Business Dubai | No end in sight to Bahrain-Saudi causeway delays

Trucks bringing goods to Bahrain are facing 24-hour delays on the Saudi side of the 25km King Fahad Causeway, with no solution in sight, an official said yesterday. The crisis is damaging trade between Saudi and its neighbours, warned Bahrain Chamber of Commerce and Industry (BCCI) board member Kareem Al Shummari, Gulf Daily News reports. He said approaches by the joint committee between the BCCI and Bahrain's customs and ports directorate had proved fruitless, with business leaders in Saudi not prepared to press the issue with authorities. The gridlock is hardly encouraging for fans of open borders and free trade. Despite being open for the past 22 years, and being a major route for trade and tourism, Bahrain and Saudi have yet to smooth out customs procedures. The latest delays are believed to hitting imports of cement, kicking back into Bahrain's construction sector. Bahrain is not the only Saudi neighbour to suffer border gripes. Long queues at the Abu Samra border have left some truck drivers waiting for days for clearance before crossing from Saudi Arabia into Qatar. Three-day delays at the border during 2006 were blamed for a 25 per cent drop in Qatar's ready-mix production capacity. Bahrain and Qatar will be hoping for better luck with their own $2bn, 45km causeway, cutting out a Saudi detour. Plans have been in place since 1999, but work is only expected to start sometime this year. Backers expect 4,000 vehicles a day, 25 per cent of which would be commercial traffic.

Why should low-cost carriers have all the Sales fun?

Low-cost carriers have been around for years, and if there’s one sure-fire way for them to drum up a little publicity, to remind travelers they really do offer low-low fares, it’s the ‘all seats for sale from one dollar/pound/euro/dirham’ offer. It works as well in Luton as it does in Kuwait.

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Why governments prefer domestic bliss

A new report PricewaterhouseCoopers says Britain could have had one of the world's biggest sovereign wealth funds had the windfall from its North Sea oil been saved rather than used to cut taxes and boost spending. The news will cause wry smiles among Gulf funds, particularly in light of EU moves to demand greater transparency from sovereign wealth funds.
The report points to Norway, which has used its North Sea revenues to build up a frighteningly profitable sovereign wealth fund worth some $650 billion, and says had the UK saved just half said its windfall it would have a fund bigger than that of Kuwait ($430bn).

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Bahrain stubs out F1 posters

News from Bahrain is that all tobacco advertisements relating to Formula One have been pulled thanks to an anti-smoking campaign by health officials. The move is the latest evidence Gulf states are getting serious about tackling what Bahrain’s public health assistant under-secretary calls an “epidemic” of smoking.

Hats of to Bahrain for stepping up, and with the F1 race only weeks away. "This is a beginning and will go a long way in our ultimate goal of getting Bahrain to be a smoke-free nation," Dr Mariam Al Jalahma told the Gulf Daily News.

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The one-eyed man is not King

In amongst all the cranes and cement factories, Qatar is to be commended for giving over space in the bustling West Bay area to non-profit project. The Al Noor Institute for the Blind is building a stunning new facility for the visually impaired.

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Residency cap don't fit

The proposed six-year residency cap on expatriate workers in the Gulf is unlikely to be introduced, senior officials told a newspaper on Saturday. “A proposal on a six-year residency cap on expatriates already exists. However, a ceiling on all expatriates working in the Gulf is unlikely, as all the Gulf states may not endorse a proposal of this magnitude in the near future,” Times of Oman quotes a sources close to Gulf policymakers.

The proposal looks to be going the same way as monetary union between Gulf states. Someone thinks it might be a good idea, but member states can’t agree on the details, or the deadline.

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Nakheel’s REIT path

Nakheel hopes to raise as much as Dh10 billion creating tradable real estate investment trusts. The revenues will be used to fund new projects; the REITs will be listed in Singapore and Dubai.
The plan is to create two REITs: one for infrastructure with an asset value of between Dh5 billion and Dh6 billion; another for homes with a value of between Dh3 billion and Dh4 billion.

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Let’s all move to Qatar

Reports from Qatar suggest the government is to ban landlords from raising rents for the next two years. The drastic action is to help combat record inflation rates. A 27.7 per cent surge in rents spurred inflation in the world's largest exporter of liquefied natural gas to 13.74 per cent in December, the second-fastest pace on record.

It is the latest in a series of Gulf government schemes to get a grip on falling purchasing power. If it’s not rent caps, it is price controls on basic foodstuffs or bumper pay rises for public sector workers.

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Gulf funds as Abramovich’s Chelsea

Another day, another ambitious announcement from a Gulf sovereign wealth fund. Yesterday Qatar Investment Authority said it was to spend $15bn over the next year acquiring assets, today it is the turn of Dubai International Capital. The investment fund, owned by the ruler of Dubai, plans to invest $5 billion in China, India and Japan over three years.
"Clearly because of the growth in emerging markets, we believe companies having exposure to emerging markets will grow significantly as well," says the fund's chief operating officer, Anand Krishnan. DIC wants to raise its asset base from $13bn to $30bn by 2012.

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Inflation busts faith in governments

It is failing cooperatives, it is greedy supermarkets, it is ineffective government policies, it is imbalances in public and private sector pay. Whatever it is, the facts on the ground are that the cost of living is increasingly expensive. Consumers in Kuwait claim the price of basic foodstuffs has risen as much as 40 per cent in the past three months.

With the official inflation rate at 7.3 per cent in October, Kuwait Times says the price of staples (cooking oil, rice, eggs, fresh milk) has shot up and that low-income families are struggling to pay the bills.

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Not Christian, but love, actually

With St Valentine’s Day banned in Saudi and under scrutiny in Kuwait, the Gulf is a tough place for budding Romeos and Juliets. In Saudi, the religious police spend the preceding week cracking down on red rose salesmen; Kuwait’s National Assembly Committee for Monitoring Negative Alien Practices has it eye on what it sees as excessive commercialization.

And they’re doomed to fail.

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The Arab League’s fear of phone-ins

More evidence, if it was needed, of the gaping chasm between how Arab governments view the media, and how the media actually is. The Arab League is proposing a satellite broadcasting charter which would entrench state control over broadcast media and curtail political expression, reports Arabian Business.
The move is thought to be in response to TV talk shows, and the worry that privately-owned stations are too viewer-focused. The paper says Saudi Arabia appears to have recently banned live talk shows after someone mocked the size (30 per cent!) of a civil servant salary increase - a position seen as a criticism of the royal family. Saudi stations still run phone-in programs but it is not clear if they are still live.

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Private investors take flight

The Arab Business Angels Network launched last week. The network hopes to put entrepreneurs in need of finance in front of private investors with time and money to get involved. ABAN will also use a fund of its own to get into promising start-ups.

The idea is wonderful – this type of private financing is commonplace in Europe and US (where $25bn is invested each year), but doesn't exist in the Middle East. ABAN hopes to find, and nurture, small businesses with the potential to grow. Entrepreneurs create wealth, create jobs, and help diversify the economy. Just as important as the money will be the experience; it is hoped cashed-out entrepreneurs will get involved, passing on their knowledge.

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Dumb Bahrain tastes Dubai's strike strife

Dubai, so often the pioneering driver of economic development in the Gulf, is well used to having neighbors copy its ideas. There must be a sense of satisfaction this morning to see the neighbors also get lumbered with some of the downsides. Workers on Bahrain's Durrat al Bahrain project are striking over pay and conditions, and their bosses appear to have no idea how to sort the problem.

Media reports claim more than 1,000 workers are now locked in their camp, as the bosses on the $6bn project scratch their heads. The workers have been on strike for the past two days demanding better pay, hot water, better medical facilities and other basics such as lights in the toilets. They are being paid $150 a month and have been encouraged in their complaints; the Indian Ambassador says his government is planning to impose a minimum wage of $265 for all Indians in the Gulf.

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The cost of exclusion

Young entrepreneurs in Dubai are to receive a 20% reduction in rents in a move to foster the development of new business talent in the emirate, says Arabian Business. There is small, but significant, qualification to this rent rebate: start-ups must be members of the Sheikh Mohammed bin Rashid Establishment for Young Business Leaders.

While the discount should be applauded – rents can gobble up one quarter of business costs, rates are up 40 recent in the last year, Dubai rentals are now the world's ninth most expensive – it is a pity this scheme isn't extended to a wider range of entrepreneurs.

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Football's leaving home

If the UK papers are to be believed, Premier League football looks set for Singapore, Tokyo and Los Angeles. It would seem a safe bet to add Dubai to that list.

The Premier League, the world's most watched – and most commercially successful, sporting event, has long recognized the value of international sales. It estimates hosting games overseas, as it plans to do from the 2010-2011 season, would bring in nearly $500m in extra TV rights. There would be more to make on separate sponsorship deals. Host cities would be asked to bid for the right to stage one game, to be held in January (mid-season). Dubai, with a new all-purpose stadium at Sports City, great weather, and increasing ties to Premier League football (Emirates sponsor Arsenal, Dubai International Capital have been linked with Liverpool) must be a shoo-in for a top game.

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Thumb-power

SMS remains a technology with lots of potential applications waiting to be discovered and implemented — for everything from payment systems to information on demand. Given the mobile network operators' strong desire to maximize profits, and the need for, say, Etisalat or Du to differentiate themselves, a good idea from a start-up has an excellent chance of getting heard.

The trend-spotting site Springwise has a good example from the Philippines, where text messaging has caught on in a huge way.

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Quick thinking creates slow-tech solution

Full marks to Jazeera Airways for its quick and positive reaction to the ongoing internet connection slow down. With more than 60 per cent of the airline's bookings being made online, it has produced a slimmed down version of its site (just 16 kilobytes in size, loading in less than 4 seconds on very slow connections) to cope with the problem. And released a press release telling the media all about it.

I have no idea how well the site responds to the slow down, or much business Jazeera will make and/or save, but such responsiveness deserves credit. It will be interesting to see if it carries on with the low-tech site after the problem is cleared. Even on a good day, I'd bet customers prefer quick and simple to slow and complicated.

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Connecting with the right excuse

For commuters using the UK's rail network autumn mornings would be sprinkled with late running trains. The standard, slightly baffling excuse would be that there were leaves on the line. Retailers, explaining a poor season's sales, often fob off investors with the excuse that the weather was 'wrong', either too rainy or too sunny.

For Middle East telecom providers there is standard go-to line when services are disrupted: 'damage to underwater cables'. A cable in the Mediterranean was damaged last week causing a slow down in internet connection speeds across the region. This was followed by damage to a cable off the coast of Dubai, and then another off Qatar. If one is bad luck, and two is careless, what does that make three?

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KFC flaps its wings

If you want to build the world's biggest sandwich you will have to top the 2,500kg monster created by Wild Woody's Chill and Grill. The longest line of pizza currently stands at 186.3m, in Treviso, Italy. Doha can now claim to be the home of the world's largest bucket of fried chicken – a 300kg mountain courtesy of Qatar Food Company, the franchisee owner of KFC.

Setting the record has certainly made the papers, at least locally, and no doubt QFC is proudly counting the press clippings. "We wanted Doha to be in the record books and what better way to offer customers abundant supply of the product they love, while setting a record on the way as well," says Sherif al-Ashry, a company official.

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Credibility gap

Citigroup has hammered Société Générale, saying its recently-discovered $7 billion fraud has threatened the bank's entire credibility. The financial industry might like to imagine the French bank's current difficulties can be kept local. They won't.

The singular actions of Jérôme Kerviel, the French trader currently being questioned by French police, threaten to damage the reputation of the entire finance industry – from banks, to advisors to credit rating agencies - at least in consumers' eyes. The SocGen debacle comes less than six months after Northern Rock, a British bank, failed, and within the same 12-month period that US banks realized they had botched their bet on the sub-prime market. To the man in the street, the banking industry looks like it is run by buffoons.

Credibility is all.

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Camp Fortune

Aldar Properties is to construct two residential cities for its workers. The two projects are expected to complete in 2010 and will eventually house 150,000 laborers.

"We are committed to provide respectable living conditions for workers ensuring security and safety," says Aldar Chairman Ahmed Ali Al Sayegh. "We believe that the company's progress is attributed partly to the labourers who work hard in our projects. For our part, we provide them with facilities and first-class services along with transportation to move them from the residential compounds to work sites."

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Early contender for Quote of the Year

"A lord with billions in Great Britain cleans his own car on a Sunday morning, whereas people of the Gulf look for someone to hand them a glass of water from just a couple of meters away."

So speaks Majid al-Alawi, Bahrain's labor minister, quoted in Asharq Al-Awsat. Fond of the colorful quote, he says the Gulf is in danger of being swamped by an "Asian tsunami" of expat workers because locals are too "lazy" and "spoilt" to do simple tasks themselves, and that the threat is "worse than the atomic bomb or an Israeli attack".

I've heard these sentiments expressed several times in expat hostelries, but hadn't expected it from a government minister.

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AdLand's warped reality

It is a dangerous science reading too much into the world imagined by the advertising industry. If aliens were to land on earth and catch a five minute ad-break they would conclude human teeth are white and straight, credit is easy to come by, and drinking soft drinks causes people to sing and dance.

We accept the ad industry sells us a fantasy, but that shouldn't mean it loses touch with the real world. Middle East advertising asks consumers to suspend their grip on reality. The industry appears to have drawn up some very strange rules.

• Maids must be invisible. No family will be seen to employ a maid.

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Death by a thousand cuts

The Fed cuts interest rates, the UAE Central Bank, pegged to the dollar, is forced to follow suit. The difference here is that the US is hurtling towards recession, the UAE is not. In fact, it is trying to get a grip on a boom.

Today's comment doesn't need to come from Kipp. We'll leave it to Shaikh Sultan bin Saud Al Qasimi, chairman of Barjeel Geojit Securities and managing director of the Sharjah-based Al Saud group. Cheaper money will only fuel consumption and, in particular, push up property prices, he tells Khaleej Times.

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Landmark branding

A consortium of Qatari funds is stumping up the $3.88 billion to fund the building of London's "Shard of Glass" skyscraper. The 310-meter tower, described as "Europe's most recognisable commercial property landmark", will add two million square feet of commercial space to the City.

It is another example of cash-rich Gulf funds stepping in to finance credit-crunched Western ventures. This one differs slightly in that it is a new build, high profile and slightly risky; nearly 400,000sqft of space has been pre-sold but filling the rest could prove sticky.

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Creating a Culture of Productivity

"There is no possibility of achieving competitiveness without raising the culture of productivity," said Professor Michael Porter, addressing the audience at 2nd Global Competitiveness Forum in Riyadh on Monday. If past experience of conferences in Saudi are anything to go by, half his audience would have been snoozing, the other half considering their lunch options.

Not that this should stop the Porter, professor at the Harvard Business School, an expert on economic competitiveness and paid north of $50,000 for making the trip, from delivering his presentation.

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Got talent

A global study of MBA students at top European, US and Asian schools has revealed that the Middle East needs to do more to attract top international talent. File this one under 'No Shit, Sherlock'.

To be fair, a closer look at the study (Hill & Knowlton's eighth annual Corporate Reputation Watch) does throw up some interesting insights, and explains what most of us already knew. MBA students much prefer publicly-listed companies to government or family-owned; one fifth are prepared to move abroad; and three-quarters would be happy to switch industry.

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First the World, tomorrow the Universe

Nakheel, developers of the three Palm islands and The World, plans to build The Universe. The project will comprise of a series of islands strung along the Dubai coast, stretching from Palm Jumeirah to Palm Deira. The construction will take 20 years to complete; choosing the name couldn't have than longer than 20 seconds.

As if to head off any criticism that its offshore developments were creating an environmental disaster zone, the news was preceded by the announcement Nakheel is to commit $55m to raise awareness of coastal development issues.

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Thrillingly sensible

Emaar Malls has inked a deal with Sega Corporation to develop and operate indoor theme parks. Emaar plans to spend $4bn opening 100 malls across the Middle East, North African and Indian subcontinent. Sega is a global leader in interactive entertainment facility operations.

I can't find anything to fault in this. Good business marrying up with another good business to create a better business. I'm sure large sums were involved, but that shouldn't detract from the business sense.

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