to the traveller looking to visit friends and family, as well as head on holiday there,” said Al Baker.

Washington-based Vice-President Americas Tony Hughes said: “Since our introduction to the American market, we have made good progress in establishing Qatar Airways as the carrier of choice for the corporate and leisure segments.”

Qatar Airways is recognised globally for its acclaimed Five Star service, superior cuisine and excellent onboard entertainment options. Two state-of-the-art Boeing 777-200 Long Range aircraft operating on the Houston route offer a two-class configuration of 259 seats and is the most spacious aircraft of any airline flying between the Middle East and America.

In Business Class, there are 42 seats with passengers able to enjoy comfort and space offering a pitch of up to 78 inches and each seat converting into 180-degree fully flat beds.

Qatar Airways currently operates a modern fleet of 69 aircraft to 82 destinations worldwide.

Global Arab Network

MENA - The Water Balance

2009-07-26T23:29:00.000-07:00

James Gavin
Half of the countries in the Middle East and North Africa region consume more water on average than they are receiving in rainfall. Yet the per capita water availability in the region is projected to fall by half by 2050, writes James Gavin...

Such are the precarious fundamentals of the region's water sector. The Middle East and North Africa (MENA) region remains the most water-scarce region of the world and in recent years the amount of water available per person has declined dramatically. According to Julia Bucknall, the World Bank's leading natural resources management specialist: "The MENA region will be seeing a lot more people trying to manage with a lot less water."

Worldwide, average water availability per person is close to 7,000m3 per year, whereas in the MENA region, only around 1,200m3 per person per year is available. Moreover, with the population expected to grow from around 300 million to around 500 million in 2025, per capita availability will halve by 2050. Water precipitation will also drop by up to 30 per cent by that date.

The picture is far from uniform. Whereas the Gulf Cooperation Council (GCC) states and Yemen largely source their water needs from groundwater, Egypt and Iraq are dependent on surface water from the Nile, Tigris and Euphrates rivers respectively. However, all are facing, to varying degrees, issues of water shortage.

Some countries show dangerous consumption trends. Since the 1960s, individuals have been drilling aquifers without official licences, meaning that the MENA region is using more of its renewable water resources than other parts of the world.

Sometimes this has had disastrous effects, with deteriorating water quality. Thousands of Jordanians living in villages in the north of the country were rushed to hospital complaining of stomach upsets in 2007 after reports of water contamination. A possible cause of this was the contamination of the water supply with sewage.

Food for thought

With the vast majority of the region's water used in agriculture - up to 85 per cent, according to World Bank estimates - the water shortage has significant ramifications for the region's food output. It already imports about half of its grain, and the large increases in commodity prices since 2007 have left the average Middle Eastern consumer to bear the burden at the checkout and in the souk.

The region's authorities have devoted an increasing proportion of their infrastructure budgets towards water in recent years, which has had a positive impact on the coverage of water supply. Around three-quarters of the region's population now have access to clean water.

Some countries have ambitious schemes to redistribute water resources in development. Morocco has invested in a scheme to move water through 13 interbasin transfer systems, with a cumulative length of more than 1,100km, capable of delivering a volume of 2.5 billion m3/year.

The MENA region leads the world in non-traditional water technologies such as desalination. The region now accounts for around 60 per cent of the world's desalination capacity. Algeria has 42 units with a total capacity in 2004 of 59 million m3/year. The Ministry of Water Resources is building 28 new large-scale desalination plants, with a combined capacity of about 712 million m3/year.

In the Gulf, private desalination projects have been around for many years, and Saudi Arabia is to build 4.5 million m3/day in desalination capacity by 2024, requiring $20 billion in new spend.

These are valuable efforts. However, the most urgent priority is to establish a suitable water resource management system. The current cost of subsiding water is proving expensive and inefficient, forcing cash-strapped utilities to put off essential maintenance works. The result - more water lost in the system. In Saudi Arabia, nearly one-third of water is lost via leaks, at more than 1 billion m3/day. The figure in Jordan, with 44 per cent of water lost, is even worse.

Some governments are taking action to improve the economic incentives. Dubai announced, in 2008, that it would introduce a new tariff system that would be matched to water consumption levels. Dubai Electricity & Water Authority said it would levy charges of AED0.04 (one cent) per gallon for consumers.

Waste not, want not

Another new strategy is to do more to encourage water conservation. In the UAE, under Abu Dhabi's Leadership in Energy & Environmental Design directive, water taps will have flow restrictors fitted, while in Saudi Arabia, the Water & Electricity Ministry has distributed 33 million free water conservation kits to consumers, generating savings in use of around 30 per cent. Closed-cycle systems, where all water is captured and reused, are being introduced in the UAE.

Increasingly, the water problems in MENA do not lend themselves to national resolution. In the Levant, water is now a cross-border issue. Jordan shares two of its biggest groundwater basins with its neighbours Saudi Arabia and Syria. Israel, meanwhile, has built a dam that has blocked water flowing from Lake Tiberias into the Jordan river. This has left the 110 million m3 capacity Wehdah dam barely 10 per cent full.

These kinds of challenges will necessitate a joined-up approach to water strategy from Middle Eastern authorities. This means devising a comprehensive plan for conserving and producing water, matching consumption to supply and exploring greater possibilities for the reuse of water.

As the World Bank says, the lesson from history is that people adapt when faced with water scarcity, and people in MENA will find a way to live with less water. The hope must be that they will be able to manage that process gradually, rather than as a kneejerk response to a crisis.

Global Arab Network

This article was first published in Business Focus (Issue 2, 2009), a Middle East Association publication produced by Newsdesk Media Ltd.

LG introduces premium notebook series in Syria

2009-07-22T16:17:00.001-07:00

- Maha Karim
LG Electronics and its esteemed distributor in Syria 'Mohamad Ekrayem and sons Co' have launched a remarkable marketing campaign promoting LG's new notebook series, under the theme: 'Let's note with LG'.
P510 and the RX80 are the new comers under LG's premier Xnote series that targets style-conscious younger generation as well as business professionals constantly on the move.

With its textured exterior facade and brown-black internal finish, the P510 notebook is equipped with the fastest Core2Duo processors with 2 or 4GB of DDR3 RAM, and an ample 500GB of HDD storage, in addition to the rubberized keyboard with a 15.4-inch, LED-backlit LCD display.

For their part, RX80 series are distinguished with their trendy touch lighting, their slim and soft edge, and their button type retainer for budget saver. These series are characterized with their vivid and clear LED backlight, their cinematic SRS sound effect, their powerful webcam viewer and their powerful 3D performance.

Mr. Omar Choi, General Manager of LG IT products, pointed out that the P510 and the RX80 underline LG's increasing emphasis on creating products that are design-led and functional. 'As these new products bring together both technology and design with high portability, ease of use, and top-notch performance, it is clearly the right choice for the active business professionals of today'.

Mr. Khaldoun Ekrayem, CEO of Mohamad Ekrayem and sons company, LG's agent in Syria, noted that:
'LG new series will astonish the high-tech fans with the notebooks' extreme performance, their premium stylish design, their smart care, smart recovery and smart partition'. He added: 'The features of these notebooks are numerous, for instance the color combination of black inside with full white case cover at the outer side is really striking in LG Xnote P510 laptop. On the other hand, LG RX80 series are distinguished with their groove pattern with soft feel spray'.

It's worth mentioning that LG aims to boost its expansion in the Syrian Notebooks' market especially after the remarkable increase of its notebook sales' figures in the Middle East for the first half of 2009 which reached 27% compared to last year. This significant success is the result of LG products' diversity in addition to the employment of the latest techniques such as the Mini Notebook technique, to add that the after sale services played a major role in this impressive achievement.

LG new notebook series will be providing LG costumers in Syria with the very stylish designs and the smartest technology in the best value for money, thus LG notebooks stand as the best choice that high-tech fans can go for.

Global Arab Network

Saudi Arabia - Banking on Expansion

2009-07-22T16:13:00.000-07:00

Having been left largely unaffected by the international credit crisis that proved so damaging for financial systems in the West, Saudi Arabian banks have maintained their stability and will now profit from the trickle-down effect of the large government-driven infrastructural development projects.

The downturn has certainly had an impact on the economy though - the government predicts growth will be less than 1% in 2009 - but overall the Kingdom has fared better than other economies in the region. The banks in particular have shown resilience.

Some relief will come through the government's planned expenditure programme. The 2009 budget projects a 16% increase in expenditure, reaching a record $126bn. Several projects, such as in power generation, desalinisation and transport infrastructure, are strategic, with the Kingdom aiming to further diversify its hydrocarbons-based economy.

A recent report by Fitch Ratings, quoted in the local media, stated that Saudi banks will be heavily dependent on government-backed projects. The same report also mentioned that overall the banking system in the Kingdom had remained strong due to its adequate liquidity base and asset quality.

Notwithstanding the strengths, a slowdown in lending in the first quarter of 2009 was an evident effect of international events, and a clear sign of a stricter lending climate in the local banking industry. According to figures from the Saudi Arabian Monetary Agency (SAMA), the Kingdom's commercial banks have reduced lending in the first quarter of 2009 by 3.6% year-on-year to SR35.5bn ($9.48bn).

Although both the private and public sector have been affected by these tighter lending conditions, the market is still hoping that none of the mega projects planned will be delayed or cancelled due to lack of funding. Local banks have sufficient liquidity but are now looking more carefully at the quality of their loan portfolio.

Consumer credit is also considered an area with large potential for growth in the Kingdom. However, despite being a potentially lucrative segment, loan seekers will also have to adapt to a considerably more selective stance by lender institutions.

Demographically driven sectors, such as housing, are expected to keep growing. Mortgage schemes have long been heralded as one of the most promising areas of business for banks in the Kingdom. Government estimates put the demand for new housing at 130,000 units per year. Final approval for the long-awaited mortgage law is expected to come by the end of this year.

The banking sector is emerging relatively strong from the credit crunch and should now be able to benefit significantly from the government's expansionary budget. In order to take advantage of their privileged position, banks will likely be more selective in regards to their loan portfolios, while continuing to expand branch networks in order to attract deposits and expand lending capability. (Oxford Business Group)

Global Arab Network

Emirates to serve second UK gateway with an A380

2009-07-19T01:05:00.000-07:00

Edited by John Short
An Emirates' super-jumbo is to serve a second UK gateway - but passengers wanting to enjoy the ride between Dubai and Birmingham better be quick. In what is likely to be one of Emirates' briefest commercial deployments, an A380 will serve Birmingham for just one day on September 9th, as part of Birmingham International Airport's 70th anniversary celebrations.

The much talked about double-decker will be used on one of Emirates' two daily services to Birmingham, giving passengers the first chance to fly directly to or from Birmingham on the A380.

Tim Clark, President Emirates Airline, said:
'Emirates and Birmingham International Airport have enjoyed a successful partnership since we started services in 2000, and it's fitting that we should mark this significant milestone in the airport's history by flying in our most talked about aircraft.'

'We hope that many travellers from around the region will take advantage of this opportunity to fly on the superjumbo for the first time. With the range of amenities we have on board, including the world's first Onboard Shower Spas in First Class, we are sure they won't be disappointed,' Clark added.

Joe Kelly, Birmingham International Airport's Deputy Chief Executive Officer said, 'Our 70th anniversary is a fantastic milestone for the airport and we are delighted that Emirates is helping us celebrate our birthday with the A380. Additionally, this is the first commercial flight of an A380 outside of London Heathrow in the UK.'

Mr Kelly added, 'As well as our 70th anniversary, September 9th is also the date that our new 45 million pound International Pier opens. The Pier replaces the existing Pier, constructed in 1984, with state of the art facilities and it is therefore very fitting that the first aircraft will be the Emirates' A380.'

Passengers will have two chances to fly on the superjumbo between Dubai and Birmingham. Flight EK039 departs Dubai at 0805hrs and arrives in Birmingham at 1235hrs. Alternatively, travellers can take EK040, which leaves Birmingham at 1505hrs and lands in Dubai at 0105hrs the next day.

Spread over two levels, the whole of the A380 upper deck is dedicated to Premium passengers. Towards the front, First Class passengers can relax in one of 14 flat-bed, massage-equipped Private Suites. These incorporate remote-controlled doors, a work desk, an electrically controlled mini-bar and the most advanced in-flight entertainment system available to travellers.

The aircraft boasts two Onboard Shower Spas - in First Class, which include heated flooring, leather seating and shower kits from Emirates' premium spa brand, Timeless Spa.

Business Class passengers will be able to enjoy a new generation of intelligent seating designed to ensure all seats have aisle access. There's a cleverly designed table that never gets in the way, and a seat that slickly becomes a fully-flat bed. Passengers have ample laptop stowage when they want to switch from work to fun and enjoy the award-winning ice entertainment system, which is available to all onboard.

First and Business Class passengers can also take advantage of the Onboard Lounge, located at the rear of the upper deck. The lounge is designed to make passengers feel like they are in their own executive club, and offers seating with a wide range of beverages and canapés. A First Class Social Area with drinks facilities is located at the front of the upper deck.

Passengers in Economy Class will notice the straight, rather than conventionally concave walls, throughout the cabin, giving the impression of increased spaciousness, enhanced by the more generous seats and wider aisles.

September 9th is not only a significant day for Birmingham International Airport in the world of transport developments. Dubai Metro, a full automated, driverless railway system running throughout Dubai, is due to open the same day.
Global Arab Network

Developing a Global Network for Women in Business

2009-07-14T23:16:00.000-07:00

Nadine Marroushi
Arab women are emerging as role models in the Middle East and North Africa region and the West. The year ahead will be about forging stronger ties between businesswomen across continents, writes Nadine Marroushi.

There is no question that women in the Middle East and North Africa (MENA) are capable of matching the achievements of their male counterparts in business. There is not only ample statistical evidence showing that women are exceeding men at university level, but there are also plenty of role models to show that they go on to forge successful careers in all sectors, and are playing an increasingly important role in business and society.

Significant role models include the UAE's Foreign Trade Minister Sheikha Lubna al-Qasimi, who, despite her royal status, began as a junior employee at a software company; Qatar's Sheikha Hanadi Nasser Bint Khaled al-Thani, founder of the Qatar Ladies Investment Company; Kuwait's Maha al-Ghuneim, chairwoman of Global Investment House; Rola Dashti, the first chairwoman of the influential Kuwait Economic Society; Sheikha al-Bahar, head of corporate banking at National Bank of Kuwait; Saudi Arabia's Lubna al-Olayan, chief executive of Olayan Financing Company; Egypt's Fatma Lotfy, deputy chairwoman of Bank of Alexandria and many others.

As a recent World Bank report points out, governments throughout the region are increasingly encouraging women to play a fuller role in the economy and society, and recognising the potential of women's entrepreneurship in diversifying economies and creating jobs. Improved investment climates are resulting in increased opportunities for businesswomen. However, despite the increase in educational attainment, female participation in the labour force is relatively low, and proportionally fewer businesses are owned by women than in other parts of the world. In Saudi Arabia, for example, women make up 58 per cent of the total student population, but only 16 per cent of the workforce. Factors behind this include differential treatment under the law, social attitudes and practical obstacles. Some private sector companies still question whether women are working as part of a long-term career path or only in between marriage and having children. The World Bank's MENA region senior adviser, Nadereh Chamlou says: "A woman may have two or three children in her lifetime but she has 30-35 working years. The full talent pool is not being tapped."

One way of moving forwards with female empowerment is to develop what Baroness Haleh Afshar, professor of politics and women's studies at York University, calls the network of "global sisterhood". By forging stronger ties between Arab female business leaders in the MENA region, and their counterparts in the UK and elsewhere, a global support network will be developed, helping to produce new ideas and partnerships.

Promoting an international network
It is exactly this that the new partnership between the Middle East Association (MEA) and Women in Business International (WIB) hopes to achieve. WIB's founder, Ahmed Suleiman says: "When Women in Business started, 12 years ago, it was difficult for British businesswomen to do business in the Middle East." The new initiative is working to break down cultural barriers, promote links between UK and Middle Eastern business executives, provide opportunities for the sharing of expertise and views, bring more women into the MEA network, and encourage more women to do business in the Middle East.

The London-based Europe Arab Bank is sponsoring the year's activities, which include the annual Women in Business International Forum in London in May, training on issues such as public relations and sales techniques, networking briefings and receptions, and trade missions. Antoine Sreih, CEO of Europe Arab Bank, stated: "We are delighted to be sponsoring this initiative. As a company, we are proud of our diversity and united by our culture; it is exciting to be at the forefront of any activity that promotes the exchange of knowledge and skills between businesswomen from the UK and the Middle East."

Another way of encouraging British businesswomen to trade with the Middle East has been the creation of a Women in Business Achievement Award to celebrate the successes women have had in competing in Middle East and international markets as exporters of goods and services. Women in Business International, which announces the winner of the award at its annual May conference in London, says: "By their example of success and perseverance, these women are role models acting as inspiration to the wider business community." The award is made in association with UK Trade and Investment and the British Exporters Association. For the first time this year, the award will also be extended to international businesswomen.

Family, too
Also in this year's calendar of events is a conference in Bahrain on family businesses, looking at how the family succession route affects businesses and how women may be affected in the family.

WIB is also looking to run a business programme in Palestine where it wants to nurture the next generation of businesswomen to create sustainable businesses. The programme will involve Palestinian women being mentored by international business executives. This initiative may also be extended to Kazakhstan, Azerbaijan, India and China.

Global Arab Network

This article was first published in Business Focus (Issue 2, 2009), a Middle East Association publication produced by Newsdesk Media Ltd.

We've lost with the Icelandic banks, now lets try the Islamic banks

2009-07-10T19:49:00.000-07:00

Edited by Maha Karim
GK Partners is pleased to announce the first conference as part of its Access to Islamic Finance (A2IF) programme, which focuses on extending and enhancing the size and accessibility of Islamic finance in the United Kingdom.

The first conference of the series, which takes place at the British Library on Monday 13 July 2009, focuses on how Islamic finance investment in British businesses can be improved and will feature presentations from industry experts and chief executives of major public and private sector bodies.

“In the past year, the world has witnessed cataclysmic turmoil in global finance, with severe impacts on the fortunes of countries, companies, charities and individuals. The reckless financial speculation and excessive risk-taking that led to the unsustainable accumulation of phenomenal volumes of toxic assets are against the basic principles and practices of Islamic finance. The unfortunate reality of the credit crunch, sub-prime mortgages and economic recession, has created renewed interest in ethical and socially responsible financial practices.” says Gibril Faal, Director of GK Partners and Convenor of the conference.

The conference has received a ringing endorsement from the government. Speaking on 6 July 2009, Rt. Hon. Lord Mandelson, First Secretary of State, Lord President of the Council
Secretary of State for Business, Innovation & Skills said “I welcome this conference. In particular, the aim of increasing and optimising access to Islamic financial products through the strengthening of partnerships between the financial, business and enterprise (including social enterprise) and voluntary & charitable sectors. It will be useful in furthering understanding of the contribution Islamic finance can make to our economic and social communities at all levels.”

To attain the untapped financial and socio-economic benefits of Islamic finance, a new proactive approach is required. Apart from further facilitative regulatory reform, there is a need for focused promotion and awareness-raising amongst the diverse potential clients, especially from non-Muslim communities and unengaged corporate, SME and social economy sectors.

“Islamic finance is available to Muslims and non-Muslims.The ‘Access to Islamic Finance’ conference will help advisers, practitioners and policymakers understand the technicalities, accessibility and benefits of Islamic finance.” says Faal.

The Access to Islamic Finance (A2IF) programme is a comprehensive and inclusive approach,
based on new forms of synergistic cross-sectoral partnerships. The practical business benefits and ethical virtues of Islamic finance are relevant and consistent with the values and financing needs of commercial and social enterprises from a wide range of sectors.

Through the A2IF programme, we seek to increase and optimise actual access to Islamic financial products and services by creating and strengthening purposeful partnerships with, amongst others: corporate and SME clients and their trade associations; public sector asset developers and managers; ethical and social enterprise clients and their trade associations; regeneration and community investment companies and agencies; charity investment and trust fund managers; financial policy and regulatory bodies; social integration and community cohesion agencies.

Global Arab Network

Nakilat and Qatargas announce the delivery of LNG carrier 'Al Rekayyat'

2009-07-09T02:11:00.000-07:00

Edited by Jihad Taki
Today another of the world's largest and most advanced Q-Flex LNG carriers was delivered to Nakilat and chartered on long term contract to Qatargas Liquefied Gas Company Limited (3), known as Qatargas 3, at Hyundai Heavy Industries Co., Ltd., shipyard in Ulsan. The Nakilat owned Q-Flex LNG Carrier 'Al Rekayyat' (216,000 CBM) will be used to ship LNG produced by Qatargas 3, to markets primarily in the United States.

The Q-Flex and the even larger Q-Max are a new generation of LNG mega-ships. The Q-Max has 80 percent more capacity than conventional LNG carriers with about 40 percent lower energy requirements due to the economies of scale created by their size and the efficiency of the engines.

Q-Max LNG carriers are unique and purpose built for Nakilat and allow for more efficient transport of Qatar's natural gas to markets throughout the world.

Qatargas 3 shareholders are Qatar Petroleum, ConocoPhillips and Mitsui & Co., Ltd.

Global Arab Network

Arab investments in Africa

2009-07-07T02:06:00.000-07:00

David Morgan
A new UNCTAD report Economic Development in Africa 2009 argues that regional integration in the African continent is essential for sustained development on the continent, especially within the context of the current global economic crisis.
Subtitled "Strengthening Regional Economic Integration for Africa´s Development", the 2009 edition of the UNCTAD annual report on Africa highlights the increasing level of investment from the Arab countries of North Africa in the wider African continent.

Better links between countries, ranging from transport infrastructure such as paved roads to banking cooperation, are needed to spur mutual economic growth, the UN body says. Weak physical and institutional infrastructure is the key obstacle to increasing intra-African trade and investment. This is why, at 9 per cent of recorded flows of total external trade and 13 per cent of recorded flows of total inward foreign direct investment (FDI), Africa currently has the world´s lowest shares of regional trade and investment, the report explains.

The report highlights the trends in “intra-African investment”, of particular interest is the increased investment from some North African countries in the continent. These investments are occurring not only between North African countries, but also in countries south of the Sahara, especially in West Africa.

Libya established a sovereign wealth fund in 2006 called the Libyan African Portfolio for Investment (LAP), which has become a dynamic force through its investments in a wide range of sectors in several African countries. One of its subsidiaries, LAP Green Network, operates telecommunications companies in Côte d´Ivoire, Niger, Rwanda and Uganda.

The LAP also funds the Libyan Arab African Investment Company, which invests in the telecommunications, mining, tourism, real estate, manufacturing and agricultural sectors, in 25 African countries across the continent.

Meanwhile, Morocco has substantially deepened its economic ties with the rest of the African continent from the year 2000. An important signal in this new orientation was its decision to cancel the debt of all African Least Developed Countries (LDCs) and grant them restriction-free access to the Moroccan market.

In the following years, investments from Morocco to other African countries increased substantially, as an increasing number of Moroccan companies set up operations in the region.

Moroccan mining companies are now present, for example, in Congo, Gabon, Guinea, Mali and Burkina Faso. Maroc Telecom, the national telecommunications company, has operations in Mauritania and Burkina Faso while Moroccan banks have established themselves in Tunisia and Algeria.

Ynna Holdings, a Moroccan company active in construction and manufacturing, has operations in Libya, Tunisia, Egypt, Côte d’Ivoire, Mauritania, Gabon, Mali and
Equatorial Guinea.

By far the most important destination of Moroccan investment in the region, however, is Senegal. Indeed, Moroccan companies active in Senegal include public transport companies such as the national shipping company COMANAV and the airline Royal Air Maroc, which have respectively taken over a passenger transport route and set up a new airline in partnership with the Government of Senegal.
Private Moroccan companies are also strongly present in Senegal.
Sectors in which they are active in Senegal include construction and public works, power, telecoms and the pharmaceutical industry. Since 2005, the report says, banks have also started to establish themselves strongly in the country, notably with the establishment of a subsidiary of Moroccan bank Attijariwafa, North Africa’s largest bank.

Egypt has also been establishing a greater presence in Africa through investment, notably with the expansion of the Orascom business group, UNCTAD says. This large group, with a diverse portfolio of activities — including infrastructure development, construction, real estate and telecommunications — is present in several African countries. One of its principal companies, Orascom Telecom Holdings, is one of the largest and most diversified telecom operators in the world. Among other countries, it operates in Algeria, Tunisia and Zimbabwe.

Another company in the group, Orascom Construction Industries, runs production units in Algeria and Nigeria.

The report says that over the last two decades Africa has made progress in creating subregional institutions dedicated to economic integration. However, the establishment of subregional economic communities has not substantially increased intra-African trade, investment and mobility of people as expected. Hence, relative to other regions, Africa has by far the most fragmented market, the report finds.
The creation of several institutions for economic integration in Africa in the last two decades was expected to boost intra-African trade in goods. Such trade increased from 2 per cent in the early 1980s to 9 per cent of total African exports in 2007, but these statistics underestimate the actual flows as they do not include unrecorded trade, which is thought to be very important. Even with this caveat, intra-African trade flows are low in comparison to those in other regions and relative to Africa´s trade potential, the report says.

Analysis of trade destinations reveals that despite the low aggregate level of intra-African trade, such trade is very important for many African countries. At least 25 per cent of exports from 20 countries are absorbed by the regional market. The importance of trading blocs is further highlighted by the fact that over three quarters of intra-African trade takes place within these regional groups.

According to the available data, intra-African investment represents 13 per cent of total inward foreign direct investment (FDI). The report notes that financial liberalization partly explains a recent surge in cross-border investments, particularly in the form of mergers and acquisitions in the banking and telecommunications sectors.

Among the many issues that the report covers, it says that more attention should be given to creating an efficient services sector in Africa.

Global Arab Network

* This article will appear in the Arab-British Business, the fortnightly bulletin of the Arab-British Chamber of Commerce.

Jordan ranks 9th in Global Services Location Index

2009-07-06T00:32:00.000-07:00

Edited by John Short
Jordan gains 5 points and features for the first time in the top ten in this year's Global Services Location Index (GSLI).
The GSLI, which is published every two years by international management consulting firm A.T. Kearney analyzes and ranks the top 50 countries worldwide for locating outsourcing activities.

According to the survey, Jordan is emerging as a hot offshoring destination for the world. Jordan's competitive compensation cost levels and affordable office space in conjunction with low tax and regulatory costs catapulted the country among the top 10 destinations. Home to a well-educated population, with low costs and its proximity to Europe, Jordan has the potential to redraw the offshoring map and in the process bring much needed opportunities for this Middle Eastern country assuming a knowledge based economy. A growing IT sector, decisive work of the Ministry of Telecommunications and the optical fibers project in Jordan document this.

Dr. Dirk Buchta, partner and managing director A.T. Kearney Middle East, said: 'While cost remains a major driver in decisions about where to outsource, the quality of the labor pool is gaining importance as companies view the labor market through a global lens driven by talent shortages at home, particularly in higher, value-added functions. In response, governments all over the world are investing in the human capital demanded by the offshoring industry.'

The offshoring industry has matured over the past decade. IDC, an IT market intelligence company, reports that outsourced offshoring alone has generated $30bn in revenues and has grown by 25% over the past two years. This does not take into account captive centers in low-cost locations operated by companies from developed countries.

'Jordan is quickly developing into an attractive outsourcing location. Initiatives such as the King Abdullah II Development Fund and EDAMA pursue the development of the country at a quick pace. As our IT infrastructure expands, I personally see great potential for Jordan to be a preferred outsourcing hub,' commented H.E. Karim Kawar, president, Kawar Group.

The GSLI, which is published every two years by A.T. Kearney analyzes and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centers and back-office support. Each country's score is composed of a weighted combination of relative scores on 43 measurements, which are grouped into three categories: financial attractiveness, people and skills availability and business environment.

While India, China and Malaysia retain the top three spots they've occupied since the inaugural GSLI in 2004, a fundamental shift in the index has taken place as once strong Central European countries have yielded ground to countries in Asia, the Middle East and North Africa.

Global Arab Network

Nigeria, Algeria, Niger in $12b gas deal

2009-07-03T16:27:00.000-07:00

ninemsn

Three African countries have signed an accord to build a $US10 billion ($A12.7 billion) trans-Saharan gas pipeline linking vast reserves in Nigeria to Europe.

The project will convey gas destined for the European market more than 4,000km from the Niger Delta in Nigeria, via Niger and Algeria.

The head of Nigeria's state oil company, Mohammed Barkindo, said on Friday the agreement "gives this project the official stamp of approval from the three governments, directing the national oil companies of these three countries to begin in earnest the definitional phase of this project".

Petroleum and Energy ministers Rilwan Lukman of Nigeria, Chakib Khalib of Algeria and Mohammed Abdullahi of Niger signed the agreement in Abuja.

The first delivery of gas is scheduled in 2015.

"A market opportunity of about 15-20 billion cubic metres exists for the TSGP (Trans-Saharan Gas Pipeline) as from the year 2015," Lukman, also a former chief of the Organisation of Petroleum Exporting Countries (OPEC) said.

"Now that this agreement is in place... we will be talking with prospective partners who might be interested in going to bed with us on this project," Lukman said.

No date was announced for the start of construction.

But Lukman said the next step will be to establish the appropriate commercial, fiscal, legal and technical options ahead of the final investment decision.

Already the Russian gas monopoly Gazprom has expressed an interest in the venture.

Last week, Gazprom signed an agreement with the Nigerian National Petroleum Company (NNPC) establishing a 50-50 joint venture in oil, gas processing and transportation. It plans to invest $US2.5 billion ($A3.16 billion) in a series of projects in Nigeria.

Gazprom plans to build at a cost of between $US400 million and $US500 million ($A506 million and $A632 million) a 360km gas pipeline running from south to the north. It will be the first trunk pipeline to become part of the Trans Saharan gas pipeline, Gazprom International's chief Boris Ivanov said last week.

Khalib, the Algerian minister, said financing the project was not likely to be a problem.

"This project is feasible. It is a project that has all the conditions to be very successful," Khalib said.

"We are going to look at the interest of the three countries. Up till now, the will of the three countries, the vision of the three countries has allowed us to come this point," Khalib said.

Niger's minister, Mohammed Abdullahi, told reporters political uncertainty in his country "is not the type that will mortgage the future of a project of this nature".

Nigeria claims proven gas reserves of about 183 trillion cubic feet, making it the seventh largest producer in the world, but a large chunk of it is wasted through daily flaring by oil producers.

Crisis costs Aussies 36% of their wealth

2009-06-27T01:29:00.000-07:00

ninemsn

It's been revealed that Australian households have lost 36 per cent of their financial wealth since the economic crisis began.

Estimates from the Australian Bureau of Statistics put combined household wealth at just short of $787 billion at the end of March, down from a peak of $1,246 billion in September 2007, Fairfax newspapers report.

The total includes household wealth held in cash, bank deposits, bonds and shares. Significantly it excludes wealth held in the form of superannuation and real estate, and both of these have also dived since the crisis began.

Financial wealth per household as measured by the Australian Financial Accounts has slid from $159,000 to $98,000 - its lowest point for more than three years. Per person it has slipped from $58,900 to $36,200.

"It's the result of the collapsing sharemarket," said Savanth Sebastian, a Commonwealth Securities economist. "Australians are more exposed to shares than the citizens of virtually any other country.

Equity raising was close call: Asciano

2009-06-21T02:34:00.000-07:00

ninemsn
Transport infrastructure company Asciano Ltd says it was a close call between deciding to proceed with a multi-billion-dollar capital raising or the sale of all or parts of the company, to pay down debt.

But in the end, the board decided the $2.35 billion equity raising was the "most certain" proposal available, chief executive Mark Rowsthorn said on Sunday.

The ports and rail operator, which was spun out of Toll Holdings in 2007, last week announced it would raise $2.35 billion from the sale of new stapled securities to institutions and retail investors.

The deal, which was upsized from $2 billion following strong support from investors, had given the company an "enormous sense of relief," Mr Rowsthorn said.

Asciano chose the raising over other options it had been considering since last year, when it announced plans to try to sell, or monetise, all or part of its businesses to cut its $4.9 billion debt burden.

Mr Rowsthorn, who is also a director of the company, told ABC's Inside Business program the board had last Sunday June 14 "four or five" serious proposals to consider, before opting the following Monday to go ahead with the capital raising.

"They involved broadbased recaps (recapitalistions) for the company, and also sales of parts of the business, ports and coal," he said.

The capital raising, one of many pursued by listed corporations this year, was one of the options.

"It was a very close contest in the end... when you looked at keeping the business together, you looked at the certainty of the transaction, the proposal we have chosen is the most certain," Mr Rowsthorn said.

Under the raising, which is subject to approval by Asciano securityholders at a meeting on July 22, the new securities were offered at $1.10 each, a 40 per cent discount to Asciano's closing price of $1.83 on June 12. The stock closed at $1.405 on Friday June 19.

Institutional investors committed for $1.922 billion worth, including $341 million from an entitlement offer, $231 million from an unconditional placement and $1.35 billion from a conditional placement.

Asciano is also looking to raise $428 million from the fully underwritten retail component of the offer.

But the company may also raise an additional $194 million from a conditional placement to Mr Rowsthorn, who holds 10.92 per cent of the company's securities.

Mr Rowsthorn on Sunday said he was not getting any sort of special deal under the placement, noting that he would be "able just to keep my pro rata rights in the company".

"It's just a vote of confidence in me going forward in the company," he added.

Pressed on how he would come up with the $194 million needed to pay for the new securities, Mr Rowsthorn said it was a "personal issue and it's a work in progress."

Asked if he would participate in the offer in full he said: "To the extent that I can, subject to my personal finances and other personal things, but that's a work in progress.

"I really have to do the work on it, and I haven't got to it yet - it's been a busy week."

When the institutional and retail offer is concluded, Asciano expects to see its debt burden fall to "just south of $3 billion".

"And with our current earnings and the credit metrics, it puts us into a much more comfortable position going forward," Mr Rowsthorn said.

Vietnam seeks closer oil ties with Saudi Arabia

2009-06-16T21:59:00.000-07:00

AlArabiya net
HANOI/DUBAI (AFP and Danielle Kamar)

State-run PetroVietnam wants closer cooperation with thw world's largest oil exporter, Saudi Arabia, in exploration and refinery development, state media reported on Thursday.

PetroVietnam and its Saudi counterpart Aramco have agreed in principle to build a petroleum "strategic alliance," the Vietnam News reported.

Strategic alliances

" The Saudi government as a whole is trying to increase its relations with the Far East "
John Francois Sezec-- Georgetown professorThe agreement came during the first visit to communist Vietnam by Saudi oil minister Ali al-Naimi, whose country is the world's leading oil exporter, the report said.

"We do not have problems in supplying Vietnam with crude oil and hydrocarbons," al-Naimi told the Vietnamese paper.

Saudi Arabia maintains strategic alliances with Japan, China, and South Korea and is their first supplier of hydrocarbons.

"The Saudi government as a whole is trying to increase its relations with the Far East," John Francois Sezec, a professor at Georgetown University, told Al Arabiya.

"In the long term, it means a reduction of the relationship with the West and an increase of the relations with the Far East," he added.

Vietnam and the Middle East

" We hope to get the opportunity to take part in exploring and exploiting oil and gas in Saudi Arabia, especially with the establishment of a joint venture with Saudi Aramco "
PetroVietnam director general According to the Ministry of Industry and Trade, trade between the Middle East and Vietnam amounted to $1.2 billion last year with a year by year increase of 17.5 percent.

"We hope to get the opportunity to take part in exploring and exploiting oil and gas in Saudi Arabia, especially with the establishment of a joint venture with Saudi Aramco," PetroVietnam director general Tran Ngoc Canh said.

Canh said he also wanted to cooperate with Saudi Arabian partners in other areas including training and setting up joint ventures to operate refineries in Vietnam.

PetroVietnam is the trading name of the Vietnam National Oil and Gas Group. Sezec said the group's alliance with Aramco is "helping Vietnam obtain some basic material that's basic to its development."

In February the country opened its first oil refinery, the $2.5-billion Dung Quat facility in central Quang Ngai province. The refinery is expected to produce 6.5 million ton a year or 148,200 barrels per day, about 30 percent of the country's needs.

Vietnam News said PetroVietnam in February signed a memorandum of understanding with Aramco to provide crude for Dung Quat, as well as oil products and liquid petroleum gas.

PetroVietnam is designing another refinery, in the north, and has tentative plans for a third in a bid to attain energy autonomy for the country.

Lebanon election results 'positive for economy'

2009-06-15T15:33:00.000-07:00

Daily Star staff

BEIRUT: Business Monitor International (BMI) has said that the results of Lebanon's parliamentary elections are very positive for the economic outlook, adding that the government needs to implement reforms to create long-term sustainable growth, and that political risks remain, as reported by Byblos Bank's publication Lebanon This Week.

It expected economic growth at 2.3 percent in 2009 and 2.2 percent in 2010, and that growth would pick up to a relatively robust pace starting in 2011 if political and economic reforms are allowed to be implemented.

The report said that while other countries now face rising political risks in the wake of the global economic downturn, Lebanon's political instability is already priced in, and investors have reacted positively to the election results based on the recent performance of the Beirut stock market.

BMI considered that the other positive outcome of the elections, particularly in comparison with some other countries in the East Mediterranean region, is that the re-elected March 14 majority is ready and willing to reform.

It noted that Lebanon has a strong legacy of business culture, and authorities have published numerous documents laying out plans to privatize failing state-owned entities, improve the taxation system and business environment and, most importantly, pay down the national debt.

It warned, however, that much will depend on whether the government is able to implement these reforms, as it has not managed to pass the 2007, 2008 or 2009 budgets because of political opposition.

It said that the most likely scenario would include some small-scale reforms and a rise in investor confidence, with larger decisions such as the privatization of ElectricitŽ du Liban not likely to be on the table until at least 2010.

According to BMI, Lebanon will feel the benefit of the election results primarily through a pick up in domestic demand, while external demand will continue to struggle.

It said increased confidence in the political system will stimulate private consumption, but warned that the improvement will not come overnight given the unfavorable global environment. It forecast a 2 percent rise in real private consumption in 2009 and 2010, given the global slowdown and associated Lebanese job losses abroad.

It said this growth could be slowed if the Finance Ministry wants to increase VAT from 10 percent to 12 percent, and the tax on interest rate deposits to 7 percent from 5 percent, as previously planned.

Despite the domestic momentum, the government will be constrained in its ability to boost growth and external conditions will hurt the trade outlook.

It expected exports of goods and services to contract by 2 percent in real terms in 2009 and imports to slow to 2 percent.

It said imports are likely to remain subdued and exports might drop and potentially even moving into negative territory if external demand remains low.

- The Daily Star

Lebanon needs low-cost tourism infrastructure

2009-06-12T22:51:00.000-07:00

By Sebastien Malo
Special to The Daily Star

BEIRUT: Lebanese take special pride in their hospitality. But as tourists worldwide are planning penny-wise summer holidays, many argue that Lebanon's inadequate low-cost tourism infrastructure may be limiting the country's capacity to welcome middle-class tourists.

"If you look at the last couple of years, you had high growth rates. The industry saw they should focus on luxury tourism," says analyst Amir Girgis, an economist with the London-based World Travel & Tourism Council.

But tourists are "more money conscious" following the global financial crisis. As a result, says Girgis, the focus on luxury tourism might be changing "because if you stick to that framework, you might lose out."

Lebanon's tourist industry, and more generally that of the Middle East, has for years geared its efforts toward attracting high-rolling travelers, building posh hotels for the affluent - most of which were Gulf tourists.

Luxury accommodations still account for most of the country's 300 hotels. But some argue that the industry is ill equipped to the needs of the frugal traveler.

Talal, a hostel near the port of Beirut, provides a case in point. The institution has been "almost fully booked since it opened nine years ago," says Wissam Aboultaif, one of the managers.

Wild Discovery, a leading travel and tourism provider based in Beirut and affiliated to Johnny R. Saade Holdings, is among the Lebanese companies that has advocated that the supply of three-stars hotels and of regional lodgings should be increased throughout the country.

"We have always campaigned for a structure of three-star hotels in Lebanon. The market mainly consists of four and five-star hotels. All year round Lebanon needs to have tourists not only spending $500 a night for a room, but other vacationers spending less" says Johnny Modawar, the company's spokesperson.

But a challenge confronts those who share Modawar's view."The image of Lebanon is that it is an expensive tourism destination," he said.

Nada al-Sardook, director general at the Tourism Ministry, admits that the lower end of the spectrum of tourists is not being serviced to its maximum capacity by the infrastructure currently available. "Lebanon must not be only a high-end destination," she says. "It is a destination for all ... We should have a supply adapted to all budgets."

The Tourism Ministry is increasingly working to open the way to the growing market. Two projects it recently launched, the Lebanese Mountain Trail - a patch of hiking trails in Lebanon's wilderness and rural areas, and the DHIAFEE Program - a network which presents tourists with lodging options off Beirut's beaten track, are expected to bring tourism to the less-commonly explored corners of the country.

The recent increase of low-cost regional flights to Beirut is also arguably bringing Lebanon more tourists with an appetite for reasonably priced tourism.

The low-cost carrier flydubai, which opened a Dubai-Beirut route earlier this month, is the latest of seven low-cost carriers said to be boosting Lebanon's low-cost tourism sector.

While much of the clientele of the low-cost carriers with a route to Beirut is undoubtedly composed of Lebanese expatriates working in the Gulf, a sizeable portion is foreign and comes for a weekend tourism escapade, according to Modawar. "I think Lebanon has much to win from this weekend tourism coming from the Middle East," he says.

Furthermore, enhancing the offer for a more affordable tourism - without compromising quality - could allow the tourism industry to tap more deeply into the market of European tourists, he says.

Marwa Rizk Jaber, the managing director and owner of the boutique travel agency U Travel in Beirut, thinks it is Lebanon's recent instability that has kept the industry from booming. "The citizens of European countries are very much affected by the media coverage on Lebanon and by the warnings of their governments not to visit Lebanon as soon as any security incident occurs," she says, predicting that "Europeans will start to come in large numbers" when the situation calms down.

This outcome may be imminent. The numbers of foreigners traveling to Lebanon are surging again since they sank abruptly in 2006 following the military conflict that affected parts of the country.

In 2008, the total number of foreigners entering the country was 31 percent higher than the previous year according to Tourism Ministry figures. This year, 57 percent more foreigners entered Lebanon between January and April 2009 than during the same period in 2008.

Furthermore, international hotel groups such as Accor and Rotana have recently announced plans to launch their budget brands in the Middle East, but have made no concrete plans to expand in Lebanon for the time being.

The Tourism Ministry and the private sector now need to develop a common marketing strategy, says Jaber. "How does the government want to position Lebanon, is the Monaco or the Switzerland of the Middle-East, or more like the Turkey or Cyprus where you have all kinds of tourism from low cost to luxury?" she asks, rhetorically. "I think the best option is to have the Cyprus model with specific areas for low-cost tourism."

Jobless rate returns to five-year high

2009-06-11T03:58:00.001-07:00

ninemsn
The jobless rate has returned to a five-year high of 5.7 per cent, despite only a modest fall in total employment in official May data released on Thursday.

The seasonally adjusted increase in the jobless rate back to a level seen in March was widely expected by economists after the rate surprisingly fell in April.

The April rate was revised upwards to 5.5 per cent after originally being reported at 5.4 per cent.

The 1,700 fall in the total number of people employed in May was well below the 30,000 forecast by economists, although full-time employment did drop by 26,200.

Deputy Prime Minister Julia Gillard says the global economic recession is hitting the Australian jobs market.

"As a result of the global recession these are tough times for working people right around the globe," Ms Gillard, who also holds the employment portfolio, told reporters in Sydney.

She said unemployment would have been a lot worse without the government's two stimulus packages, that included cash handouts.

"For Australians hit by recession, we will be standing with them. We want to stand shoulder to shoulder with them," Ms Gillard said.

"We are strongly positioned compared to other countries - we've acted here to cushion Australia from the full effects."

Government forecasts were revised in the May budget, estimating an 8.25 per cent unemployment rate by mid-2010.

Queensland saw the biggest unemployment jump in May, rising to 5.3 per cent from 4.9 per cent in April.

NSW had the highest rate in the country, rising to 6.4 per cent from 6.1 per cent, while in Western Australia it increased to 4.9 per cent from 4.6 per cent.

The jobless rate in Victoria was 5.9 per cent in May compared to 5.7 per cent the previous month, while it was up to 3.3 per cent in the ACT versus 3.1 per cent previously.

However, the Tasmanian unemployment rate fell to 5.7 per cent from 6.1 per cent and was down to 5.4 per cent in South Australia from 5.5 per cent.

The rate was unchanged in the Northern Territory at 3.9 per cent.

JB Hi-Fi shareholders eye high dividend

2009-06-09T04:13:00.001-07:00

ninemsn

A higher final dividend is once again in store for JB Hi-Fi Ltd shareholders after the discount electronics retailer defied the economic downturn by announcing it will beat its full year profit guidance by $5 million.

Shares in JB Hi-Fi finished at a 17-month high, up 69 cents, or 5.12 per cent at $14.17 after the company said its after-tax profit would be around $92 million for the year to June 30.

The result would be up 41 per cent from $65.1 million booked in the previous financial year, which was a 61.1 per cent rise on the 2006/07 result.

Analysts' average estimates had put the JB Hi-Fi 2009 net profit at $87.1 million, which was revised upwards after a strong first half result.

Strong sales across most categories will lift total sales by 26 per cent to $2.3 billion, slightly below the previous guidance of $2.35 billion, chief executive Richard Uechtritz told AAP.

Mr Uechtritz said further cost cuts would enable gross margins to be held at around 22.2 per cent for 2008/09 and earnings before interest and tax margin were set to increase over the previous financial year.

Mr Uechtritz said shareholders were likely pocket a bigger dividend than in previous years as the company had a strong cash position and no acquisitions were on the horizon.

"Arguably, we're one of the lowest-geared retailers out there," he said.

"We don't have any acquisitions on the board ... so we're throwing off more cash, so the board would probably have to seriously look at returning some of that money to the shareholders."

Shareholders were rewarded in 2008 when the company boosted its final fully franked dividend by 167 per cent, or 10 cents, to 16 cents on higher sales and a continued store expansion.

In February JB Hi-Fi's board declared a 15 cent interim dividend, up 50 per cent on the previous corresponding half.

Mr Uechtritz said the boost from the government's second $42 billion stimulus package had failed to materialise for the share market's lowest-cost retailer.

"Our performance in the second half has been similar to our performance in the first half, so we didn't get as big a bump as we expected from the stimulus package."

He said JB Hi-Fi continued to grab market share from competitors despite "pretty hot" competition and aggressive discounting across the sector.

"Compared to a general softness in the more traditional categories of discretionary retail spending in the economy over the past year, our experience particularly in the field of home entertainment has been very positive, as reflected in the results," Mr Uechtritz said.

On Citigroup numbers, JB Hi-Fi is Australia's third largest consumer electronics company with an estimated market share of 11 per cent in 2007/08.

Mr Uechtritz said the store expansion rate of 15 per cent per year would continue, but declined to specify when the company would reach its target 160 company-branded stores.

It will also open another 50 stores in smaller mall and strip metropolitan shopping centres and country towns across Australian and New Zealand.

"We feel that the best return on investment is opening a new JB store," Mr Uechtritz said.

"There's no similar JBs out there. We don't have a competitor that is just focused on home entertainment."

JB Hi-Fi has 105 stores across Australia and New Zealand.

Russia sees oil at $150 if investment curbs persist

2009-06-05T20:28:00.000-07:00

Daily Star

Denis Dyomkin and Guy Faulconbridge
Reuters

ST. PETERSBURG, Russia: Russia, the world's biggest energy producer, warned Friday oil could soar to $150 a barrel if the global economic crisis continued to curb investment in capacity by top producers. Moscow's top energy policy official also warned output from Russia could be hit unless borrowing costs fell for its energy giants and called for a move away from trading oil only in US dollars.

Russia, which is currently producing more oil than Saudi Arabia, has refused to cut production with the Organization of Petroleum Exporting Countries and wants higher prices for the lifeblood of its $1.7 trillion economy.

"If capital investments do not recover then the recent forecast of the Saudi oil minister, when he said in Rome that oil prices could be $150 [per barrel] in two to three years, could become reality," Deputy Prime Minister Igor Sechin told the St. Petersburg Economic Forum.

"I can tell what we think is needed for us - we need not less than $75," said Sechin, one of Prime Minister Vladimir Putin's most trusted advisers.

Russia had enjoyed the longest economic boom in a generation during the presidency of Putin in 2000-08 on the back of high oil prices.

But Putin's successor and the Kremlin's new chief Dmitry Medvedev says the habit must be kicked and that the severity of Russia's economic crisis has shown the fragility of reliance on oil and gas exports.

The economic crisis hammered confidence in Russian corporate borrowers - who owe $400 billion to foreign lenders - and some major Russian companies have said they are finding it too expensive to borrow in Western markets.

"A reduction in access to the financial markets could lead to a reduction of output," Sechin said, but added Russian production forecasts were stable due to investment made over previous years.

Sechin, who is considered one of Russia's most powerful officials, called for oil markets to find a way to insulate themselves from the decline of the US dollar, which has led to a rise in the nominal US dollar price for oil.

"We need to protect the oil market from risks on the currencies market," Sechin said. "As far as a peg to one currency is concerned there are no simple answers that could replace the existing system tomorrow or a day after tomorrow," he said. "But without work in this direction oil markets could become hostage of decisions of the government of one country."

Sechin, 48, is the informal leader of a group of officials whose aim is to restore some of the clout wielded by the former Soviet Union by using Russia's vast energy resources.

But the economic crisis has forced most Russian energy companies to cut investment as they find it more expensive to borrow abroad. And extraction is becoming more costly.

Russian oil output fell by 1 percent in 2008 to 488 million tons (about 9.8 million barrels per day), the first decline in a decade, as the easily extractible deposits of Western Siberia, which have been exploited since the 1960s, started to decline.

Russian officials say future gains in oil output will now have to be made in the more distant parts of Siberia and the Arctic, which will need hundreds of billions of dollars in investment to bring oil to market.

Until revision during the depths of the economic crisis, Russia had been planning its 2009 budget on a Urals price of $95 per barrel. Russia is now using an assumption of $41 a barrel for 2009 and a price of $50 a barrel in 2010.

The recovery in oil prices to almost $70 a barrel has underpinned the first signs of recovery in Russia's economy, and driven a recovery in its currency and stock markets.

Islamic finance: Can it save Western banks?

2009-05-29T23:54:00.001-07:00

Shariah-compliant assets range between $700 million and $1 trillion worldwide (File)

DUBAI (AlArabiya.net)

The rules are simple, no dealing in alchohol, pornography or anything deemed morally harmful coupled with no interest and you have the foundation for an Islamic financial system, which has been able to withstand the current economic meltdown, presenting Islamic banks with a unique opportunity to flourish.

Unlike banks in Western economies, Islamic banks have been delt less of a blow by the financial crisis and experts believe it is because the laws followed are based on those set out in Islam's Holy book, the Quran, which for Muslims is the word of God.

No interest and risk sharing

" There has been much questioning of the values underpinning the conventional financial system, and the search for alternatives means that Islamic banks are likely to receive more attention, especially as their raison d'être is morality in financial transactions, based on religious teachings "
Professor Rodney WilsonIslamic banks do not borrow in interbank markets as their funds are from their own deposits and they do not hold toxic collateralized debt obligations. Furthermore Islamic law forbids interest and encourgaes risk sharing, which means that any investment, profit or loss, is shared by both the bank and its clients.

The fact that Islamic banks have seen minimal adverse effects from the crisis has made them more attractive to investors, especially in the Gulf Cooperation Council (GCC), who watched the value of their investments in conventional banks plummet, according to a new report, named The development of Islamic finance in the GCC, from the London School of Economics and Political Science (LSE).

"There has been much questioning of the values underpinning the conventional financial system, and the search for alternatives means that Islamic banks are likely to receive more attention, especially as their raison d'être is morality in financial transactions, based on religious teachings," said author of the report Professor Rodney Wilson, who wrote the report for LSE’s Kuwait Programme on Development, Governance and Globalization in the Gulf States.

The demand from the world's 1.3 billion Muslims for investments that comply with their beliefs means assets that comply with Islamic law range between $700 million and $1 trillion, with some estimates seeing assets growing to $1.6 trillion by 2012.

The value of Shariah-compliant assets in the GCC, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, amounts to more than $262 billion.

"The increasing international respect for Islamic finance has been noted in the GCC, and this should encourage local acceptance by both governments and bank customers, not least because no Islamic bank has failed in the crisis and required a substantial government bail-out," Wilson said.

Linking the West with Shariah

" Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure "
Lord Mayor of the City of LondonWilson said the GCC's position in the heart of the Muslim world made the area a strategic hub that could link Islamic finance to Europe, Asia and Africa and argued the spread of subsidiaries of GCC-based Islamic banks was an indication that it was already happening.

However, regulatory differences and harmonization among different schools of thought, are just some of the main obstacles of Islamic banking as it looks to grow into a cross-border system, mainly targetting European countries with large Muslim communities.

As the industry expands into non-Muslim or secular states, the need to educate others about the sector has become greater.

In a sign that cultural barriers may be coming down, this week a London-based training program was launched by the Lord Mayor of the City of London, Ian Luder, to enable the European financial hub to better cater to the requirements of Islamic finance.

"Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure," Luder said.

The program, which will be run by the Islamic Banking Finance Center U.K., was established to provide research and training for private and public organizations such as insurance companies, banks, non-financial businesses and academic institutions.

"The Islamic finance sector is expanding at an exponential rate…due to its strong financial principles and ethical values, which prohibits the charging or paying of interest and encourages mutual risk and profit sharing between parties,” Akmal Hanuk, chief executive of IBFC-U.K., said.

Malcolm Turnbull's wealth tops $178m in BRW's Rich 200

2009-05-29T00:14:00.000-07:00

By Emma Thelwell,

ninemsn Money

Federal Opposition Leader Malcolm Turnbull has raked in more than $10 million a year since he was elected to Parliament, according to a ranking of Australia’s richest people.

With a total fortune of $178 million, the Liberal Party leader has rejoined BRW magazine’s Rich 200 list after a four year break.

However, Mr Turnbull told reporters today the figures were "basically plucked out of the air".

"They have no idea," he said. "It’s flattering."

Mr Turnbull has pitched himself as an ordinary working bloke who has 'done good' – a man who understands the plight of the Australia’s poor - since he joined the Liberal party in 2004.

"I do not come to the position of leader of the Liberal Party from a lifetime of privilege," he said in his first speech as Opposition Leader last September.

"I know what it is like to be very short of money," he added. "I know what it is like to live in rented flats. I know what it is like to grow up with a single parent, with no support other than a devoted and loyal father."

John Stensholt, editor of the BRW Rich 200, told ninemsn that Mr Turnbull is the richest politician - indeed the only acting Member of Parliament – ever to have graced the Rich 200 list.

"Kevin Rudd doesn’t even come close,", Mr Stensholt said. "He’s worth about $50 million, at most, and that’s mainly through his wife."

Thanks to his former careers at OzEmail and Goldman Sachs, Mr Turnbull was a firm feature of BRW’s rich list from 1999-2005, when his net worth was estimated at $133 million.

Since becoming a parliamentarian, Mr Turnbull’s investment choices have "become conservative," said Mr Stensholt.

Heavily invested in the property sector, Mr Turnbull owns 10 properties in Australia, including a harbour side mansion in Sydney. He has also cranked up his wealth by investing across 40 different managed funds, alongside government bonds and cash deposits. BRW, which publishes the full Rich 200 list on Thursday, would not disclose the amount Mr Turnbull has made in the last year alone.

According to Mr Stensholt, "he didn’t want to comment" to BRW on his reinstatement to the Rich 200 list.

However, 80 percent of those on the list were happy to speak to the magazine – even though many of Australia’s rich suffered a dismal financial year along with the rest of the globe.

Anthony Pratt, son of the late Richard Pratt, rose to take number one position in this year’s list, after inheriting a $4.3 billion fortune and the helm of cardboard packaging and recycling company Visy from his father.

A close second place, with $4.2 billion in the bank, is Westfield boss Frank Lowy. Meanwhile, Harry Triguboff, the Sydney property magnate, takes this year’s bronze medal with a wealth of $3.66 billion.

At number four, Gina Rinehart remains Australia’s richest woman - although the iron ore magnate saw her fortune drop from $4.39 billion last year to $3.47 billion this year on the back of sliding commodity prices.

The Rich 200 notched up a combined loss of more than $25 billion as the economic downturn hit hard.

However, as Mr Stensholt pointed out, they fared better than the stock market overall. “Their wealth dropped 18 percent overall, but the All Ords was down around 35 percent last year”, he said.

Last year’s richest Australian, Andrew Forrest, chief executive of Fortescue Metals Group, was hammered by losses of more than $7 billion - whittling his fortune down to $2.38 billion. However, Mr Forrest still sits comfortably in the Rich 200, at number eight.

The rural property sector clocked some movers and shakers this year, BRW said, noting that Queensland pastoralist Peter Hughes and his family have made the list with a tidy sum of $443 million.

While some were lucky to gain a spot on the rich list amid the current economic gloom, others fared worse.

High-profile departures from the Rich 200 include Alan Bond, who saw his African oil and diamond investments tumble in value. Phil Green, who resigned as chief executive of Babcock and Brown last year, also slipped off the list.

All said, thirty people fell out of the Rich 200 as their wealth crumbled in the face of the global turmoil.

What’s more, the combined wealth of the list plunged to $114.1 billion, down $25 billion over the year. The cut-off band for entering the list has dropped accordingly from $200 million last year, to $150 million.

Amid the tumbling wealth, the number of individual billionaires has fallen back from 38, to 28 this year, the magazine said.

The BRW Rich 200 edition goes on sale tomorrow.

Saudi bank chief blames self-regulation for crisis

2009-05-28T23:58:00.000-07:00

The Saudi Arabian Monetary Agency (SAMA) has helped cushion the financial crisis' affect on local banks

RIYADH/DUBAI (AFP, AlArabiya.net)

Saudi central bank chief Mohammad al-Jasser on Tuesday blamed an ideology of self-regulation in the banking sector for the global economic crisis and called for comprehensive policing of banks.

"The current crisis has shown beyond any doubt that self-regulation is no regulation, just as self-recommendation is no recommendation," Jasser, governor of the Saudi Arabian Monetary Agency, said.

"Some major advanced economies had ... an ideological belief that markets are self-regulating and self-repairing," he said at a Euromoney Saudi Arabia Conference in Riyadh.

" The current crisis has shown beyond any doubt that self-regulation is no regulation, just as self-recommendation is no recommendation "
Mohammad al-Jasser, Saudi Arabian Monetary Agency"It is high time that we dropped the ideologies and theoretical constructs that led us astray and enacted .... comprehensive regulation to prevent the excesses that were the root cause of the problem we are in today," said Jasser.

SAMA has maintained high capital ratio requirements for the banks, giving them a greater cushion against downturns, but the industry is also less-developed than in other countries.

Jasser credited tough regulation with the stable position of Saudi banks even as those elsewhere had stumbled if not failed. "While we supported decontrol, we never followed the push for banking deregulation too far," he said.

No Saudi bank has failed, though the central bank has had to make liquidity available to them in the toughest stretches of the crisis.

" Every economic crisis comes with an opportunity, which should be utilized to help the process of recovery "
Jarmo Kotilaine, NCB CapitalLast week experts at the Saudi International Banking and Investment conference predicted Saudi banks would be among the first to “bounce back” once a recovery to global crisis gets underway.

The chief economist of NCB Capital, the investment banking arm of Saudi Arabia's largest bank, said Saudi banks were healthy and well-positioned though foreign investment had lessened.

“Every economic crisis comes with an opportunity, which should be utilized to help the process of recovery,” Jarmo Kotilaine was quoted as saying by the Middle East Financial Network.

Saudi king sees fair oil price at $75-80: report

2009-05-28T23:48:00.001-07:00

King Abdullah said that the kiingdom's economy was strong enough to get over the financial crisis

DUBAI (AlArabiya.net)

Saudi Arabia will not cut public spending and sees no need to borrow from local or international markets, press reports quoted the nation's king as saying on Tuesday.

"The volume of spending will not contract and we do not need debt whether local or foreign," King Abdullah Bin-Abd-al-Aziz al-Saud said in an interview with Kuwait's al-Seyasah daily.

" The volume of spending will not contract and we do not need debt whether local or foreign "
Saudi King Abdullah bin Abdul AzizThe monarch said the Gulf kingdom's economy was strong enough to get over the financial crisis and said a number of infra-structure projects worth billions of dollars were underway, ruling out that the possibility that Saudi Arabia would have to liquidate state investment.

King Abdullah said the current price of $75-80 a barrel is a fair price for oil. "We are now seeing a quick recovery in the global economy and we see indications of increasing demand on this material (oil)."

With regards to the Gulf Arab Monetary Union, the king said Gulf countries would review their deal and would seek to resolve disputes prior to its implementation.

Last week the United Arab Emirates withdrew from the planned union, throwing the project into doubt even though Saudi Arabia, Kuwait, Qatar and Bahrain said they were still committed.

The UAE, the world’s third-largest oil exporter, is the second country to withdraw after Oman dropped out in 2006.

In 2004, the UAE offered to host the eventual central bank of the monetary union but was rejected two weeks ago by the Gulf Cooperation Council, which decided to house it in Saudi Arabia.

King Abdullah said Saudi ties with the UAE would not be affected by the surprise move, which the UAE linked to plans to place the joint central bank that would manage the currency in Riyadh.

"The leaderships of GCC countries could disagree over certain opinions and issues, but these differences quickly go, be it in Gulf summits or bilateral meetings ... The kingdom and Saudi Arabia will remain brotherly," King Abdullah said.

Aussie dollar steady above $0.78

2009-05-28T18:06:00.000-07:00

ninemsn
SYDNEY, May 29 (Reuters) -

The Australian dollar held above $0.78 on Friday as higher commodity prices and encouraging U.S. data whetted appetites for riskier currencies.
* Private sector credit numbers due at 0130 GMT, and generous handouts by the government are expected to have supported housing loans.
* That should affirm bets the Reserve Bank of Australia will keep interest rates steady at 3 percent at its policy meeting on June 2.
* Australian one-month overnight index swap show rates are seen steady at 3 percent.
* Aussie was up at $0.7849, from $0.7778 seen here late Thursday. It was also higher at 75.83 yen , from Thursday's 75.24.
* Aussie now trading near the bottom of an upward trend channel that started in late April and was established by lows of $0.7477 on May 15, and $0.7703 on May 26.
* Bond futures were up, recovering from a recent sell-off. Three-year bond futures were up 0.1 point at 96.07, and 10-year futures rose 0.11 points to 94.77.
* Japanese data out Friday show any economic recovery likely to be moderate. Overall household spending fell 1.3 percent in April, more than forecasts for a 0.6 percent drop, while core consumer prices fell 0.1 percent. [ID:nTKF106401] [ID:nTKX006257]
* A weak Japanese economy bodes ill for the Aussie because Japan is the top buyer of Australian exports.
* The Reuters-Jefferies CRB index <.CRB> is up 1.4 percent, helped by oil prices which hit a six-month high on Thursday after OPEC decided to keep output unchanged, and data showed a steep drop in U.S. crude inventories. [O/R]
* An encouraging rise in new U.S. single-family home sales, and fewer filings for first-time jobless aid last week had lifted U.S. stocks on Friday. [ID:nN28317740] (Reporting by Koh Gui Qing)

Future of newspapers is digital: Murdoch

2009-05-28T18:00:00.000-07:00

ninemsn

News Corp chairman Rupert Murdoch said on Thursday that the future of newspapers is digital, but it may be ten to 15 years before readers go fully electronic.

Murdoch, in an interview with the News Corp-owned Fox Business Network, also said that newspapers, faced with eroding print advertising revenue and circulation, are going to have to start charging readers on the web.

The News Corp chief said newspapers in the future will continue to make money "from our readers, from our advertisers (but) the newspapers may look very different.

"Instead of an analogue paper printed on paper you may get it on a panel which would be mobile, which will receive the whole newspaper over the air, (and) be updated every hour or two," he said.

"You'll be able to get the guts or the main headlines and alerts and everything on your Blackberry, on your Palm or whatever, all day long.

"All these things are possible. Some of the greatest electronics companies in the world are working on this very hard," Murdoch said.

"I think it's two or three years away before they get introduced in a big way and then it will probably take ten years or 15 years for the public to swing over."

Murdoch, who has announced plans to charge readers of his publications online, also said "you're going to have to pay for your favourite newspaper on the web".

The days of free news online were "going to stop," he said.

"I believe newspapers will be selling subscriptions on the web," he said.

"A (newspaper) website will be vastly improved, much more in them and you'll pay for them.

"There's a case that newspapers rushing on to the web to try and get a bigger audience and get more attention for themselves have damaged themselves," he said.

"Now they're going to have to pull back from that and say `Hey, we're going to charge for this'."

Asked by Fox about a government bailout for newspapers, Murdoch said News Corp would never take government money.

"We'd give up our freedoms and everything else to criticise or to play our full role in the community," he said.

"Nothing that News owns will ever take money from the government and I don't believe even The New York Times would."

The 78-year-old Murdoch announced this month that he planned to begin charging readers of the websites of News Corp newspapers "within the next 12 months".

Murdoch's holdings include The Wall Street Journal, the New York Post, The Times of London, the Sun and The Australian, among others. The Wall Street Journal online already requires a subscription fee for access to all of its content.

Murdoch's comments came as The Atlantic magazine reported that top US newspaper executives held a "discreet" meeting in Chicago on Thursday to discuss the future of the troubled industry.