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Dubai targets lifestyle diseases

Lifestyle-related conditions such as cardiovascular diseases, cancer and diabetes are being targeted under a new approach to healthcare in Dubai, says a report. Other priorities are providing facilities and services to accident and trauma victims and to children with genetic disorders and congenital abnormalities. Adequate capacity is in place to deal with the relatively low incidence of communicable diseases, says the study, called The Healthcare and Life Sciences Sector in Dubai. The report says socio-economic development in UAE has been characterised by increasing per capita income and access to modern amenities and services – and this has led to changes in the population’s nutritional and lifestyle habits. Dubai Healthcare City (DHCC) and Dubai Biotechnology and Research Park (DuBiotech) have been established as free zones to address the need to upgrade healthcare and the life sciences. The document was produced by the Dubai Chamber of Commerce and Industry as part of its preparations for the second round of the Dubai Hamburg Business Forum 2008, to be held in the German city on December 18 and 19. The forum will explore areas where businessmen and investors in Dubai and Hamburg can work together. The report, one of several prepared by the chamber on a range of economic sectors, focuses on the development of the healthcare sector. The creation of the Dubai Health Authority (DHA) as the body responsible for the sector in Dubai was announced in June 2007. Its targets include full health insurance provision for Emiratis by 2009 and phased coverage for expatriates over several years. Responsibility for the administration of hospitals, health centres and clinics in Dubai currently lies with the Ministry of Health (MoH), and the Department of Health and Medical Science (DoHMS). The March 2007 Dubai Healthcare Provision Report lists seven public hospitals, five of which are managed by DoHMS and two by MoH. The former have 1,711 beds and the latter 310. Of the DoHMS-managed hospitals, one specialises in maternity and pediatrics and one is an emergency hospital, while the rest are general hospitals. One of the MoH-managed hospitals provides psychiatric care while the other is a general hospital. Dubai’s 18 private hospitals have 913 beds. The Neuro-Spinal Hospital, with 36 beds, specialises in neurosurgical treatment and rehabilitation, while a hospital offering maternity care and surgery has 14 beds and another specialising in plastic surgery has four. The others are general hospitals. The DHA is setting up structures for primary care and hospital funding, the creation of a new central clearing house and recruitment of full-time staff. The recently announced mandatory health insurance policy, designed to ensure that everyone in Dubai is given access to healthcare facilities, has led to increased demands for health services and products. A system to have blue-collar workers registered at clinics close to their accommodation is being prepared. Licences for new clinics are being granted only to those located in areas with insufficient existing medical facilities. Until recently healthcare in the emirate has been limited to the delivery of health services and medical consumables. The establishment of DHCC in 2002 was the first step towards creating a global hub for specialised healthcare and medical services. The $3 billion (Dh11bn) development will be a base for healthcare and medical corporations, institutions and foundations and is due to be completed in 2010. DuBiotech, which is being built at a cost of $400 million, is intended to establish a viable local research base. It will have a 300-hectare biotech science park with office and laboratory space, and 30 international companies have agreed to become partners in the venture. The pharmaceutical industry in the UAE, and particularly Dubai, is a vital sector, says the report. There are eight pharmaceutical factories in the country with investment totalling $64.2m. Local manufacturing activity has increased notably over the past few years, with a strong focus on regional and global exports. Dubai’s pharmaceutical market was estimated to be worth Dh1.1bn in 2005. The report says more should be invested in research and development and establishing more developed institutions to provide quality products. The current manufacturing operation makes unpatented products. More than 400 pharmacies ensure wide access to medical consumables and equipment. The prices of medicines are regulated by the ministry. Future prospects of sector Dubai’s healthcare strategy for the year 2015 focuses on developing administrative and legal frameworks based on international best practices to upgrade and improve private and public services. The DHA is developing the infrastructure required to provide full health insurance coverage for UAE Nationals. Cover will be extended to the expatriate population over a number of years. The provision of basic health services will match international benchmarks. In the near future the number of hospital beds is expected to reach 5,415 by 2010 – nearly double the capacity available in 2007. These will be made possible through the establishment and expansion of nine hospitals in Dubai, providing an additional 1,075 beds, and nine hospitals at DHCC, contributing 1,006 beds. business24-7.ae

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UAE economic growth outlook for next year positive, says Al Tayer

The outlook for economic growth in the UAE next year is positive, said Obaid Humaid Al Tayer, Minister of State for Financial Affairs. “Our economy is strong and our laws are sufficient to deal with the international financial crisis,” he told the Federal National Council. “We are ready to provide the banks with other funds in addition to the payments they have received if they want them. Currently liquidity is available and there is no liquidity crisis in the country. “The government took all suitable measures to make liquidity available in the market. The committee responsible consists of the ministries of finance and economy and the Central Bank has met 15 times so far. The government is ready to take more measures when necessary.” Al Tayer said the Ministry of Finance had imposed conditions on the release of payments to banks to end the liquidity crisis. “The banks should use the loans they receive to improve their liquidity and bridge any gaps they may have. The banks provide the Central Bank with a report on their financial situation every two weeks so that we can support them in case they need it.” He said the real estate sector had been affected by the global crisis, but added: “The laws and regulations of the Central Bank have not been violated by any bank. “The percentage set by the Central Bank for property finance is 20 per cent of a bank’s total loans, but the current property finance percentage averages 15.5 per cent. The Central Bank is able to control the practices of banks and our laws are good.” Al Tayer, when asked about the Central Bank’s role in combating investment fraud, said: “There are gaps in the 1989 law that established the Central Bank and this law is being modified. “The role of monitoring banks is assigned to the Central Bank. But there are other bodies that we look forward to working with in coming months, especially security bodies and federal and local bodies, to monitor investment companies that are launched on the internet. “This needs great effort and we work with the Telecommunications Regulatory Authority and economic departments, which take suitable measures against certain websites and have good plans for monitoring in the future.” Central Bank Governor Sultan Nasser Al Suwaidi, in a speech to the FNC, said the national economy was strong and stressed that the country’s banks did not have any financial problems. He reviewed the measures taken by the Central Bank to tackle bogus investment companies and stressed the significance of the amendment to the Central Bank establishment law. “The coming amendment is positive and handles important issues not covered by the current law.” Al Suwaidi said those engaged in investment fraud should face the proper penalties. “A very large number of brokers have not received the proper punishment – and they should be punished. Selling non-existent investments is a legal violation.” He said the Central Bank had seen cases where investors had put money into schemes offering high interest rates without knowing they were unlicensed. Al Suwaidi said the Central Bank had warned Nationals and expatriates against investing in such schemes. “We also co-ordinate with public prosecution offices, courts and the Ministry of Interior to expose bogus companies, and we have strong mechanisms to expose them.” He said legislation was important but the first line of defence lay with investors who should avoid depositing money with unlicensed bodies. Capital inflation exceeds national average Inflation in Abu Dhabi soared up to 11.6 per cent in 2007 to record the highest rate in the UAE and surpassed the country’s average, official figures showed yesterday. Dubai came second, with an inflation rate of 11.2 per cent while it stood at 10.3 per cent in Sharjah and 9.8 per cent in Ras Al-Khaimah, the Ministry of Economy said in a report on inflation in each of the emirates. The report put general inflation in the UAE at 11.1 per cent in 2007 compared with 9.2 per cent in 2006 and 6.5 per cent in 2006. The surge in Abu Dhabi’s inflation was a result of a sharp rise in rents by nearly 17.6 per cent in 2007 to record the highest rent growth in the UAE. Dubai came second, with an increase of 17.3 per cent, followed by Sharjah and Ras Al Khaimah, with a growth of 17.1 per cent each. The figures showed rents jumped by 18.5 per cent in the UAE last year. The ministry report did not give breakdown for other emirates. Abdel Hai Mohamad business24-7.ae

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UAE banks sharply boost reserves with Central Bank

UAE banks boosted their mandatory reserves with the Central Bank by more than Dh13 billion in the first half of 2008 as part of a CB drive to stem excess liquidity and tackle high inflation, official figures showed yesterday. But the CB is expected to have eased its rules on the required minimum reserves in the second half to free funds for banks after the global financial crisis reversed the liquidity situation from a surplus to crunch. From around Dh33.58 billion at the end of 2007, the required reserves with the CB by the country’s 24 national banks and 28 foreign units jumped to nearly Dh47bn at the end of June, an increase of about Dh13.4 billion, showed the figures by the Central Bank. The increase boosted the ratio of the reserves above the 14 per cent floor to around 16 per cent of the banks’ current and saving accounts at the end of June compared with nearly 15.1 per cent at the end of 2007. “The banks’ actual reserves with the Central Bank dropped by Dh3.92bn or around 7.1 per cent to nearly Dh51.12bn at end-June 2008 from Dh55.04bn by the end of 2007,” the Central Bank said. “But their required reserves surged by Dh13.48bn or nearly 40.1 per cent to Dh47.06bn. As a result, their excess reserves reduced by Dh17.40bn or 81.1 per cent to record Dh4.06bn balance compared with Dh21.46bn at the end of 2007.” Bankers said the increase was apparently a result of stricter rule by the CB to force the banks to boost their required reserves to mop up soaring liquidity, which is normally associated with high inflation. Another reason was that there was an increase in the banks’ combined current and saving accounts from around Dh219bn at the end of 2007 to nearly Dh293bn at the end of June 2008. The ratio of the reserves at the end of June was also far higher than the minimum one per cent of time deposits as it swelled to 6.7 per cent of those deposits of nearly Dh692.7bn, according to the CB report. “The required reserves could be now lower than their June level because it believe the CB has eased its rules in this regard to ensure banks have sufficient liquidity. This was evident in its recent decision to approve Dh50bn in emergency funds for the banks,” an Abu Dhabi-based banker said. Despite the surge in required reserves, the banks’ net overall credit position with CB tumbled by nearly Dh90bn to Dh128.1bn at the end of June 2008 from Dh217.5bn at the end of 2007, the CB figures showed. It gave no reason for the sharp drop but bankers attributed it to the banks’ decision to recover a large part of their investments in the form of certificates of deposits issued by the CB over the past year to absorb liquidity. Strong domestic demand for credits caused by the economic boom boosted the UAE banking sector’s loans and advances above their deposits for the first time to turn the UAE into the largest Arab lender relative to bank deposits. Nadim Kawach business24-7.ae

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Emaar may invest in Philippines’ mining sector through JVs

Emaar Properties is looking at investing in the Philippines mining sector using controlling stakes in joint venture companies, a newspaper reported yesterday. “There is a resurgence of development in the region, as China, India and even Japan require continued supply of minerals,” the Philippine Daily Inquirer quoted Environment and Natural Resources Secretary Lito Atienza as saying. “We need to take advantage of this as we are in the centre of the region, near the markets for such minerals.” Atienza told the newspaper the Dubai property giant is looking for mining and ecotourism developments in the Philippines. The country has set an investment target of $10 billion (Dh36.7bn) to $13bn in the mining sector by 2010. China’s Metallurgical Group Corporation has also expressed interest in investing in local mines, Atienza said. The global financial crisis, Atienza told the Daily Inquirer, will not slow down investments from companies which are geared towards the development of natural resources. These include India, China, Korea and Australia, he said. “This year we will try the new scheme of partnering with the investors in a 60-40 joint venture agreement where the Philippine Government can hold as much as 40 per cent. This will stir up a lot of interest in the mining sector,” Atienza said. “The mineral industry has been stalled in many cases because of the quarrels between the local partners and the investors. So as not to sacrifice time elements, and to stop if not eradicate squabbles among key industry players, we are proposing a joint venture with the government,” he said. Emaar, the developer of Burj Dubai, the world’s tallest manmade structure, started implementing an aggressive overseas expansion and diversification policy two years ago. The company has expanded its footprint to cover more than 36 markets and has moved into segments such as retail, hospitality, education, healthcare and financial services. Other joint ventures include one in India with MGF and another in Morocco. It has tied up with Raffles to open the first Emaar Raffles International School in Dubai and Singapore. In October 2007, Emaar joined hands with Bawadi, a member of Tatweer, to develop 70 million square feet of land in Bawadi, the largest hospitality and leisure development in the world located in Dubailand. business24-7.ae

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Government support and demand to help realty growth in UAE

Strong government support and healthy end-user demand for real estate in the UAE will help maintain a positive long-term growth for the sector, according to a report. “Real estate sector fundamentals remain strong even discounting near-term weakness,” says Abu Dhabi Commercial Bank (ADCB) in a report titled ‘UAE: Macro Economic Update’. According to the bank, on Dubai Financial Market and Abu Dhabi Securities Exchange, real estate sector indices have fallen by 80.5 per cent and 62.3 per cent so far this year. Due to the continuing economic slowdown and cautious approach of banks to lend to the real estate sector, the report expects the sector demand to weaken in coming quarters. Certain banks have reduced their loan-to-value ratio to 60-75 per cent from the earlier 85 per cent. “As a result, a larger down payment is required, possibly forcing potential buyers to postpone their purchasing decisions, and hurting real estate demand.” In an effort to kickstart the mortgage business, Abu Dhabi Finance, a mortgage finance joint venture, was set up recently by Aldar and Sorouh in partnership with ADCB and Mubadala Development Company. However, rental demand is likely to remain robust as potential property buyers defer decisions to buy and move into rental properties. “We believe unavailability of cheap credit could also compel realty companies to postpone launches of new projects and delay ongoing developments. Although the government has taken steps to ease liquidity by extending more credit lines to banks, those institutions in turn seem reluctant to lend to real estate companies,” the bank said. Rental yields expanded in October on the back of lower asset prices and a tight supply market, as gross yields increased to 6.3 per cent from 4.7 per cent in September, according to HSBC Holdings. “Rental demand is likely to remain robust as we sense potential buyers are deferring their plans until there is better visibility in the credit markets,” it said. ADCB also expects construction costs to come down due to decline in prices of major raw materials such as cement and steel. “Further, a relatively stronger dirham is likely to reduce the cost of imported raw materials in the near term. All these factors should largely offset expected lower profitability resulting from weaker sales prices,” it said. Demand for residential units in Abu Dhabi will outstrip supply until the end of 2011 as population grows and household size shrinks in the UAE, Citi Investment Research said recently. “Population growth and shrinking household size should drive a shortage of at least 30,000 units in 2012,” it said. Real estate projects announced in Abu Dhabi till date, including those under planning and development, are estimated to cross $466bn (Dh1.71trn) when completed, according to the latest update. Parag Deulgaonkar business24-7.ae

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Four Kuwait banks reviewed for possible rating downgrade

International ratings agency Moody’s Investors Service has placed on review for possible downgrade the long-term deposit rating and bank financial strength rating (BFSR) of four Kuwaiti banks due to their exposure to property sector. The banks are National Bank of Kuwait at Aa2/B-, Commercial Bank of Kuwait at Aa3/C, Al Ahli Bank at A1/C- and Bank of Kuwait and the Middle East at A1/C-. Moody’s said the key factors prompting concerns about the health of Kuwaiti banks are their exposures to real estate (particularly commercial property) and lending for purchasing securities. In addition to evidence indicating that demand in the Kuwaiti real estate market weakened during the first ten months of 2008, the steep decline of the local stock market between September and November 2008 could weigh further on real estate demand and has also caused significant problems for Kuwaiti investment companies and tensions in the local financial market. Moody’s also cautioned that a stock-market-related loss of wealth by Kuwaiti households and corporates alike could result in rising delinquencies on bank loans extended for securities purchasing purposes, although all banks report that this has not been the case and that loans remain adequately collateralised by a combination of stocks and real estate. Moody’s says the situation is further complicated by new central bank instructions which reportedly limit bank’s flexibility to sell securities held as collateral. On the one hand, Moody’s acknowledged the central bank’s reported action may have restrained an even steeper decline in stock market prices. However, such action could potentially hinder banks’ capacity to exit their positions in the event of growing customer delinquencies. “Moody’s is also concerned that the recently announced support mechanism for Kuwait’s investment companies, which among others calls on the country’s banks to extend long-term secured funding to such companies, could have a material impact on the composition of banks’ balance sheets and divert resources to activities that do not contribute to their franchise evolution,” said Stathis Kyriakides, lead analyst at Moody’s for Kuwaiti banks. Finally, recent events have highlighted the long-identified need for institutional reform in Kuwait (particularly with regard to the operations of the Kuwait Stock Exchange), while political unrest culminating in the recent resignation of the government is unlikely to contribute to the restoration of calm in the financial markets. Moody’s has put National Bank of Kuwait’s B BFSR, (which maps to a baseline credit assessment (BCA) of A1), Aa2 long-term global local currency deposit rating and Aa2 long-term foreign currency deposit rating on review for possible downgrade. The bank’s short-term local and foreign currency ratings as well as the rating assigned to its commercial paper programme were affirmed at Prime-1. Commercial Bank of Kuwait’s C BFSR, Aa3 long-term global local currency deposit rating and Aa3 long-term foreign currency deposit rating were all placed on review for possible downgrade. The bank’s short-term and foreign currency deposit ratings were affirmed at Prime-1. Al Ahli Bank’s BFSR, A1 long-term global local currency deposit rating and A1 long-term foreign currency deposit rating were all placed on review for possible downgrade. The bank’s short-term and foreign currency deposit ratings were affirmed at Prime-1. Bank of Kuwait and the Middle East’s BFSR, A1 long-term global local currency deposit rating and A1 long-term foreign currency deposit rating were all placed on review for possible downgrade. The bank’s short-term and foreign currency deposit ratings were affirmed at Prime-1. Moody’s upgraded National Bank of Kuwait’s long-term local- and foreign-currency deposit ratings to Aa2 from Aa3 on July 26, 2007. Last year, Commercial Bank of Kuwait’s BFSR was changed to C form C-, the bank was assigned Aa3/P-1 GLC deposit ratings and its foreign currency deposit ratings were unchanged at Aa3/P-1. Al Ahli Bank’s BFSR was changed to C- from D+ and the bank’s global local currency and foreign currency deposit ratings were unchanged at A1/P-1. Bank of Kuwait and the Middle East’s BFSR was changed to C- from D+, the bank was assigned A1/P-1 global local currency deposit ratings and its foreign currency deposit ratings were unchanged at A1-P1. At the end of September 2008, National Bank of Kuwait had total assets of KWD12.4bn (Dh169bn); Commercial Bank of Kuwait had total assets of KWD4.3bn; Al Ahli Bank had assets of KWD3bn; Bank of Kuwait and the Middle East had assets of KWD2.2bn. business24-7.ae

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Dubai awards Dh4.9bn Concourse 3 contract

The Al Habtoor–Murray & Roberts–Takenaka (HMRT) Joint Venture has been awarded a Dh4.9 billion contract to construct Dubai Airport’s new Concourse 3 for Dubai’s Department of Civil Aviation (DCA). Concourse 3 will be connected to the two major public levels of Terminal 3 via an automated people mover in addition to the vehicular and baggage handling system utility tunnels. The building, which follows the characteristic shape of Concourse 2, will be 645 metres long, 90 metres wide and 42 metres high in the centre from the apron level, and will accommodate 20 aircraft stands, 18 of which will accommodate Airbus’ new A380. The concourse will include one four-star and one five-star hotel, first- and business-class lounges, and duty-free areas. The total built-up area will be 528,000 square metres. Work will commence immediately, with completion scheduled for the end of April 2011. The consortium’s successful delivery of the recently opened Terminal 3 and adjoining Concourse 2 at the same airport was instrumental in HMRT securing this new project. business24-7.ae

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Strong economy boosts Qatari population

A massive influx of foreign workers triggered by unprecedented economic performance boosted Qatar’s population by more than half a million in just four years to record one of the world’s highest growth rates. Official figures showed the population of the world’s third-largest gas producer leaped by nearly 18.1 per cent at the end of June compared with the same period of last year and around 17.7 per cent in the previous year. Growth was also as high as 17.2 per cent during 2005-2008 and 16.8 per cent during 2004-2005, showed the figures by Qatar Statistics Authority (QSA). The rates are nearly four times the average annual population increase of between 2.1 and 5.2 per cent in the previous four years. At the end of June, Qatar’s population was estimated at 1.448 million compared with 1.226m at the end of June 2007 and 1.041m at the end of June 2006. It was put at nearly 888,000 at the end of June 2005 and about 616,000 at the end of the first half of 2000. QSA’s monthly figures showed the population continued its rapid rise to gain nearly 100,000 to reach around 1.541m at the end of October, an increase of about 6.4 per cent in four months. In 1997, Qatar’s population stood at around 522,000, more than one million below the 2008 population. According to the government-controlled Qatar National Bank (QNB), the annual population growth during 1997-2004 stood at only 5.3 per cent. “The rapid increase in population over the last few years is attributed to the strong performance of the economy, which has resulted in a large number of projects coming online, thereby leading to the influx of professionals, service and contracting sector staff and others,” QNB said. Despite the surge, Qatar has maintained its position as one of the wealthiest nations in terms of GDP per capita, which was estimated at $57,936 in 2007. As the population is projected to average around 1.5 million by the end of 2008, due to the departure of many foreigners for seasonal holidays, the GDP will record one of its highest growth rates this year and the Gulf country’s per capita income is set to continue its climb. QSA’s figures showed the population at the end of October included 1,185,575 males and 355,555 females, adding that its estimates included those who were present inside Qatar during the month of October. It gave no nationality breakdown but independent estimates put the native population at around 20 per cent of the total, while most of the rest are other Arabs, south-east Asians and Westerners. Qatar, a small Organisation of Petroleum Exporting Countries member, has recorded the highest per capita income and economic growth rate in the Arab world over the past 10 years because of strong crude prices and a rapid increase in its exports of liquefied natural gas (LNG), which exceeded 30 million tonnes in 2007. The exports are projected to climb to around 77 million tonnes within three years as the gas-rich country is pushing ahead with mega LNG projects to tap its gigantic offshore North Field, the world’s largest single reservoir of non-associated gas, with an estimated 900 trillion cubic feet. The surge in LNG sales has allied with a sharp rise in oil prices over the past few years to catapult Qatar’s economy by more than four times during 2003-2007 to reach QR258,000 in 2007. It is projected by QNB to soar to QR327,000 in 2008 and nearly QR387,000 in 2009, an average annual growth of between 21 and 35 per cent during 2003-2008. Qatar has in the recent past recorded extraordinary economic growth. Nadim Kawach business24-7.ae

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Saudi banks start feeling tremors of global meltdown

Saudi Arabia’s banking sector, one of the largest in the Middle East, has started to feel the pinch of the global financial crisis with a decline in its performance in the third quarter for the first time in 2008. After surging by 29.1 and 8.3 per cent in the second and first quarters of this year, the combined net profits of the kingdom’s listed banks plunged by nearly 22.2 per cent in the third quarter, banking data showed yesterday. The decline was partly due to growing loan loss provisions that reached nearly SR1.2 billion (Dh1.17bn) at the end of September, according to the National Commercial Bank (NCB), the country’s largest bank. “Since the beginning of the global financial crisis in August 2007, it was apparent that no country, industry or individual will escape the unfolding negative repercussions, whether they emanate from the mere psychological fear or the weak macroeconomic fundamentals or both,” NCB said in its weekly economic bulletin, sent to Emirates Business. “As a result, the kingdom was no exception in being relatively impacted despite the fact that the economy continued to achieve healthy twin surpluses in the fiscal and current account balances. Accordingly, it is appropriate to view the Saudi banking performance in this current context especially that the first decline in profitability this year by 22.2 per cent Q/Q in 3Q08 came in after positive growth rates of 29.1 per cent and 8.3 per cent in 1Q08 and 2Q08, respectively.” But NCB stressed it remains implausible to largely attribute such performance to the delayed impact of the financial crisis on Saudi banks. It said this is because most global banks had reported losses for the past four quarters, with most asking for liquidity injections or capital contributions. “In addition, the current mark-to-market accounting standards do not give banks ample room to manoeuvre when it comes to hiding huge losses on their trading and available for sale investments, which would have been apparent along the 15-month period of the ensuing crisis,” it said. “Finally, although the SR1.21bn in loan loss and investment provisions had clearly weighed heavily on the banking sector’s Q3 profitability, it does represent an efficient way of managing profitability in times of stress rather than an implicit declaration of future losses.” In another report, a key Gulf investment bank said the global financial crisis has impacted Saudi banks despite what it termed as their limited exposure. “The Saudi banking sector, with its limited exposure to the global financial markets, was somewhat able to escape the severe implications of the global financial distress. However, being an important part of the intertwined global markets, some of the dampening effects were directly or indirectly translated into the kingdom’s banking sector performance,” said the report by the Kuwait-based Global Investment House (GIH). But the report presented a good outlook for those banks given the kingdom’s strong macroeconomic fundamentals, a surge in investment, reforms in some sectors and the government pledge to support the banking sector. “Saudi Arabia’s strong macroeconomic outlook, favourable demographics, increased infrastructure investments along with sectoral reforms will provide various economic sectors, especially banking, with enormous future business opportunities. The increased economic activity will enhance both the financing appetite and customer deposit base,” it said. Nadim Kawach business24-7.ae

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Wealth reserves to shield UAE from global credit crisis

The UAE has accumulated huge wealth during the recent record surge in oil prices which would shield it from the ongoing financial crisis. A report released by Abu Dhabi Commercial Bank said the severity of crisis in UAE is far less than in the West. It said the UAE will continue to record fiscal surpluses in 2008 and 2009 as it has the lowest break-even oil price in the GCC region of $23 per barrel against the IMF’s baseline petroleum price projection of $68 per barrel for 2009. The report said the returns on accumulated wealth relative to the country’s GDP are substantial and can be used to mitigate the effect of oil price cyclicality and support investments in infrastructure and diversification. The rising population and expatriate community will support domestic demand to stimulate growth in non-oil GDP. The report claimed the Asian and emerging economies are beginning to replace Western countries as the UAE’s main trading partners, providing some protection against the worst affects of the downturn. Assuaging fears about Dubai’s debt, it said the emirate’s debt has been backed by foreign asset reserves which leaves the emirate’s capacity unimpaired. The bank also said the recent central bank’s move to inject liquidity in the financial market were precautionary and that the underlying financial system was sound. Waheed Abbas business24-7.ae