The liquidity crunch in the United Arab Emirates banking sector is stabilising but the Gulf state’s central bank is ready to do more if needed, UAE Central Bank Governor Sultan Nasser ALl Suweidi said on Monday. « Things are getting better and stabilising, » Suweidi told reporters when asked whether the central bank had done enough to cushion the banking sector from the credit crisis. « If there is a need we will do more, » he said. Suweidi added that the second-largest Arab economy could face a real estate price correction. « A real estate correction could happen but UAE banks are well-cushioned and we could still go to lower levels, » he said. Agencies
International Airport is to be equipped with a public prosecution office to handle smuggling, illegal immigration and drugs cases, a senior government lawyer announced yesterday. Mohammed Ali Rustom, the chief prosecutor for Bur Dubai second district, also outlined procedures to deport travellers caught with small amounts of illegal drugs instead of prosecuting them in a court case. Mr Rustom said the “fully functional” prosecution office would be provided by the Dubai Civil Aviation Authority at the International Airport’s administration building. It would be the base for three full-time prosecutors, including an assistant chief prosecutor. “The decision to open the office was taken one month ago by Sheikh Ahmad bin Saeed Al Maktoum, president of the Dubai Civil Aviation Authority,” Mr Rustom said. DIA already has a prosecutor on duty 24 hours a day, seven days a week to ensure the speed and efficiency of procedures. Mr Rustom said the number of drug smuggling and possession cases originating from the airport had risen slightly in the first six months of 2008 compared with the same period last year. “This year we registered a total of 381 drug- related cases from January to June, compared to the same period last year when we only registered 336 cases.” However, Mr Rustom pointed out that this was not a major increase when compared to the dramatic rise in the number of visitors to Dubai in 2008 from the previous year. The assistant chief prosecutor for Bur Dubai second district, Mohammed al Nuaimi, recently said 98 per cent of drug cases originating at the airport involved narcotics, mostly heroin, swallowed in capsules by smugglers, a method he said was typically used by visitors from Asia. “Most of these are individual initiatives, people who try to make Dubai a transit point for the transport of illegal narcotics, but there are no organised drug smuggling gangs involved,” Mr Nuaimi said. He said although no formal guidelines were in place, visitors arrested at the airport with small quantities of drugs in their possession would often be sent straight home rather than face prosecution here. “While there is no formal order to this effect, we follow the Dubai Attorney General’s instructions in cases of possession of small quantities of drugs,” he said. In such cases, “we recommend deportation to the technical office at the Public Prosecution Department which is the body that takes the decision”. Under UAE law, anyone convicted of possession of drugs or drug abuse faces a four-year prison term. Mr Rustom said decisions on whether travellers involved in minor possession should be referred to the courts or deported without proceedings would be taken on a case-by-case basis, adding that there were no fixed criteria. The Pakistani cricketer Mohammed Asef was detained at Dubai International Airport in June after customs inspectors discovered 0.24 grams of opium in his wallet. He was deported after two weeks in custody. Mr Rustom said most minor possession cases usually involved people visiting the country for the first time. Only last week, the Dubai Criminal Court of First Instance heard three new cases of narcotics smuggling via Dubai International Airport. All three suspects were men, two of them African and the third Asian, and all had carried the drugs inside their bodies. A Nigerian man was attempting to smuggle 1,113.07 grams of cocaine stuffed inside 77 capsules, the court heard. The man, detained on July 23, admitted he had swallowed the capsules and that he was told to deliver the drugs to a man he did not know at a hotel in Dubai. In another case, the court heard that a Ghanaian man was caught at the airport on Sept 4 with 715 grams of cocaine hidden inside 60 capsules concealed inside his body. The man told prosecutors he was asked by a compatriot in Ghana to deliver his consignment to an Italian man at a Dubai hotel. Mr Rustom said the conviction rate for drug cases in general was close to 95 per cent. The total number of cases prosecuted by Bur Dubai second district, whose jurisdiction includes the airport, ports and Rifaa area of Dubai, was 3,452 in the first six months of this year, an increase of 218 cases compared to the same period in 2007. The total number of cases prosecuted from the airport actually decreased from 752 cases in the first six months of 2007, to 682 cases in the same period this year. Hani Bhatihish thenational.ae
The UAE will play host to an international donors’ meeting in the first week of November discussing how to bailout Pakistan from bankruptcy and economic turbulence. The meeting of the Friends of Pakistan group will be held in Abu Dhabi with the participation of 25 countries, IMF, World Bank and other international financial institutions. The group held a meeting in New York earlier this year during the visit of President Asif Ali Zardari, who then sought $100 billion to help his country’s economy. Since then, with hectic negotiations with friendly countries and international financial institutions, Pakistan has already secured a pledge of $4bn from the international community to help the country avoid bankruptcy. « The second formal meeting of the Friends of Pakistan group is being hosted by the Government of UAE here in Abu Dhabi. It will be held in the beginning of the next month, but the exact date, venue and the agenda is yet to be decided, » Khursheed Ahmed Junejo, Pakistan’s Ambassador to the UAE, told Emirates Business. « We expect all the group countries to attend the meeting, which will be chaired by the UAE and attended by President Zardari. We are expecting 25 countries, including the US, Britain, China and Germany, in addition to international financial institutions. » The ambassador, a prominent politician in the ruling Pakistan Peoples Party who took charge about two months ago, said expectations are very high from donors in the group to support Pakistan financially. « Pakistan is fighting a war against terrorism on behalf of the whole world on its soil; therefore we need financial assistance from the world community. I’m optimistic the outcome will be positive with group members pledging a good amount of money to support our economy, » he said when asked if Zardari’s approach of seeking $100bn will be achieved in the meeting. Referring to the current global financial crisis, Junejo said the crisis – coupled with the country’s war on terrorism and the law and order situation – has badly affected the country. « At present, Pakistan, in fact the whole world is facing financial and economic crises. The rupee value has declined against the US dollar, which has lead to a drop in our remittances from here this year compared to years before, » he said. However, the ambassador said under the leadership of President Zardari, Pakistan is now drawing up a new economic roadmap that is set to bring positive changes in the country within a year. He said the president went to the US and China immediately after assuming his office to attract foreign investment and was successful in re-organising the Friends of Pakistan group, which includes the G8 and Middle East countries and China. « The UAE is the biggest foreign investor in Pakistan with the existing investment of $5 billion in different areas, including a refinery. Investment from UAE was extremely good until 2005, but now it has declined by 28 per cent, » he said, adding a complex of the recent global crisis has resulted in a massive flight of capital from Pakistan. « By end of this year, we expect things to return to normalcy and re-attract investment from the UAE and other countries, » he said. The ambassador invited UAE companies to invest in Pakistan’s various sectors, particularly in power plants, agriculture, real estate and exploration of mineral resources. By Nissar Hoath business24-7.ae
The insurance sector in Bahrain posted strongest annual growth in 2007 with gross premiums surging 21 per cent to BD135.6 million (Dh1,321m) against BD112.4m in 2006, the Central Bank of Bahrain said (CBB). Life insurance contributed the lion’s share of growth, soaring by nearly 67 per cent, with medical and the traditionally strong motor business also growing by 39 per cent and 16 per cent respectively. Life premiums amounted to BD38.8m, an increase of 67 per cent over the 2006 figure of BD23m. The life market accounted for 29 per cent of the premiums generated during 2007. The profitability of insurance firms rose by 56 per cent, while their total assets grew by 42 per cent. The number of insurance firms operating in Bahrain market during 2007 totalled 163, of whom 22 were locally-incorporated firms, 11 were branches of foreign firms and the others insurance ancillary services and organisations. The country hosts insurance major such as Hannover Re, Allianz, Axa and ACE Group, which will help expand and advance the industry further. business24-7.ae
International bank HSBC has raised 4.6 billion Qatari riyals ($1.3 billion) for Qatar’s Al Wa’ab City – a mixed-use development in Qatar – using a variety of sources including debt, mezzanine and equity funding sources. HSBC was appointed as Financial Advisor by the $3.2bn (Dh11.7bn) Al Wa’ab City. Kapil Chadda, Head of Investment Banking in Qatar for HSBC, said: “This financing stands out due to the raising of such a large amount of capital, for a green-field real estate project in Qatar. The innovation stems from a unique combination of financing sources which are both conventional and Islamic and with a range of international, regional and local banks and investors”. The company has raised QAR3.6bn in senior debt on a fully underwritten basis which represents almost a third of the total value of the project. “This is a remarkable feat in the challenging times and is a testament to the quality of the sponsors [Nasser Bin Khalid Group], the credit profile of Qatar in the GCC and the project itself,” added Chadda. The remaining two thirds of the financing is coming from a mixture of equity and mezzanine finance. HSBC assisted the company in charting the way to raise financing, arranging a bridge loan and structuring, underwriting, book running and holding the senior loan. Sheikha Hanadi Al Thani, CEO of Al Wa’ab City, said: “We very much appreciate the extraordinary efforts of HSBC as our financial advisor to organise this transaction in such difficult times. The financing of this project is ground-breaking for the Middle East. “It is the first time that senior debt and mezzanine finance, let alone one that is Shariah compliant, have been combined for a regional borrower with equity investors, and the first time that this group of local, regional and global banks, sponsors and investors have come together in this way, all on the same day.” business24-7.ae
Financial turbulences in global markets failed to create any adverse impact on Omani banks, which recorded a robust performance in the third quarter, said a recent study. The non-fee income of the banks declined marginally but they maintained a strong performance due to growth in core income. The combined profits of the listed banks rose by 37.6 per cent during the nine months period of 2008, from RO125.5 million to RO172.7m, in comparison to the corresponding period of the previous year. The banking sector is poised for a positive growth in the medium term. According to the study by Kuwait-based investment bank, Global Investment House, an above five per cent of real GDP growth and the economy’s attempts at diversification supports its positive view on the economy of the Sultanate. The Muscat Securities Market has been affected due to the recent declines in the GCC stock markets because of its strong positive correlation to the regional indices. But regulations by the Central Bank of Oman (CBO) and Capital Market Authority (CMA) have helped protect the market from global financial crisis as most of the investments by banks and insurance companies are inside the Sultanate, the study said. Stock markets would get a positive support from confidence building measures undertaken by the CBO and the CMA, it added. « We believe that the above five per cent of real GDP growth and diversification efforts of the Omani economy displayed by the increasing share of non-oil sector supports our positive view on the economy of Oman. The confidence building measures by the CBO and CMA should go a long way in supporting the stock market. Also, the strong performance of the Omani banks, backed by core income growth reflect our positive outlook on the sector in medium term, » said the study, sent to Emirates Business. According to the Global, most of the listed Omani banks recorded a double-digit growth in their profits. Ahli Bank Oman showed 84.6 per cent year-on-year growth in net profits from RO2.8m for nine months of 2007 to RO5.1m during nine months of 2008, followed by Bank Dhofar with a 49.9 per cent growth whereas Bank Muscat showed a 43.9 per cent growth in its profits for nine months of 2008. « Albeit none of the Omani banks reported a decline in profits, National Bank of Oman (NBO) and Oman International Bank were the two laggards in terms of profit growth. It is commendable that when some of the major regional banks in the GCC registered decline in profits, even the laggards of the Omani banking sector registered double-digit profit growth, » said Global. Ahli Bank Oman’s superior performance was attributed to its conversion to a commercial bank from erstwhile mortgage bank and in case of Bank Muscat, a 70.7 per cent growth in non-interest income during the nine months of 2008 was cited as the growth driver. Banks and public companies too displayed excellent economic situation, the study said. By Shveta Pathak business24-7.ae
For Dubai Drydocks World, the ongoing international financial crisis is not a problem but an opportunity, said the head of Dubai World – the group that owns the company. In an interview with Emirates Business, Sultan Ahmed bin Sulayem, Chairman of Dubai World, said it is important to know when and where to invest to take maximum advantage of a crisis such as the present one. He said Drydocks World’s investments in South East Asia are a well-considered move that seeks to benefit from the region’s shortage of shipbuilding and maintenance facilities. More than half of the company’s revenues last year came from that region, he added. The company is bullish about the Asian market as a whole and is in talks to acquire a Chinese maritime company – a first step towards a firmer foothold in the region. The firm does face a few challenges, though, he said. The biggest is recruiting and retaining suitable manpower, while getting UAE nationals to move abroad remains another one. How has the global financial crisis affected your business? It has not affected our businesses at all. We are still getting more and more contracts on a regular basis. How important are your investments in South East Asia? South East Asia, especially Singapore, is a very important place in terms of the size and numbers of vessels operating there. This area is also short of maintenance facilities. Therefore, it was a strategic decision to invest there in both building and maintenance of ships. How has your performance in the South East Asian region been so far? Last year, we made $1.5 billion [Dh5.51bn] in revenues from this area, plus another $1bn from Dubai dry docks. What about competition in this sector? And how are you facing it? Currently, there are dry docks in Dubai, Oman and Qatar. These are all competing to serve in the Arabian Gulf area. So we are in competition with the existing companies on their own turf. The main reason for us to move into and invest in this part of the world [South East Asia] is because of our customers, who were impressed with our services in Dubai and asked us to come to serve them on or near their home bases. Has the global financial crisis impacted on your business in South East Asia? It has not affected us, as our dry docks in Singapore and Indonesia are fully booked for the next two years. We are also investing in China so that we can take more contracts. Is this the right time to buy assets? And where? Yes it is. And currently we are looking to invest in China, India, Vietnam, Thailand and Latin America. The first investment, for which we are still negotiating, will be in China through a 60 per cent stake in the company Top Niche. Then, we are going to invest in other companies as and when there is an opportunity. How would you assess the Chinese market? It is not an easy one. To enter this market, we have to plan well. We are entering the Chinese market through a $50 million investment in the company that already has a major presence in China – Top Niche. What is more important to you, the building or maintenance of vessels? Revenues from maintenance services is much more than from building new vessels. In this area, 70 per cent of the vessels are more than 20 years old, and therefore many of them need very specialised maintenance services in order to get insurance cover and be able to sail. As far as building new ships is concerned, there is a huge demand for vessels, which is rising due to the increase in global trade volumes. Vessels are important to transport goods from one place to another and so ship building activities will go on increasing. But, as I said, maintenance, especially in this part of the world, will always be slightly more lucrative. What are the major challenges that you are facing? The biggest challenge is to be able to recruit and retain qualified staff, especially UAE nationals. The majority of our staff in our locations abroad are not UAE nationals. It is difficult to get them to relocate, as they don’t want to live and work abroad. Currently, we have a number of programmes to attract more UAE nationals, especially engineers, to work abroad. What made you go abroad? We are keen to diversify our income. We don’t want to limit ourselves to Dubai only as a source of income. This will also help us in facing the global financial crisis. The other important reason is that our customers, whom we serve in Dubai, were impressed with our services and they have asked us to set up base in South East Asia to serve them better and save them the effort of travelling to Dubai to get maintenance services. We have also developed oil rig-building facilities, and these have a healthy demand. And what about your recent projects in Dubai? We are expecting an increase in profits of Drydocks World, especially in our operations in the Dubai dry dock and Dubai Maritime City. In Dubai, we have developed the luxury yachting sector with facilities that were earlier available only in Europe. How important is the Asian market to Dubai Drydocks World? Asia today is the most important area. Most dry docks in Asia have closed due to the increase in the cost of living and problems with labour unions. There is a huge latent demand and we are investing in this area to cater to it. What was the reason behind your setting up a training school on Battam island in Indonesia? The purpose is to train the workers there and improve their professional as well as living standards. Our idea is not to exploit these workers but to give something back to them and their community. Sultan Ahmed bin Sulayem: Chairman of Dubai World Sultan Ahmed bin Sulayem is the chairman of Dubai World – the Dubai-owned company that controls about 100 businesses. The 52-year-old oversees all of Dubai World’s activities, which include property, retail, private equity, financial services and maritime services. He started his career in Dubai as a customs official and has served as the head of Jebel Ali Free Zone. He also chairs property major Nakheel and has set up Istithmar, a private equity fund with investments in financial services, tourism and healthcare businesses in the United States, Europe and Asia. Sultan Ahmed bin Sulayem was educated at Temple University in Pennsylvania, and has been described as one of the key individuals who manoeuvered Dubai away from a country that had merely struck oil in the 1970s to a shipping, property and tourist nation. By Muna Ahmad business24-7.ae
Abu Dhabi plans to create a second city centre to accommodate a projected threefold growth in population. « We are creating the Capital City District, with a population of 350,000 to 380,000 residents, » Falah Al Ahbabi, General Manager of the Abu Dhabi Urban Planning Council told Bloomberg. « It will form a second centre for Abu Dhabi, located on the mainland in the area that has been known up to now as Khalifa C. » The population of Abu Dhabi will grow from around 1 million people to 3 million by 2030, according to the planning council. « This will pose significant sustainability challenges in terms of mobility and transportation, » Al Ahbabi said in the statement. The UPC is thinking ahead many years to decentralise population density currently centred in the north eastern part of Abu Dhabi Island, with a high density spine extending southwards along Airport Road. « Abu Dhabi’s population is projected to rise to three million by 2030. This will pose significant sustainability challenges in terms of mobility and transportation concerns. In 2008 with approximately one million residents, Abu Dhabi is centred in one area, posing immense challenges for commuters, » said Al Ahbabi. « The remainder of Abu Dhabi Island is developed with palaces, villas, mosques, schools and other institutional and recreational activities while there are extensive low-density suburbs on the mainland. » By 2030, the UPC reckons the land use structure of the city will change dramatically to create a city, which will function well with more than three times its current population. « We are creating the Capital City District, with a population of 350,000 to 380,000 residents, which will form a second centre for Abu Dhabi, located on the mainland in the area that has been known up to now as Khalifa C, » explained Al Ahbabi. « It will sit on an axis that is an extension of the Mussafah Bridge alignment. The new district will be at the centre of the mainland Emirati communities. » On Abu Dhabi Island, the city centre will be expanded north-eastwards to encompass Sowwah Island (the new Financial Centre), the redeveloped Mina Zayed port area, and parts of Reem Island. This will continue to be the financial and commercial heart of Abu Dhabi. Meanwhile the Capital City District – the new location of the UAE Government, embassies and some Emirate and Municipality government functions – will be appropriate for the seat of the National Government. « As the capital of the UAE, Abu Dhabi is asserting its natural political leadership by promoting a visionary and forward thinking urban development strategy with its own dimension given to the term and based on influence rather than size. By developing the concept of ‘Sustainable Urban Mobility’, the UPC is promoting a concrete and influential example that demonstrates the consistency of our approach. It demonstrates our capability to cope with the contemporary urban living life-styles promoted in Plan Abu Dhabi 2030, » said Al Ahbabi. New transport infrastructure will be developed to connect the City Centre with the Capital City District. The existence of two centres will create an efficient movement system. In single centred cities there is a great ‘tidal flow’ of commuting traffic into the centre in the morning that congests incoming routes while leaving outgoing routes half empty. Then the opposite happens for the evening commute. In a dual-centred city, there is nearly equal movement between the centres, so that street space and public transport are fully utilised in both directions at once. Al Ahbabi clarifies: « By breaking the mould of a traditional ‘City Planning’ model, the UPC is promoting a new mindset through responsive urbanism concepts. Our role is to think and act ahead in order to deliver on our promise. » In 2030, Abu Dhabi will have a series of major centres of activity. In addition to the dominant City Centre and Capital City District, Abu Dhabi will have a series of major centres of activity. The Abu Dhabi mainland will expand substantially with the redevelopment and expansion of Shahama-Bahia, Baniyas and Wathba. WAM
