the edge - feb 2013 (issue 41)

The Edge | 3

f e b r u a r y2 0 1 3 w w w.t h e e d ge . m e

Business News 8Qatar Impact 16Country Focus 42

Finance & Markets 19Simon Watkins writes about the differing viewpoints of the Shari’ah powerhouses of Asia and the Middle East.

Energy & Sustainability

25Jamie Stewart reports on the Qatar energy industry’s foray into producing GTL for aviation.

Construction & Real Estate 31Khalifa Al Misnad discusses online real estate listings.

Tech. & Communications

37Shehan Mashood asks if your firm could be losing money through its corporate website.

Business Insight 75The Edge talks food and beverage with Henk Bruggeman, Hakkasan’s director of operations Middle East and China, and insurance with Akshay Randeva, director, strategic development of QFC.

Products Page 8210 Things 84

cover story

>46

contents

featuresFeature Story: Food for a Day 52

Barry Mansfield writes about Qatar’s plans to achieve national food security through the Sahara Project.

Feature Story: Doha Media City 58Shehan Mashood investigates why Doha has a long way to go to

achieve a thriving local media sector.

Feature Story: Reality Cheque 62Simon Watkins asks if inflation will be the biggest challenge to

Qatar’s economy and financial sector in 2013.

Feature Story: Qatar’s first Biobank 66Erika Widén takes a look at Qatar’s first population based Biobank,

and its benefits.

Business Management: Price priority 70London Business School’s Tim Ham and Marco Bertini discuss why

price optimisation should be a top priority.

Qatar has maintained a dominant position for the past two years when it comes to

exporting natural gas to growing nations. However, Jamie Stewart reports how in the next decade, Qatar will face a fierce

competitor – The World. With an already well-developed and low margin LNG production infrastructure and a fleet of large and highly capable carriers, Qatar is well prepared to take on competitors such as Australia in the global market. (Image Reuters/Corbis).

4 | The Edge

publications director mohamed jaidah [email protected]

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The Edge | 5

2013 is looking to be an interesting one for Qatar, as oil and gas production plateaus and focus turns to increasing the private sector’s contribution to gross domestic product (GDP). indeed, the economy should dominate many boardroom conversations in Doha this year, in particular the predicted slowing in overall GDP as well as the spectre of rising inflation.

Of course, that the latter will reach the peak of more than 10 percent it did a few years ago seems unlikely, and there is much to be optimistic about financially in Doha. But as our economic correspondent Simon Watkins highlights on page 62, rising food prices and increased demand for property – a major driver of inflation – is cause if not for concern, then at least one for measured caution for local businessmen and investors in the coming year.

Of course, as we move towards 2022, opportunities to make high profits still abound in Qatar. One sector that is arguably ripe for growth is that of the media, as Shehan Mashood highlights on page 58. Though Qatar’s moneyed population of locals and white collar expatriates is small, it is highly literate and consumes vast amounts of content through various mediums.

A ‘Doha Media City’ may never see fruition, but for the country’s size, economic activity in Qatar is also disproportionally high and thus offers much potential for a thriving media – advertising, production, publishing both digital and traditional print and many other associated creative outlets – in a lucrative environment that has arguably not fulfilled its true potential.

As highlighted at a recent forum in Doha, a lack of impetus in developing a more robust media in Qatar is one obstacle, as is a lack of cohesion among those in the broader media sector to better serve and protect their interests.

A lack of a sophisticated marketing approach in advertising is ostensibly another problem, for example the annual advertising spend in newspapers far outweighed that of online in Qatar in 2012, a statistic that is contrary to world trends, rapidly moving in the opposite direction. Another uncertainty is where media freedom stands in Qatar, with some commentators feeling the new draft media law does not match up to international standards for press independence.

The latter is arguably the most important factor, where transparent and clear guidelines can only serve to promote confidence in the sector, which through its incredible power to market brands, products and services ostensibly contributes far more to private sector growth than many outside the industry might consider.

Two other areas where Qatar has much potential and energy and attention have been focused with recent or at least impending results are in healthcare and food security, both featured in this edition of The Edge.

On page 66 we have an exclusive preview as Erika Widén talks with two of the masterminds behind the Qatar Biobank, an initiative resulting from a partnership between Qatar Foundation and Imperial College in London, which is the first healthcare initiative of its kind in Qatar and indeed the entire Middle East, and is due to be publicly announced sometime in 2013.

The long-term aim of the Qatar Biobank is to build up a database sourced mainly through samples taken from Qatari citizens (and long-standing expatriates of more than 15 years residence) and to use it to fight against diseases endemic to, and which plague the country itself - such as cardiovascular diseases and diabetes – both socially and financially.

Then finally, on page 52 Barry Mansfield takes a walk through The Sahara Project, which recently opened in Doha. Designed to grow fruit and vegetables in a low-impact man-made environment consisting of fertiliser-only soils, it is the first tangible step of Qatar’s ambition to rapidly reduce its dependence on food imports in coming years, which could have a significant impact on the economy and even on inflation.

Food for thought indeed. Enjoy the issue.

Miles Masterson Managing Editor

editor’s letter

The Sahara Project, which recently opened in Doha

is designed to grow fruit and vegetables in a low-impact

man-made environment.

8 | The Edge

The Edge | 9

Arabian StallionThe Qatar Motorshow in Doha in late January featured among other regional and international product launches, the world unveiling of the first ever ‘Arab supercar’, the Lykan Supersport. Manufactured by United Arab Emirates company W Motors, the vehicle is set to retail for more than QR12 million, its creators saying that they chose the Qatar Motorshow as they hope the rich of the region will be their preferred customers. Indeed, less than 10 Lykan are planned for production, and all will contain diamond-encrusted LED lights, gold stitching in the plush leather interior, a 3D hologram display and a special edition Cyrus Klepcys watch valued at almost QR800,000 alone. For those interested in its performance and whether it can actually drive, the supercar’s makers boast impressive figures, 750 brake horsepower, start acceleration from zero to 100 kilometres per hour (kph) in less than three seconds and a top speed of more than 400 kph. (Image by Herbert Villadelrey, Firefly Pictures)

photoof the month

10 | The Edge

labour relations department of the Ministry of Labour in Qatar received 6000 worker complaints last year. According to local media reports, the top concerns facing workers included employers not fulfilling obligations under the visa sponsorship system, including refusal to give end-of-service benefits, and also delays in paying wages. In some cases, workers are not paid at all. A committee was set up by the government last year to look at the sponsorship rules, but has not responded to the growing number of sponsorship abuses. Once the response is received, the ILO will establish a tripartite committee to review the evidence, and make recommendations to the government of Qatar.

International labour unions have recently lodged a new case with the International Labour Organisation (ILO) presenting evidence on the use of forced labour in Qatar. With only 300,000 Qatari nationals, 1.2 million migrant workers are needed for the country’s infrastructure boom, and are reported to be forced into unsafe conditions and low wages. This is the first time the term ‘forced labour’ has been used to define working conditions in Qatar in a case to the ILO. International Trade Union Confederation general secretary Sharan Burrow said the visa sponsorship system in Qatar allows the exaction of forced labour by making it difficult for a migrant worker to leave an abusive employer or travel overseas without permission. “Employers have near total control over workers. In the next few months the contracts for the new World Cup stadia and infrastructure will be announced. Millions more workers will be hired from overseas for the road, rail and building infrastructure for the World Cup. We are putting multi-national companies tendering for these contracts on notice to abide by international law and respect workers’ rights,” said Burrow. The

newsThe worldwide grounding of Boeing 787 Dreamliners in January – triggered by a spate of security scares centering on lithium-ion battery fires – has created uncertainty about an outstanding order by Qatar Airways (QA) for 55 more of the aircraft, including 25 firm purchases. The Qatari flag carrier already operates five of the aircraft, having received its first unit in November 2012. It was among eight airlines forced to suspend 787 flights after emergency airworthiness directives were issued by regulatory bodies in the United States, Europe and Japan. The other affected carriers are United Airlines, Poland’s LOT, Chile’s LAN, Japan Airlines (JAL), All Nippon Airways (ANA), Air India and Ethiopian Airlines. Media interest in the Dreamliner’s difficulties has grown steadily since 7 January 2013, when a fire erupted on a parked JAL 787 in Boston after a battery explosion. That followed two largely unreported electrical fires on the QA and United Airlines fleets in December 2012. Industry experts initially downplayed talk of design flaws in the aircraft, which entered service in 2011 after years of delays. But following an emergency landing by an ANA 787 on 15 January – during which a battery malfunction emitted smoke into the cockpit – the Japan Transport Safety Board swiftly ordered the grounding of all JAL and ANA 787s. Its emergency directive was followed by a similar order from America’s Federal Aviation Administration (FAA) on 16 January, which was in turn adopted by the European Aviation Safety Agency (EASA) on 17 January. Though not bound by the directives, QA – along with LAN, Air India and Ethiopian Airlines – voluntarily withdrew their 787s from service, leaving all 49 Dreamliners in operation across the globe grounded.

Qatar Airways (QA) CEO Akbar Al Baker is implementing the directive issued

by the United States Federal Aviation Administration for all operators of the

Boeing 787 (Dreamliners) to ground the aircraft, effective from January 17, 2013.

Number of the monthThe number of worker complaints received by Qatar’s Labour Relations Department of the Ministry of Labour in 2012.

6000

business

Qatar Airways grounds Dreamliners

International unions challenge Qatar’s labour practices

By Martin Rivers

The Edge | 11

news

“Having surveyed

the needs and challenges

of more than 200 SMEs in

Qatar, we can say with great certainty that

competing for tenders

represents one of the biggest

barriers to growth.”

– Noora Al Mannai, CEO of Enterprise

Qatar.

Arab leaders met in Riyadh last month at the third annual Arab Economic and Social Development Summit, where the main topic was economic integration among the Arab nations, or a lack thereof. Arab League chief, Nabil Al Arabi was quoted by a news website as saying, “we stress our determination to complete all the prerequisites of forming the free trade area before the end of this year,” and added that Arab leaders would work towards achieving an Arab customs union fully by 2015.

Amendments to promote the flow of investment and capital within the region were also discussed at the summit. Compared to other areas, the Middle East North Africa as a region is much less globally integrated, with regional trade accounting for only 10 percent of total trade during 2010, according to the World Bank.

business

The percentage of regional trade in the

MENA region.

10%

Enterprise Qatar (EQ), a support organisation for the development of SMEs in Qatar announced recently a new initiative called the Government Procurement Contracting Program (GPCP). This new direction adopted by EQ is to help SMEs secure business through winning tenders. Noora Al Mannai, chief executive of Enterprise Qatar, said difficulties in competing in the tendering process are one of the biggest challenges facing SMEs in Qatar today. “Having surveyed the needs and challenges of more than 200 SMEs in Qatar, we can say with great certainty that competing for tenders represents one of the biggest barriers to growth,” she explained.

Under the new initiative SMEs will have access to a subcontracting and partnership exchange portal where buyers can meet suppliers. HE Sheikh Jassim bin Abdul Aziz Al Thani, minister of business and trade and chairman of EQ noted the benefits of such a portal, saying “The GPCP is a development trend applied in many developed countries like the United States and European Union. Empowering SMEs through the available opportunities through structuring a dynamic comprehensive ecosystem in Qatar would have the greatest impact in achieving the aspired diversified economy.” Other projects under the GPCP include an investment portal that provides information regarding business opportunities, and advisors to help improve success rates with government and large private sector tenders.

A change in strategy for Enterprise Qatar

Economic integration the biggest takeaway from Arab summit

Arab League chief Nabil Al Arabi stressed the importance of developing a free trade area for the region. (Image Corbis)

12 | The Edge

QIB, the largest Islamic Bank in Qatar, has launched a new programme called Aamaly dedicated specifically to providing special services to the country’s

small and medium sized enterprises (SMEs), offering them financial benefits, guidance and advice. Basem Shahrouri, QIB’s head of business banking spoke extensively about the Aamaly programme and the benefits for SMEs that will include dedicated relationship managers, special SME-centric banking centres, 24-hour banking, payroll services, cash and cheque collection, overnight vaulting and time deposits, together with flexible lending and financing options. Acting CEO Ahmad Meshari, explained that the SME sector in Qatar is promising, and is expected to grow rapidly to play an important role in Qatar’s overall growth. QIB already enjoys a sizeable corporate and retail base and it also has a strong branch presence across the country to meet customers growing requirements,” he said.

At its recent Annual General Meeting (AGM), members of the the Qatar Australia and New Zealand Business Association also resolved to change the name of the group to QANZBA - from ANZBIQ- to better reflect its business and networking focus. The committee elected Susie Billings as chair of QANZBA, with Jonathan Cartmell elected as vice chair and Ian Lindquist as treasurer.

Orange Business Services, the business services arm of France Telecom-Orange, has announced the launch of a joint venture company in Qatar, through

the establishment of EGN LLC, which will trade in Qatar as Orange Business Services. The company aims to address the significant ICT market opportunities in Qatar, which has ambitious investment programmes in place.

Qatar-based Silatech has announced recently the launch of the organisation’s new web platform. In addition to frequent news updates and general information about Silatech, the bilingual platform contains detailed information about Silatech projects ongoing in 11 countries throughout the region, as well as knowledge resources of particular value to researchers, media and policy makers.

QNB Group announced recently that it has acquired an additional 49.96 percent stake in the share capital of the Tunisian Qatari Bank, thus raising its total shareholding to 99.96 percent, effective the moment the Group receives the required approvals of the regulatory authorities in the Republic of Tunisia Republic and the State of Qatar.

QIB celebrates the launch of Aamaly with its SME clients

QNB Group acquires an additional stake in the share capital of the Tunisian Qatari Bank

Qatar Australia New Zealand Business Association elects new 2013 leadership team

Orange Business services launches a joint venture in Qatar

New Silatech web platform

newsbusiness in brief

“The newly launched index meets the demands of the ETF envisaged by Al Rayan Investment for listing at QE. In practical terms, the Shari’ah screening produces a subset of financially healthy companies with strong fundamentals.’’

Rashid Al Mansoori, chief executive of Qatar Exchange (QE) said recently during the QE and Al Rayan Investment launch of the QE Al Rayan Islamic index.

“We are all for clean, healthy competition – that is what brings efficiency and raises standards, but in Qatar we have a world-class airline that also owns a private jet business, enjoys a monopoly on ground handling, as well as being the airport operator.”

Captain Hassan Al Mousawi, chief executive officer of Rizon Jet, Qatar’s privately owned luxury fleet – explaining Rizon Jet’s challenges to sustain a viable business in Qatar.

Words & Numbers

182 billion Qatari Riyals. The amount Qatar expects to save each year until 2017 to boost reserves – according the International Monetary Fund.

146billion Qatari Riyals. The allotted budget for developing Qatar’s transportation sector up until 2014.

Sheikh Fahad bin Ghanim Al Thani is the majority share holder of the joint venture.

Silatech unveiled a bilingual site, which incorporates advanced, mobile-friendly design features, and integrated information feeds.

Acting CEO of QIB, Ahmad Meshairi believes SMEs will play an important role in Qatar’s growth.

AS TOUGH AS THE GUYS WHO WEAR THEM.Safety footwear for your employees.

Industrial Area St. No: 24Tel: +974 4463 8777 | Fax: +974 4460 4286P.O.Box 150, Doha, Qatar | E-mail: [email protected]

Red Wing Shoes 19cmx25cm SFP.indd 2 1/30/13 12:45 PM

14 | The Edge

Third Annual Road Planning, Design and Construction Middle EastThe Third Annual Road Planning, Design and Construction Middle East summit will encourage key industry leaders to engage in stimulating, knowledge-sharing discussions both on a strategic and technical level.

event of the month 25 - 27 4 – 6Second High Level Forum on Global Geospatial Information ManagementStakeholders from government, non-governmental, acamedia and the priavte sector will come together to address and discuss important issues on global geospatial information management. The forum will also seek to promote greater deployment of geospatial information and establish best practices.

17 - 20Qatar Projects At the Qatar Projects event delegates from the governmental and private sector will come together to discuss Qatar’s outlook and its strategies for infrastructure growth. Special focus day’s will entail discussions on topics such as exploiting opportunities in manufacturing, managing resources and the movement of materials.

25 – 26The Seventh GCC Regulator’s Summit Thomson Reuters Governance, Risk & Compliance is hosting the 7th summit in association with Qatar Central Bank, Qatar Financial Centre Regulatory Authority and Qatar Financial Markets Authority. The summit will take place under the patronage of His Excellency Sheikh Abdullah bin Saoud Al Thani, the governor of the Qatar Central Bank and chairman of the QFC Regulatory Authority and Qatar Financial Markets Authority.

events

“With a good mix of public and private sector delegates, this event provides an excellent opportunity to explore how the

major cities of the region will have to change if they want to be successful in the 21st century.” – a spokesperson from Arup, an engineering consultancy firm, regarding the Road Planning, Design and Construction Middle East event.

businessQatar, February 2013

SALAM STORES new.pdf 1 1/28/13 10:08 AM

16 | The Edge

A s the host of a television business show, my inbox is inevitably filled up with a lot of press releases and economic reports.

They can take a bit of sifting through, but one did catch my eye this month: a report called Doing Business 2013 co-produced by the World Bank and the International Finance Corporation. It ranks countries based on how easy or difficult it is for a local entrepreneur to open up a small-to-medium sized business (though in Qatar’s case it does not specify if those ‘local’ entrepreneurs are exclusively Qatari or not).

The report takes into account 11 different stages of setting up – everything from getting construction permits and electricity, through to getting credit and employing workers – and it is an interesting way of measuring a country’s business landscape.

Qatar’s position is really pretty good – 40th out of 185 countries surveyed. In the region it is surpassed only by Saudi Arabia at 22nd and the United Arab Emirates (UAE) at 26th, and is well above the regional average (98th).

Now, there are a lot of numbers here, but when you analyse the data, Qatar’s ranking in those 11 individual stages begins to tell some interesting stories, both good and bad.

Take taxes, for example. Obviously Gulf states are attractive places for doing business because of the more relaxed tax laws. So attractive in fact that Qatar is ranked second in the world for ease of paying taxes. The report claims Qatari businesses only make four tax payments a year compared with 12 for Organisation for Economic Cooperation and Development (OECD) high-income countries, and pay only 11.3 percent in labour taxes, while OECD countries pay 23.8 percent. And remember, those OECD countries have an average of 15.2 percent in profit tax to pay too, of which there is none in Qatar.

Qatar also ranks favourably in ‘Dealing with Construction Permits’ (18th), ‘Getting Electricity’ (25th), and ‘Trading Across Borders’ which moved up 17 places to 58th. The report found the introduction of a website for electronic customs clearance at Doha seaport had cut import and export times, and that the cost of exporting was far lower than Middle East and North Africa and OECD averages. So far, so good.

However, the problem with some of those high numbers is the way they can over-inflate the overall ranking, and mask some deficiencies.

Getting the job done

One of Qatar’s worst individual rankings in the report was in ‘Getting Credit’ – 104th out of 185 countries, and down seven places from last year. In the region, it falls behind Saudi Arabia, Oman, the UAE and Egypt. The major sticking point seems to be not so much a lack of funds, but a lack of depth in credit information and the non-existence of a credit reference agency, which could provide such information on the private sector.

Qatar also struggled in ‘Protecting Investors’ (100th) where it was scored poorly for disclosure issues – to both company directors and the public – and for shareholder rights in any legal suits.

The area of most concern was in ‘Starting a Business’ where Qatar was ranked 109th. In the region, only Kuwait was worse. It seems the number of procedures – things like applying for name approval and company registration – have only increased over the years, along with the amount of time needed by the new business owner to complete such tasks. And this is where you could say the data crosses paths with the anecdotal evidence. People will often say that official paperwork comes with a lot of red tape here, or at the very least a long chain of approval and sign-offs.

To be fair this is just one report, but there is always something Qatar can take away from it.

It is worth remembering that many of the big companies that will shape and indeed build the Qatari landscape in 2013 were once just small entrepreneurs looking for their chance to grow.

Kamahl Santamaria is a Doha-based news anchor with Al Jazeera English and host of the channel’s business and economics programme Counting the Cost.

Think it is tough getting things done in Qatar? kamahl Santamaria looks at a new World Bank report which puts Qatar near the top 20 percent of the best

places in the world to do business.

Qatar Impact

C

M

Y

CM

MY

CY

CMY

K

finance & markets

The Edge | 19

Contents: Tale of Two Shari’ah 19 . Qatar Economy 2012 Performance 21 . Should the Qatari riyal be pegged to the dollar? 22 . Global Participation in region critical: GCC executives 24.

finance & markets

A ccording to Standard & Poor’s and other similar sources, the global Islamic finance industry is set to

double in size from its current value of QR4.9 trillion by 2015. Moreover, according to exchange data, a total of QR510 billion in sukuks were issued in 2012 globally (a 64 percent increase from 2011), taking the outstanding sukuk market to an unprecedented high of QR874 billion.

It is little wonder then that Islamic finance centres in the Middle East and in Asia are seeking to cast themselves in the role of primary guardian of the code of finance defined by Shari’ah

principles. There are many similarities in the way in which Islamic finance is practiced. For example, all of them forbid investing in activities that can be deemed speculative, involve uncertainty, entail the payment of interest, or are involved in prohibited businesses.

However, there are also some key differences, which have long-term ramifications for the development of this financial sector. One such broad-based regional difference lies in the basic school of Islamic thought that governs the regions and their corollary approach to finance, highlights Yusuf Battiwala, Islamic Finance

A tale of two Shari’ah Apart from positioning itself as a centre of Islamic history, art and culture, Qatar is also striving to become a hub of Islamic or Shari’ah compliant finance, but has to compete with different approaches from established markets such as world leader Malaysia. (Image Getty Images)

The Shari’ah powerhouses of the Middle East and Asia have at times differences in approach and opinion. What bearing does this have on this fast growing global financial sector? asks Simon Watkins

This section is brought to you by Qatar Financial Centre

Brought to you by:

20 | The Edge

sectors | finance & markets

specialist at Allen&Overy in Dubai. While Saudi Arabia follows the stricter Hanbali school Battiwala says, Malaysia, home to the largest Islamic bond market in the world, adheres to the less conservative Al Shafi`i school of Sunni Islam, while much of the remaining Gulf Cooperation Council (GCC) steers more of a middle course, following the Mâliki approach.

In practical terms, underlines Gregory Man, senior lawyer specialising in Islamic finance for Clifford Chance in Hong Kong is that, for example, a financing structure for a murabaha-type sukuk that may be able to be traded at an amount other than par in Malaysia, may not be considered as having sufficient tangibility in the underlying assets to make the sukuk tradable at an amount other than par in the Middle East.

There has been some controversy over such structures, particularly of the commodities type (Tawarooq) in which a bank buys and takes title to the relevant commodity assets from a third party broker, and then sells the assets to the borrower at cost plus a specified profit. In the Middle East, Islamic scholars highlight the risk of the commodities never changing hands and of there being no tangible commodities at all, just cashflows between banks, brokers, and borrowers, thus negating the basic tenet of Shari’ah pertaining to tangible underlying assets underpinning all transactions.

A wider adjunct to this, says Khairul Nizam, assistant secretary general of the Accounting Auditing Organisation for Islamic Financial Institutions (AAOIFI) in Bahrain, was evident in 2008, when the organisation stated in February of that year that the repurchase undertakings found in around 85 percent of apparently Shari’ah-compliant bond and equity fund structures that were based on mudaraba and musharaka violated the Islamic duty to share risk as well. Following this, the issuance of these two types of bonds fell through the year by 83 and 63 percent.

Nizam adds that having already produced 44 Shari’ah standards over the past few years to carefully demarcate what is precisely Shari’ah-compliant and what is not – in addition to another 40 standards on accounting, auditing, ethics, and governance – it appears that there is a broad-based move across the globe back to true Shari’ah-compliant banking and tradable assets.

Interestingly, in this regard, Malaysia continues to lead the way in the issue of sukuk, and Islamic equities products, by some margin (with around 80 percent of

Islamic finance products in Malaysia held by non-Muslim investors), while Saudi Arabia continues to dominate straightforward bank deposits, concentrated almost entirely within the Muslim community.

Responsibility for imposing such regulatory frameworks also differs. “If you offer an Islamic REIT, in principle the underlying assets should be covered on a takaful basis, and it is here there appears to be a difference as to what sort of overseeing body provides the guidance,” Marcel Omar Papp, Head of Retakaful (Islamic Reinsurance) for Swiss Re Retakaful, in Kuala Lumpur, tells The Edge.

In the Middle East, guidance broadly comes from the AAOIFI, while in Malaysia specifically, and in Asia more generally, such guidance comes largely from central banks, their associated bodies (monetary authorities, for example, in the case of Hong Kong), and Shari’ah boards. This more insular operating environment in Asia, Papp adds, finds further resonance in the fact that Asia’s Islamic finance sector is currently much more focussed on individual domestic markets than is the case in the Middle East. “In Malaysia the vast majority of sukuk issuances are sold into the deep local ringgit-denominated market, whereas in the Middle East, especially in the GCC, the majority of major sukuk offerings are geared towards international investors.”

So, where does Islamic finance in Asia and the Middle East, specifically countries such as Qatar, go from here? As it looks increasingly towards making more international-oriented sukuk offerings, thinks Man, then Asia’s interpretation of Shari’ah finance is likely to move more towards the Middle East’s, if only on the basis that a level legal playing field will be required for international investors.

Simon Watkins is a freelance financial journalist based in London in the United Kingdom

Global Sukuk Issues by country (US$m) - 4Q 2012

Other 842

911

1,165

1,444

1,450

1,450

21,994

0 5,000 10,000 15,000 20,000 25,000

Turkey

UAE

Saudi Arabia

Qatar

Indonesia

Malaysia

Qatar is striving to become a centre of Islamic Finance, as evidenced by more than US$1.45 million sukuk issues in Q4 2012 Source: Zawya

Malaysia continues to lead the way

in sukuks and Islamic equities products, while Saudi Arabia continues to dominate straightforward bank deposits.

The Edge | 21

finance & markets | sectors

Macroeconomic Analysis

Qatar’s Economy: 2012 into 2013Despite caveats, harking back at its performance in 2012, prospects for the Qatari economy in coming year remain positive, writes Thomas Bacon.A bid by Qatar’s government to consolidate several years of economic expansion, while channelling a budgetary surplus towards large-scale capital works projects, helped the country achieve its aim of more moderate growth for 2012.

HE Yousuf Hussein Kamal, minister of economy and finance, said in December the government expected gross domestic product (GDP) growth to ease to 5.4 percent by the end of 2012, and to five percent in 2013 and beyond. The estimates are down significantly on 2011 figures when Qatar’s economy expanded by 14.8 percent. The minister, who was speaking at a finance conference in Doha, added that forecasts were in line with plans to achieve and maintain fiscal stability, while also focusing on diversifying the economy.

Estimates from the International Monetary Fund (IMF) are similar to government projections, the organisation forecasting expansion of 4.9 percent in 2013 and the oil and gas sector’s contribution to stay flat .

In a recent note, ratings agency Fitch said it also expected Qatar’s GDP growth to ease further in 2013. The agency added that with gas production having now reached the government’s target, economic expansion was set to fall to mid-range single digits, while ongoing high capital spending by the state would maintain growth for the non-energy sector.

Energy production began levelling off at the end of 2010 when gas output reached the government’s annual target of 77 million tonnes, although additional flow boosted GDP in 2011. For the first time since the middle of the last decade, Qatar decided against embarking on new production or adding processing capacity in 2012. However, the country still holds sizeable untapped fields in reserve.

The banking sector ended 2012 on a high, with end-October deposits up 21 percent to QR348 billion. The combined

assets of lenders also rose to QR800.6 billion marking a year-on-year increase of 22 percent, according to central bank data issued in December.

Banking lending activity was even stronger, with credit and financing portfolios expanding by 26 percent at the end of October to reach QR485 billion of which all but QR29.86 billion went to local borrowers. Increased lending to the local economy is expected to help the government achieve its key objective of maintaining private sector growth this year.

Although still at an early stage, the infrastructure programme, which has been valued at US$130 billion (QR473 billion) by the General Secretariat for Development Planning (GSDP), is earmarked for a major role in boosting private sector participation. The initiative is set to offer extensive opportunities across the sectors to investors until at least 2019, with construction, engineering, finance, technical services and logistics firms among those set to benefit.

Winning the right to host the World Cup helped accelerate Qatar’s long-term infrastructure development programme, which includes a metro and light rail system, railways linking to a regional network, and improvements to the road system. It has also added momentum to the ongoing expansion of hotel capacity.

Despite the large-scale spending plans, ratings agency Standard & Poor’s (S&P)

HE Yousuf Hussein Kamal, the Qatari minister of economy and finance, said in December 2012 that the government expected GDP growth to ease to 5.4 percent by the end of the year, falling further to five percent in 2013 and beyond.

The combined assets of Qatar’s lenders rose to QR800.6 billion marking a year-on-year increase of 22 percent, according to Central Bank data issued in December 2012.

800billion

22 | The Edge


Based in Turkey, Thomas Bacon is an analyst at Oxford Business Group (OBG).

still expects the country to post a healthy surplus equivalent to six percent of gross domestic product in 2012 through to 2015, on the back of continuing strong performance and ongoing solid growth.

In November, S&P assigned an AA/Stable/A-1+ sovereign credit rating to Qatar following its positive forecast, combined with what it described as strong external and fiscal balance sheets. The S&P rating followed a positive assessment from Moody’s, which in September rated Qatar’s long-term bonds AA2 with a stable outlook.

Despite years of rapid economic expansion, close monitoring of Qatar’s monetary supply by the Central Bank has resulted in a check on inflation. Figures show it was running at a moderate two percent at the end of 2012, with any effect made on the economy largely insignificant.

Although the government has increased its projected oil price by US$10 (QR36.4) to US$65 (QR236.6) per barrel in its 2012 to 2013 budgetary cycle, the estimate remains well below current and expected global rates. As such, Qatar country will still almost certainly be able to fund its investment programme in 2013 without having to dip into reserves, even if international energy prices drop. Prospects for the Qatari economy in the coming year therefore look good.

Currencies

To Peg or not to Peg?Should Qatar should reconsider being linked to the US dollar? Dheeraj Shahdadpuri debates the pros and cons. There have been many historical debates on the merits and demerits of a pegged exchange rate system. Theoretically, many developing countries adopt a pegged exchange rate system to garner competitive advantage and encourage investments from foreign entities. But for the oil and gas rich gulf countries, which are major

suppliers of petroleum commodities to the world, gaining competitive advantage has not been the main objective.

Qatar has officially pegged its currency at QR3.64 per dollar for more than a decade. This has predominantly served its purpose of stabilising the oil and gas led income stream. Since oil and gas are traded in dollars in international financial markets, this avoids fluctuation generally associated with flexible exchange rate regime.

However, the fixed exchange rate system has its own set of shortcomings, which increasingly became realised in Qatar during 2007 to 2008. There was constant pressure building up not only in Qatar, but in neighbouring countries as the peg makes imports costly whenever the dollar depreciates against other major currencies in the world financial markets.

To provide perspective, Qatar faced early double-digit inflation during the years 2006 to 2008, with the rate peaking at just above 15 percent in 2008. Since then, the United States (US) Federal Reserve embarked on a series of interest rate cuts to save its dwindling economy, the dollar continued to depreciate against major world currencies. To avoid flight of speculative capital into the country, Qatar was also forced to reduce its interest rates to match that of the Federal Reserve.

But as the domestic financial system was already flush with ample liquidity and with the reduction in interest rates, inflation kept climbing. And theoretically, investments generally are seen to be declining when inflation goes viral as it puts downward pressure on the real economic profits of businesses.

However, the global economic environment has changed significantly from those turbulent times. Interest rates in the US are at rock bottom levels. Oil prices are averaging an all-time high. Qatar’s gas production has increased substantially in last few years and the country’s inflation, as measured by consumer price index (CPI) was 2.6 percent in December 2012.

But the question keeps arising: should Qatar not reconsider its long standing dollar peg to avoid any economic trouble ahead of any new turbulence in global financial markets?

This question becomes even more pertinent considering fellow GCC member Kuwait chose to drop the dollar peg and instead pegged its Dinar against a basket of currencies in 2007, to fight rising inflation and in anticipation of the much-touted but now delayed Gulf-wide Khaliji currency.

Plans of a single currency

within the GCC countries have been stalled and until further progress is made towards launching a single gulf currency, the dollar peg continues to favour Qatar.

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fixed income markets will grow at a mild to high growth rate in 2013.

A significant majority of survey respondents see the financial community playing a vital role in the region’s economic growth and consider the sector’s contribution to be highly significant. Two thirds of respondents believe the development of domestic local currency bond markets across the GCC is an important fundraising tool for sovereigns, corporates and institutions.

Survey questions posed to delegates reflected some of the key themes of discussion at the S&P Leaders’ Forum, which focused on the financial community’s role in driving sustainable economic development. Topics of discussion included financial inclusion and job generation; strategies for aligning investment strategies with market needs; productive approaches for tapping capital markets and cross-border investment.

“The survey results confirm the important role of capital market development,” said Stuart Anderson, managing director and regional head Middle East at S&P. “Greater access to both domestic and international capital markets will be key to achieving the next phase of growth for Gulf corporations and meeting massive funding requirements for the region’s infrastructure projects. The survey also reveals the appetite of the financial community to further improve the region’s capital market infrastructure and raise standards to global levels in partnership with the international financial industry.”

The majority of respondents believe improved corporate governance is the most critical requirement for establishing the GCC as a highly desirable investment destination. Aggregating or merging regional exchanges and listing more investment opportunities in oil and gas respectively are the second and third most recommended measures. The need for sufficient cash liquidity and upgrading to emerging market status complete the top five recommendations.


A substantial proportion of the GCC financial community feels that more participation from international financial firms is critical for the further development of the region’s financial industry.According to a survey conducted recently by DNM Connect among delegates attending the third Standard & Poor’s (S&P) Leaders’ Forum held in Abu Dhabi, as much as 81 percent of survey respondents believe that ‘significantly more’ or ‘some more’ participation from international financial firms is vital for the region to deepen its capital markets, develop its asset management industry and private pension funds, and meet its massive requirements for infrastructure funding.

Despite two-thirds of respondents rating the global competitiveness of the GCC financial sector as average and a quarter rating it low, 94 percent consider it important or very important for the sector to be able to compete globally. The survey revealed optimism about the growth of key capital market sectors, with more than 73 percent confident that regional and local

Dheeraj Shahdadpuri is a financial analyst currently based in Dubai in the United Arab Emirates.

GCC Markets

Experts: Global Participation in GCC Critical

The percentage of regional executives confident that GCC regional and local fixed income markets will grow at a mild to high growth rate in 2013.

73%“Greater access to both domestic and international capital markets will be key to achieving the next phase of growth for Gulf corporations and meeting funding requirements for the region’s infrastructure projects,” says S&P regional head Stuart Anderson.

The answer for Qatar is not simple. If the global economy continues to prosper from now onwards, then it would be worthwhile to see how the dollar fares in international financial markets. On one side the Federal Reserve will be tempted to increase its benchmark interest rates but with increased risk appetite, demand for the US dollar might decline as investors would be chasing relatively riskier assets. The Qatar Central Bank will also be required to increase its interest rates to match that of the US. This might erase some liquidity from the markets and may be slightly detrimental to Qatar’s economic progress, though this could be equally matched through fiscal spending programmes.

The choice of dollar peg comes down to a point where merits of such a system are to be weighed against its ills given the current and expected economic circumstances, which has so far seemed to work for Kuwait but could be different for Qatar.

By shielding the domestic currency from volatile swings in global financial markets, governments can reduce the likelihood of a currency crisis. And for a hydrocarbon exporting country such as Qatar, any unforeseen and wild fluctuation in currency markets in the international markets could impact its economic ambition.

In order to maintain some level of certainty to its income stream, the impact of imported inflation has to be addressed. Furthermore, the regional policymakers have also time and again highlighted that the choice of dropping the dollar peg will be taken collectively, which will also to some extent pave a way for launching a common regional currency. But given the recent situation in euro area and the disadvantages of a common currency (the Euro), which the world is witnessing, plans of a single currency within the Gulf Cooperation Council countries have been delayed. And until further progress is made towards launching a single gulf currency, the riyal-dollar peg continues to unanimously favour Qatar.

The Edge | 25

gas, which Qatar possesses in abundance, into liquid-based hydrocarbon fuels such as diesel or petrol via a refining process. The refined products are more easily transported to global markets than gas, and have a higher sales value.

The Pearl GTL plant, in Ras Laffan industrial city in Qatar is the largest such project in the world. The plant’s second train ramped up to full-scale production towards the end of last year, and as a result, the GTL sector is expected to support

Contents: Qatar’s innovative GTL aviation fuel makes its debut 25 . Qatar oil and gas growth to remain flat in 2013 26 . Qatar’s Opportunities in water and waste water treatment and offshore projects 27 . QU and Oryx emissions agreement 28.

energy & sustainability

atar is looking to its burgeoning gas-to-liquids (GTL) businesses to drive growth across the

wider economy through 2013 and to help diversify the nation’s energy sector throughout the rest of the decade. The sector’s potential for the country was exemplified early in January, when Qatar Airlines (QA) operated a commercial Airbus A340-600 flight using GTL fuel from Doha International Airport for the first time, to London, United Kingdom.

The new GTL fuel for the flight, produced in Qatar by energy giant Shell and Qatar Petroleum (QP), was the first of its kind to be approved globally for more than 20 years. Qatar is attempting to drive growth in the GTL sector through a number of recently completed and newly announced projects, with investment of QR90 billion planned up until 2020 in the chemicals and petrochemicals field, which includes a number of GTL projects.

GTL is the act of converting natural

Taking to the skies: A new era for Qatari GTL?

In early January, Qatar Airways operated the first commercial Airbus A340-600 flight from Doha to be fuelled by the gas-to-liquids (GTL) process. (Image courtesy Qatar Airways)

A number of prominent projects have propelled the gas-to-liquids field to the forefront of Qatar’s energy industry, just as the state looks to the sector to drive new growth. The Edge Energy and Sustainability Sector editor Jamie Stewart reports.

26 | The Edge

sectors | energy & sustainability

growth in Qatar’s energy sector despite the scheduled completion of all large oil and gas projects.

According to Qatar National Bank (QNB Group), growth in Qatar in 2013 – despite the overall rate across the economy slowing – will be due to higher GTL production. “Oil and gas growth is forecast to pick up marginally in 2013, to 2.8 percent, owing to higher oil and liquefied natural gas output and a full year of Pearl GTL operating near its rated production capacity,” the bank stated.

In mid-January Doha played host to the first World GTL Congress, a three-day event that reflects the importance being placed on the sector at the very top in Qatar. QA chief executive, Akbar Al Baker, the man behind the airline’s innovative push to produce environmentally friendly jet fuel via GTL processes, addressed the conference.

“Qatar Airways began this journey five years ago with the aim of ensuring not only energy security and sustainable growth for our airline, but for the industry at large,” Al Baker said.

“Since then we have moved from a concept on paper to the commercial supply of GTL fuel at the Hamad International Airport which will open its doors later this year, providing all aircraft that land with the facility to refuel with GTL jet fuel,” he added.

On the commercial side, Doha is looking to drive its burgeoning new industry through the establishment of Muntajat, a chemical and petrochemical marketing and distribution firm, as reported last month in The Edge. Launched at the end of December, Muntajat holds the rights to purchase, market, distribute and sell Qatar’s production of chemical and petrochemical regulated products to the international market place.

Fully approved for use as an aviation fuel, the GTL jet fuel is a blend of up to 50 percent GTL Synthetic Parafinic Kerosene (SPK) meeting the stringent requirements of ASTM-D-7566 and conventional crude oil-derived standard jet fuel (Jet A-1).

“The production of GTL jet fuel is a great achievement for Pearl GTL and Qatar,” said HE Mohammed bin Saleh Al Sada, chairman of the board of Muntajat and Minister for Energy & Industry, chairman & managing director of QP. “GTL jet fuel will be supplied into the wider jet fuel pool at Doha International Airport enabling the State of Qatar to enjoy the benefits of this product. It is indeed an historic moment for Qatar that the first aviation fuel to be approved globally in the last 20 years originates in Qatar”.

The new Qatar Airways

GTL aviation fuel that was produced in Qatar is the first to be approved globally in 20 years.

Hydrocarbon sector

Qatar oil and gas growth to remain ‘flat’

The growth of the Qatar economy is set to slow in 2013 due to the completion of all large oil and gas projects, combined with a downward revision in oil price forecasts, according to a major financial institution.

HE Mohammed bin Saleh Al Sada, chairman of the board of Muntajat and minister for energy & industry, chairman and managing director of Qatar Petroleum has hailed the development of Qatari GTL jet fuel as an aviation coup for Qatar.

Qatar’s oil and gas sector will experience a slowdown in 2013, with the next major project, Barzan, a joint LNG venture between Qatar Petroleum and ExxonMobil Qatar set to be operational within the year.

Qatari oil and gas sector growth predicted by Qatar National Bank for 2013.

2.8%

The Edge | 27

energy & sustainability | sectors

The forecast of gross domestic product (GDP) growth, released by Qatar National Bank (QNB Group) last month, pegged growth for the economy at five percent in 2013, down from a revised prediction for 2012 of 6.1 percent.

The 2012 prediction was revised upwards from 5.6 percent, QNB Group said, to take into account new data for the third quarter of that year released by the Qatar Statistics Authority in early January.

The next major project to come online in the oil and gas sector will be the Barzan gas project. The scheme will be completed in two phases, with train one due to become operational in late 2014 and train two expected to follow in 2015.

The first phase of the QR37.8 billion Barzan gas development project being implemented as a joint venture between Qatar Petroleum and ExxonMobil Qatar, will be operational by the end of 2013, according to an official related to the project.

“Until then, only small increases in oil and liquefied natural gas (LNG) production will be possible through operational efficiency gains,” QNB Group stated.

The slowdown has long been expected. Indeed, because of the lull in the completion of new projects, the sector so vital to Qatar’s overall economic strength will become less of a driving force for growth.

QNB Group added that Qatar’s non-oil and gas growth rate “remains high by both regional and international standards.” The bank said that oil and gas growth is forecast to pick up “marginally”, due to higher oil and LNG output. However, growth is expected to be flat in 2013 as average oil prices are forecast to ease to US$108 (QR393) in 2013, compared to US$111 (QR404) in 2012.

The predicted rebalancing of the economy away from a heavy reliance on oil and gas is good news for Doha. Data released by the World Bank show Qatar’s GDP began to shoot up in 2004 as oil and gas exports increased, with a single year-on-year contraction in 2009 because of a decline in global demand for Qatar’s primary exports following the financial crisis (see graph).

A shift towards stronger growth in the non-oil and gas sectors is therefore essential for business in Qatar to grow on a sustainable footing. Qatar’s non-oil and gas growth rate will “successfully drive the economy during the coming years,” QNB Group predicted.

Opportunities are increasing offshore for Middle East oil and gas sector contractors both in the water and waste water treatment and offshore oil and gas contracts. (Getty images)

Opportunities abound emerging for Qatar firms going into 2013 and beyond, and water looks set to be the key in more ways than one. Qatar-based companies involved in sustainable water technologies are seeing huge opportunities open up before them driven by significant growth in the food industry, according to a top consultancy.

And water technology is not the only booming area within the energy and sustainability sphere for local businesses, with regional contractors set to cash in as

Gulf-based oil and gas giants increasingly shift from onshore to offshore projects, a local investment banking group has also said.

Qatar is one of four Middle East and North Africa (MENA) countries listed by consultancy Frost & Sullivan in January as hosting growing business opportunities for water technology companies.

“Proliferation in the food and beverage industries, inclusive of production units for juice, dairy products, oil processing, canned fruits, and vegetables, has led to implementation of sustainable water management practices,” Frost & Sullivan environment programme manager Kshitij Nilkanth said.

“Within the MENA, the Kingdom of Saudi Arabia, Egypt, Qatar, and the United

Water and Offshore Sectors

Qatar growth opportunities

Source: World Bank

28 | The Edge

sectors | energy & sustainability

The Qatari energy industry and academia have joined forces on a project to capture carbon from the flue gas of power plants. Qatar University (QU) and energy firm ORYX GTL will work on the project, according to a deal signed in mid-January. Work will take place at a simulated natural gas-fired power plant at QU’s gas processing centre (GPC).

The scheme, described as vital for the future of Qatar’s gas industry, will test a range of chemical solvents to discover which is most effective at capturing carbon.

GPC director Abdelwahab Aroussi said the agreement “will provide our students with knowledge and skills to meet Qatar’s needs for professionals in this field”.

Qatar has ratified the Kyoto treaty, which limits the volume of carbon that signatory nations can emit, although Doha is yet to put in place a specific target. However the treaty carries weight internationally and Qatar is highly reliant on gas-fired power plants for electricity generation, which emit significantly amounts of carbon. If Doha can drive forward the project, it could limit its own emissions while exporting the technology globally.

Carbon Capture

QU and Oryx GTL to help cut gas emissions

Arab Emirates are experiencing significant growth in the food industry, including meat production, thereby opening up huge opportunities for water technology companies,” Nilkanth added.

MENA countries rely on imports to meet at least 50 percent of food requirements – a very high figure relative to the globe – because of a lack of arable land in the region.

But an increasing exposure to global food prices has led governments to review food security in terms of food sovereignty, which translates to meeting demand from domestic sources as far as possible.

With food security high on the agenda, best practice in areas such as water recycling is expected to become the norm in coming years, Nilkanth said, opening the door to companies that can advise on and provide services in that field.

The inevitable knock-on effect is that this need will drive improvements in water recycling technologies in countries that have a need to boost domestic food production to satisfy growing populations while maintaining economic growth, such as Qatar.

And such opportunities look set to remain well beyond 2013. Frost & Sullivan said in a statement in January that it forecasts “rapid growth” for the MENA water and wastewater treatment market in the food and beverage industry.

“This will further result in industrial customers approaching water specialists to improve operational efficiency and successfully meet stricter environmental standards,” the statement said.

A second growth area, and one no less related to water, lies behind a Gulf-wide shift on the part of the upstream oil and gas sector towards offshore projects.

Regional banking group Mashreq stated in mid-January that this increasing focus in offshore will benefit regional contractors, with 45 projects on going in mid-January – two more than the peak level recorded in 2008, before the global economic slowdown slashed energy demand.

“Output from oil and gas projects in the Gulf contributes significantly to the GDPs [gross domestic products] of countries in the Gulf Cooperation Council [which includes Qatar],” corporate and investment banking group head Julio De Quesada said. “This new focus on offshore production should be a boost to the continuing economic development of the region.”

According to Pennwell Corporation, which hosted the Offshore Middle East

Officials from Qatar University and ORYX GTL sign the memorandum of understanding in mid-January (Qatar University)

Jamie Stewart is a freelance journalist and oil and gas industry researcher and analyst based in the United Kingdom.

Oil producers are turning

offshore in search of oil and gas to boost production because technological advances have significantly brought costs down.

2013 conference in Qatar at the end of January, one of the most important challenges facing the offshore oil and gas industry is access to modern technology.

The shift offshore has attracted interest across the region from new entrants to the market capable of providing equipment, products and services to the offshore sector, alongside the more established global contractors, Mashreq said.

In a recent report, researcher MEED Projects said that oil producers are actively turning offshore in search of oil and gas to boost production because technological advances have significantly brought costs down.

As a result, the region now accounts for a “significant proportion” of global platform and pipeline contracts, Mashreq said.

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The Edge | 31

Contents: Online real estate portals 31 . Commercial market in Qatar 32 . Lack of affordable residential units 33 . Cityscape Qatar 34. Qatar to upgrade roads 34

real estate & construction

Online real estate portals Prior to that time, soon-to-be Qatari residents needed to be on Qatari soil in order to get a decent sense of what was available in the market place. Even when a person was physically in the country, the process of finding a suitable location (be it a home or office space) was a time consuming process as one had to visit several real estate agents and firms to collect data on listings. As was often the case, a visit to the actual property listings would be necessary, since images were not as frequently catalogued as it is today.

By the time a prudent property seeker would collect the necessary data and visit the properties of interest, there would be a good chance that the inventory collected would be out of date. The local general consensus

How has online real estate listings changed the industry in Qatar? Khalifa Al Misnad reports.

T he online world of real estate was a slow bloomer in Qatar, and the region compared to other parts

of the world such as North America and Europe. What used to be a very difficult and cumbersome process for companies and individuals to find property in Qatar, is now immensely relieved with more real estate brokerages adopting to take their property listings virtual.

In 2008, very few real estate firms had a website, and of those firms that did, the websites did not provide a platform for visitors to view active real estate listings.

several years ago was that an online real estate portal could not be justified in our market, especially in light of how quickly properties were turning over in Qatar during that time period.

Qatar’s real estate market has matured significantly in the past five years, especially with regards to the tools being provided to potential renters and buyers in the market. What used to be a market dominated by unregulated freelance real estate agents,

The percentage of Qatar’s Internet users in 2012.

86.2 %

32 | The Edge

Qatar today boasts a number of credible firms that are investing in the customer experience, especially with regards to the web. Coreo’s online real estate platform (www.mycoreo.com) is an example of a website of a real estate brokerage that started, and based its existence on the online real estate movement in Qatar towards the end of 2008. Coreo’s business model was in large part focused on providing users the ability to search online active real estate listings in Qatar, and its success as a firm for its online focus heavily speaks to the need that was present for such a platform. The fact that the majority of residents in Qatar come from abroad, most property seekers will start their property search online before even landing in Qatar.

Furthermore, 20.7 percent of Qatar’s population were Internet users in 2005, which has grown to 86.2 percent in 2012, making the need for firms to adopt online listings more of a business necessity than a customer luxury. Now that renters and buyers can surf the web from the comfort of their living room couch to collect most of the property information they need, they are able to make better and quicker decisions as to how to fulfill their needs. Easier access to property information and imagery also has the positive effect of increasing transparency and instilling confidence in the market. The real estate industry’s adoption of sharing property inventory online is just the beginning of the integration of real estate marketing and technology. Although a late bloomer, Qatar’s real estate firms have rapidly caught up with the West. In an active and up-and-coming real estate market such as Qatar, it is vital that property related information is more readily available to not only streamline the process, but also provide confidence in the market.

Office Space

Commercial market in Qatar

sectors | real estate & construction

Khalifa Al Misnad is the director of Coreo based in Doha, Qatar.

The total office

supply in Doha is approximately 3.6 million square metres, and more than 30 new office towers are under construction.

100

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West Bay Airport road

C-Ring D-ring Al Sadd Grand Hamad

St.

Salata

Office rents in Doha(Price range in QR - per sq.m./month)

High demand in 2013 for commercial space says Mirco Alexander Maurer.2012 was a good year in the commercial real estate market, and current signs show an even higher demand for commercial space. The main requests are for commercial land, to build new offices and mixed-use towers, hospitals, shopping malls, logistic centres and other commercial properties. Also the demand in the infrastructure sector is positive, since professionals from the engineering and construction sector are coming to Doha and requiring office areas. Thereby, the number of new commercial office buildings rises continuously, currently the total office supply in Doha is approximately 3.6 million square metres (sqm2) and there are more than 30 new office towers under construction, which will be completed within 2013 and 2014.Many of the towers are offered for rent to one client or floor-by-floor, while the demand still remains high on smaller areas. Engel & Völkers has witnessed that governmental and semi-governmental are taking huge spaces, especially in the oil and gas industry. We are not certain, which other industry could take such huge spaces of 10,000 sqm2 upwards. Of course, the banks are as well having a huge demand, for example we have seen Doha Bank, Qatar International Islamic Bank and others building their own towers.

million square metres. The total approximate office supply available in Doha, and 30 more new office towers under construction.

3.6

Source: Engel & Völkers

The Edge | 33

real estate & construction | sectors

Rent Inflation

Lack of affordable residential units Aziz Sharif discusses the lack of affordable one to two bedroom apartments in Qatar.In a recent interview with the Gulf Times newspaper, Ananthakrishnan Prasad, the International Monetary Fund mission head to Qatar said “there is an oversupply in high-end luxury housing segments and an undersupply in affordable housing”.

Property in Qatar is a constant source of discussion and endlessly confusing, but if you understand the patterns and the reasoning behind the rental property market, then you are on your way to making more wise decisions. Qatar’s property market is essentially a study in behavioural finance, and two distinct traits can be observed.

The less obvious trait is what is known as Gambler’s Fallacy, where an investor erroneously believes that the onset of a certain random event is less likely to happen

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Rent movements in 1&2 bed fully furnished

Mirco Alexander Maurer is the managing director at Engel & Völkers based in Doha, Qatar.

following an event and or a series of events. Although past events do not necessarily affect events in the future. For example, building high volumes of luxury housing after the market contracted believing that unhindered growth will follow. The second trait is oligopolistic behaviour – competitors follow each other in raising prices but not in dropping them. This phenomenon is especially evident in the one to two bedroom flat segments, where demand has been on the rise. Company housing provisions have largely cushioned the dynamics of the high-

end segment of the market; however, the market in question is the middle field, where rents currently range between QR5500 to QR12,000 per month. There is a perceived sense of substantial undersupply that leads to a feedback loop, which results in rising prices promoting rental inflation. The medium term effect of this will be an oversupply like we experienced in 2009 to 2010 when rental rates contracted. The combination of these two behavioural characteristics results in the pattern of steep prices rises followed by a slower substantial fall of these prices led by

Due to the development of the new Hamad Airport and the Port in Wakra, the demand for office space on C and D-Ring and Airport Road is higher than in Westbay. Salata Area seems to be more interesting for companies nowadays as new buildings are getting rented on average for QR130 sqm2 with the potential to increase in the coming months. However, the highest rates are still in West Bay at approximately QR225 sqm2 and above.

Source: Mannzili

The highest commercial space rates are still in West Bay at QR225 per sqm2 says Mirco Alexander Maurer, managing director of Engel & Völkers

34 | The Edge

Qatar’s roading sector will witness a sharp increase in contract awards in 2013 as the government initiates a major infrastructure upgrade of the country’s road network. Qatar and Saudi Arabia has once the region’s busiest road markets to date, with contracts valued US$1.8 billion (QR6.5 billion) currently awarded.

The country’s roading market in 2012 has been propped up by two major awards, the US$640 million (QR2.3 billion) deal awarded to the United Arab Emirates Al Jaber Group for package 13 on the Doha Expressway and US$961 million (QR3.4 billion) awarded to South Korea’s Hyundai Engineering and Construction for the Lusail Expressway. According to MEED Projects spending on future projects will increase in 2013, as more than 30 highway projects, valued at US$27.5 billion (QR100 billion), are awarded.

Infrastructure

Qatar road upgrade valued at QR100 billion

Aziz Sharif is managing partner of Mannzili based in Doha, Qatar.

Qatar has weathered the downturn better than many economies around the world. In the years prior to Qatar’s World Cup 2022 bid, the government had embarked on ambitious real estate, construction and infrastructure projects. Following the success of that bid, Qatar has introduced more than US$100 billion (QR364 billion) in new projects, many of which are already underway including residential, commercial, retail, and hospitality developments. Cityscape Qatar, backed by industry leaders, is an event that intends to support this continued real estate growth by providing a platform that will highlight high growth investment opportunities, showcase innovative products and underline sustainable developments. the event that runs from May 27to 29, will serve as a platform to bring together international, regional and local investors, architects and designers, real estate developers, governmental authorities and senior executives involved in the design and construction of public and private real estate developments from Qatar and internationally.

Real Estate Event

Cityscape Qatar takes place for the second time in 2013

US$640 million

(QR2.3 billion) deal awarded to the United Arab Emirates Al Jaber Group for package 13 on the Doha Expressway.

an increased supply of units built in light of a perceive limitless growth in demand from a growing richer expatriate population. The increased supply can notice in areas such as Al Sadd, Ibn Mahmoud and Al Muntaza. If you look at the demographics of the one to two bedroom flat segments you will find that single expatriates and young families mostly drive the demand. The question must be asked, how much is an expatriate willing to spend on rent in a country where they came to accumulate savings?

Innovate Qatar NEW.pdf 1 1/28/13 9:57 AM

The Edge | 37

The corporate website is an often overlooked facet of communications, filled with outdated content and bad design. Could it be costing your organisation money? By Shehan Mashood

W ith all the hype and excitement still surrounding Facebook, Twitter and other social media

applications it can be easy to forget the corporate website. And while social media allows a two way interaction between organisations and customers, there is no better place on the web to establish the company’s brand and reputation than the corporate website. At least that was the take away message from a recent seminar titled ‘Success in Digital Investor Relations’ that was held recently at the St. Regis in Doha.

According to an annual survey conducted in the region by M:Communications and KWD Webranking, their review of corporate websites across the region based on requirements of the investment community has some interesting findings. It revealed that an increasing number of companies are using online channels to communicate with their shareholders, such as disclosing financial reports and information on corporate governance. “Corporate websites have become the first stop for anyone seeking information about a specific company,” said Nicholas Lunt, managing director of M:Communications, the company that conducts the survey in the region each year. The survey of opinions from close to 300 leading global investors

Contents: Are you making the most of your corporate website? 37 . Personal devices and the bandwith burden 39 . Solving Qatar’s customer service problem 40 . Applications for SMEs 40

tech & communications

Are you making the most of your corporate website?

38 | The Edge

sectors | technology & communications

and analysts showed that the main areas of interest of corporate websites were market information, strategy and growth drivers.

“We are delighted to have been involved with this year’s event,” said Abdul Aziz Al Emadi, director, listing department at Qatar Exchange, “Qatari listed companies are committed to the development of investor relations best practice, especially through digital communications. It is the future for communicating with shareholders and stakeholders alike.”

While some of the largest organisations in the country seem to understand the importance of a corporate websites, the rest of Qatar seems to be lagging somewhat behind. According to an ictQatar report, only around 19 percent of public and private companies have a web presence. All government entities on the other hand had websites as of 2010, and 91 percent of those with multilingual support.

A keynote speaker at the event, Oscar Diaz Canel, head of investor relations at BBVA, a global financial group noted that “following the financial crisis there has been a greater demand for transparency from investors. It is important to use digital media to convey messages quickly and effectively to those concerned, and any company that wants to compete on an equal footing for international investor attention needs to address good online communications.”

“Qatari listed companies are committed to

the development of investor relations best practice, especially through digital communications.” – Abdul Aziz Al Emadi, director, Qatar Exchange

Web presence among Qatari businesses

Company information disclosure on the Internet

SME Large Enterprises Total

Source: Qatar’s ICT Landscape 2011.


1% 8%

10%

81%

Website available in Arabic only

Website Available in Arabicand atleast one other language

Website available in languageother than arabic

Do not have a Website

Low Neutral High

30%

12%25%18%

17%

58%

70%

17%

53%

Web presence among Qatari businesses

Company information disclosure on the Internet

SME Large Enterprises Total



1% 8%

10%

81%

Website available in Arabic only

Website Available in Arabicand atleast one other language

Website available in languageother than arabic

Do not have a Website

Low Neutral High

30%

12%25%18%

17%

58%

70%

17%

53%

1

3

5

2

4

Aamal Company

Al Khalij Commercial

Bank

Commercial Bank of Qatar

QatarTelecom

QatarNational Bank

The top five ranked corporate web-sites in Qatar based on requirements of the investment community.

Source: KWD Webranking according to requirements by investment community.

The Edge | 39

technology & communications | sectors

Personal devices such as smartphones and tablets are affecting the performance of office networks due to the rich content they serve, writes Shirley O’Sullivan, vice president of marketing for a network optimisation firm.Since 2009, more than a billion Apple and Android devices have been sold, and their use has slowly filtered into the workplace, giving rise to the term ‘bring your own device to work’ (BYOD). These devices consume a significant amount of network bandwidth, crowding out other applications on office networks. Data caps on cellular network and home broadband connections mean that a disproportionate amount of this activity takes place on the corporate network. Most business do not yet have the tools to see or control activity from these devices on the corporate network, and without effective traffic management tools, information technology operations is just along for the ride with BYOD.

It is clear the BYOD culture is going to have a growing impact on network capacity and business applications. If network administrators do not take action to gain visibility and control over BYOD traffic then business operations and profitability will be impacted.

BYOD adoption has increased 15-fold since 2009 with 1.02 billion devices expected to be used in the workplace by the end of the year. According to the

recent Global Mobility Study conducted by IDG Research Services, 71 percent of employees report that they access the corporate network with their personally owned smartphone. The additional bandwidth burden these devices place on the network can range anywhere from 4GB to more than 200GB in a given month.

What can businesses do?Like corporate issued laptops, mobile

devices are used at work for recreational activities. However, because BYOD devices are not inventoried or issued by companies, many IT departments have no idea how many devices are on their network, what applications they are using or how much bandwidth they are consuming. More importantly, they have no way to control the impact of these devices on the network.

To contain the impact these devices have on the corporate network, businesses can begin by increasing visibility on office networks. Real-time view of all application and web content on the corporate network provides visibility into BYOD-driven traffic from millions of rich content sites and hundreds of enterprise applications. Using Quality of Service (QoS) policies will enable network administrators to limit BYOD downstream and upstream traffic to a manageable portion of network capacity, enabling bursts when bandwidth is not needed by higher-priority business applications.

Tablet devices can cause immense strain and bottlenecks on office newtorks.

Network Optimisation

Personal devices and the bandwith burden

Shirley O’Sullivan is vice president of marketing for EMEA at Blue Coat Systems, a company that provides web security and WAN optimisation solutions.

The percentage of employees who report that they access the corporate network with their personally owned smartphone.

71%

40 | The Edge

A great way for small and medium enterprises to develop an edge over their competitors is to use web based applications to help them operate more efficiently and cost effectively than before.

MailChimpThis application allows you to manage all the email campaigns sent from your organisation, it allows you to send newsletters to imported contact lists. It also allows you to track analytics to see how effective your campaigns were.

EventbriteOrganise your own corporate events. Eventbrite is an application for managing event registrations. It allows you to create an event, share and promote, and even set ticket prices if necessary.

ElanceIs an online application that allows clients to hire freelancers to complete a job. The online collaboration tools remove the need for physical proximity of labour, allowing you to work with anyone around the world. Payment is handled through the Elance website.

Survey MonkeyThis is a simple tool that is great for conducting market research or surveys online. Simply add your questions and send them to a mailing list that will return all the data once completed. In addition to generating its own summary, the application allows you to export the results.

YammerThis inventive application based on social media networks works as a means of private communication for organisations. Communication between co-workers is much more streamlined than via e-mail, and aided by collaboration tools.

sectors | technology & communications

Could mobile self-service apps be the key to solving customer service issues? By Shaheen Haque, a call centre technology solutions expert.Qatari businesses tend to look at customer service as a cost to the company, when in reality its contribution to overall customer satisfaction is paramount. Providing frustration free support services and resolving complaints in the most efficient possible manner can play a significant role in customer retention.

But beyond the bounds of a direct help line, businesses in Qatar have now begun to ramp up their online services. For instance, banks and financial services firms commonly provide account access via mobile devices. However, these organisations, which are so keen to connect with the modern customer through these new channels, often completely overlook the customer service aspect.

The rapid advance of smartphones and the development of mobile applications have opened a new avenue for communicating with customers and provides a way to serve customers better and develop more lasting relationships – if done correctly. Many organisations however, are struggling to determine how best to use these new tools to their advantage, and provide their customers

Web tools

Applications for SMEs

Mobile apps

Solving Qatar’s customer service problems

Many local banks offer online banking services, however unique customer solutions such as Barclays’ Pingit application launched in the United Kingdom allows users to transfer money to their phone contacts. Such inventive customer touch points are missing in the local Qatari market.

with a capability that works well, and adds value.

Businesses must make a fundamental shift in their attitudes, focusing on the customer’s needs and providing capabilities to help them do what they want to do rather than making an objective of deterring them from calling service agents.

The Importance of integrationThe key to excelling at customer service

is to integrate all customer touch points. When the customer calls, agents have access to all the information pertaining to that customer and what they have been through, allowing the agent to help resolve the issue quickly, and the customer is spared from having to repeat the same information.

A study conducted by Ventana Research on behalf of Interactive Intelligence reports that the original purpose of self-service systems – the avoidance of calls to customer service personnel – may be realised through the deployment of applications designed to keep the user in mind.

To cater to the mobile customer, companies in Qatar need to deploy a complete mobile platform that allows them to build constant improvements into their customer service capabilities. Customers are going mobile and they are going social, but they still expect an exemplary service experience. This is where customer service needs to be.

Shaheen Haque, is territory manager for the Middle East at Interactive Intelligence, a call centre technology solutions provider.

The EDGE ad-03.pdf 1 1/31/13 4:36 PM

42 | The Edge

country focus | united kingdom

Erika Widén spoke with Michael O’Neill, recently appointed British ambassador to Qatar, about the deep-rooted bilateral relations between both nations.

T he British government first established a permanent presence in Qatar in 1949, when the first

political agent, John Wilton was appointed. A political agent is an official appointed by the British government to act as an advisor to the ruler of the protected state. Qatar was a British protectorate until 1971, when it declared its independence from the British Empire, and become an independent sovereign state.

As Qatar’s population and economy grew, it became clear that the Political Agency building could not accommodate the expanding British presence, Michael O’Neill, the new British ambassador to Doha tells The Edge. Therefore, in 1963 the Political Agency relocated to a new site in

Qatar and UK: Strong Mutual Investment

Rumeila, and in 2008 the British embassy relocated to the West Bay Diplomatic Area. The British Embassy in Qatar also represents 10,000 commonwealth nationals whose countries do not have an embassy or consular representation in Doha. In 1992, the Qatar British Business Forum (QBBF) was established to support bilateral and trade relations. Currently the QBBF has more than 400 members.

“There is a long historical connection between the United Kingdom (UK) and Qatar, there has always been a British community here and that has grown much larger. I have met people who have been here for 20 to 30 years that say when they arrived there were 2000 to 3000 British people here. Now, there are more than

15,000,” says O’Neill.At present, there are 160,000 Britons

residing in the Gulf Cooperation Council. The United Arab Emirates (UAE) hosts the largest British community of approximately 100,000, Saudi Arabia 25,000, Bahrain 7000, Oman 7000 and Kuwait 6000. The main employment sectors for British nationals in Qatar include engineering, construction, oil and gas, education, and the financial sector.

Qatar is the UK’s third largest export market in the Gulf region, after the UAE and Saudi Arabia, and the fifth in the Middle East and North Africa region, after the UAE, Saudi Arabia, Turkey and Israel.

According to the Qatar based British embassy records, the value of UK goods

The Edge | 43

united kingdom | country focus

“Most of Qatar’s exports are gas and that is hugely important for our energy

supply and security, but there is also a very big investment relationship.”– O’Neill, British Ambassador to Qatar

exported to Qatar rose from GBP363 million (QR2 billion) in 2005 to GBP1.4 billion (QR6.5 billion) in 2011. The figures in 2011 indicate a 14 percent increase from 2010 from GBP990 million (QR5 billion).

The value of Qatari goods imported into the UK in 2011 reached almost GBP4.8 billion (QR27 billion). The overall value of bilateral trade in goods increased by 82 percent from GBP3.2 billion (QR18 billion) in 2010 to GBP5.9 billion (QR34 billion) in 2011. In 2011, the UK exported services of value of GBP569 million (QR3.2 billion), an increase of 10.7 percent from 2010.

“The value of bilateral trade in goods both exports and imports with Qatar between January and September 2012 is currently at GBP3.69 billion (QR21 billion),” continues O’Neill. “Most of Qatar’s exports are gas and that is hugely important for our energy supply and security, but there is also a very big investment relationship.”

According to O’Neill, Shell is the largest foreign investor in Qatar, followed by Vodafone. Shell is an Anglo-Dutch company with a joint venture with Qatargas, and is currently building two of the largest projects in the world with Qatar Petroleum in Ras Laffan Industrial City. Moreover, Shell has established a world-class research and development facility and a learning centre at the Qatar Science and Technology Park (QSTP). “We call this facility the Qatar Shell Research and Technology Centre and we are committed to investing up to US$100 million (QR364 million) on programmes there for more than 10 years,” states Shell in Qatar. In addition, QSTP has a number of important collaborations with UK companies and institutions such as Imperial College London, Williams F1, Sheffield University, Virgin Health Bank, and Rolls Royce.

Vodafone is a British leading international mobile communications group, which in 2008 received a license to operate in Qatar in partnership with Qatar Foundation.

O’Neill adds that UK businesses have a significant presence in the financial, business, and legal services sector such as Barclays, Clyde & Co, Ernst & Young, Eversheds, HSBC, KPMG, PwC, RBS, Coutts, SNR Denton, Simmons & Simmons, and Standard Chartered to name a few.

“Also Sherborn School opened its doors in September 2009 as part of Qatar’s Outstanding Schools Initiative. University College London has a campus in Education City, the first British

university to do so,” continues O’Neill. “Other important UK investors in Qatar include major companies in security, construction, education, retail, energy and transport infrastructure.”

Additionally, Qatar’s government has also invested heavily in recent years in the UK. The total of GBP20 billion (QR115 billion) government funded include stakes in Sainbury BAA, London Stock Exchange, Barclays, the United States Embassy building in Grosvenor Square, and the Shard development in London. According to the British Embassy records, there are plans for an additional GBP10 billion (QR57 billion) worth of investments in the near future. In 2011, Qatar purchased the Athletes Village in the Olympic Park and the Shell Centre in London. “Qatari Diar, the direct property investment arm of the Qatar Investment Authority opened a London office at the beginning of 2010,” adds O’Neill.

Consequently, continues O’Neil, “we have witnessed a significant increase in bilateral visits over recent years. The highlight was the State visit of His Highness Sheikh Hamad bin Khalifa Al Thani and Her Highness Sheikha Moza bint Nasser Al Missned to the UK in October 2010.”

Her Majesty the Queen opened the South Hook Liquefied Natural Gas (LNG) Terminal in Wales recently, which is where most of Qatar’s LNG arrives in the UK. “The relationship is very strong politically, commercially in human terms and at senior levels. The Prince of Wales for instance as been a regular visitor to Qatar.”

In 2012, the British embassy in Doha processed more than 30,000 visa applications, which is a 22 percent increase from the previous year. Roughly two thirds of the applicants were Qataris. “We also received 2300 Qatari applications to study

Government: Hereditary and Constitutional

monarchy, Parliamentary system,

Unitary state

Capital: London

Population: More than 62 million

GDP: US$2.432 trillion in 2011

(QR8.8 trillion)

UK AT A GLANCE

Michael O’Neill, British ambassador to Qatar discusses with The Edge how he thinks the UK can assist Qatar towards the National Vision 2030.

44 | The Edge

country focus | united kingdom

BUSINESS TRAVEL INSIDER: Manchester, Uk

GETTING THERE:Qatar Airways (www.qatarairways.com) flies to Manchester daily. An economy return fare in March costs from QR4010, or QR16,290 in business class. The flight time is around seven hours.Currency: Pounds sterling. GBP1 = QR5.8 (exchange rate as of January 2013)

WHERE TO STAY:Radisson Blue Edwardian Manchester (http://www.radissonblu-edwardian.com) Located in a historic building in the centre of the city, this luxury hotel combines character with all modern comforts. Its bars and restaurants are popular destinations in their own right, and the hotel’s spa is guaranteed to keep the winter blues at bay.A business class room costs GBP137.50 (QR797) in March. The price includes breakfast, free Wi-fi, early check-in and a daily turn down service.

WHERE TO PLAY:Bringing a splash of Argentine style to Manchester’s streets, the Gaucho Grill (www.gauchorestaurants.co.uk/) is the place to dine if you love steak. It is not just the food that’s the attraction, either – its stunning black and white interior, liberally dotted with cowhide, is one to remember.

SPLASH YOUR CASH:If you are in need of a fashion fix, there is no better place to spend your pennies than

Manchester has built on its industrial beginnings to become a thriving modern city, writes victoria Scott.

at the Trafford Centre (http://www.traffordcentre.co.uk). It is home to 280 different shops, including a branch of London favourite Selfridges and upmarket department store John Lewis.

CULTURE vULTURE:Dedicated to 200 years of British democracy, the city’s People’s Museum (http://www.phm.org.uk/) is a must see. Reopened in 2010 after a complete overhaul, it engages visitors with interactive exhibits that bring the past to life.

INSIDER TOP TIPS:For a bird’s eye view of the city at night, head up the Beetham Tower to Cloud 23 (www.cloud23bar.com/). This bar’s floor-to-ceiling windows guarantee a fabulous backdrop to an informal business meeting or a well-earned evening off.

in the UK, which is more than a 13 percent increase from 2011,” continues O’Neill. “Many Qataris including senior members of the royal family have studied in the UK and visit regularly.”

In October 2010, a memorandum of understanding (MOU) on business, trade and technical cooperation was signed during HH the Emir’s state visit to the UK. In February 2011 when David Cameron, UK’s prime minister visited Qatar, a MOU was signed between the Qatar Olympic Committee and the British Olympic Association. In December 2012, a MOU for Cooperation between the Public Prosecution of the state of Qatar and the government of the UK was signed. “The Double Taxation Agreement was signed in June 2009, which came into force on January 2011,” adds O’Neill.

O’Neill believes the relationship between Qatar and the UK is very strong, and his role as the newly appointed ambassador is to deepen and broaden those relations.

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LNG: QATAR vS THE

WORLDThis decade will see a grand battle to sell natural gas to growing nations. In the blue corner, with an established infrastructure, targeting the booming Asian markets: Qatar. In the red corner, with projects coming online from 2014, also targeting thriving Asian demand: The World. Your commentator at ringside: Jamie Stewart

48 | The Edge

T he decade ending in 2020 has already been termed as the “golden age of gas” by the International Energy Agency (IEA). In this

era, the world will see gas-producing nations vying against one another for the most lucrative supply contracts, the hydrocarbon dollars and the power and influence that accompany bilateral deals on the global stage.

Qatar today is in an extraordinarily dominant position, one it has maintained for the past two years. But competition, on a grand scale, is imminent. If we view the fight for control of the world’s liquefied natural gas (LNG) supply industry as a grand boxing match between Qatar and the rest of the world, then let the bout commence...

In the Qatar cornerDecember 2010: As the year drew to a close, in Ras Laffan Industrial City, Qatar realised a long-standing ambition by raising its LNG production capacity to 77 million tonnes per annum (mtpa). The milestone was the culmination of years of investment in infrastructure and expertise which propelled the nation from an LNG production capacity of zero to the magic 77 million figure – a target put in place by HH Sheikh Hamad bin Khalifa Al Thani, the Emir – in just 14 years.

Celebrations were held across Qatar. As speeches were made, officials reflected on what it would mean for the tiny state to boast what was at that time, by far, the world’s largest means of LNG production. LNG exports would earn Qatar many hundreds of billions of Qatari Riyals over the coming years, which would be invested globally and pumped back into the domestic economy, ultimately benefitting home-grown businesses.

Qatar’s 77 million tonne achievement was called “a defining moment in Qatar’s history as a gas producing and exporting nation” by RasGas managing director Hamad Rashid Al Mohannadi. Ras Laffan director Abdulaziz Al Muftah called it a “great achievement, which makes a vision a reality,” while Exxon Mobil Corporation chairman and chief executive Rex Tillerson termed it “truly an inspiration for the world”.

In 2011 Doha-headquartered energy giants Qatargas and RasGas exported 76 million tonnes of LNG, accounting for 31 percent of the global market. The second largest exporter was Malaysia with 24 million, less than one-third of the Qatari total.

Round one to Qatar.

Round two: The Golden Age2010 to 2014: At the begininning of 2013 we find ourselves mid-way through the second round.

As the globe’s dominant producer, the first round went to Qatar. The next stage of the fight from Doha’s standing is about consolidation: preparing for the longer term, ensuring a range of customers across the globe that are geographically, politically and economically diverse enough to ensure a steady flow of exports regardless of what happens in the rest of the world.

cover story | energy sector

Qatar has targeted the burgeoning emerging economies of Asia, particularly China and recently the south East Asian markets of Thailand and Singapore as lucrative clients in the global fight for LNG contracts. Here managing director of Rasgas Company Limited Hamad Rashid Al Mohannadi speaks during the World Gas Conference 2012 in Kuala Lumpur Malaysia in June last year. (Image Reuters/Corbis)

With the United States (US) still only scratching the surface of its unconventional gas revolution – one that has pulled down US gas prices and is already changing the global energy economy (see map) – Doha has chosen to look to South America, Europe and, most notably, Asia.

In 2011, 47 percent of Qatar’s LNG exports went to the Asia Pacific region and 42 percent to Europe, according to a recent Qatar National Bank (QNB) study. And the growth markets of Asia remain Qatar’s primary target today. The region “is characterised by a shortage of hydrocarbon resources combined with rapidly rising demand for gas-fired power generation”, the QNB study stated.

The push for diversity has yielded results. In 2007, Qatar exported LNG to eight different countries, while just four years later, in 2011, it exported to 23 countries, from the United Arab Emirates and Kuwait to Argentina, the United Kingdom and Japan.

And, as reported in The Edge last month, Qatar has now added Southeast Asia to its order book, with the the signing of a long-term sales and purchase agreement between PTT, a state-owned energy company in Thailand, and Qatargas. Doha has made no secret of its Asian intentions: “Qatargas sees the Kingdom of Thailand as an evolving LNG market and recognises its potential within Southeast Asia to absorb significant quantities of LNG in the future,” the company said in a statement.

Having developed a taste for Southeast Asia, Qatar is also eyeing the Singapore market, having inked a deal to supply a commissioning cargo to a Singapore terminal – the first ever to enter the city-state – mirroring an approach taken by the company in its dealings with PTT.

Finally, long-term supply agreements are under discussion with India, Pakistan and Turkey, QNB says.

Doha is mid-way through a golden age of LNG exports. Round two, without a doubt therefore, goes to Qatar.

The Edge | 49

energy sector | cover story

Round Three: The fightback2014 to 2017: The latter part of this decade is the period in which the deals being signed today by Doha will need to be sustained, if Qatar is to maintain its dominant position in the face of a global battle for the world’s LNG supply routes.

Elsewhere in the world, the fightback has already started. Major LNG production capacity is under construction in many locations, most notably in Australia, while final investment decisions are to be taken soon regarding projects in North America.

There are two basic stages in the export and import of LNG: liquefaction and regasification. At the liquefaction stage, gas is extracted from the earth and cooled to allow it to liquefy and be transported via tanker. It is then heated and regasified at the receiving port, so that it can be distributed to areas of demand via pipeline or reloaded and distributed by smaller vessels.

In Australia, which most recently completed a 4.3 mtpa Pluto LNG project operated by Woodside Energy, no less than eight extraction and liquefaction schemes are under construction. They will boost

the nation’s production capacity from 24 mtpa today to 60 mtpa in 2017, according to the Australian energy department, although cost overruns have begun to plague the projects. Investment decisions are also pending on a further three schemes.

Barclays energy market research head Trevor Sikorski tells The Edge. “After 2014 it gets interesting, because you’re talking about some of the big Australian facilities coming on line in 2015, 2016 and 2017, plus you’re looking at exports of United States (US) gas beginning over the same three-year period, so you can see a time, depending on how fast regasification comes on line, where you start to see more LNG.”

And the US is also set to join the fray, transforming its new volumes of unconventional gas into hydrocarbon dollars, adds Sikorski. Qatar can expect fierce competition from other quarters too. Angola, on the west coast of Africa, commissioned a 5.2mtpa

A 6.9 mtpa project is under construction

in Papua New Guinea, South-East Asia, called the PNG LNG project, which like Qatar, is targeting the Asian market.

In 2011, Qatar’s share of global LNG production capacity was 16 percentage points above Australia’s. By 2017, this gap will be reduced to five percent.

5%

With an already well-developed and low margin LNG production infrastructure and a fleet of large and highly capable carriers, Qatar is well prepared to take on competitors such as Australia in the global market. (Image Reuters/Corbis).

Altamira$3.86

Lake Charles$3.29

Cove Point$4.68

UK$10.47 Belgium

$10.12

India$13.00

China$15.00

Korea$15.38

Japan$15.38Spain

$11.41

Rio de Janeiro$4.68

Bahia Blanca$4.68

Natural Gas Overview: World LNG PricesFederal Energy Regulatory Commission . Market Oversight . www.ferc.gov/oversight

World LNG Estimated January 2013 Landed Prices

Source: Waterborne Energy, Inc. Data in $US/MMBtu Updated: December 8, 2012

Landing prices of LNG are dependent on supply and demand among other factors, with those able to produce some of their own (notably the United States, thanks to fracking in shale deposits) begetting the lowest. This diagram shows exactly why Asia is such a lucrative market for Qatari LNG. Source: Waterborne Energy (data in US$/MMbtu)

LNG project in April, which was intended to supply the US market, although the investment decision was taken before North American gas prices nosedived. The attention of the project’s investors is now turning to Asia, although according to Sikorski, the project is yet to sell any gas. On top of this, a 6.9 mtpa project is also under construction in Papua New Guinea, Southeast Asia, called the PNG LNG project, which is also targeting the Asian market. Exports are expected to begin in 2014.

The IEA says that, assuming no delays to existing project schedules, global LNG production capacity will have reached 358 mtpa by 2017, slashing Qatar’s share from 27 percent at the start of 2011 to 22 percent in 2017. On the flip side, Australia stands to gain the largest share of production capacity, up from just nine percent in 2011 to 17 percent in 2017, just five percentage points short of Qatar.

Round three, in the grand LNG battle, will thus go to Australia.

Round Four: Fighting for survival2017 to 2025: With the post-2017 loosening of the global supply picture, the LNG sector will undergo a fundamental change. It will transform from a seller’s market – one which proved highly lucrative for Qatar in the first half of this decade – to a buyer’s market, in which the giant Asian consumers will be negotiating hard to secure the best price, with a range of suppliers never before seen in the LNG sphere. To survive in the new competitive world of LNG post- Qatari LNG production should dominate world energy markets for the next decade.

50 | The Edge

cover story | energy sector

2017, Doha will need to take a long, hard look at its contractual pricing strategy.Qatar has traditionally supplied LNG through long-term contracts index linked to oil price

movements – if oil becomes more expensive, so does its LNG, whereas if the price of oil falls, so Doha’s income declines.

The state has done well out of the arrangement, particularly over the past two years with oil prices generally holding above US$100 (QR364) a barrel. This has led to some high-profile legal cases, particularly in Europe, with energy companies facing Qatar through the international arbitration courts.

“Qatar has a lot of long-term contracts in Asia so its market share is not going to disappear overnight,” Sikorski says, “but a lot of the marginal, short-term or mid-term…will eventually be either replaced or supplemented with new forms of LNG, particularly if they are not willing to price in a way that is more competitive.”

The alternative pricing arrangement, and one which consuming countries are crying out for, is to tie contracts to gas hub prices. For example, a firm in Europe may pay a price linked to the short-term market price for gas across a number of European energy exchanges, so ensuring that the price they pay to Qatar moves in line with an index that it has a lot more in common with fundamentally.

Despite the increasing competition, Sikorski says, the country will still have advantageous options. “Qatar has by far the most marginal cost of production, particularly when you compare it to some of the new facilities coming on in Australia,” he says, explaining that production in Australia will be relatively expensive.

“So if Qatar want market share, they can go and get it, if they are willing to price accordingly.” Round four will be a tough slog, but it might just be Doha’s cost of production – if it is prepared to give some ground on contractual pricing – that swings the global battle for LNG in Qatar’s favour.

Whoever will emerge victorious by 2020 remains to be seen, but what is clear is that Qatar and the rest of the world will soon find themselves increasingly in a struggle for control of the new LNG economy.

From 2017 the global

LNG sector will transform from a seller’s

market – one that has proved highly lucrative for Qatar – to a

buyer’s market.

Fracking: Global Game ChangerTen years ago, the US government was considering plans to construct a series of LNG

import terminals, as the nation’s consumption neared the point at which it would have overtaken domestic production.

However, today the government has approved one LNG export terminal, and is considering further applications, with domestic natural gas production now comfortably outstripping demand. The reason for the dramatic turnaround – one that could have far-reaching consequences for Qatari income over the coming decades – is the rise of fracking.

Fracking is the method by which formerly ‘unconventional’ gas can be recovered from shale rock beneath the Earth’s surface by pumping fluid into a well at very high pressure. It has changed the energy landscape in the US, which today enjoys LNG prices of less than a quarter those paid in Asia (see map).

The rest of the world looks set to follow in the US’s footsteps, albeit at a more conservative pace, because fracking is not without its critics, who harbour concerns regarding the environment, the geological impact including the triggering of minor tremors, and the effect of the fluids on potable water supplies.

Yet progress is being made globally, which means Qatar could see its export markets eaten into over the longer term. For example, the size of unconventional gas resources in China, is at an early stage of assessment, but it is undoubtedly large according to the IEA, which estimates it at 13 times as much as China’s conventional gas reserves.

In Europe, a huge importer of Qatar LNG, recoverable resources of shale gas “are believed to be large, though how much can be recovered economically remains uncertain,” the IEA adds.

So while Doha is in a golden age of LNG income and its supply contracts are secure for the foreseeable future, thanks to fracking its recent dominance of the market is not what it once was, and there could yet be an imminent shale gas revolution. with global energy industry ramifications.

The Edge | 51

energy sector | cover story

FOOD FOR A DAYMoving Qatar towards agricultural self-sufficiency

The Sahara Forest project in collaboration with Norwegian firm Yara International and QAFCO realises its first pilot facility in Doha. An agreement for the site was signed in February 2012 in Oslo, with US$5.4 million (QR20 million) in funding. (Image courtesy The Sahara Project)

Qatar outlined ambitious plans to achieve national food security in the wake of 2008’s food crisis. The aim of the Qatar National Food Security Programme (QNFSP) is to bring the country as close as possible to food self-sufficiency by 2023. Some observers have even raised the prospect of farms rising skywards in the form of skyscrapers as Qatar considers introducing hydroponics, or soilless agriculture, and ‘vertical farming’. Though some of these ideas are just in the conceptual phase, with the recent opening of The Sahara Project in Doha, real progress has been made towards Qatar’s high tech ‘farms of the future’ and could be the ticket to self-sufficiency, writes Barry Mansfield

54 | The Edge

atar has been affected by rising food prices in recent years, caused by produce growing countries opting to restrict their exports. At the wholesale market in Doha, shoppers have become accustomed to

aubergines from Saudi Arabia, apples from Lebanon and China, expensive tomatoes from the Netherlands, bananas from the Philippines and strawberries from Egypt. Qatar residents spent QR3.5 billion on food imports in 2012, with costs set to rise a further 15 percent in the next 12 months.

Along with Saudi Arabia and United Arab Emirates (UAE), Qatar has been investing in land overseas (including Sudan and more than 7300 square kilometres in Australia) to produce crops that can be shipped home. However, in the future, Qatar plans, ambitiously some might say, to produce much of its food domestically, despite the fact that there are no rivers, and aquifiers are fast diminishing. The vision is for solar powered desalination to irrigate the extra agricultural land, which was described as an “insurance policy” by Fahad Al Attiya, Qatar National Food Security Programme chairman.

“Our future development is inconceivable if we cannot secure our own food resources,” Al Attiya told the Guardian newspaper in January. “We are all in favour of international trade, but we also believe in climate change and its consequences for farming. In the future some countries may reduce their

The Sahara Project, a

10,000 square metre pilot agricultural facility, using a saltwater cooling system and greenhouse roofs to dissipate waste heat opened in Doha in December 2012.

feature story | food security

Fahad Al Attiya, Qatar National Food Security Programme chairman firmly believes that by using technology for innovative agriculture, in the future Qatar can increase its self-sufficiency, from the current 10 percent to more than 60 percent of its food requirements. (Image Reuters/Corbis)

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exports and we cannot remain so dependent.“We have made no investments for the past 20 years. We still use old farming

methods so productivity is very poor,” Al Attiya added. “A substantial share of crops is lost during storage. We need to input new skills, training and technology. Many think it’s unrealistic, but I think it’s going to be revolutionary.”

There are no formal targets, but Al Attiya estimates that Qatar can be 60 percent self-sufficient in food production. At present the country has about 1400 farms using its finite water resources on 45,000 cultivated hectares, contributing less than ten percent of the nation’s food consumption. Al Attiya says that a total of 110,000 hectares could be used for agriculture, which could be extended to 130,000 by reclaiming land from the desert.

By last year, QNFSP was openly co-operating with research and development institutions to create new technologies. It is known to have exchanged ideas with the Syrian-based International Centre for Agricultural Development in the dry areas, the German Aerospace Centre and Texas A&M University, which has a campus in Doha. So far, US$300 million (QR1 billion) has been invested in the plans, but Al Attiya admits the implementation process will

food security | feature story

The amount of land in square metres that Fahad Al Attiya, Qatar National Food Security Programme chairman, believes can be utilised

for advanced agriculture in Qatar.

130,000

The Sahara Forest project is Qatar’s first venture into creating viable agricultural alternatives that could save the country billions in food imports and create a thriving domestic agricultural sector. (Image courtesy The Sahara Project))

56 | The Edge

cost “billions of dollars,” with roughly 50 percent of funding coming from the government and the rest from the private sector.

Sahara Forest ProjectIn addition, the Sahara Forest Project AS, a Norwegian private limited company, is building a project test and demonstration centre of sufficient scale to prove the commercial viability of its own concept. It hopes local communities will eventually benefit directly through employment and educational opportunities. The site will function as a shared innovation platform by bringing together international and local entrepreneurs, scientists, business and other stakeholders in green innovation.

The Sahara Forest Project was first presented in Jordan to His Majesty King Abdullah II in 2010. In January 2011 a Memorandum of Understanding was signed with the Aqaba Special Economic Zone Authority in Amman, which confirmed three comprehensive studies to be carried out in Jordan. The agreement allows 20 hectares for a test centre, and 200 hectares for possible later expansion.

As for Qatar, collaboration with Yara International and Qatar Fertiliser Company (QAFCO) has seen the Sahara Forest Project realise its first pilot facility in Doha. An agreement for the site was signed in February 2012 in Oslo, with US$5.4 million (QR20 million) in funding. The 10,000 square metre pilot facility, opened in December, uses a saltwater cooling system and greenhouse roofs to dissipate waste heat. The heat from the mirrors drives a desalination system, which produces distilled water for plants grown in the greenhouse and surrounding desert. Waste heat is used to warm the greenhouses in the winter and to regenerate the dessicant used for dehumidifying the air. The system also produces an algae byproduct for use as biopower.

In the company’s chief executive officer, Joachim Hauge, the QNFSP finds a respected long-term planner who previously advised the European Union Energy commissioner on Europe’s 2030 decarbonisation objectives. Hauge believes that increasing food production by 70 percent by the year 2070 will stretch science to the limit, but is satisfied that the universities, thinktanks and non-governmental organisations are “working tirelessly” to this end. “For the seawater-cooled greenhouses in The Sahara Forest Project, development has been especially quick, going from concept drawings a few years back to now being able to produce high yields of cucumbers,” he says.

Hauge is keen to clear up some misconceptions about hydroponics, too. “We give the plant the exact nutrient that it requires, with no waste of valuable water and fertiliser, to enhance the root zone growth,” he says, “leading to a very healthy plant with high quality and tasty fruits. The plants can be raised without pesticides using good hygiene and biological control systems.”

Obstacles and opportunitiesBut there are caveats. Eckart Woertz, former director of economic studies at the Gulf Research Centre, agrees that the cultivation of vegetables and fruits might make sense in Qatar, but suspects that production of water intensive cereals with desalinated water “would be highly questionable” he says and warns that “desalination is environmentally unfriendly, as the disposal of the brine is ecologically harmful for marine life.”

It is ostensibly just as well, then, that in 2013 the working group will perform a comprehensive programme at the Qatari site to fine-tune the technologies to local conditions. The Oasis is the full-scale commercial implementation of the Sahara Forest Project. It is hoped that in future a Qatar Farming Community might hold a centrally financed infrastructure rented to local small-scale farmers. A Farming Community Fund could be made available to local participants using microfinance principles, but details are not firm at present.

So can we expect to see vertical farms looming over Doha one day? Hauge emphasises that vertical farming will not be utilised in his project, at least. “It is an interesting concept for areas with high population density,” he says. “I think that in the coming years we will gain more knowledge, including on the cost-analysis aspect, giving greater clarity on the future potential for this approach.”

Eckart concurs, saying to The Edge “commercial vertical farming, as propagated by Despommier of Columbia University, is still largely an academic exercise…with

“We give the plant the exact

nutrient that it requires, with no waste of valuable water and fertiliser, leading to a very healthy plant with high quality and tasty fruits.” - Joachim Hauge, CEO Doha Sahara Forest Project.

feature story | food security

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opponents saying that the advantage of reduced food miles and production close to urban costumers is overcompensated by the energy needs for lighting, heating and cooling. There are open spaces available, so the economic advantages of having vertical farms might be more limited than in larger urban agglomerations without a hinterland.”

The biggest difficulty for the Sahara Forest Project, admits Hauge, is not with any of the individual components, but “in bringing all the technologies together in a well-integrated system, where the waste-stream from one technology becomes a resource for another component. With this technical challenge there is also a challenge in bringing together people and innovation cultures from various fields of science and technology development.”

Hauge is fixed on “crossing borders” but also drawing on local partners, which he says are very capable, after they completed the site in time for the COP 18 climate change talks last November. This could, he closes, also create opportunities for Qatari based entrepreneurs, as Sahara Forest is open to any or all forms of close co-operation and joint ventures with commercial companies in a field that could eventually help Qatar to save billions of riyals annually.

HIGH-TECH FARMING’S SPANISH SUCCESS STORYThe sunny south of Spain provides more to the national economy than tourism. Over the past five decades, the small coastal plain or campo, found 30 kilometres southwest of the city of Almería, has been intensively developed for hydroponic agriculture. More than 20,000 hectares of extra-early market produce, including lettuce, cucumbers and peppers, is grown in greenhouses in the campo de Dalías.

The crops have no direct contact with nature beyond sun, air and water. They never touch soil; tomatoes grow in temperatures of around 45 centigrade from bags filled with oven-puffed grains of white perlite stone. Chemical fertilisers are drip-fed to each plant from four large, computer-controlled vats holding potassium nitrate, magnesium and potassium sulphate, calcium nitrate and phosphoric acid.

The benefits speak for themselves, as the project accounts for over US$1.5 billion (QR5.4 billion) in economic activity.

Barry Mansfield is a freelance journalist based in Belgium.

“We still use old farming methods

so productivity is very poor. We need to input

new skills, training and technology…I

think it’s going to be revolutionary,” -

Fahad Al Attiya, Qatar National Food Security Programme chairman.

food security | feature story

Sahara Project chief executive officer Joachim Hauge, pictured at the facility in Doha, is pragmatic in his belief that achieving the country’s ambitious food security goals will be a great challenge, but is also confident that all stakeholders are moving boldly in the right direction to do so. (Image courtesy Sahara Project)

58 | The Edge

Creating a viable media sector in Qatar

DOHA: MEDIA CITY?

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media industry | feature story

Since its inception Al Jazeera network’s English language television channel has garnered the attention of audiences across the globe for its objective coverage of large news stories, many of them ignored by Western outlets, winning numerous accolades and critical acclaim. However, when it comes to the development of a thriving media business sector within its own borders, Qatar still faces many challenges, argues Shehan Mashood.

United States (US) secretary of state, Hillary Clinton recently said she felt Al Jazeera offered real news,

something, which channels in the US were failing at. Indeed, American cable networks have seen the media favour discussion panels over on the ground reporting, with CNN closing its investigative unit last year because it was not profitable. However, Al Jazeera has grown to become one of the most, if not the most influential media outlets in the region, and is looking to expand its reach. It provides the news from the perspective of the developing world, and not simply those that have a bearing on the foreign policies of Washington.

Al Jazeera is no doubt an organisation reflecting the kind of ambition Qatar has shown internationally in recent years. However, inside the nation that is home to the news organisation, some media experts inside the country feel that the same drive and ambition apparent in so many aspects of the country is not matched when it comes to developing the local media.

Everette E. Dennis, dean of Northwestern University in Qatar (NUQ), explains to The Edge that while there is some reference made to the media in Qatar’s 2030 National Vision, it has not been strongly enunciated.

Dennis also feels that there is a lack of cohesion among the various elements of the local media, and if they presented a more unified front they could become a stronger voice in developing a sector that has much potential to contribute to Qatar both socially and as a thriving business sector.

In fact, during a speech at a media industries forum organised by NUQ and largely driven by Dennis in late 2012 he commented passionately on the subject. “Unlike Qatar’s evident and visible commitment to such cluster economies as energy, health and medicine, education, sports, culture, tourism, meetings,” he said, “it is more difficult to see a transparent vision for media industries. It is assumed, however, that the term ‘knowledge-based

industries’ does embrace general audience media and specialised media linked to economic sectors and others.”

The media industry must be seen as a genuine economic sector, Dennis explains to The Edge, adding that media development is related to economic development in that media is really a kind of information engine for all enterprises.

In addition to being a source of revenue in itself, it leads to strong synergies and increased business activity. The advertising industry, public relations and various other commercial enterprises, he adds, are what a thriving media sector can bring to Qatar. This is certainly an important component of driving economic growth particularly at the retail level, which drives much of the marketing spend.

Doha Media City?At the forum, sentiments were expressed regarding the possibility of Qatar setting up a ‘media free zone’ akin to that of Dubai or AbuDhabi to achieve some sort of cohesion in the media sector. Some critisism of the idea centres on that fact that many international news media outlets have regional headquarters in the United Arab Emirates and would be unlikely to open offices in Doha. Dennis says this does not have to be a physical location, but could be a de facto media city. Much like the Qatar Financial Centre allowing organisations not based in their building to be registered with them, and declare their offices under QFC Authority, there is not necessarily a reason for the various media enterprises to be in physical proximity to each other, points out Dennis.

A Qatari media city does not have to be about the news, he furthers. Abu Dhabi for example he says, has a media free zone mandated with developing Arabic content. “It is important to understand what kind of growth in the media sector is possible with an expected population increase from 1.7 million to 4.5 million over a certain period, adds Dennis. “The two most important facets that will shape any media city will

“Qatari companies

should be able to reap the benefits of growth in the media sector” - Khalid Al Sayed, editor in chief, The Peninsula.

60 | The Edge

Khalid Al Sayed, editor in chief of the Peninsula newspaper, is sceptical about the creation of a media free zone, and believes there needs to be more discussion about its necessity in Qatar.

feature story | media industry

The percentage of advertising spend on newspapers in 2011 of the total media spend in Qatar.

78.5 Everette E. Dennis, dean of Northwestern University Qatar, feels the media sector has not been articulated strongly enough in Qatar’s National Vision.

be the types of ownership models that are going to attract international partners and then of course the issue of freedom of expression that could not only affect journalistic content but entertainment too.”

Khalid Al Sayed is the editor in chief of The Peninsula, a Qatari daily newspaper, is however at odds with the idea of developing a media free zone in Doha, tellingThe Edge that Qatari companies should be able to reap the benefits of growth. Indeed as the population and the size of the economy grows, so too will the media sector in value, he feels, the ‘media free zone’ is something that needs to be more seriously discussed, and should only happen if Qataris agree to it. “It should be what Qataris are happy to have. What the society wants matters,” he says, adding that what is is of paramount importance is to speed up the new media law, and opining that a free zone is simply an attempt to skip this procedure.

The draft media lawThe current media law in Qatar dates back to 1979. There has been much discussion about a draft law that was approved by Qatar’s Shura Council in June of last year but is still pending adoption. Numerous sources have expressed their disapproval of the draft media law, saying that it does not support press freedom in as much as some of the content regarding what constitutes a threat to national security is vague and subjective, for example. “Qatar’s commitment to freedom of expression is only as good as its law,” commented Joe Stork, deputy director for the US-based Human Rights Watch recently, “which in this case does not meet the international standards it professes to support. Instead of supporting press freedom, this draft media law is a commitment to censorship.”

Jan Keulen is the director of the Doha Centre for Media Freedom (DCMF), an organisation that works towards enhancing media freedoms and promoting quality journalism in Qatar and the region. Keulen explains to The Edge that the objective of a media law for a country like Qatar should be to facilitate the development of media and media freedom. The law should also be viewed in context of the National Vision 2030 he furthers, since Qatar is moving towards a certain type of society that is spelt out in that document.

“It’s a country which has one of the most influential media companies in the world within its borders, a country which has one of the most prestigious journalism

schools in Doha. It is a country that has the DCMF, a centre for advocacy and of capacity building and of reflection about the role of media. It is a country which is developing one of the best broadband systems in the world,” says Keulen. But compare this to the draft law, and there is a certain disconnect he adds, “I am not very happy with [the] law. I don’t think it’s up to the circumstances, I think Qatar deserves a more modern law.”

“Almost all media laws have problems,” furthers Dennis. “The more you try to define freedom as said by others, the less freedom you have.”

In a rapidly transforming society the lines of what people feel comfortable adopting are changing so quickly that it can be difficult to settle on a law that suits everybody. The clashing forces of modernity and tradition within locals, the extreme openness westerners are accustomed to, and the conservative nature of culture and tradition prevalent in Qatar are also at odds. “So it’s not going to be the media you would have in the United States,” adds Dennis. “but it’s not the media law you would find in North Korea either. It must cater to Qatar’s needs.”

The pull from different forces in society is something Al Sayed agrees with, saying the country is in a learning curve. But as a

The Edge | 61

Almost all media laws have problems, the more you try

to define freedom as said by others, the less freedom you have.” - Everette E. Dennis, dean Northwestern University Qatar.

Qatari editor, he feels that the draft law if adopted will be a welcome change from the old one of the late 1970s. “As a newspaper I should know what my boundaries and limits are,” explains Al Sayed, adding that the draft law was discussed with the editors-in-chief of local newspapers. “We were able to put in our comments,” he explains, “I feel they considered our points.”

This can been seen as a progressive move on the part of the government, as will the change of some of the penalties for transgressing from a criminal to a civil jurisdiction, explains Dennis, adding that this means a person might be fined rather than being sent to prison.

“In some ways it is good that people can’t be jailed,” agrees Shabina Khatri who co-founded the popular online news website DohaNews with her husband, and fellow journalist Omar Chatriwala. “But they also impose such steep fines on journalists that they might as well be jailed. Because if you can’t pay, you will be detained.”

New media outlets such as DohaNews which has become a popular news resource in Qatar has an eclectic mix of original, curated and crowd sourced stories that are becoming a growing format of information consumption.

Indeed, it is organisations like this, looking to develop online content pose some interesting challenges both to the proposed draft law, and content creators. Keulen thinks that technological developments will make the law obsolete

even before it is passed. Putting online news outlets in the same category as newspapers subjects it to a lot of rules and exceptions, furthers Khatri. “I think this would have a chilling effect on free speech,” she says. “I really don’t know what the future will hold in terms of online content because it is really hard to regulate. The Internet is borderless.”

A viable business model Serious restrictions on media freedom have the potential to stunt conceiveble growth in the sector, but argubaly the biggest challenge facing media organisations in developing a successful business model in Qatar and other parts of the Arab world is a lack of knowledge about different kinds of media as marketing tools, as well as accurate measuring metrics such as circulation auditing.

Most media pundits here would agree that marketing mindsets seem far behind the developed world, where ‘old’ media such as newspapers and radio dominate advertising spend. This ignorance of what media is and how it can benefit firms has a direct affect on growth in the media sector overall. Advertising is driven for the most part by sale numbers, not branding nor against content. Advertisers do consider media as a vehicle that it can place content against but rather always opt for traditional mass communication, and shy away from niche publications or even newer modes of communications such as digital media. Print media is highly competitive when it comes to advertising, and newspaper is still seen as king.

While online advertising is likely to grow in Qatar considering its usage, traditional media

Al Jazeera in the USAAl Jazeera English has been trying for years now to break into the United States (US) market but has been snubbed numerous times by cable and satellite distributors. “On the one hand cable companies are big national conglomerates,” says Everette E. Dennis dean of NUQ. “but on the other hand they are highly sensitive to local issue and feelings. People are perpetually unhappy with cable companies.” Not wanting to even potentially irk an already unhappy community is a big reason why they have not been able to break into the market. So when Al Jazeera picked up former vice president Al Gore’s Current TV channel for US$500million (QR1.8 billion), it was not paying to inherit their paltry viewership but to gain access to its distribution network in the US of about 40 million homes in the country.

The acquisition was met immediately with setbacks when Time Warner Cable said it would drop Current TV. The company has since backtracked on its statement but is unlikely to offer the same distribution price negotiated by Current TV at 12 cents per subscriber a month, according to a Reuters report. Al Jazeera could end up paying to carry its channel for the short term, says the dean of NUQ, Dennis, like Rupert Murdoch did with Fox News, which now earns 89 cents per subscriber.

Nevertheless, Al Jazeera America has a chance to create something that is better than existing cable channels, feels Dennis. “Channels such as MSNBC and Fox have very partisan audiences, so perhaps Al Jazeera’s approach could be much more distinct,” he says.

Continued on page 74

media industry | feature story

62 | The Edge

Reality Cheque: Will inflation be the biggest challenge to Qatar’s economy and financial sector?

The Edge | 63

For Qatar, its huge oil and gas wealth is a double-edged sword, its oil and natural gas reserves have insulated it from the economic shocks of 2007 to 2008. On the other hand, with government spending on major infrastructure projects, comes the spectre of rising inflation. Can Qatar successfully balance these two competing and contradictory economic forces going forward? Simon Watkins reports.

An increase of expatriates coming to Qatar

will result in a bullish tone to the country’s property market, possibly pushing inflation higher.

Inflation risks growIn its most recent update on the country, the International Monetary Fund (IMF) highlights this dichotomy of a nation that still depends on the oil and gas industry for more than half its gross domestic product (GDP), around 85 percent of its export earnings, and about 70 percent of its government revenues. From this year, says the IMF, inflation is set to nearly double within the next three years (from three percent now to at least five percent in 2016). This worrisome increase is not solely attributable to the country’s huge hydrocarbons wealth, but also partly due to the increase in state directed spending on a vast number of major infrastructure construction projects in the lead up to the World Cup.

While the IMF projects that the high level of government spending on World Cup-related infrastructure projects (including new roads, drainage systems, a rail network, hotels, transport, communications, and stadia) will help the non-oil and gas sector grow (by nine percent of total GDP in 2012), it also highlights that the country’s economic growth overall is likely to decline (to 5.2 percent this year, against 6.6 percent in 2012, and 18.8 percent in 2011), while inflation will continue to do the opposite. Much of last year’s increase in prices, for example, says Harish Bhatia, a consultant at the international management firm Hay Group in Dubai, was attributable to such infrastructure spending, with two major projects: the US$640 million (QR2.3 billion) deal awarded to the United Arab Emirates’s Al Jaber Group for package 13 on the Doha Expressway, and the US$961 million (QR3.5 billion) deal awarded to South Korea’s Hyundai Engineering & Construction for the Lusail Expressway. This year is set for a much bigger boost to inflation from the same sector, with spending valued at US$27.5 billion (QR100 billion) on around 30 highway projects. “These ambitious plans pushed wages up by around 6.5 percent in 2012 and is likely to push them up another five percent this year,” says Bhatia.

Rising price trendsWith the IMF expecting an additional US$125 billion (QR455 billion) in infrastructure spending in the five years leading up to 2016 alone, and a similar amount thereafter as part of the government’s stated priority of fully financing its budget from non-hydrocarbons revenues by 2020, and in the run-up to the 2022 World Cup, Matthew Green, head of United Arab Emirates (UAE) research and consultancy for CBRE in Dubai, expects a significant increase in the number of expats coming to live and work in Qatar. And as a corollary of this markedly higher influx of foreign money into Qatar, he also expects a bullish tone to the country’s property market that should further serve in pushing inflation higher.

Moreover, the Qatari authorities have made this inflationary rise on the property market all the more likely by implementing changes in the regulations relating to foreign ownership of property in the country, adding to the already

It is believed by some that the quid pro quo of granting Qatar’s sovereign wealth fund the ability to invest in the Chinese capital market will be in reciprocation for Chinese investment in the Qatar Stock Exchange. IPO activity however is expected to be slow in the coming year. (Image by ArabianEye)

qatar economy | feature story

64 | The Edge

Qatar is unlikely to see much

increase in activity in the areas of M&A and IPOs as firms have very little interest in divesting any of its companies to anybody else, but rather they will continue to develop stakes in companies abroad, says - Neil Beveridge, senior Middle East oil and gas analyst for Sanford Bernstein.

short supply of rental accommodation, says Green. In this context, until the enactment of Law 17 in 2004, in fact, non-Qatari nationals were not allowed to own or have long-term leaseholds on property in Qatar. However, since the passing of the snappily-named law Regulating Ownership and Usufruct of Real Estate and Residential Units by Non-Qataris, foreigners have been permitted to invest in property for either their own use, or as a pure investment to rent to others. Although, as it currently stands, only three areas are available for freehold purchase (The Pearl, West Bay Lagoon, and the Al Khor Resort Project), there are another 18 areas in and around Doha that have been designated for foreigners to acquire the ‘right of usufruct’.

Banking asset qualityA natural adjunct for Qatar of rising inflation against the near-static interest rate environment that is necessary to support current projected economic growth rates is its declining asset quality in the indigenous banking sector, and to its domestic stock market. In the course of Q1 to Q3 last year, for example, international investors withdrew a total of US$588 million (QR2.14 billion) out of Qatari equities, according to data from Deutsche Bank. Moreover, by the end of Q3 of last year, total lending by banks increased to represent 120.1 percent of deposits, according to the Qatar Central Bank (QCB), implying that Qatari banks were, at least at that point, reliant on short-term borrowing from capital markets and other banks. This reliance on volatile short-term funding was exactly the same situation as occurred in 2008, when UAE banks were taking interbank lending from the rest of the world.

In its most recent judgment on Qatar’s banking system – including both the conventional and the Islamic elements – major ratings agency Moody’s highlighted the high degree of dependence government-related business had on the domestic

feature story | qatar economy

His Excellency the minister of business and trade, Sheikh Jassim bin Abdul Aziz Al Thani, who has been empowered to set prices for numerous items in an attempt to control inflation in the market, recently announced a new draft company law that he hopes will modernise existing legislation for setting up companies. In the long run this could help deepen the nation’s capital markets

The amount in billions international investors withdrew out of Qatari equities in the first three quarters of 2012 (Q1-Q3) last year, according to data from Deutsche Bank.

2.14QR

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qatar economy | feature story

economy. “The economy is undiversified and heavily reliant on the oil and gas sector, and credit risks relating to exposures to the construction and real-estate sector,” underlined the agency.

Again, the official figures from the QCB bear this out. The public sector, and principally government agencies and semi-agencies, were the main drivers of loan growth, increasing by 35 percent in the year to August 2012 (the time of its last major banking sector update), to QR201.3 billion. It accounted for the majority of loans in Qatar, and its share had grown from 22 percent (QR35.9 billion) in 2007 to 42 percent (QR201.3 billion) as of August 2012.

Indeed, according to the Central Bank, the financing of large capital investments in developing the country’s infrastructure has been the key driver of public sector loan growth. It added that government agencies, semi-agencies and large corporates, which are engaged across economic sectors, are expected to continue to be the main driver of loan growth given the large development programme and infrastructure projects underway, and to be implemented in the short to medium term. Fitch ratings agency, notes in its 2013 GCC/Middle East Banks Outlook that balance-sheet constraints, intense competition (exacerbated by the decision of the Qatar Central Bank to separate conventional and Islamic banking operations), and undiversified

funding portfolios are posing challenges to the growth of Qatari banks, and that the sector’s loans/deposits ratios are gradually creeping up.

Anti-inflation strategyNone of these relatively negative factors, though, have escaped the attention of the relevant Qatari authorities. On the thorny issue of rising inflation, to begin with, Qatar’s State Cabinet has stressed this year that measures must be taken to introduce amendments to some key provisions of Law Number 12 of 1972 which gives the right to the Minister of Business and Trade to fix the maximum wholesale and retail prices of a number of items, mainly food and hotel room tariffs. Those found violating the new trading parameters would face increased jail terms and fines. The issue of broadening and deepening its domestic capital markets (through which banks’ asset quality could be markedly improved) is likely to prove a little trickier. Certainly, says Neil Beveridge, senior Middle East oil and gas analyst for Sanford Bernstein, mergers and acquisitions activity and IPOs are highly unlikely to see much of an increase in activity in Qatar in the foreseeable future. “Qatar has very little interest in divesting any of its companies to anybody else, but rather they will continue to build up stakes in companies abroad, as they have been doing to great effect over the past few years,” he tells The Edge. In this respect, Industries Qatar’s decision last September to increase the amount of shares that foreigners can buy in it - to 12.25 percent from 7.5 percent - is likely to prove something of a false dawn for foreign investors, who, in any event, may not be particularly interested in acquiring such assets ahead of the likely worsening in the country’s economic profile ahead of 2022, thinks Sebastien Henin, portfolio manager at The National Investor, in Abu Dhabi.

Indeed, it is something of a vicious circle in this respect, as imposing strict limits on foreign ownership of shares (typically only up to 25 percent of a company) has been the main reason why Qatar failed to enter the MSCI emerging markets index on several occasions (most recently, last July) when it was an attractive prospect to foreign investors.

Broadening the capital baseAn altogether brighter prospect for improving its financing options was recently delineated by QNB Group that, along with others, expects regional companies will continue to drive bond issuance higher in 2013 for a number of reasons. Firstly, it says, tapping debt markets has the benefit of broadening the investor base of Qatar’s companies. Secondly, these companies will be keen to take advantage of the prevailing low interest rate environment. Thirdly, strong

1.5

1.2 1.2 1.21.1 1.1

1.61.5

1.8 1.8 1.8 1.92.1 2.1 2.1 2.2 2.32.2

2.5 2.6 2.6 2.62.7

1.7

QATAR INFLATION RATEAnnual Change on consumer price index

Source: www.tradingeconomics.com | Qatar Statistics Authority

Jul/11

1 1

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MAkING vITAL HE ALTH RESEARCH POSSIBLE: QATA R BIOBANk

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MAkING vITAL HE ALTH RESEARCH POSSIBLE: QATA R BIOBANk

Qatar Biobank is the largest population based initiative ever undertaken in the country, involving the collection of biological samples. Qatar Biobank will be the driving force in developing research into the risk factors for obesity and related diseases, which are a major health challenge for Qataris, of whom 17 percent suffer from type-2 diabetes. Erika Widén reports.

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Qatar’s National Vision 2030 states that the wellbeing of its people is a priority. “To improve the health of Qatar’s population,

Qatar aspires to develop an integrated system for healthcare, managed according to world-class standards. This system will meet the needs of existing and future generations, and provide for an increasingly healthy and lengthy life for all citizens...accessible to the entire population.”

Clearly fulfilling this aim, Qatar Biobank is one of the first population based health initiatives in the region, and is in the final stages of preparing for an offical launch in 2013. During the Qatari official state visit to the United Kingdom (UK) in 2010, the Royal Society first announced the Qatar Biobank during the presence of Her Highness Sheikha Moza bint Nasser Al Missned. Qatar Foundation for Educuaton, Science, and Community Development and the Supreme Council of Health established the Qatar Biobank, with the assistance of experts from Imperial College London. In the lead up to its official unveiling The Edge met exclusively with two European professors from the Imperial College London to discuss the Qatar Biobank.

“There are many important research projects already going on here in Qatar,” says Professor Elio Riboli, director of the school of public health at the college, “but this is the first one to involve tens of thousands of people from the young population.”

Riboli explains that the main reason why the local biobank was founded is because what is developing today in Qatar is similar to what is happening around the world when it comes to changes in trends in types of diseases. “We have moved from a world

where infectious diseases were the main problem, into a world where chronic diseases such as nutrition and obesity are becoming the main health issues, [especially] in Europe and North America.”

According to Riboli, statistics show that there are millions of people who die around the world per year, due to high blood pressure. “Almost eight million deaths each year, which is even higher than tobacco,” he says, adding that high blood glucose (a form of diabetes), lack of physical activity and obesity and high cholesterol are the main contributors.

Ribilo underlines that a key factor is migration from a traditional rural society, where people have a lot of physical activity to a carbon-based society, where people do little physical activity and spend their day eating and in an air-conditioned environment. “There are two billion people overweight or obese in the world today, including Qatar,” continues Riboli, adding that in the Middle East, the number of obese has increased dramatically in the last 20 to 30 years, from 100,000 to half a billion today. “We are not blaming society, we are saying this is what happens and the question is how can you investigate better in the Qatari population and what are the causes of diabetes and cardiovascular diseases, and to understand how to prevent them.”

Prospective studyBiobank is a prospective study, which in healthcare terms, means that biological samples are collected from participants and their urine, blood and saliva kept in a high tech storage facility for many years. This will permit scientists to study diseases already present in the Qatari population, as well as to follow

healthcare | feature story

68 | The Edge

up with the participants to see who develops a disease in the future. Researchers will compare data, including genetic information and data on environmental exposures and lifestyles, from participants who developed illnesses, with data from those who remain healthy. Riboli adds that the three biological samples are divided into 160 small tubes, and then stored via different methods, depending on the type of analysis.

Professor Paul Elliot, head of department of epidemiology and biostatistics at Imperial College London says to The Edge, “Basically, we store biological samples and over time some will go on to get chronic diseases such as heart diseases, stroke, cancer – we then find those people and go back to their samples and look within the samples to predict to those that would get a disease and compare to those who didn’t. This is what is called a biomarker or measurement, in that way

feature story | healthcare

the number of people in the world considered overweight or suffering from obesity.

2 billion

we can understand more the cause of the disease…and this will allow us to screen people and intervene for those with that type of profile. And this is moving to a personalised healthcare.”

Elliot further explains that the idea of Qatar Biobank is to study the local community and residents that have been living in Qatar for more than 15 years. “What is unique about this programme is that eventually we will invite everyone who wants to come. But 60,000 people from the local population is a reasonable target.”

Conversely, Elliot highlights that Qatar Biobank has state of the art technology to collect huge amounts of information about a person’s internal and external exposures. “The physiological exposures based on the chemistry in the body, but also reflecting what people are exposed to in their every day life, their diet, the environment they live in and their lifestyle, all that gets picked up either through looking at metabolised patterns in the blood, which will vary according to ones lifestyle and genetic makeup.”

Elliot explains that genetic makeup does help predict their risk of disease and environmental

Professors Paul Elliot (left) and Elio Riboli of Imperial College London discussed with The Edge the concept of Qatar’s first biobank.

T

The Qatar Biobank will be one of the first of its size in the region, set to change the way healthcare is approached in the Arab World. (Images courtesy Qatar Biobank)

The Edge | 69

healthcare | feature story

Qatar Biobank will help

scientists develop ‘smart drugs’ that

are targeted to the individual, and are

effective treatments for the Qatari

population. At Qatar Biobank three biological samples – urine, saliva and blood – will be divided into 160 small tubes then stored via different methods depending on the type of analysis.

exposure against the genetic background, which determines their risk. “Both now with these new technologies, it can be explored with great detail, you can measure thousands of markers [chemical substance] of individuals, and that is why we require blood, urine and saliva samples so we can do great detailed explanations to identify where the individual sits in the spectrum.”

Additionally, Elliot explains that as well as genetic trends, samples also reveal a great deal about the impact of the participant’s environment.

“Where they live is determining what their biochemistry looks like and that’s determining lifestyles, and we know it is not genetic and we see south China differentiates with north China, and they are genetically very similar,” adds Elliot, explaining that is because they have adopted the lifestyle of their host environment. “We cannot change people’s genetics but we can change the environment and the genetics in thread by influencing the environment, and that is good because that means we can influence risk.”

Qatar Biobank benefitsMost medical treatments are developed through the study of Western populations and there is a lack of large scale research based in the Gulf region. Qatar Biobank will play a vital role in facilitating in preventing and improving medical treatment that affect the local population and is set to become a valuable national resource for the health of Qatar’s children and grandchildren.

“Qatar is an extremely interesting population from a medical point of view. It’s a population in rapid transition towards more Western lifestyles,” says Riboli. “Qatar is home to residents from different regions of the world, which means we can look at disease risk factors in multiethnic populations in detail and on a very large scale.”

According to the professors, Qatar Biobank will support the production of innovative medicines in the future. By carefully studying and then following the health of a large number of people, Qatar Biobank will give unique insights into the causes of a range of diseases that lead to premature death and impact the quality of life of the Qatari population. These insights will include new approaches to prevent diseases occurring in the first place, but will also result in better strategies to treat common diseases that afflict the population of Qatar. The information gained from undertaking genetic and other laboratory analysis of the blood samples collected, will help scientists develop ‘smart drugs’ that are targeted to the individual, and are effective treatments while presenting fewer undesired side effects among the local population.

“Qatar Biobank will provide a platform to support a wider spectrum of biomedical research in Qatar. This will stimulate public and private sector research development opportunities, working in partnership, and leading to scientific innovation that can be commercially developed,” concludes Elliot.

70 | The Edge

Is your price right?

Why achieving price optimisation should be a top priority for business success for every company that offers a product or service.

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T he incredible recent growth in the quantity and quality of customer data has enhanced the ability of companies to create tailored marketing solutions and adjust prices to fit

people’s budgets and preferences. Though some have succeeded in driving profits and expanding their market share as a result, many have not. Our research sought to find out why a more tailored approach to pricing has not worked for every company, despite the promise, and to lay out a plan by which companies can establish a better approach to price optimisation.

We found that, while firms typically sense that they can improve price setting and benefit greatly from doing so, many also lack a well-developed and thorough plan. In addition, we uncovered a number of barriers that prevent organisations from developing and implementing an effective price optimisation strategy.

Why price optimisation?The benefits of price optimisation stem from a company’s ability to understand and take advantage of either of two variations:

Price Elasticity variations: The volume effect of a price change on a company’s customers is typically diverse. For example, the ease and speed with which price comparisons can be made on the Internet has driven fierce price competition in different markets, yielding high consumer price elasticities. This can be seen in the United Kingdom (UK) motor insurance market where a one percent price reduction online can drive up to a 50 percent increase in volume. Yet, that same one percent price change offered on the telephone results in only an eight percent variation in volume. This diversity in elasticity leads to significantly different strategies for setting prices optimally.

Price Margin variations: Margins can vary to a similar degree to price elasticities but ten-fold variations in customer contribution are common.

Customers with low margins and low price elasticities are prime candidates for price increases. Conversely those with high margins and price elasticities should be considered for price reductions. Price optimisation allows a company to segment its customers and appreciate that it has groups sitting on very different places on the same curve. For those that do not, finding that ideal place on the curve is where the opportunity for price optimisation lies.

price optimisation | business management

Every company has to put a price on what it sells, but in research conducted on price optimisation, the London Business School’s Tim Ham and Marco Bertini found that most companies often fail at this important task, and there are also surprisingly large rewards for those who pay this often disregarded strategic consideration even scant attention.

In food retail, occasion drives price

elasticity, those doing weekly shopping are more price sensitive than those stopping in on their way home after work.

Price sensitivityWhen setting prices, a company must reflect on its consumers, competitors, product and customer economics, and broader strategy.

Of the companies we surveyed, only 41 percent analysed the sensitivity of their customers to price changes. Price sensitivity is the most complex and requires organisations to establish relationships between price changes and shifts in customer purchasing behaviour.

Asking customers about the effects of pricing can be problematic, as they have a tendency to overestimate their price sensitivity. Comparing the actual behaviour of customers with that predicted by market research can also expose alarming variations.

People in the process of choosing between suppliers can be highly sensitive, not least because of the way that providers market themselves. However, when customers are renewing a contract, they tend to be far less focused on price.

In food retail, shopping occasion proves to be a driver of price elasticity, as those on a standard weekly shopping trip tend to be more price sensitive than those stopping in for a few items on their way home after work. These two examples show that there can be stark variations in how consumers respond to price changes that are highly quantifiable. Those companies that do this can achieve significant competitive advantage.

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business management | price optimisation

Price comparisonsIn the retail and service sectors, competitor prices are often given greater prominence in the price decision than any other factor. This is partially because companies have a better understanding of competitor prices than they do of customer value and price sensitivities. It is also because managers assume that pricing is to a large extent beyond their control.

The truth is, the importance of competitor prices varies markedly. Competitor reactions can either mitigate or accentuate the effects of a price change. Often, one company’s price change will be quickly mimicked by the competition, reducing the impact of the change.

Conversely, competitors can exploit an opportunity. This can be observed in the utility energy markets where, following a rise by one, others may seek to capitalise on a short term sales opportunity and follow the price rise later on.

Product economicsQuestions pertain not only to product profitability but also to the profitability of customers.

Focussing on product considerations first, cross-product promotions and subsidies well predate the online marketplace across many industries. For instance, restaurants discount main courses to drive consumption of higher margin complementary food categories such as desserts.

Nevertheless, even with these practices being so common, 57 percent of the companies we surveyed optimised prices for products independently for each, despite recognising that the purchase decisions are interrelated.

Customer factors must also be considered. Margins can vary substantially between groups of customers. These variations need to be understood and reflected in price decisions. Strangely, 75 percent of companies surveyed did not have an established methodology for measuring differences in the value of customers to their companies, yet the same percentage perceived a greater than 50 percent variation between the most and least valuable customers.

Modelling customer lifetime values requires an understanding of many factors including financial discipline and market realities. Though data-driven, this field of study is an inexact science that necessarily draws on the experience of the modellers and market experts.

If done well, modelling will expose the variations in customer value that exist within a company’s customer base. Often, between 30 and 40 percent of customers contribute close to 100 percent of profits while another 30 percent actually reduce profits.

Strategic AlignmentIs the pricing coherent and aligned with the company’s competitive, product and consumer strategies? Any company seeking to optimise profit must provide customers with a set of prices that are aligned to the company’s competitive, product and consumer strategies. Prices are strong signals to the consumer above and beyond the cost of an item. Issues to consider are price levels, transparency, simplicity and price assurance. When it comes to a single product’s price strategy, it must be undertaken in light of the overall product portfolio strategy. A good example of this is the previously mentioned restaurant pricing strategy – restaurants seeking stronger margins overall should price particular products as part of that overall plan.

Of course, prices set by one firm are seldom judged in the mind of the consumer without immediate comparison or contrast

The five rules of price optimisation

1. Do not leave it purely to the pricing team. It is essential that any price optimisation work have broad engagement and support throughout the company.

2. Set a challenging target for the benefits delivered. The analysts and statisticians involved may be best positioned to unearth additional opportunities and should be set challenging targets to encourage them to do so.

3. Audit your current performance. Companies should identify the areas in which the greatest opportunities for improvement lie through asking those same four questions that we asked in our research.

4. Identify barriers early. It is essential that firms assess those that most apply to their organisations and systematically mitigate their impact.

5. Start simple. The simultaneous introduction of multiple factors into a company’s pricing structure would be unwise.

to the prices of the competitors’ offerings. Therefore, it is important for companies to articulate how their prices are likely to be perceived by consumers in comparison to rivals.

We have found that a discounting strategy is not in line with a broader business strategy. Short term pursuit of volume can undermine the longer term customer and brand strategies in markets such as airline travel for example, where highly discounted prices can damage the long-term revenue potential of not only the company but the industry.

Optimisation obstaclesOur research identified a range of impediments to price optimisation that explain why most organisations fail to reap the potential benefits.

Awareness of opportunity: The value of finding optimal price levels for goods and services only becomes clear when the customer value and price elasticity assessments have been made.

Organisational structure: The team performing the pricing analysis generally does not have the power to make pricing decisions. For instance, others determined to discount prices to hit personal volume targets often override optimal pricing plans. Pricing plans must be close to the province of the one person who is responsible for both the short- and long-term profitability and market performance of the organisation: the CEO.

Analytical capabilities: Pricing can require advanced analytical and statistical skills. Of the factors considered, this was believed to be the biggest constraint to developing a cohesive strategy by the companies we surveyed.

Useful data: It is common for us to encounter companies that are awash in data, but it is of limited use in understanding price elasticities as the volume effects are difficult to interpret.

Execution: Sometimes, corporate organisational structures simply do not allow prices to be varied in ways that thorough analysis suggests.

The Edge | 73

Sector variationsWhile the principles of price optimisation focus generally on the trade-off between unit margin and volume in a market, the opportunities and challenges for implementation can vary markedly across segments within the market.

It is the nature (timing, frequency, and depth) of the interactions that a customer has with a company throughout that customer’s life cycle that best informs the optimal pricing approach.

For firms in sectors such as utilities and insurance challenges exist in finding how to trade off prices between those that can attract highly price-sensitive new customers and those that will reaffirm loyalty at the point of contract renewal. How to offer discounts to customers with multiple product holdings is another.

For firms in sectors such as restaurants, hotels and airlines coping with the complexity of multiple dimensions that determine the ‘optimal price’ is the primary challenge, as is balancing short-term downward pressures on price against the long-term needs that drive value perception.

In the retail sector when and how to vary prices among multiple locations and which dimensions to use to decide such variations is a key issue, while in the fast-moving consumer goods sector a major challenge is how to balance the conflicts between the use of discounts to drive engagement and the delivery of strong brand and value performance.

In many companies considerations and others must are often assessed by executives often assess intuitively.

However, our research found that utilising a more focused and rigorous price optimisation process helps managers to make more educated decisions pricing decisions, which can lead to far greater profits in the long-term.

Pricing plans should be close to the

province of the one person who is responsible

for a company’s profitability: the CEO.

Of the companies surveyed for this article, only 41 percent analysed the sensitivity of their customers to price changes.

41%

price optimisation | business management

Considering it is relatively undeveloped in Europe where the research behind this article was conducted, price optimisation clearly not yet an advanced concept in many developing markets such as Qatar, and firms undertaking it here should surely find strategic advantage in doing so.

74 | The Edge

“The concept of freedom of expression is easily subscribed to,” says Dennis, “but the daily application isn’t. Governments don’t like to be criticised, private interests don’t like to be criticised. They like to control the flow of information about them, so any time you have an independent media system the players lose control and that is the reality a modern society, it isn’t a bad thing. And it doesn’t have to be threatening but people need to know how to master such an approach, and it can be done.”

A UNESCO report on the impact of press freedom shows a direct correlation between the freedom of press and the gross domestic product of a nation. In its report however, it sights Qatar as an outlier, obviously bolstered by its hydrocarbon wealth contributing to GDP. However if the nation is looking towards the ideal of a knowledge based economy and the creation of a thriving private sector, what it will need is an independent media that can be backbone of a well informed society and become a thriving private sector business.

spilloverpage

finds itself in a small and oversaturated market, a sentiment with which Al Sayed agrees.

According to a Commercial Bank report on the media sector in Qatar, newspapers benefitted from the majority of advertising spending at 78.5 percent in 2011, and expect a minimal decrease in the coming few years. Globally however there is a significant shift towards digital advertising, a trend not yet reflected in the local media market.

This makes it more challenging for new media outlets such as DohaNews, which came to the fore during the tragic Villaggio fire that killed 19 people. “When the fire happened it just seemed like Qatar was lacking something like this,” says Khatri, and that is when they realised they were satisfying a demand in the market for the immediate sharing of information. Since then, both Khatri and Chatriwala have been working on DohaNews full time, and trying to figure out how to make it a sustainable business, which has not been easy she admits. The website, like others, faces the same challenges many media organisations around the world do right now, monetising content. Advertising is perhaps the first thing that comes to mind, “it is very lucrative, and we are trying to figure out how to navigate that field,” says Khatri. She does however admit that advertising alone cannot sustain them, so they are looking at innovative ways to develop multiple revenue streams. The goal she says is not to become a huge organisation, but to provide a public service.

Towards the futureIf Qatar wishes to develop into the type of society outlined in its national vision, it will need more than anything a free and independent media system that is able to discuss openly the challenges it will face.

DOHA: Media City?

growth is expected in Qatar, albeit at a rate that is less than the country has been used to, which will drive continued demand for project financing. And, finally, with the introduction of Basel III standards that call for greater market liquidity and collateral obligations, more banks in the country are likely to regard raising core capital through

Reality Cheque: Will inflation be the biggest challenge to Qatar’s economy and financial sector?

debt issuance as a the most efficient and cheapest way of doing so.

In this respect, given Qatar’s sovereign rating of AA- with a stable outlook from Standard & Poor’s, and Aa2 with a stable outlook from Moody’s, domestic firms should find financing at affordable levels (certainly better than could be achieved through any available equity financing structures, and without the concomitant loss of shareholder control over the company involved).

Islamic finance expansionFinally, underlines Roger Nightingale, senior global strategist for Pointon York investment fund, in London, Qatar’s efforts to position itself as an Islamic financing hub in the Middle East are likely to gather impetus, despite the recent setback when NYSE Euronext reduced its ownership level to 12 percent in the Qatar Stock Exchange (QSE).

The quid pro quo for China’s granting on 11 December of a US$1 billion quota for Qatar Holdings - the investment arm of its US$120 billion (QR 437 billion) sovereign wealth fund, the Qatar Investment Authority - to invest in China’s capital markets, is widely believe to be a similar reciprocation for the Chinese to invest in QSE. Jiang Yang, vice chairman of the China Securities Regulatory Commission (CSRC) and Yang Maijun, chairman of Shanghai Futures Exchange (SFE) have been in Doha for a week discussing future relations between the two bodies and the QSE. Any deal, says Nightingale, could well be a precursor to tie-ups between the two countries in the realm of Islamic financing as well (the size of Islamic banking sector in Qatar is around US$35 billion (QR127 billion), accounting for an estimated 19.3 percent of the country’s total banking assets).

Interestingly in this regard, Qatari officials are believed to have been in discussion with Cheng Guoping, the Vice Foreign Minister of China who is acting as the point man for the development of Islamic finance in the country, which has around 20 million Muslims in its population (around 1.5 percent of the total). Indeed, in June of last year, Cheng informed Ekmeleddin Ihsanoğlu, secretary general of the Organisation of Islamic Cooperation, that Beijing wants to be granted observer status in the organisation.

Continued from page 58

Continued from page 62

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Potential for growth in the insurance and reinsurance markets >79Qatar Financial Centre Authority director strategic development Akshay Randeva discusses with The Edge the upcoming MENA Insurance Barometer,to be released at the MultaQa insurance and resinsurance event in Qatar in March, and the overall opportunities for growth in the sector in the region.

also in this sectionChallenges in the Qatar food and beverage sector >76The Edge spoke with Henk Bruggeman, director of operations Middle East and China for Hakkasan, a high-end Chinese restuarant franchise which opened a branch recently in the St. Regis in Doha, and discussed the challenges in the restaurant industry in securing quality produce for a satisfactory luxury dining experience.

business insightInside the minds of leading business figures

76 | The Edge

Restaurateur discusses challenges facing the industry in Qatar

The award winning Cantonese restaurant recently opened at the St. Regis. Henk Bruggeman, director of operations Middle East and China of Hakkasan spoke with Erika Widén about the main challenge the restaurant industry faces in Doha.

FOOD AND BEvERAGE SECTOR

What type of cuisine does Hakkasan restaurant have and what are some signature dishes?Our main cuisine is Chinese Cantonese. All of our dishes are based on traditional Cantonese cooking, but we give it a modern twist in all of our menus. It is not fusion; it is pure traditional Chinese cooking. Sixty percent of the dishes are signature dishes and the remaining 40 percent are the creative influence of the chef working with local produce as much as he can, making up the whole menu.

What do you think is unique about Hakkasan?

It is all about giving people an experience, all of the elements have to come together…if it is about the food, the drinks, from our cocktails to our wine list, the music etcetera…all of these different elements together have a very positive effect on our brand and brand identity where we give people the complete experience from the moment clients arrive to the moment they leave. The food has to be phenomenal, if you look at our restaurants in London, the first Hakkasan

business insight | food & beverage

The Edge | 77

built this hotel he actually got in touch with us and tried to find out if we would open a Hakkasan here in this property, and here we are today.

Is getting supplies one of the main challenges the restaurant industry faces in Doha?

That is certainly one of the challenges; we have adjusted our menu slightly. We cannot obtain all of the products that we would like to have so we have changed some of the dishes and we have brought in new dishes with products that are locally and constantly available. It is still a little bit up and down, the deliveries of products here in Doha. Today, it all came in a container and everything is available this week, next week the container may be delayed and then there is no, for example, tomatoes, beef or fish. So, that is definitely a challenge.

From where does Hakkasan receive the fresh produce and how does the process work?

Everything is imported in Doha, so we have some suppliers who ship directly from China or Europe. We use some suppliers from Dubai who ship it to Doha and whatever else we can get directly from the local suppliers here, so we are using the same supply chain as the hotel, so everything is ordered through the hotel.

Are there any challenges in importing the food?

Doha is pretty much organised with suppliers so they transport the food correctly in refrigerated trucks, which is very important. In that respect with the local suppliers we don’t have any main challenges. We went a few months ago to visit all of the suppliers to know where they store all of their food. We wanted to ensure that they follow all hygiene rules, to make sure that once it comes to the hotel that we are confident that it has been stored properly before we have received it.

Do you have an alcohol permit?We go through the hotel. We don’t have

an alcohol permit ourselves but the hotel is licensed so we are using that. Doha only has one alcohol supplier, with whom we have very good relations. They have been very helpful because they have their own

“Sixty percent

of the dishes are signature dishes and the remaining 40 percent are the creative influence of the chef working with the local produce.”

opened 11 years ago and they achieved a Michelin Star status in the first year. It was the first Chinese restaurant ever to receive a Michelin star, that was a phenomenal award and recognition for the restaurant.

A Michelin Star is based on the food, the service, and ambience that you give to the client. In Europe, you have the Michelin guide that was previously used by Michelin the tyre maker, who gave out a little booklet if you were travelling around Europe saying you should try this and that restaurant in all of the different countries, and they gave the restaurants stars. The maximum Michelin stars that a restaurant can achieve is three. We are very proud to have one Michelin Star for our original Hakkasan in London. The second Hakkasan in London, which opened one and a half years ago in Mayfair, also achieved a Michelin Star in its first year. Our restaurant in New York, which we opened eight months ago also achieved a Michelin Star. It is a phenomenal achievement for us as a brand and all of the other restaurants have the same approach, the same quality, and standards because what we do in New York and what we do in London, we do everywhere else. The benchmark for us is London, that is where we are from originally, where it all started.

Where else in the Gulf region are there Hakkasan restaurants, and have they received any awards?

We have one in Dubai and Abu Dhabi, and Doha is the third one in the region. Abu Dhabi has won a lot of awards from restaurant of the year and chef of the year, and best Chinese restaurant in Abu Dhabi. We are very proud of achieving those awards in Abu Dhabi.

How was the restaurant market study conducted before taking a decision to open Hakkasan in Doha?

It is not as big of a market as we have in Dubai, New York and Los Angeles. It is a different mix of clients that you have here in Doha. It is much smaller but we believe since we are within the St. Regis hotel, which has very high standards and in this whole operation also fits a Hakkasan. The owner of the hotel, Mr. Al Fardan, is a big fan of Hakkasan, and knows it from London. He has been in Dubai, he has been in Abu Dhabi, he has been in New York and when he

food & beverage | business insight

78 | The Edge

portfolio of wines but we also have a lot of special imports, which we consolidated in Europe, that we have imported through the alcohol supplier QDC to get it into Hakkasan in Doha. We have our own very unique wines on our wine list that you can’t get anywhere else in Doha.

By offering a unique wine list, will Hakkasan attract more guests?

We believe so. All of those elements make us different to other restaurants. It is our challenge to make sure that we can deliver that and that is why we are different…In this part of the world if you are able to serve alcohol then you normally have a limited choice of what the supplier offers from their portfolio. We brought in forty percent of our wine list as special imports so that it is

“Hakkasan London was

the first Chinese restaurant ever to receive a Michelin Star, that was a phenomenal award and recognition for the restaurant.”

unique to Hakkasan and unique to Doha, so I am sure that our guests will appreciate it.

How does the restaurant industry in the Gulf region differ from other parts of the world?

There is definitely a difference between Dubai and Doha. Dubai has obviously built up its name for being very vibrant and very fast. Abu Dhabi is picking up; Doha is definitely going to pick up considering what is going to happen here in the 10 to 15 years in preparing for the World Cup. That has a lot of work that needs to be done on the infrastructure so that will bring a lot of business to Doha so in that respect we also believe that we are here in good time. It will only grow and that is good for the country, good for this hotel and good for Hakkasan at the end of the day.

business insight | food & beverage

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financial services | business insight

Barometer reading of the insurance and reinsurance sector

Shehan Mashood spoke exclusively with Akshay Randeva, director, strategic development at Qatar Financial Centre Authority (QFCA) about what the insurance and reinsurance barometers they have developed say about the two sectors in the region in the future.

INSURANCE/REINSURANCE

What was the reason behind developing the MENA Insurance Barometer and Reinsurance Barometer surveys?Our motivation for compiling and publishing the annual (Middle East North Africa) MENA Insurance and Reinsurance Barometer reports is threefold. Firstly, the region’s insurance and reinsurance sector is experiencing tremendous growth, and exhibits further significant potential going forward. The QFC Authority is committed to highlighting these opportunities to the global and regional insurance and reinsurance communities.

Secondly, data and intelligence on the key trends and drivers shaping the industry are still not as easily accessible as in other markets – neither in terms of reliability and accuracy nor in terms of depth and quality.

And finally, as a leading financial centre in the region we see it as our obligation to improve the transparency of the sector with the ultimate goal to facilitate more robust decision making and promote the professionalism of the

80 | The Edge

insurance premium growth is tremendous. The size and potential of the reinsurance market becomes obvious when looking at the cession rates. Approximately 40 percent of all non-life premiums written by GCC-based insurance companies are ceded to reinsurance companies, translating into a reinsurance market volume of roughly US$5.1 billion (QR18 billion) for the GCC in 2011.

How do you expect the GCC insurance barometer and the forthcoming MENA Insurance Barometer to aid the insurance industry in the region, and perhaps enhance transparency?

The 2012 GCC Insurance and Reinsurance Barometer editions as well as the forthcoming MENA Insurance Barometer provide unique qualitative insights into the sentiment of the most relevant global and regional players in the marketplace, insurers, reinsurers and intermediaries. The research provides a snapshot of the current trends and drivers. It also reveals market participants’ short term expectations on pricing and profitability levels, the fastest and slowest growing as well as the most and least profitable lines of business, and general trends such as consolidation or the outlook for foreign insurers’ market share.

The surveyed executives see room for improvement, for example, in terms of accepting the need to further invest into education and professionalism, but also the crucial role of improved regulatory and governance frameworks across the region.

In contrast, reinsurance by its very nature, is a global business. To a major extent, the market’s supply and demand dynamics that can be observed in the GCC region are determined by earthquakes in Japan, hurricanes in the United States and dislocations in Western financial markets, to name just a few global factors.

Another recurring topic is the need for higher retention rates, that is, the need for direct insurers to keep a larger share of their original business on their own balance sheets. Insurers also need to take on some of the risks, rather than purely relying on reinsurers, as an incentive to improve underwriting and risk management standards. Higher risk retentions would

business insight | financial services

“Insurers also need

to take on some of the risks, rather than purely relying on reinsurers, as an incentive to improve underwriting and risk management standards.”

sector, both for domestic and foreign market participants.

What are the prospects of the insurance and reinsurance markets across the region?

Insurable assets in the Gulf Cooperation Council (GCC) are growing rapidly. Huge public and private infrastructure and construction investments are driving the need for insurance and reinsurance solutions in the region. In 2011, the GCC countries generated a combined gross domestic product (GDP) of an estimated US$845 billion (QR3 trillion) at constant 2005 prices – ranking the GCC among the 20 largest economies in the world. The total GDP of the MENA region including Turkey exceeded US$3.3 trillion (QR12 trillion), close to five percent of the world’s total. As an economic block the region would rank as the world’s fifth largest economy, almost matching Germany’s GDP.

What are some specifics on the performance on the MENA insurance and reinsurance markets?

In 2011, the MENA region as a whole generated annual insurance premiums of more than US$40 billion (QR145 billion). The GCC’s premium contribution stood at approximately US$14.9 billion (QR54 billion). Between 2007 and 2011, at average real growth rates of 7.5 percent and 10.1 percent the MENA region’s non-life and life insurance markets, respectively, have expanded significantly faster than GDP. We expect this pattern to persist, driven by continued economic growth and accelerating economic diversification, but also in view of the low insurance penetration, which describes insurance premiums as a share of GDP.

The MENA region’s insurance penetration in 2011 still stood at a low rate of 1.3 percent. The GCC’s ratio came in slightly higher at 1.5 percent. This is a mere fifth of the global average, despite the fact that some of the region’s countries, such as Qatar, exhibiting some of the world’s highest GDP per capita levels. As GDP per capita is empirically proven to be single most important determinant of insurance penetration the potential for further

The Edge | 81

ultimately benefit the professionalism, sophistication and stability of the region’s insurance markets at large.

The previous insurance barometer showed a positive outlook for the sector, what has changed since then, and why?

The strong fundamentals of the region have remained largely intact. Above average GDP growth, continued high investments into infrastructure and construction projects. The region’s reinsurance markets have obviously been affected by the record-level global catastrophe losses in 2011. Prices have firmed in a number of markets and lines of business, with a certain impact on the regional markets. More fundamentally, the region’s perceived status as a ‘non-catastrophe’ area has come under closer scrutiny.

Why are commercial insurance lines higher in percentage than personal insurance lines in the region?

This is a general observation in emerging insurance markets all over the world. It reflects the fact that the commercial sector’s insurance needs tend to emerge earlier than those of the middle class where awareness of the benefits of insurance develops more gradually. In the GCC region, the main reason for this pattern is the exceptional amount of major infrastructure, energy and construction projects, which shape the region’s lines of business mix.

The survey mentioned that foreign insurers would gain a larger market share, has this come to pass? What do they offer that local insurers don’t?

In general, foreign insurers expand their market share in a gradual and cautious way. According to many of our survey participants, foreign insurers’ competitive edge is in the areas of superior financial security, technical expertise, customer focus and distribution know-how. In addition, the expatriate community – which is growing again - tends to choose insurers from their home countries. However, the expansion of foreign insurers continues to be slowed down by a relationship-

driven way of doing business, in commercial lines in particular.

What do you see as challenges to Qatar’s and the region’s insurance markets?

To some extent, Qatar’s insurance market is in a unique position, as many of the challenges seen in other countries do not apply. One example is the political instability that in large parts of the MENA region is considered the most relevant threat to the operating environment. Other potential threats include global economic uncertainty (in particular the crisis of the eurozone which is an important trading partner to the MENA region). Again, Qatar’s exposure is comparatively minor. And finally, fragmented insurance markets are frequently mentioned as a challenge – not in Qatar where the top five insurers account for more than 80 percent of the market. What remains a relative weakness of Qatar is the shortage of human capital that constitutes an exceptionally high reliance on expatriate staff, and could cloud the medium to long-term prospects.

Will the expected population increase in Qatar affect the insurance sector?

Yes, it will drive motor and health insurance in particular. The positive impact from a growing population is relatively easy to project as these lines are (planned to be) of a compulsory nature. The combination of population growth and the high share of young as well as increasingly affluent people, this massive under-penetration presents an enormous gap which will have to close in the years to come, in particular as governments in the GCC region have started to make certain insurance lines compulsory, such as medical and motor.

There is lack of enterprise risk management frameworks in the GCC market, how can these be addressed?

Regulators are increasingly putting pressure on domestic firms to enhance their enterprise risk management processes. Finally, management teams and investors alike see a stronger need for appropriate internal risk management frameworks as a prerequisite to protecting their company’s balance sheet.

“The GCC’s [insurance]

premium contribution stood at approximately QR54 billion in 2011.”

financial services | business insight

82 | The Edge

productsand reviews

Subtitled as ‘A cross-cultural guide for business and life in the Gulf’ this successful book has been mandatory reading for every newcomer to this part of Arab world since it was first published in 1998. Indeed, the book has been republished almost every year since and twice in 2008. And now for the first time the original version has been completely overhauled and updated to more accurately reflect the substantial changes in the Middle East over the past few years, including the Arab Spring, declining attitudes towards Westerners by some and the rapid modernisation in countries such as Qatar and the United Arab Emirates.

Author Jeremy Williams OBE, as you might expect, has spent almost forty years living and working in the region as a diplomat, consultant and correspondent. His book, as the title suggests, is aimed at businessmen but really offers sage advice for anyone. His admiration for the Arab people shines through and in his preface Williams underlines that his aim is to foster understanding between visitors to the region and the local community, to help build relationships and to avoid the kind of frustrations that can quickly stem from what are often very different ways of doing business and approaching the world.

Williams is at pains to point out that his book should not be taken as definitive. However, it does come close, and contains more information than earlier versions, including maps and references. He also often goes into minute detail about the nuances of decorum in different countries such as Saudi Arabia or Kuwait, making it an indispensable tool for businessmen intending to conduct operations across the region. Though it is largely intended for newbies, upon reading this new version of Don’t They Know it is Friday?, The Edge came to realise that no matter how long you have been in the region, it really does take a lifetime to become aware of everything that you might need to know. Thankfully we have Mr Williams’ wonderful book to help us. Highly recommended.

The Sony, Xperia Z features a five inch full HD 1080p display, a Snapdragon S4 Pro quad-core processor, 13 megapixel fast-capture camera. Featuring the latest in Sony technology, content, design and connectivity with rich user experiences, Xperia Z will launch globally in Q1 2013. The smartphone shares capabilities with Sony digital cameras and features Exmor RS for mobile, the world’s first image sensor with HDR (High Dynamic Range) video recording for smartphones. HDR technology offers clear images against strong backlight, so users can capture razor sharp pictures and videos whatever the conditions.

The ePad Gamer is a unique tablet in the shape of a handheld gaming console, which offers more than 1500 amazing pre-loaded games. With the full functionality of a regular tablet using a capacitive touch screen supported by a five megapixel dual camera, the ePad Gamer allows users to click and share their photos onto social networks.

With the variety of Android pre-loaded games, users can access games such as Angry Birds, offering limitless entertainment. Those especially fond of the classics such as Mario and Contra will already have access to a vast number of such games using the pre-installed gaming console emulators which allow users to relive their favourite childhood memories.

The Toshiba Satellite U940 is powered by 3rd Generation Intel Core processors and Windows 8, and the 14 inch laptop features an NVIDIA GeForce GT 630M for faster multitasking capabilities. This feature is complemented with NVIDIA Optimus Technology that delivers better performance and battery life. Featuring Toshiba PC Health Monitor, the Satellite U940 also monitors your notebook’s hard drive condition and helps you detect system problems in advance. Its eco utility feature lets you manage your laptop’s power consumption, extending battery life

and reducing environmental impact. The computer also features USB3.0 ports, Bluetooth 4.0, HDMI and 2-in-1 Bridge media slot, the Satellite U940 provides superfast data transfer. Powered with the innovative USB Sleep-and-Charge feature, the U940 allows you to charge mobile devices even when the laptop is switched off. The built-in SRS Premium Sound 3D also delivers quality audio.

Read it: Don’t

They know

It’s Friday?

SONY Xperia Z

ePad Gamer Tablet

Toshiba Ultrabook

Available at Virgin Megastore for QR120

84 | The Edge

It takes customisation to a whole new levelOne of the biggest draws of this movement might be the ability to customise the product you want to buy. Product developers can have standard designs that customers can alter to their liking. It will also be much cheaper to build one offs than before.

It could change manufacturing foreverIf the process of additive manufacturing takes off it could change the model of mass production forever. A localised approach to building what you need would impact economies and jobs all over the world that depend on the manufacturing industry. It would also decrease the cost of production for entrepreneurs looking to develop new products.

It reduces the carbon footprintBy printing what you require in your city, or even at your desktop, the carbon impact of transporting products half way around the world could be diminished. Materials however, would still need shipping, if they cannot be locally sourced.

It challenges intellectual property lawsMuch like the music and movie industry over the past decade, manufacturing companies could now face huge challenges. It can become very difficult to protect intellectual property on the Internet and even more so, to enforce. Anybody could replicate designs from a manufacturing company and reproduce them.

It embraces new materialsToday, most printed products are either some form of plastic or metal, but soon new types of materials could be developed. In fact a recently formed company called Deep Space Industries plans to mine asteroids for minerals and print parts using the technology.

It could print organsAnother company called Organovo is a bio-printing venture that is looking to design human cells that can then be printed as living tissue. The idea is to develop technology that in the future might able to print entire bodily organs for people.

10 things

10 th

ings

Things you might not know about 3D printingThere has been a lot of talk recently about 3D printing, and how it could change our lives. The possibilities are endless, from transforming the business model of manufacturing, to theoretically printing organs.By Shehan Mashood

It is not newAdditive manufacturing, or 3D printing as it is more commonly known is an industrial technology that has been around for about 30 years but has rapidly gained in popularity recently. It works by reading a computer-designed model and layering liquid or powder material in slices on top of each other to build a physical product using a machine that works in the same way as a printer.

But it is much more affordableThe cost of 3D printers has dropped drastically, with some available for as cheap as a few thousand Qatari Riyals. The technology today is developing at a very rapid pace and could soon be ready for mainstream retail.

It has no limitsCutting and shaping material has its limitations based on the tools, the size of a product or indeed a workman’s skill to create a mould (for processes such as injection moulding), design has been somewhat hindered. However, since the 3D printing process works by layering material over each other the amount of detail and intricacy of design has no bounds anymore.

It facilitates the sharing of designs anytime, anywhereAnother huge advantage could be the development of an online designer community. Since design is all you need to create a new product, people can collaborate from all around the world on projects. They can also share designs for people from anywhere to download.

the edge - feb 2013 (issue 41)

Documents

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