9 novembre 2008 Par La Rando

Dubai summit can ‘pave the way for a new era of progress’

Electoral systems around the world need to be reformed for better global governance – and new powers need to be integrated into the international decision-making framework, the World Economic Forum heard yesterday. Klaus Schwab, founder and executive chairman of the WEF, said real progress in the world’s governance system needed participation of as many global powers as possible. The world was witnessing a transformation, he said, which would affect the future and the coming generations. « There are transformational changes and we see them already in the world. We have to really re-think about the notion of capitalism and make it more integrated and more human, » he said. « We have to re-think about global governance and global co-operation. We have to re-think about the relation between governments and businesses as well as the relation between the rich and real economies. « Everybody is talking about new powers such as China and India, but the financial crisis showed the world that it must look at other places as well, including the Middle East and the GCC region, » Schwab said. The summit is a gathering of 700 of the world’s most innovative and relevant minds, including leaders from academia, business, government and civil society from around the world. It provides a platform to share ideas and collaboratively address some of the key issues on the global agenda to lay out solutions to some of the most pressing issues. The three main issues on the agenda at the summit are financial instability, food security and energy supplies. At the opening press conference, Schwab was joined by Mohamed Alabbar, Member of the Dubai Executive Council and Chairman of Emaar Properties and co-chairman of the summit. Alabbar said the gathering was a clear declaration to the world from the UAE and Dubai « that we are committed participants on the international arena… and we have sincere intention to launch and support practical solutions to overcome world challenges. » Alabbar said that despite the difficult circumstances lived by the region, Dubai remains to be the ray of hope for this region and the world as well. « The Dubai summit can pave the way for a new era of global socio-economic progress, » he said. « We were preparing for the summit for 11 months. Its timing has become critical due to the recent dramatic events in the world economy. « We saw the crisis originate in the developed world and have a significant impact on the developing world. This added more importance to the discussions about global challenges and integration during this critical time. » Al Abbar added that Dubai was the perfect place for such a historic meeting. « As a city, we are global in character and have always been forward-looking. » Mohmad Al Kady business24-7

9 novembre 2008 Par La Rando

Global business leaders warn of pain ahead: Dubai WEF summit

Business leaders gathered in Dubai on Saturday have warned the world to brace for even more painful economic times ahead, but said the victory of US President-elect Barack Obama offers hope for fresh leadership at a crucial time for the global economy. The financial crisis that began with bad US home loans is now moving from the banking sector into wide swaths of the global economy, costing millions of jobs, forcing working families to cut back and driving once-mighty companies into bankruptcy. The US government said on Friday the country’s unemployment rate shot to 6.5 per cent, its highest level in 14 years. Jobless rates are rising elsewhere too: The UN labor agency said last month that world unemployment will hit 210 million people by the end of next year, its highest rate in the past decade. How deeply the global downturn will cut remains uncertain, participants at a regional meeting of the World Economic Forum in Dubai said on Saturday. While they called for calm, they also acknowledged there is cause for concern. “We will be telling our children and our grandchildren about this crisis,” said Mohamed El-Erian, co-chief executive of Pacific Investment Management Co., the Newport Beach, California-based investment firm better known as PIMCO. “You cannot turn off the fuel of this crisis easily.” Consumers in the US for example, are facing the triple whammy of tougher access to credit, rising joblessness and falling home and investment values, El-Erian said. Cleaning up the fallout will take both time and sacrifice, participants said. “It’s going to be really tough,” El-Erian said. “You now have to save even more for retirement. This is a tough time, and it’s important that expectations be formulated accordingly.” The need to recalibrate spending and expectations was a theme sounded by others as well. Howard Davies, director of the London School of Economics and Political Science, said residents of countries like the US and the UK have no alternative but to increase savings and reduce household debt. And, he said, homeowners and individual investors need to accept that a big chunk of the nest eggs they had amassed on paper is likely gone forever. “People are going to have to recognise the wealth hit and be prepared to move on from that,” he said. The economic slump is not just affecting Western countries. Soud Ba’alawy, executive chairman of investment firm Dubai Group, said “each and every business is going to be challenged”. He predicted annual growth in the booming Gulf could slow to as low as 2 to 3 per cent, from 6 to 8 per cent previously. Business leaders were hopeful, though, that the future Obama administration will bring a renewed willingness by the world’s largest single-nation economy to work with other countries to fix the global economy. “You now have a golden opportunity for leadership at a time when leadership is needed both domestically and internationally,” El-Erian said. The three-day event, a forerunner to the World Economic Forum in Davos in January 2009, has attracted more than 700 economic and academic experts. AP

4 novembre 2008 Par La Rando

Oman joins bailout bandwagon by allocating $2 billion

Oman’s central bank yesterday jumped onto the bailout bandwagon allocating about $2 billion (Dh7.34bn) to lend to local banks and ease credit crunch in the country’s financial sector, its governor said yesterday. « We encourage banks to acquire the liquidity from each other or from foreign banks but in case they fail to acquire the liquidity we are willing to lend to them » Hamood Al Zadjali told Al Arabiya television. « We have allocated about $2bn, » he added. The central bank will lend at an interest rate of Libor plus 150 basis points. The central bank said it would provide dollar liquidity to banks in the Gulf state to make up for shortages caused by the global financial crisis. A central bank statement carried by the agency said the plan was in response to the « current situation on world markets » and includes dollar loans of one to three months by the central bank, as well as measures to make foreign exchange transactions smoother. The bank said the liquidity can be used only to fund local projects, pay back the depositors of hard currency, or service foreign loans that are due and cannot be extended. The plan has been launched together with the finance ministry. The global financial crisis has prompted Gulf Arab states to enact a slew of policy responses to combat tight liquidity conditions in markets and sagging investor confidence. The other five members of the oil-rich GCC have already pledged to stand by their banking sectors as the global financial crisis bites. Agencies

4 novembre 2008 Par La Rando

Dubai exports rise 43 per cent despite global credit crisis

Exports from Dubai so far this year have registered a 43 per cent increase compared to the same period last year, according to Hamad Buamim, Director-General, Dubai Chamber. Firms registered under the Chamber exported goods worth Dh193 billion until the end of October 2008 compared to Dh135 billion during the same period last year. Speaking during the release of ‘The Report: Dubai 2008’, published by the Oxford Business Group, Buamim said the effects of global slowdown will be visible during Dubai’s next year’s growth results and urged the businesses community to make use of the available opportunities. « We had a 43 per cent growth this year compared to last year. The number of Certificates of Origin issued until the end of October this year was 533,000 – a 15 per cent increase, compared to 463,000 during the same period last year, » said Buamim. « So I don’t think the financial crisis has had any impact so far. But we think the outlook for 2009 will have an impact. To be very honest the global financial crisis and the slowdown in the United States and Europe will definitely have an impact on us, as we are a global city and part of the global economy. But this impact will be minimal. The double-digit growth that we have been achieving for the last few years will reduce, » he added. A slide in the oil prices will also contribute to a partial slowdown, he said, adding: « Right now we are witnessing oil prices going down. Yet the average has managed to remain over $100 per barrel. Although this will have an impact, some of these prices are higher than what was even budgeted by several countries in the region. » A working group has been created to look into the impact of global economic crisis on the local economy. « The working group has been discussing the challenges ahead. We are still positive about the future. At one stage we looked at the projection for 2015 to find out if it will be affected in any way. But so far we believe that the plan will not be affected as the Dubai’s growth during last two years was even higher than what we planned for, » he added. « For the past ten days I have been attending several events and we are discussing these issues. Although nobody exactly knows the extent of impact on the local economy, people have been discussing about the opportunities that have arisen and made use of, » said Buamim. Firms such as DP World and Dubai holding could make use of the very attractive rates of investment overseas. « The whole of UAE and GCC has a lot of investments overseas. We believe that the fundamentals are still solid and it would not be such a bad idea to take advantage of attractive investment rates. » Joseph George business24-7.ae

4 novembre 2008 Par La Rando

Dubai Group to organise first World Pension Forum in region

More than 80 participants from the US, as well as government officials and senior executives of leading UAE companies will address the Middle East’s first World Pension Forum (WPF), which will be held in Dubai on from November 17. Organised by diversified financial services company Dubai Group, WPF hosts various conferences around the world to help US pension fund managers make knowledgeable investment decisions and allocate funds to potential investment destinations. Titled « Pearls of the Gulf », the forum will facilitate the development of long-term partnerships between the funds and the Middle East. The forum aims to offer insight into the new patterns of global trade and people flows, the expanded role of sovereign wealth, and the erection of first-class infrastructure. The event will also give UAE-based companies an opportunity to share their success stories. Soud Ba’alawy, Executive Chairman of Dubai Group, said: « Given the current scenario worldwide, this forum comes as a timely event and will offer key insights into our financial markets, particularly the role that this region is playing in the global economy. Organisations such as the World Pension Forum provide opportunities to foster long-term partnerships and open doors for business opportunities around the world. WPF pursues a shared vision with Dubai Group to bridge capital flows between the East and the West. » Philip Schaefer, President of the World Pension Forum, said: « We are thrilled to be bringing our delegation of institutional investors to the UAE for the first time. The region has shown what can be accomplished with dynamic, visionary leadership. We plan to return often. » Over the past few years, pension funds and other Western institutional investors have been eagerly exploring opportunities in the Middle East to capitalise on the region’s extraordinary growth story. In January 2008, The Economist reported that Morgan Stanley estimates pension funds worldwide hold more than $20 trillion (Dh70.4trn) in assets, the largest for any category of investor. business24-7.ae

4 novembre 2008 Par La Rando

Zurich and Abu Dhabi firm in takaful venture

Zurich Financial Services Group and the UAE-based Abu Dhabi National Takaful Company have signed an agreement to establish an Islamic insurance company in Dubai. The new insurance company, Zurich Takaful Company, will be based in Dubai International Financial Centre, subject to the receipt of the required regulatory approvals. Zurich will control 51 per cent in the new joint venture company, while the remaining 49 per cent stake will be owned by the Abu Dhabi company. Mario Greco, CEO of Zurich’s Global Life Business segment, said: « The launch of Zurich Takaful offers an exciting growth opportunity and is in line with Global Life’s strategy, while it also reinforces the group’s commitment to the Middle East and North Africa. The new company provides a partnership, blending global financial strength and experience with specialist takaful expertise through the union of two powerful brands to create a new force in takaful. » Khadem Al Qubaisi, Chairman of Takaful, said: « We are delighted to announce our new partnership with Zurich. The business will offer a tailored family takaful product range to meet the needs of our discerning consumers. This joint venture will enable takaful to participate in one of the fastest-growing business lines in the region and in the world, which is a key component in our regional expansion plans ». business24-7.ae

4 novembre 2008 Par La Rando

Etihad Airways to save Dh73m on fuel this year

Etihad Airways would be able to reduce its annual aviation fuel bill by Dh73 million ($20m) by the end of this year, owing to a series of cost-saving measures. The airline said yesterday it has so far saved more than Dh44m. The Abu Dhabi-based carrier, which launched a fuel hedging strategy in December 2006, saw it hedged at 70 per cent in 2007, 80 per cent in 2008 and 40 per cent next year. Now, with oil dropping to around $68 a barrel from its peak of $147 a few months ago, the airline says it still remains a wild card. « Whilst the oil price has fallen relative to its summer peak, it still remains a sizeable cost for all airlines and, of course, it is not a controllable cost such as headcount or capital expenditure, » James Hogan, Chief Executive of Etihad Airways, told Emirates Business. « The cost of oil, whatever the price, has a bearing on our business but the key point is that Etihad has to remain competitive in whichever market we operate. Pricing is an important element but as a full service carrier you need to look at all the aspects of our offering, » he added. The fuel bill fluctuates between 35 and 40 per cent of Etihad’s operating cost, which is a huge leap on the 20 per cent it cost back in 2006, according to Hogan. When asked how the airline was managing to raise finance for new aircraft and route expansions at a time when the credit market is drying up across the globe, Hogan said: « We have just had an Airbus A340-600 delivered and another one is set to join the fleet in December. We financed the debt for the two planes in the market and we were fortunate that the rates agreed were set before the September slump in the financial sector. » Clearly, the global financial turmoil has not deterred Etihad from revisiting its orderbook. « The orderbook is unchanged with the first aircraft of our deal announced at the Farnborough air show in July set to join the fleet in 2012, » said Hogan. He said similarly the airline is moving ahead with its route expansion starting off next month with flights from Abu Dhabi to both Moscow and Almaty in Kazakhstan. And March 2009 will see Etihad begin non-stop services to Melbourne and Lagos. Etihad had said recently that going forward the carrier may be looking for possible equity partnerships in order to face the international financial crisis. « In terms of possible equity partnerships my focus right now is on the core business and every day I look in microscopic detail for any blip in any market that might be feeling the squeeze, » said Hogan. He said the airline’s passenger and yield numbers look good for November, December and January. « But there is no complacency here. All markets are tough and we must remain competitive and keep a tight rein on controllable costs. » The airline said besides hedging strategy, fuel savings have been achieved through a variety of measures that include reducing weight on board, changing certain operating procedures and reducing cruise speed where appropriate. Shweta Jain business24-7.ae

4 novembre 2008 Par La Rando

UAE oil output 2.3 mln bpd after cut

The United Arab Emirates is pumping around 2.3 million barrels per day (bpd) of oil, down from 2.5 million, after cutting output in line with an OPEC decision and shutting some wells for maintenance, a state oil company official said. « Now we’re producing around 2.3 million bpd, » Abu Dhabi National Oil Company (ADNOC) deputy chief executive Abdulla Al-Suweidi told reporters at an energy conference in Abu Dhabi on Tuesday. « Before Opec, we were producing around 2.5 million. Production is also reduced due to maintenance. » Around 150,000 bpd of oil output was off-line for scheduled work at offshore fields, he said, adding that it would come back by the end of November. The world’s fifth-largest oil exporter planned to cut oil output by 150,000 to 200,000 barrels a day for 40 days in October and November for maintenance, an ADNOC official had told Reuters earlier this year. The Opec member pumped around 2.5 million bpd in October, a Reuters survey showed. [nL3648048] On Monday, UAE Oil Minister Mohammed al-Hamli said the country had kept its pledge to cut oil supplies in line with its Opec commitments, and had started reducing production along with other OPEC members. The country would cut by 134,000 bpd, in line with the group’s decision on October 24. The UAE’s current oil production capacity stood at 2.8 million bpd, Suweidi said. The country would take another 10 years to boost its oil capacity to 3.5 million bpd, Suweidi said. It had previously targeted 3.5 million bpd by 2012. Suweidi gave no reason for the delay but said that most of the 3.5 million bpd production capacity would be on-line by 2015. « We are going ahead with projects as planned, but whenever we can wait we will wait (because of high costs). Our plans are not affected by changes in the oil price. » ADNOC was pumping around 5 to 6 billion cubic feet per day of natural gas, he said. A new project to boost production by one billion cubic feet per day would be completed in 2013 to 2014, he said. The plan is known as the Integrated Gas Development Project. The Organization of the Petroleum Exporting Countries agreed at an emergency meeting last month to cut output by 1.5 million bpd, or about 5 per cent, starting from November, to stop a plunge in oil prices that have more than halved since July and lost 32 per cent in October alone. ADNOC notified term customers last week it would cut its contracted volumes for its main export grades by 5 to 15 per cent in December, and cut its Upper Zakum crude by 5 per cent starting from November. Reuters

3 novembre 2008 Par La Rando

UAE sees good investment opportunity in US

The UAE is eager to boost investment in the United States and sees good opportunities as the global financial crisis has cut the price of many companies, Foreign Trade Minister Sheikha Lubna bint Khalid Al Qasimi said in an interview. « A lot of these are great companies. There is nothing wrong with these companies… They have good returns, » Lubna said. « There would be no better time than now to actually take stock of some great investment opportunities and acquisitions of companies at a fraction of what they were worth months back, » she said. « Sometimes, people look at these like they are hard times. But for some people it’s an opportunity. » She was echoing comments that Sultan Ahmed bin Sulayem, Chairman of the Dubai Government-owned investor Dubai World, made on Thursday. « Today there are things in the market worth a fraction of what they should be worth, » Sulayem said. Dubai World’s assets include Dubai Ports World, which was at the centre of a political firestorm two years ago when US lawmakers discovered the Arab company had acquired US port operations as part of its purchase of British company P&O. To calm the furore, DPW sold the port assets to American International Group, the insurance giant which went to the brink of collapse this year and is now nearly 80 per cent US Government owned. The US Federal Reserve stepped in last month to rescue the insurer with an $85 billion (Dh312bn) credit facility and subsequently provided an additional $37.8 bn. « So, who now actually owns the port operations in New York, New Jersey, Philadelphia, Baltimore, New Orleans and Miami? Send me an email when you know, » she said with a smile. The UAE has no hard feelings over the controversy, which at least « made us famous », she said. « For us, it was a business deal that went wrong because of the political climate at the time, » she said. Agencies

3 novembre 2008 Par La Rando

Dubai apartments selling for 20% more

Sales prices of apartments in Dubai rose 20 per cent as rentals registered a marginal jump of four per cent in the third quarter of 2008 compared to the previous quarter, according to a report. Unit prices in Discovery Gardens registered a growth of 39 per cent, while International City rose 31 per cent due to limited new supply and good development progress being made. Both developments benefited from considerably low launch prices, which made the units affordable and attractive to investors and owner-occupiers, Asteco, a Dubai-based property management company, said in a third-quarter report on Dubai property market. Apartment prices in Business Bay and Dubailand increased by 29 per cent with Uptown MotorCity nearing completion in the latter master development. Speaking to Emirates Business, Asteco Managing Director Andrew Chambers said there is still demand for residential properties in Dubai but investors are taking a more cautious approach. “The supply and demand gap still exits in the emirate, however, buyers are taking their own time in making decisions,” he said. Meanwhile, overall apartment rental rates rose by four per cent compared to the last quarter. International City and Jumeirah Lake Towers recorded increases of 13 and 11 per cent respectively, due to their affordability level. “Generally, rental rates are stabilising as more supply enters the market, especially at the high-end sector. However, there is still room for growth in the low- to medium-segment because of high demand, little availability and limited supply in the short-medium term,” the report said. Sale prices of villas also rose by 24 per cent over the last quarter. Although the demand-supply gap narrowed over the last couple of years, Asteco said there was high preference for villas and townhouses. Villa prices in Downtown Burj Dubai registered an increase of 61 per cent. Prices in The Palm Jumeirah, The Palm Jebel Ali and Emirates Hills jumped 42, 39 and 35 per cent respectively, as they attracted interest high net-worth individuals who are immune to the current global financial situation. The Meadows witnessed an increase of 38 per cent as a result of little movement of tenants, no additional supply and villas being traded as a finished product, consequently commanding a higher premium. However, villa rental rates continued to rise but at a slower rate of 11 per cent, compared to the previous quarter. The villa rental market has begun to stabilise as more people opt to buy villas or townhouses due to high rents. Additional units are being handed over in The Palm Jumeirah, Al Barsha and Arabian Ranches. The highest increase was reported in Downtown Burj Dubai with 25 per cent. This is attributed to limited supply of villas in the area. Office rental rates increase Office rental rates rose 10 per cent quarter-on-quarter as Deira reported a 40-per cent growth due to its proximity to the Dubai metro, high demand from banks and little availability. Several banks, which have recently rented office space in Deira, are confident the area will continue to boom due to RTA’s plans to provide better connectivity for future metro users, consequently solving traffic congestion and parking issues, Asteco said. Rents in Dubai Investment Park, a development predominantly attracting back office operations, have increased by 11 per cent due to recent handovers of office space and comparatively affordable rates. While there is still a shortage of office space, rents are expected to reach equilibrium by 2009/2010 as more supply enters the market. Sales prices in office market rose 17 per cent over the previous quarter due to several projects nearing completion or in the process of being handed over. Dubai Silicon Oasis and Downtown Jebel Ali lead with a 33-per cent growth over the last three months. In general, office sales prices in Dubai range from Dh1,100 to Dh8,000 per sqft and average at Dh2,500. Parag Deulgaonkar business24-7.ae