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Inflation to rein in UAE growth

Dubai: Galloping inflation may slow the growth of Gulf economies, especially the UAE and Qatar, a top IMF official said yesterday. “The unprecedented economic boom driven by oil revenues and the recycling of regional liquidity has seen Gulf GDPs racing at a pace close to those of some of the East Asian countries. But inflation is becoming a major limiting factor,” Mohsin S. Khan, director of the International Monetary Fund’s (IMF) Middle East and Central Asia Department, told Gulf News yesterday. The real GDP of the UAE and Qatar is growing by almost 10 per cent annually and the other Gulf countries are growing by 6 to 8 per cent. With the surge in econ-omic growth these countries are facing high inflation, primarily driven by supply constraints. The UAE Ministry of Economy earlier said nominal GDP last year grew by 23.6 per cent to Dh599 billion. “In the UAE, inflation is estimated at above 10 per cent. However, this figure is for the whole of the UAE and for a city like Dubai the inflation rate could be much higher,” he said. With the rising cost of living, the UAE is facing upward pressure on wages and an overall cost escalation in all economic sectors, especially tourism, hospitality and financial services. According to the IMF, a key driver of inflation in the UAE and Qatar is soaring house rents. Despite assurances by the government and the central bank, the IMF does not expect new supplies of housing this year to cool inflationary pressure. “New supplies of housing units will have some impact on rents and inflation, but not as much as the central banks would expect to happen,” Khan said. On the monetary policy measures taken to tame inflation, Khan said the Gulf countries in general have limited options because interest rates follow the US rates due to the currency peg. Curtailing liquidity by other measures such as variable reserve requirements or bank rates is not effective in the region because of the sheer volume of liquidity that is floating in the financial system. Apart from the huge liquidity available in the region, Khan said stock market corrections have resulted in a lot of money re-entering the banking system and real estate. According to Khan, the inflationary pressure caused by excess cash flows in the region is compounded by the sheer lack of assets that can absorb liquidity. “Ideally, the corporate sector in the region should create an active debt market. The emergence of sukuks and convertible sukuks to some extent is a viable solution to rein in liquidity but the current size of these asset class is relatively small,” the IMF official said. Not cool enough According to the IMF, a key driver of inflation in the UAE and Qatar is the soaring house rents. Despite assurances by the government and the central bank, the IMF does not expect new supplies of housing units this year to cool inflationary pressure. Source : el watan

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Saudi Arabian introduces 14 more flights to Dubai

Riyadh: Saudi Arabian Airlines, the national carrier of the Kingdom, has increased the number of its weekly flights to Dubai by 14, said Hassan Al Yami, the carrier’s general manager for the Middle East and Gulf. The latest move brings the total weekly flights between the two destinations to 44. In a statement, Al Yami said the move is to meet the increasing demand in the Saudi Arabia-Dubai sector. He said the new flight schedules include significant changes as there are flights that take off from Dubai in the morning. Heavy demand He added that the airline expects the demand to be heavy as it provides flexibility for passengers in general and businessmen in particular. “According to the new schedule, Saudi Arabian Airlines will have 14 new weekly flights between Dubai and the Kingdom. Twelve of them will be between Dubai and Dammam using MD90 planes,” the official said. He added that two weekly non-stop flights will operate between Dubai and Madinah. One of the two flights will be on Tuesday night using a Boeing 777 plane and the second on Thursday morning with an MD90 plane. The airline will also start two-weekly direct flights between Dubai and Salalah, Oman, from June 27. Source : el watan

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McDonald’s plans more outlets in UAE

Dubai: American fast-food chain McDonald’s intends to beef up its operations in the UAE by adding more restaurants this year. McDonald’s Managing Director Rafic Fakih told Gulf News yesterday they are set to open 10 to 12 outlets in Dubai, Sharjah, Abu Dhabi, Al Ain and Ras Al Khaimah. Some of the restaurants, which will boost the 44-strong chain in the UAE, are scheduled to commence operations in about two or three months. The famous American brand’s Middle East portfolio boasts of 220 outlets throughout the Gulf region. Revenues Fakih admitted that given the number of restaurants in the UAE, their segment is not considered the major driver in the Asia-Pacific, Middle East and Africa region, but revenue figures have always been promising. “Up to now, since the last three or four years, we’ve always posted double-digit growth,” he said. Based on the latest financial report released by McDonald’s Corporation, comparable sales in Asia-Pacific, Middle East and Africa (APMEA) rose from five per cent to 9.6 per cent in March, driven primarily by the strong performance in Japan and China. Overall, McDonald’s restaurants worldwide posted 8.2 per cent increase in comparable sales in March. The food chain’s operations in Europe reported the highest monthly comparable sales growth of 11.2 per cent, compared to 6.2 per cent in the U.S. and 9.6 per cent in APMEA. Source : El watan

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Dubai : Family businesses show better prudence

Dubai: Family-owned GCC conglomerates are strong on credit quality and accounting standards, according to a report by Moody’s, the international rating agency. “Whilst financial transparency and conglomerate-type business strategies pose analytical challenges, such companies also frequently demonstrate hidden credit strengths,” said Moody’s Investors Service. Analysing the key characteristics and issues involved in assessing the credit strength of family-owned companies in the Middle East, Philipp Lotter, Moody’s Senior Credit Officer and author of the report, said, “The main analytical challenges in assessing the credit quality of family-owned companies in the GCC, where such groups are commonplace, are the ownership structure and the limited public financial disclosure.” Key areas Moody’s new report, titled ‘Family-Owned Corporates in the GCC, looks at four keys areas such as corporate structures, accounting and transparency issues, capital structure and liquidity and analytical considerations. According to Moody’s, many large family-owned or closely held companies in the GCC encompass diversified core operations, often comprising real estate, construction and energy activities complemented by large land banks and investment portfolios. As a result of closely-held corporations being not obliged to publicly report their results, the availability of public information can often be sketchy. To assess a company’s financial strength, Moody’s has so far relied on private annual accounts, often prepared under International Financial Reporting Standards and audited by international firms. Moody’s said the quality of information, and indeed companies’ willingness to share such information on a confidential basis, are often high. Moody’s observes that many companies in the GCC – whether closely held or publicly quoted – rely heavily on short-term funding, which often depends on the strength of their banking relationships rather than any contractual commitment. The use of uncommitted lines to meet potential short-term liquidity needs remains a source of some uncertainty. Source : El watan

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Dubai : HSBC branch in Britain tells poorer clients to go elsewhere

London: Britain’s largest bank is closing the doors of one of its branches – but only to poorer customers. The HSBC in the well-heeled area of Canford Cliffs, near Poole in Dorset, will only offer cashier services to richer clients from June 11. Anyone else will have to make do with cash machines. The branch lies close to the Sandbanks area overlooking Poole Harbour which boasts some of the most expensive property prices in Britain outside London. To be eligible for face-to-face banking services at the branch, customers will have to fall into its “premier” category, which means they will have to have savings of at least £50,000 or a £200,000 mortgage. Alternately, they must have a £100,000 mortgage plus a salary of £75,000-plus. HSBC – which promotes itself as “the world’s local bank” – said all customers would still be able to deposit cash, cheques and coins at “express” terminals within the branch and withdraw cash. Premier status But those who do not qualify for premier status will have to pay a fee of £19.95 per month to use cashier services – such as opening a current account or applying for a mortgage. A spokesman said the group had a “unique” situation in the area, with three branches in a radius of around two miles. It has a branch in Westbourne one mile away and another in Poole just over two miles away, both of which will remain full-service branches. The spokesman said: “We’re not banning the poor – that’s utterly untrue. “What we’re recognising is that, in this area, we have a unique situation: we have a high proportion of ‘premier’ customers who have more complex needs and warrant a premier service. “We have other branches that are very close that can service the other needs of customers who aren’t ‘premier’ customers.” He added that the banking giant had no plans to convert other branches to offer face-to-face banking to premier customers only. However, Canon Jeremy Oakes, vicar of the parish of Canford Cliffs and Sandbanks – whose church also banks at the branch – said many elderly parishioners with mobility problems would find it “very difficult indeed” to use the two other branches. Source : Glfnews

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Dubai keen to export Iranian flowers

DUBAI (ArabianBusiness.com) — Dubai Flower Center (DFC) is to serve as a center for exporting flowers from Central Asia and Iran. These states want to boost their export activities into Europe and the Far East, according to DFC marketing director Ibrahim Ahli. Representatives from the flower center recently visited Central Asia to generate interest from the region, particularly from companies operating in Iran, which currently possesses 3,000 flower production units. The country also produces more than 1,486 million stems of cut flowers, 38 million pot plants and 120 million trees and shrubs every year, which could prove potentially lucrative for facilities such as Dubai Flower Center. “Central Asian and Iranian flower exporters can greatly benefit from the proximity of Dubai and its excellent infrastructure including DFC’s cool supply chain, which offers the ideal solution for transhipment of perishable cargo from these regions,” said Ahli. “DFC already houses international operators offering various services, which could immensely help countries from the region to increase their exports, especially with our capacity of 180,000 tons per annum,” he added. Iran is famous for its diverse floriculture products, which include tulips, hyacinth, chrysanthemums, carnations and iris. However, with nearly one million stems wasted every day due to lack of storage facilities, the country is eyeing the technology found at DFC. DFC believes it can provide not only the logistical support the Iranian flower exports sector requires, but a strategic positioning for the PGCC market as well. By paying a 5% customs duty at DFC, Iranian companies would be able to send products directly to any PGCC countries. “We can assure the Iranian producers and exporters that DFC offers a free zone environment, with no customs duty for cargo in transit and our connectivity to global markets through more than 117 airlines operating from Dubai International Airport,” said Ahli. Iran is currently preparing to build four terminals in Mazandaran, Markazi, Khuzestan, and Teheran provinces. On completion, the terminals will be linked with hubs such as Dubai, Germany and the Netherlands. “We noticed an eagerness from the Iranian industry professionals and other officials to cooperate and participate to work towards improving logistical support for the exporters,” said Ahli. “The DFC, which has already established itself as one of the leading transhipment hub for perishable goods, can surely support the Iranian floriculture industry as we have the necessary infrastructure to meet their requirements.”

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UAE takes strong exception to HRW report on workers

DUBAI — The Ministry of Labour (MoL) yesterday said the Human Rights Watch (HRW) report, suggesting that the country’s draft labour law falls far short of international standards insofar as protecting workers’ rights is concerned, is unfortunate as it does not reflect ground realities. A 15-page report released by the HRW at a Press conference yesterday urged the UAE government to revise the law to protect workers’ rights to organise themselves and bargain collectively. The report also said that the draft law should, among other things, cover such groups as domestic workers. Feedback In a statement, Dr Ali bin Abdullah Al Kaabi, Minister of Labour, said he appreciated the comments made by the HRW about the draft labour law in the UAE and the ministry would take them into consideration. He said the revised draft law has been placed on the Internet and is receiving feedback from relevant organisations. Public opinion The effort made by the MoL to seek public opinion about the revised draft labour law underscored its profound belief in the principle of transparency and the importance of taking views of all relevant parties, including HRW, into consideration, the minister added. Revised draft law Pointing out that the ministry was still receiving responses to the revised draft law, Dr Al Kaabi said, “Based on our values and keenness to grant workers their rights, we are going to thoroughly study all proposals.” Reiterating that the UAE has a clean record of protecting workers’ rights, he said the ministry would cover in its study the HRW’s proposals as well as opinions expressed by other parties. An earlier statement issued by the ministry said the HRW did not accurately reflect either the progress that had been made in addressing labour issues or the seriousness with which the government was dealing with these issues. However, the UAE government, the statement said, “welcomes constructive input and discussions from international bodies and organisations, with regard to the area of guest worker welfare in the country”. Sarah Leah Whitson, HRW’s Middle East Director, said the Labour Ministry’s request for comments on the draft law represented an important step towards reform and transparency in the UAE. “And we hope that the Labour Ministry takes advantage of this process to revise the serious flaws in its draft law.” She said the law failed to address a series of abuses against migrant workers, who comprise 95 per cent of the country’s workforce, and “are particularly at the risk of abuse”. Further, she claimed, in a blatant contravention of international standards, the proposed law contains no provisions on workers’ rights to organise themselves and bargain collectively and explicitly punishes striking workers. “The UAE must amend its draft law to respect workers’ rights to organise, bargain collectively and strike,” said Whitson, alleging that over the past one year, the authorities have been dealing with workers staging demonstrations, rather than addressing the poor working conditions that fuel labour unrest. She pointed out that the draft law also violates international standards by arbitrarily excluding from its purview all domestic workers employed in private households, public sector workers, security workers and most farming and grazing workers, leaving them vulnerable to exploitation. “The government should extend equal labour protection to domestic workers instead of reinforcing the discrimination they already face,” she said. Moreover, she said, the draft law discriminates against women workers and treats women workers as dependents rather than as competent adults with full and independent legal capacity. The draft labour law, she claimed, also fails to incorporate the 2001 Dubai Court of Cassation ruling that prohibits employers from confiscating employees’ passports. HRW officials also stressed the need for employment contracts and instructions to be made available to workers in a language they speak fluently to eliminate miscommunication of facts that further fuels the exploitation of migrant workers in the UAE. Besides, they said there is a need for the government to enforce its labour laws by providing effective penalties for violations and stringent punishment to employers. The current law continues to provide weak financial penalties of between Dh 6,000 and Dh 12,000 for employers found violating the law, they added. “The current fine of a few thousand dollars is no deterrent for employers with multi-million-dollar contracts,” said Whitson. Source : khaleedj

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Iraq, UAE oil companies sign agreements

An official at the UAE’s Crescent Petroleum Company announced that the company has finalized a 10-month study on oil exploration in Iraq jointly with Iraqi officials, Iraq Directory reported Monday. He said that the Iraqi area to be included in the study is between the southern city of Basra and the borders of Kuwait. He added that the firm has also conducted studies on other Iraqi regions and has drawn up a development plan for the giant southern Ratawi field. The UAE Crescent Petroleum and the Iraqi Oil Exploration Company have signed several technical cooperation agreements since 2005 to encourage foreign companies to invest and develop Iraq’s oil sector. (Source: MENAFN.com)

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UAE is most competitive Arab economy

Doha: The United Arab Emirates is the most competitive economy in the Arab world followed by Qatar and Kuwait, according to a World Economic Forum report released here yesterday. The report places four Gulf countries among the 40 most advanced econo-mies of the world. The UAE is ranked 29, Qatar 32, Kuwait 37th and Bahrain 39. While the UAE’s ranking remained unchanged compared to the 2005 report, Qatar and Kuwait have moved up from 34 and 36 respectively. But Bahrain is placed two ranks lower.

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Dubai airport’s passenger throughput crosses 8m

Dubai: Passenger throughput at Dubai International Airport, the busiest in the Middle East, crossed the eight million mark in the first quarter this year, an increase of 17.7 per cent over the corresponding period in 2006, a statement said. The airport handled a total of 8.15 million passengers from January to March, compared to 6.89 million in the corresponding period of 2006. January was the busiest month with 2.9 million passengers, while February was the slowest at just over 2.5 million passengers. With a total of 28.78 million passengers in 2006 the airport registered an increase of over 16 per cent over 2005. Passenger traffic is expected to reach 33 million this year and up to 60 million by 2010. The total tonnage of cargo handled during the period under review reached 362,919 tonnes against 334,329 tonnes during the first quarter of 2005, a substantial increase of 8.6 per cent. March was the busiest month for cargo with over 132,400 tonnes, while January and February had a marginal difference at just over 115,000 tonnes for both. There were a total of 63,494 aircraft movements during the period under review, an increase of 9.2 per cent over the first quarter of 2005. With over 21,922 aircraft movements, January was the busiest month, slightly over March (21,847) and February (19,725). Shaikh Ahmad bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman of Emirates Group, said that the report is very encouraging and will set the tempo for the remainder of the year. He noted that after a successful year throughout 2006, Dubai International Airport is looking forward to repeating the feat this year. “The region’s aviation sector is the world’s fastest growing, and Dubai being the regional hub for trade, tourism and aviation, a consistent increase in passenger throughput at DIA shouldn’t come as a surprise,” he added. Traffic registers 17.7% rise in first quarter An increase of 9 per cent in aircraft movement during the furst quarter of 2007- An increase of 17.7 per cent in passenger movement compared to the last year figures.- In terms of cargo, the growth is almost 9 per cent compared with last year.- A total of 115 scheduled airlines and 25 frequent charter airlines operating to 200 destinations.