Trade and Export Middle East | March 2014

ISSUE 26 | March 2014

www.tradeandexportme.com BUSINESS INTELLIGENCE FOR INTERNATIONAL TRADE

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EDITOR’S LETTER

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I must confess that I have been looking forward to the March issue, as I get to present the winners of our Trade Excellence awards 2014.

The awards were held on the 25th of February at the ritz carlton, DIFc. While driving to the venue, I got stuck in traffic heading to the Gulfood. So, I was bit nervous about the attendees making it on time for the event.

To be honest, it was difficult to keep smiling with so many issues going on back stage. But all this trouble

was worth it, since the event was a complete success. The awards started at 8:00pm with the opening remarks and the keynote address and were followed by 4 awards under “logistics.” To add an element of fun, we gave away 3 raffle prizes to the audience. The event ended at 10:00pm, with awards in the free zone, legal, finance and business support categories, and I was happy to get instant feedback from people about how much they enjoyed themselves. Of course, all this wouldn’t have been possible without our sponsors and the hard work of the team. a big congratulations to all our winners and finalists! It was indeed tough competition.

The 275 plus people present there were a proof of the important role that trade plays in this region. Trade is all about connecting people and removing boundaries and that is what we believe in doing too.

as we move forward with this conviction, I hope you will enjoy our March issue and the stories that we have put together, along with our coverage of the Gulfood 2014 conferences. I would also like to take this opportunity to introduce our advisory board members to you on page 6. February was a busy month, with too many things on our plate, but as they say, all’s well that ends well. and it was indeed a befitting ending to our month!

Until next time..

Editor’s note…Chairman

Dominic De Sousa

CEONadeem hood

EDITORIAL

Group Director of EditorialPaul Godfrey

[email protected] +971 4 440 9105

Senior Editoraparna Shivpuri arya


Business Assistantadelle Louise Geronimo

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ADVERTISING

Group Sales Directorcarol Owen

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DIGITAL SERVICESwww.tradeandexportme.com

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While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be

held responsible for any errors therein.

Aparna Shivpuri Arya, Senior Editor, Trade and Export Middle East

3MARCH 2014

44

46

about town

updatesNews: International news and trends with domestic trading relevance.

eVeNTs CALeNDAR: A listing of the exhibitions and conferences in the region, to help you spend less time planning and more time attending.

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15

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Gulfood 2014: We present you a roundup of the event and the conferences which were held alongside.

Dubai Exports: The organisation recently opened its office in Mumbai, India. We bring you a coverage of the event.

ISSUE 26 MARCH 2014

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4 MARCH 2014

CONTENTS

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trad

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focu

sTrade Excellence Awards: 25th of February was an important date for us, as we hosted our second Trade Excellence Awards. Turn the pages to find who the winners were.

Free zones: Aparna Shivpuri Arya speaks to Ibrahim Mohamed Al Janahi, Deputy CEO, Jafza and Chief Commercial Officer, Economic Zones World, to understand what makes the free zone a magnet for businesses.

Interview: Souad Al Hosani, President, Nexus Business Services, is a woman of many talents. Here she speaks about her favourite project to Aparna Shivpuri Arya.

Logistics: Geoff Walsh, General Manager, DHL Express, KSA, explains, to Aparna Shivpuri Arya, the trade scene in the country.

FINANCeCurrencies: Western Union Business Solutions team gives us the heads up on the major currencies for March 2014.

Islamic finance: How will 2014 shape up in terms of opportunities for the Islamic finance industry? Ahsan Ali, Global Head of Islamic Origination, Standard Chartered Bank, gives us a lowdown on the prospects for Islamic finance in 2014.

47

International trade: Dr. Mohammed Al Zarooni, Director General, Dubai Airport Free Zone (DAFZA) gives us an analysis on the impact of Expo 2020.

COUNTRY FOCUsBahrain: Abdulrahman Al-Baker, Executive Director of Financial Institutions Supervision, Central Bank of Bahrain, explains to us about the financial landscape in Bahrain and what the future holds.

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5MARCH 2014

CEO, Dubai Exports, Department of Economic Development, Dubai

Director, Foreign Trade & Export Support International Economic Relations Sector, Department of Economic Development, Abu Dhabi

Chairman, Regional Banking Commission (MENA)- ICC Paris

Corporate Communications Director, Dubai Customs

CEO, Ras Al Khaimah Free Trade Zone

H.E Saed Al Awadi Dr. Adeeb Al Afeefi

Lakshmanan Sankaran

Khalil Saqer Bin Gharib

Peter Fort

ADVISORY BOARD

For more information, please visit www.tradeandexportme.com

6 MARCH 2014

P.O. Box 61450, Dubai, United Arab Emirates. Tel: +971 4 881 8288, Fax: +971 4 881 9157 e-mail: [email protected]

www.aflogistics.com

• Automotive Logistics • Freight Forwarding & Customs Clearance • Warehousing & Contract Logistics• Corporate Transportation • Goods Transportation & Distribution • Relocations & International Moving

When it comes to integrated logistics solutions across the supply chain, you can trust Al-Futtaim Logistics to get your business moving ahead.

We can help your business grow.

2020READY

In line with the Smart Government initiative announced by UaE Vice-President and Prime Minister and ruler of Dubai his highness Shaikh Mohammad Bin rashid al Maktoum in May 2013. The UaE Banks Federation has unveiled the Mobile Wallet Project, that falls under the financial component of the initiative.

The Mobile Wallet Project, will enable device users to store and transfer money, and pay for goods and services electronically and conveniently through a common platform.

The Smart Government initiative aims to ensure that all key government services will be delivered via mobile phones and other advanced technological tools.

The Smart Government in the UaE is an advanced step of e-governance that aims to encourage government and government-related entities to provide creative solutions for round-the-clock, highly efficient and transparent services through mobile phone applications that meet customers’ expectations.

UaE’s ‘Mobile Wallet Project’ revealed

UpdATES

rEGIONaL NEWS

KSa has been one of the best performing G20 economies in the recent years, with a real GDP growth averaging 5.9% yearly from 2008-2013, according to QNB.

The authorities recently announced their 2014 state budget plan, projecting

another expansionary budget to continue the process of diversifying the economy. Based on a conservative oil price assumption of USD80/b, government revenues and expenditures are expected to be USD 228 billion in 2014, despite the expected declines in oil revenues.

The non-oil private sector is expected to be the key driver of growth in 2014, boosted by large public sector infrastructure investment and the rapidly growing population.

an announcement by the KSa Ministry of Finance (MoF) suggests that overall economic growth slowed to 3.8% year-on-year in 2013 owing to a decline in oil output. Oil production accounts for just under half of GDP. Production was raised during 2011-2012, mainly to make up for lower exports from elsewhere in MENa. however, it was cut back slightly in 2013 as production recovered in other MENa countries.

Meanwhile, non-oil growth grew by

a robust 5.0% year-on-year in 2013 as consecutive years of elevated government spending lifted business and consumer confidence and banks’ comfort in lending. In terms of sectors, the budget announcement indicated that the fastest growing sectors in 2013 were the construction (8.1%), the transport and communication (7.2%), as well as the retail sector (6.1%).

The non-oil sector is expected to continue growing strongly this 2014 reflecting government-led infrastructure projects, such as the riyadh metro and a high speed inter-city rail network currently under construction. Furthermore, the authorities are investing USD 86 billion in building the new King abdullah Economic city in an attempt to diversify the economy away from hydrocarbons into a knowledge-based economy.

USD 676 million

value of planned investments by Kuwait’s sovereign wealth

fund in Italy

Non-oil sector to drive KsA’s growth

UAE, Qatar indices to be reclassifiedIndex provider MSCI has reiterated that MSCI Qatar and MSCI UAE Indices will be reclassified from Frontier Markets to Emerging Markets at the May 2014 semi-annual index review.

MSCI has , meanwhile, reclassified equities across a broad spectrum of Asian and emerging markets as part of its February semi-annual index review.

Changes in constituents will take place after markets closed on February 28th, MSCI said in a statement.

8 MARCH 2014

Total volume of cargo handled by Oman’s Port of Salalah in 2013 grew by 6.5%, with 7.7 million tonnes of cargo compared to 7.3 million tonnes in 2012, figures were released in a report by the National Centre for Statistics and Information.

The volume of cargo handled by Port Sultan Qaboos also rose by 5.5%

in 2013, with 5.3 million tonnes of cargo handled versus the 2012 total of 5.1 million tonnes. The statistics measured the yearly period to end December 2013.

The report also stated that 6.6 million tonnes of the total cargo that the Port of Salalah handled in 2013 were comprised mainly of cargo

for exports, which stood at, an 8.2% growth on the 2012 total of 6.1 million tonnes exported. Inbound cargo for

unloading amounted to 1.2 million tonnes, registering a modest decrease of 2.3% against the 2012 total.

During Bahrain’s King Hamad bin Isa Al Khalifa’s visit to India, investment deals worth over USD 450 million were signed.

The King was accompanied by a business delegation that held talks with Indian officials from New Delhi and Mumbai. Also while in India, a Bahrain-India Business Forum was held, during which 7 deals and 27 memoranda of understanding were signed.

The agreements reflect the broad range of relations between the two countries across a number of sectors, from chemicals to financial services and from ICT to health care.

King Hamad’s visit to India was in line with Bahrain’s strong interest in boosting ties with India and other South Asian countries.

Non-oil trade between India and Bahrain grew over 135% between 2006 and 2011 bringing the figure up to USD 882 million in 2011. Total oil and nonoil trade for 2011 rose to USD 2.5 billion, up 280% from approximately USD 666 million in 2006. India is already the GCC’s largest trading partner, with bilateral trade forecast to have exceeded USD 175 billion in 2013.

UpdATES

rEGIONaL NEWS

Kuwait’s sovereign wealth fund will invest EUR 500 million (USD 676 million) in Italian companies in co-ordination with Italy’s own strategic investment fund.

The deal follows similar agreements with Qatar’s investment fund last year to invest in Italian companies operating in the fashion, food and tourism sectors and a

separate deal with the Russian Direct Investment Fund.

Kuwait and Italy will create a company with capital of EUR 2.5 billion, of which 80% will come from Italy’s strategic investment fund, the FSI, and the remainder from the Kuwait Investment Authority.

The FSI said the deal would be signed formally in March.

Kuwait to invest USD 676 million in Italy

Port of Salalah cargo volume grew in 2013

Bahrain, India boosts trade ties

9MARCH 2014

UpdATES

rEGIONaL NEWS

20 millionexpected number

of tourists to dubai by 2020

Many regional and international meeting and incentive groups, as well as corporate groups and business travellers, increasingly looking for meetings

facilities that embrace Islamic culture and comply with Islamic law.

In line with this, the Gulf Incentives, Business Travel and Meetings Expo

(GIBTM) will be featuring two seminar sessions that will highlight the rising demand in the Sharia-compliant market.

The sessions include “Business Travel in the Middle East” and ‘The habits of Middle Eastern business travelers’, based on research conducted by, international professional services firm, Ernst and Young.

This year’s GIBTM will be held at the Abu Dhabi National Exhibition Centre (ADNEC) on March 24th-26th. The event will provide a forum for in-demand Shariah-compliant meetings destinations and facilities.

The theme of this year’s Annual Investment Meeting (AIM), is “Investment Partnerships for Sustainable and Inclusive Growth in Frontier and Emerging Markets.” Representatives of 165 countries have been invited and a total of 10,000 visitors are expected.

The opening day of the congress will see the presentation of the first AIM FDI report, with a special focus on FDI flows

to and from frontier and emerging markets. Produced in conjunction with the fDi Intelligence unit of the Financial Times, the report will look at the key opportunities and challenges in these fast growth markets.

For the first time ever, developing countries absorbed more FDI than developed countries, with a 52% share, even if these inflows declined slightly by 4%.

According to Dr. Karl P. Sauvant, Resident Senior Fellow at the Vale Columbia Center on Sustainable International Investment (VCC) at Columbia University, New York, the rise of the emerging markets requires us to revisit our perspective on global FDI. Whereas the pattern shifted some 20 years ago from bipolar (dominated by the US and the European Community) to tripolar (entrance of Japan into the world FDI market and

the notion of the FDI Triad), and this characterization can no longer. He mentioned that it is still unclear whether emerging markets will be able to maintain their share in world FDI flows in 2013. Their share, whilst remaining important, might drop as growth in developed economies continues to pick up.

More of this will be discussed, during the Annual Investment Meeting which will take place in Dubai on the 8th – 10th April 2014.

GIBTM 2014 to highlight Shariah-compliant MICE destinations

The changing face of FDI

10 MARCH 2014

UpdATES

GLOBaL WaTch

During the year 2013, china has bought a total of 1,066 tonnes of gold, compare to the 975 tonnes by India, making the South East asian country now the largest consumer of gold in the world, according to the data released by the World Gold council.

Global demand for gold in jewellery in 2013 was the highest for 16 years, but investment funds were heavy sellers and the price fell by nearly a third during the year.

In India, consumption increased by 13% but

further growth was curbed by import restrictions aimed at narrowing the country’s current-account deficit. The council estimates around 200 metric tonnes was smuggled into the country.

china’s lead over India as the world’s top importer is likely to be sustained, said Marcus Grubb, WGc, Managing Director of Investment Strategy.

he also stated that china is 10 years behind India in terms of deregulation and growth of demand and given

that last year was such a strong year, it will be hard to equal that again in 2014, [but] the stock of gold in china is less than half of that in India, so there’s plenty more room to grow.

For decades, Beijing’s restrictions on the type of gold individuals could

own kept china’s gold market under wraps. Private ownership of gold bars and coins was prohibited until 2002. But with the liberalisation of china’s gold market, along with rising affluence, prompted people to start buying gold regularly.

as the world’s Group of 20 (G20) largest economies convene in australia, they have embraced a goal of generating more than USD 2 trillion in additional output over 5 years while creating tens of million of new jobs.

From the two-day meeting of Group 20 finance ministers and central bankers in Sydney said they would take concrete action to increase investment and employment, among other reforms.

The group accounts for around 85% of the global economy.

The targeted acceleration would boost global output by more than the world’s 8th largest economy russia produces in a year. The deal was also something of a feather in the cap of hockey, who spearheaded the push for growth in the face of some skepticism, notably from Germany.

There is no detail yet on how reforms to promote economic growth will be implemented or repercussions if targets are not met.

Leaders from G20 countries are expected to deliver their own plan for economic growth at a November summit in Brisbane. australia is acting as president of the G20 this year, following russia in 2013 and ahead of Turkey next year.

China overtakes India as world’s top gold consumer

G20 pledges USD 2 trillion boost in global growth

Russia said it welcomes the readiness shown by the European Union (EU) to create a free trade zone between the EU and Moscow-led Customs Union in the near future,

Russian Foreign Minister Sergei Lavrov said Russia backs gradual liberalising of trade relations with the EU, noting that Russia and its Customs Union’s partners needed to increase the competitiveness of their goods first.

Lavrov commented on the article written by EU High Representative for Foreign Affairs and Security Policy Catherine Ashton about the matter. According to him, he welcomes the idea of establishing a free trade area, and this indeed is proof that they are heading towards progress.

Meanwhile, Moscow welcomed “open and honest conversation” over the Eastern Partnership as well as energy dialogue with the EU, which he said was the cornerstone of Russia-EU strategic partnership.

EU-Russia to establish free trade area

12 MARCH 2014

In a move to boost its tourism sector, New Delhi has announced extending the visa-on- arrival facility to 180 countries.

The country’s Planning Commission after a high-level meet said the new facility would allow tourists to apply online and within a few days the visitors would be receive information about their visas on arrival.

“We have decided to extend visa-on-arrival to tourists from 180 nations. It will take five to six months to put the infrastructure in place. We hope to implement this from the next tourist session beginning October,” India’s Planning Minister Rajiv Shukla said.

“This move will provide a major boost to the country’s

tourism sector. This is historic,” said the Minister.

The number of foreign tourists arriving in India grew by 13% during the first nine months of 2013, United Nation World Tourism Organisation (UNWTO) data showed.

The visa-on-arrival facility will be initially offered at nine airports across India for a period of 30 days, then it will be extended to other airports as well.

India currently offers visa-on-arrival to nationals of 11 countries, including the Philippines, Singapore and Japan.

India is among the top 25 largest international tourism earners, but lag behind considerably in comparison with neighbours like China and Singapore in

the list of the world’s most visited places.

International tourist arrivals grew by 5% in 2013, reaching a record number of arrivals of just over 1 billion, according to the latest World Tourism Barometer published by the UN World Tourism Organisation (UNWTO) in January this year.

Russia and China clearly lead the list of most visited countries, UNWTO noted. China, which became the

largest outbound market in 2012 with an expenditure of USD 102 billion, saw an increase in expenditure of 28% in the first three quarters of 2013. Russia, the fifth largest outbound market, reported 26% growth through September.

Demand for international tourism in 2013 was strongest for destinations in Asia and the Pacific (up 6%), Africa (up 6%) and Europe (up 5%), says the UN.

UpdATES

GLOBaL WaTch

India to extend visa-on-arrival facility

The primary budget surplus of Greece for 2013, which excludes interest payments and other one-off items, reached more than EUR 1.5 billion (USD 2.05 billion), exceeding requirements for additional debt aid, according to Prime Minister Antonis Samaras.

He also mentioned that the surplus is three times more than they calculated, for a month earlier, Samaras had placed the primary surplus — a budget surplus not counting debt servicing costs — at around EUR 500 million.

It is the first time in over a decade that the country has registered a primary surplus. Greece hopes to utilise these savings in order to obtain assistance with its enormous debt from its international creditors later this year.

Samaras has pledged that they would use the surplus to help those worst affected by 4 years of austerity cuts.

Some European officials, however, have expressed scepticism over the scope of Greece’s surplus claims.

EU data agency Eurostat is expected to formally announce the size of the surplus in April. Following a Eurogroup decision in November, Greece can hope for help in reducing its massive debt if it achieves a primary surplus.

The Greek economy is forecast to exit a 6-year recession later this year, and the country is also expected to make its first medium-term debt sale since 2010, raising EUR 1.5-2.0 billion in 5-year bonds in the second half of the year.

However, with the elections coming by, the Greek Central Bank has warned that electoral bickering could hurt the economic recovery.

Greek budget surplus beats forecast

13MARCH 2014

According to the latest date on ICT release by UNCTAD, world imports of information and communication technology (ICT) goods stood at almost USD 2 trillion in 2012, up from USD 1.8 trillion in 2011.

This puts ICT goods such as mobile phones, Smart Phones, laptops, tablets, integrated circuits and other components at 11% of world merchandise trade and among the top products traded globally – exceeding trade in agricultural products (9.2%) and motor vehicles (7.2%) according to World Trade Organisation data.

The latest figures also show that developing countries continued to receive more than half of total ICT goods imports at 54%.

Telephones for cellular networks remained the second most traded ICT item worldwide after integrated circuits, with a global value of USD 190 billion, or just under 10% of total imports of ICT goods. In some regions, however, communication equipment accounted for a much greater share – in Africa it stood at 43% in 2011.

In developed economies meanwhile, communication

equipment was the only ICT category with positive growth, at 7% between 2010 and 2012. During the same period, computer and peripheral equipment imports grew significantly in developing and transition economies, at 4% and 11% respectively, but stagnated in developed economies.

In 2012, global imports of notebooks, tablet PCs and other portable data processing devices were valued at USD 141 billion.

The latest UNCTAD figures, which add 2012 numbers to a dataset that has been compiled since 2000, identify developing economies as a significant part of ICT value chains.

ICT goods among top traded products globally

UpdATES

GLOBaL WaTch

Japan’s economy logged its best performance in three years as Prime Minister Shinzo abe’s growth blitz drove the expansion, but weak second-half data and a sales tax rise scheduled for april are likely to dampen hopes for a firm recovery.

The 1.6% expansion last year marked the first annual figures under abe and his policy blitz dubbed abenomics, after the conservative swept national elections on a ticket to restore Japan’s fading status as an economic superpower.

abe’s government was likely to champion the figures published as proof that the drive to stoke growth and conquer years of deflation was taking hold.

Since Abe swept to office in late 2012, the Yen lost about

a quarter of its value against the Dollar – giving a boost to Japanese exporters – while Tokyo’s benchmark Nikkei index soared 57% last year to post its best performance in over four decades.

But critics fear a tax rise in april – crucial for chopping Japan’s massive national debt – will curtail the budding recovery.

The sales tax is set to increase to 8% from 5%, the first rise since the late 1990s.

The annual figures published only modestly beat Japan’s expansion in 2012 before abe came to power, and weaker-than-expected second-half data was likely to stoke more concerns about keeping up the pace of growth as Japanese consumers get set for the tax rise.

consumer and corporate spending in the latter half of the year failed to take off, pointing to a still-cautious mood in households and boardrooms.

Japan’s economy grew 1.6% in 2013

China’s government has approved the establishment of 12 new free trade zones in the country. The FTZs will not come into effect before the end of the year.

According to state-owned agency Xinhua quoted sources as saying Chinese provinces Tianjin and Guangdong are in the new list.

The Chinese Cabinet is yet to give a go-ahead to the decision. China’s Central administration will undertake a survey to test the feasibility of the project.

According to a government official, China sets no limits on FTZ numbers and no timetables on building them, as long as they meet the requirements of an FTZ.

The move to announce a dozen more FTZs comes as Beijing moves to sustain investor enthusiasm.

Policy initiatives in the Shanghai FTZ include regulations allowing foreign companies with subsidiaries in the zone to issue yuan-denominated bonds; to allow foreigners to buy and sell Chinese equities and bonds directly without going through current pilot programmes and to similarly enable Chinese individuals in the zone to buy overseas financial products without going through the current Qualified Domestic Institutional Investor (QDII) programme.

China approves 12 new FTZs

14 MARCH 2014

CommUnITy

EVENTS caLENDar

Save the date!We know that you are a busy trader with a demanding events diary. Therefore, we are providing you with a snapshot of exhibitions and conferences in the region, so you spend less time planning and more time attending.

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Date Event Location

March

04-05 avionics Europe abu Dhabi National Exhibition centre

04-06 Paperworld Middle East Dubai International convention & Exhibition centre

04-06 abu Dhabi air Expo al Bateen Executive airport

04-08 Dubai International Boat Show Dubai International Marina club

05-06 International Medical Travel Exhibition and conference Dubai International convention & Exhibition centre

08 Gulf Expo-Dubai Dubai, UaE (TBa)

08-09 Datamatix Emiratization conference Dubai, UaE (TBa)

10-12 Dubai Pharmaceutical & Technologies Exhibition Dubai International convention & Exhibition centre

11 Gulf Expo-Qatar Doha Qatar (TBa)

13-15 Taste of Dubai Dubai Media city

16-19 INTErIOrS & BUILDEX Oman International Exhibition centre

16-19 The Big Show Oman International Exhibition centre

17-19 arab Oil and Gas Show Dubai International convention & Exhibition centre

18-20 Kuwait Medica conference and Exhibition crowne Plaza Kuwait

19-20 cloud World Forum MENa JW Marriott hotel Dubai

20-22 Dubai International horse Fair Dubai World Trade centre

23-25 cabsat Mena Dubai World Trade centre

23-27 Sour Oil Gas advanced Technology Beach rotana hotel, abu Dhabi

24-26 aBILITIESme abu Dhabi National Exhibition centre

24-26 GIBTM-International Exhibition for the Global Meetings and Incentives Industry abu Dhabi International Exhibition centre (adiec)

25-27 Doha International Maritime Defence Exhibition & conference Doha Exhibition centre

25-27 agribusiness Middle East Exhibition Dubai International convention & Exhibition centre

25-27 agra Middle East Dubai International convention & Exhibition centre

25-27 Poultry & Livestock Middle East Exhibition Dubai International convention & Exhibition centre

25-27 Fishing & aquaculture Exhibition-Middle East Dubai International convention & Exhibition centre

april

01-02 World Tobacco Middle East Dubai World Trade centre

01-03 Occupational Safety and health Middle East abu Dhabi National Exhibition centre

07-10 Plastivision arabia Sharjah Expo centre

07-10 FaBEX SaUDI araBIa riyadh International Exhibition centre

07-10 METaL & STEEL SaUDI araBIa riyadh International Exhibition centre

07-11 cOMEX Oman International Exhibition centre

08-09 Gov Tech Middle East abu Dhabi National Exhibition centre

08-10 Dubai International Wood & Wood Machinery Show Dubai International convention & Exhibition centre

08-10 annual Investment Meeting Dubai International convention & Exhibition centre

08-10 International Property Show-Dubai Dubai International convention & Exhibition centre

08-10 Dubai Entertainment amusement & Leisure show Dubai World Trade centre

09-10 “Middle East air cargo and Logistics Exhibition & conference abu Dhabi National Exhibition centre

15MARCH 2014

TRAdE TALK

aBOUT TOWN

The World Food Security Summit and the Gulfood Franchising Conference were held alongside Gulfood 2014 to highlight some important issues related

to the food sector. We bring you an overview of the discussions.

W ith over 80% of its food products being imported, the Gulf region has a lot on its plate when it comes

to food security. And this was the underlying theme at the World Food Security Summit which was held on the 23rd and 24th of February at the Conrad Hotel.

Organised with the official support of the Ministry of Water and Environment, the Summit was opened by His Excellency H.E. Engineer Saif Al-Shara, Assistant Undersecretary of Agricultural Affairs & Animal Sector, Ministry of Environment & Water, UAE, who delivered the keynote address on the state of food security in the UAE and the Middle East, as well as the challenges in securing the region’s future food supplies.

“The region is entering a new period of economic growth underpinned by a burgeoning population with a high dependence on imported food from around the world – food security is an immediate priority. Development and execution of a core food security strategy is essential to provide a sustainable growth platform,” said H.E. Engineer Saif Al-Shara.

With imports accounting for between 80-90% of GCC food consumption, food security, sustainability and safety are an immediate priority for the region, as well as a key challenge worldwide.

The need to establish more coherent and effective systems of governance for food security as well as targeted investments in health, education, water and sanitation infrastructure are imperative. Investment in agriculture is a growing trend in the GCC, with several Arab nations currently investing in foreign land to expand their farming sectors. KSA and the UAE combined already hold around 2.8 million hectares of overseas land

in countries with agricultural sectors crippled by chronic under-investment - primarily in Greenfield sites in North Africa and South Asia.

The Summit focused on issues such as role of the private sector in food security, trade regulations and so forth.

The Gulfood Franchising Conference was held on the 25th of February and brought together franchisors, existing and potential franchisees, entrepreneurs, and franchising experts in the food and beverage industry. It aimed at providing insights and expertise on acquiring and operating a franchise successfully.

Enrico Clementi, Managing Partner, Tribe Restaurant Creators gave the opening remarks of the conference. In his speech, Enrico discussed how the trends in the F&B sector have changed over the years. According to him a few years back the F&B community showed more interest in setting up their businesses in big and leading malls and other well-known establishments. But recently, there has been a lot of smaller developments that are targeted to communities which has a more focused customer-base.

As Enrico continued it was made clear that the size and popularity is no longer the trend in the F&B sector. More and more franchisors are looking for unique concepts and start-ups that would make them different among the other industry players.

On the consumers’ perspective, he mentioned that there is no doubt that in the Middle East market, big and well-known franchises would always be appealing to the consumers. But right now, the market is witnessing an increase in demand for businesses that has a more target focused clientele rather than those brands that have already been repeatedly rolled out to multiple shopping malls and other establishments.

He further added that operators and investors in the Middle East nowadays are more specific with what they want out of a franchise.

Following Enrico’s remarks Alexander Williams, Director- Strategy & Policy, Dubai SME came on stage and gave an overview on their role in assisting both the franchisors and franchisees and also the impact of the Expo 2020 in this sector.

According to him, ever since the announcement of Dubai hosting the Expo 2020 they have been getting numerous visitors from different parts of the globe who wants to cash-in the opportunities that the event will bring into the Emirate.

Franchisors nowadays are looking for franchisees who can operate and manage the operation themselves, said Alexander.

Alexander then shared that he is often asked this question –“What are the trends that you see in Dubai for the next few years?” And he said, his answer is always the same - that it’s going to be economic treaties, trade, transport, and travel and tourism.

Projections by Oxford Economics states that the Expo 2020 is expected to account for a total economic output of nearly AED 142 billion with 277,000 employment opportunities being created between 2013 and 2021.

Expounding on this Alexander mentioned that Dubai SME is now developing a 5-year plan to look at the various opportunities that thi event will bring for SMEs.

The events were an excellent platform to network and to get to know the latest in the world of food security and franchising.

With demand for food projected to increase by 50% over the next 20 years and food prices on an uptrend, there is no better time to address these issues.

Ensuring food for all

16 MARCH 2014

Panel discussion

17MARCH 2014

TRAdE TALK

aBOUT TOWN

It is no secret that India is one of the most important trade partner for the UAE. To further cement this relationship, Dubai Exports

officially opened its Mumbai office. We bring you the details.

The primary aim of Dubai Exports’ Mumbai Office is to provide exporters with ‘on the ground’ support and information, “The opening of our Trade Office is an

occasion of unprecedented significance for us as it marks five years since we started our presence in India. Our first Trade Office was established in New Delhi and now we are pleased to come to Mumbai” remarked Eng. Saed Al Awadi, CEO, Dubai Exports. The opening of the Dubai Exports Mumbai office is a reflection of the growing importance of India and its longstanding ties with the UAE. This special relationship is underpinned by the high level of bilateral trade which has continuously increased over time.

Therefore, it’s no surprise that India is Dubai’s major trading partner. Eng. Saed Al Awadi claimed, “The economic and entrepreneurial dynamism in the country, we feel opens the door to our firms to partner and work with counterparts in India. Through, our presence in India we have been supporting UAE firms as well as connecting Indian companies with counterparts in the UAE. In this regard the first international exhibition held by Dubai Exports was in India. Similarly, the first outward mission was also to India in the ever important jewellery sector.”

More specifically, the role of the office is to increase the international competitiveness of exporters and to raise the

general market awareness of the country’s products in the Indian market. In doing so the office seeks to overcome the inherent weaknesses of exporters which largely tend to be small and medium sized firms (SMEs). For example, one would not expect the vast majority of SMEs, with their limited resources, to have detailed knowledge of foreign markets or staff with appropriate language skills.

Even if the country data is purchased, exporters are still faced with a host of other issues or problems which require it to have local representation in the overseas market. However, the costs involved in establishing an overseas presence, make it prohibitive for the vast majority of SMEs. Therefore, Dubai Exports’ Mumbai office can remedy this problem through its ability to benefit from economies of scale in that it will service a number of exporters across a range of sectors.

Costs of establishing an overseas office is just one reason as to why SMEs do not venture into foreign markets. Another equally important reason is that they have a low profile or market image.

SMEs by their very nature are small and hence do not have the same market profile or an established track record like larger companies. Of course in the domestic market this is not a problem as SMEs can spend the time and effort marketing their products on a one to one basis with key customers. However,

Mumbai times

18 MARCH 2014

in the international arena SMEs need greater assistance in promoting their products and the role of one to one customer building can be left to Dubai Exports’ Mumbai office for customers in that region. Second, the one to one interaction with customers implies that SMEs need to make the right impression the first time and therefore need to be aware of business etiquette or market entry methods. This is the case with all exporters but more so a problem with SMEs due to their limited international experience.

Third, exporters in general tend not to have the foreign market networks that are

can assist the exporters in dealing with pre and post sales issues and thereby reducing the problem of distance.

Finally, exporters can truly enter foreign markets if they have the appropriate information and the Dubai Exports’ Mumbai office with its close proximity to customers can assist exporters to find or exploit market opportunities. Finally, various types of trade barriers act as a disincentive to exporters to enter a particular market. However, Dubai Exports’ Mumbai office can overcome this to a certain extent through advising exporters especially in relation to the appropriate standards as well as building effective relationships with the various foreign government departments and agencies.

commonly required for exporting and hence the Dubai Exports’ Mumbai office role is to build these on behalf of exporters.

Fourth, the sheer distance of some markets hinders firms from exporting to these regions. Although, an overseas office cannot reduce the distance of the foreign market it

ABoUTCompanies in the UAE wishing to use the services of the Dubai Exports’ Mumbai Office can email: [email protected]

More specifically, the role of the office is to increase the international competitiveness of exporters and to raise the general market awareness of the country’s products in the Indian market. In doing so the office seeks to overcome the inherent weaknesses of exporters which largely tend to be small and medium sized firms (SMEs).

19MARCH 2014

TRAdE TALK

aBOUT TOWN

Audience at the event Presentation by Eng. Saed Al Awadi, CEO, Dubai Exports

Opening ceremony

Eng. Saed Al Awadi cutting the ribbon Panelist taking questions from the participants

20 MARCH 2014

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aWarDS

TRAdE TALK

W ith the motto of “Strive, Achieve, Excel” the second Trade and Export Middle East Excellence Awards started were held at the Ritz Carlton

DIFC and started at 7:00pm with a networking session. The Awards were aimed at honouring those organisations that are the path breakers when it comes to making trade simpler, easier and faster.

There were 15 awards in 5 categories – free zones, legal, finance, business support services and logistics.

The event’s MC, Ben Jacob, welcomed everybody as they settled down in their seats. With close to 275 attendees, the venue was abuzz with excitement and anticipation.

Dominic De Sousa, Founder, CPI Media Group opened the event by giving a brief history of the organisation and welcomed the Senior Editor, Aparna Shivpuri Arya, on stage.

Speaking about the magazine, she remarked, “Trade has never been more dynamic and important for this region and the UAE, than now. With Dubai winning the Expo 2020 these next six years will lead to a tremendous increase in investment, tourism and trade, for the UAE as a whole. And we feel lucky to be able to cover all these developments and bring you the latest information.”

The keynote speech was given by Mr. Mohammad Rashid Ali Lootah, Deputy CEO, Dubai Exports, who appreciated the partnership between the magazine and Dubai Exports and highlighted the importance of trade in the region.

The event would not have been possible without the support of our sponsors – DP World, GAC, RSA Logistics, Nexus Business Services, Turkish Confectionary Promotions Group and Etisalat.

The second Trade and Export Middle East Excellence awards were held on the 25th of February at the ritz carlton, DIFc. The glitzy evening saw the best of

the trading community network and cheer the winners.

Recognising EXCELLENCE IN TRADE

23March 2014

Emirates SkyCargoEmirates SkyCargo pride themselves on offering customers comprehensive cargo solutions. Through SkyChain, their online cargo logistics system, they are changing the way the cargo business works, empowering customers with the tools they need to better control their consignments.

Emirates’ 212-strong fleet now serves 141 destinations in 80 countries on six continents. In addition, Emirates SkyCargo’s fleet of 12 freighters (02 Boeing 747-400ERF and 10 777Fs) operates scheduled flights to 44 destinations in 38 countries. This includes 13 destinations in six countries not currently served by passenger services.

Noble Shipping and Logistics LLCNoble Shipping and Logistics L.L.C is a global integrated logistics provider, based in Dubai, UAE, with a team having versatile knowledge and experience in sales and operations- Sea freight, Air Freight and Transportation in Local and GCC.

SME LOGISTICS COMPANY OF THE YEAR

AIR CARGO SERVICES PROVIDER OF THE YEAR

LOGISTICS

Global Shipping & LogisticsGlobal Shipping & Logistics (GSL), Dubai is a leading logistics provider within the UAE offering controlled warehouse infrastructure. A member of the Al Shirawi Group, GSL has been active in the freight service provider sector in Dubai since it’s incorporation in 1975. GSL offers customers a range of freight management and local warehouse & distribution solutions in addition to 3PL and 4PL services.

LARGE LOGISTICS COMPANY OF THE YEAR

24 March 2014

FINANCE

DP World UAE RegionDP World has a portfolio of more than 65 marine terminals across 6 continents, including new developments underway in India, Africa, Europe, South America and the Middle East.

Container handling is the company’s core business and generates more than three quarters of its revenue. In 2013, DP World handled 55 million TEU (twenty-foot equivalent container units). With its committed pipeline of developments and expansions, capacity is expected to rise to more than 100 million TEU by 2020, in line with market demand.

Euler HermesEuler Hermes is the global leader in trade credit insurance and a recognised specialist in the areas of bonding, guarantees and collections. Euler Hermes established operations in Dubai (UAE) sponsored by Alliance Insurance PSC since 2006 and in Saudi Arabia in cooperation with Allianz Saudi Fransi Cooperation Insurance, a joint venture between Allianz Group and Saudi Fransi Bank, since 2008. Euler Hermes is also present in Bahrain, Kuwait, Oman and Qatar.

TRADE CREDIT INSURANCE PROVIDER OF THE YEAR

WAREHOUSE AND MATERIAL HANDLING COMPANY OF THE YEAR

Western Union Business Solutions

Western Union Business Solutions is a global leader in foreign exchange and international payments. With industry expertise and market-leading technology, we help companies to deliver funds fast.

It works with clients to ensure that it understands their unique business needs. The organisation guides them through the world of foreign exchange.

EXCHANGE HOUSE OF THE YEAR

LOGISTICS

25March 2014

BUSINESS SUPPORT SERVICES

Sharjah Islamic BankSharjah Islamic Bank started servicing the society 1975; providing banking services individuals and companies. The bank was originally founded as National Bank of Sharjah and was the first bank to convert to Islamic Banking in 2002. The revolutionising from commercial banking to Islamic banking was a significant twist for the bank. Not only were specialised products & services modulated for customers, the banks entire organisation was converted to be conventional to Islamic regulations.

National Bank Of FujairahIncorporated in 1982, National Bank of Fujairah PSC (NBF) is a full services corporate bank with strong corporate and commercial banking, treasury and trade finance expertise as well as an expanding suite of personal banking options. Leveraging its deep banking experience and market insight within Fujairah and the UAE, NBF is well-positioned to build lasting relationships with its clients and help them achieve their business goals.

TRADE FINANCE BANK OF THE YEAR

ISLAMIC BANK OF THE YEAR

EUROMONITOREuromonitor International is the world’s leading provider for global business intelligence and strategic market analysis. It has over 40 years of experience publishing international market reports, business reference books and online databases on consumer markets.

It delivers market research solutions to support strategic planning for today’s increasingly international business environment.

BUSINESS INTELLIGENCE PORTAL OF THE YEAR

FINANCE

26 March 2014

FREE ZONES

VirtuzoneVirtuzone was established with the objective to deliver a simple, flexible and valuable service for start-ups, small businesses and individuals, to form a company in the UAE, filling a significant gap in the market for a higher standard of professional corporate set-up services.

Since launching in July 2009, Virtuzone has assisted over 2,000 companies, start-ups, small enterprises and individuals, becoming the most dynamic and probably the fastest growing company set-up operator in the region.

RegusRegus is the world’s largest provider of workplace solutions, offering the widest range of products and services that allow individuals and companies to work however, wherever and whenever they need to.

Regus operates over 1800 business centres across 600 cities in 100 countries. Products and services include fully equipped offices, world class business support services, meeting rooms and the largest global video conferencing network.

FIRM OF THE YEAR FOR OFFICE SET UP

FIRM OF THE YEAR FOR COMPANY FORMATION SERVICES

Jebel Ali Free Zone (JAFZA)Jebel Ali Free Zone (Jafza) is one of the world’s leading free zones. Established in 1985, Jafza is today home to over 7300 companies, including more than 120 of the Global Fortune 500 enterprises, from 120 countries across the world. It is the leading driver of the burgeoning UAE economy. The Free Zone accounts for half of Dubai’s exports and more than a quarter of the Emirate’s total non-oil trade.

FREE ZONE OF THE YEAR FOR EASE OF DOING BUSINESS

BUSINESS SUPPORT SERVICES

27March 2014

LEGAL

Clyde & CoClyde & Co is a global law firm with a pioneering heritage and a focus on core sectors of Infrastructure, International trade, Insurance, Transportation and Natural resources. With over 2,500 staff operating from 37 offices and associated offices across 6 continents, the firm advises corporates, financial institutions, private individuals, and governments. Clyde & Co has the largest shipping and international trade practice in the world and in the MENA region. Its shipping expertise covers the entire range of wet and dry contentious and non-contentious matters.

Al Tamimi & CoEstablished in 1989, Al Tamimi & Company are the largest law firm in the Middle East with offices in the UAE, Qatar, Jordan, Iraq, Oman, Kuwait and Saudi Arabia. They are a full service law firm specialising in a range of practice areas and pride themselves on providing their clients with not only professional expertise but superior service and quality commercial advice. They have advised on some of the region’s most complex matters and continue to be at the forefront of market developments.

FIRM OF THE YEAR FOR INTELLECTUAL PROPERTY RIGHTS

FIRM OF THE YEAR IN MARITIME LAW

Latham & WatkinsLatham & Watkins is a full-service international law firm dedicated to working with clients to help them achieve their business goals and overcome legal challenges anywhere in the world. The firm’s dedicated Global Islamic Finance Practice has extensive experience across banking, project development and finance, capital markets, restructuring, mergers and acquisitions and investment funds and dispute resolution, advising governments, banks, sponsors, export credit agencies and investment funds on Shari’ah-compliant transactions.

FIRM OF THE YEAR FOR ISLAMIC FINANCE LAW

FINANCE

28 March 2014

Turkish Confectionary Promotions GroupTurkish Confectionery Promotion Group was established in 2012. It aims to promote the export of Turkish confectionery products, improve the image of Turkish confectionery. Turkish Confectionery Promotion Group is carrying out its activities in coordination with and control of Ministry of Economy and is affiliated to the Turkish Exporters Assembly.

EDITOR’S CHOICE AWARD FOR PROMOTING TRADE

In Association with Official PortStrategic SME Partner Business Services Partner

Country Promotions Partner Supporting Partner PublisherLogistics Partner

29March 2014

30 March 2014

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TRAdE TALK

INTErVIEW

With a history of more than two decades, Jebel Ali Free zone (Jafza) has played an important role in promoting trade in the Emirate and the region. Aparna

Shivpuri Arya speaks to Ibrahim Mohamed Al Janahi, Deputy CEO, Jafza and Chief Commercial Officer, Economic Zones World (EZW) to get all the details.

The trade catalyst

Jafza has been at the forefront of attracting investment to the UAE by bringing in MNCs from all corners of

the world. Not many would know that Jafza is a part of EZW, which also include, TechnoPark and Dubai Auto Zone.

TechnoPark is EZW’s knowledge driven business and industrial park focused on core economic sectors – water, health, energy, engineering and logistics.

On the other hand, Dubai Auto Zone (DAZ) is EZW’s comprehensive market place for the auto industry catering to buyers, sellers, service providers, principals and traders alike.

Talking about Jafza, Mr. Ibrahim said, “Jafza is EZW’s flagship operation and home to over 7,300 multinational companies, including more than 120 of the Global Fortune 500 enterprises. It is the region’s most efficient logistics hub and the only one in the world located between a top container terminal (Jebel Ali Port) and a top international airport (Al Maktoum International Airport), enabling the best in multi-modal connectivity.”

Elaborating on the importance of Jafza in the EZW set up, Mr. Ibrahim remarked that in 2013 the freezone posted more than 9% growth in the number of companies. The largest number of new companies that joined the free zone in 2013 came from India, China, US, UK, Egypt, Pakistan, KSA, France, Canada, Lebanon, Turkey, Netherland, Italy, Syria, Germany, South Korea and Jordan. These countries together accounted for more than half of the number of new companies

that joined the Jafza in 2013. He then went on to highlight the key

characteristics, which make Jafza such an ideal destination for businesses.

Jafza’s key strength lies in its unique trade and business eco-system that reduces cost and enables new opportunities for growth. The freezone’s unmatched business - conducive offerings include:

• Extensive range of products specifically designed to meet a variety of customer needs. These include (plots of land with ready infrastructure to develop own facilities; pre-built warehouses to meet customer’s need for high quality storage and light manufacturing; modern fully equipped showroom to display products; customised development solution offering innovative products that addresses industry specific requirements; high-end office space for lease spread over a range of high and low rise facilities; Business Park that provides ready-to-use, fully furnished and equipped offices, with no set-up cost, designed for customer’s short term or long term use; retail outlets offering range of retail possibilities throughout the free zone including food courts in Jafza North and South; and on-site residence under which Jafza offers accommodation for company labour and staff within the Freezone).

• Capability to respond promptly to customer and market demands.

• Single minded commitment to serve and

support its customers to enable them to achieve their aspirations in the region.

• Integrated systems including One-Stop-Shop for all the services at the free zone that make the customers’ operations seamless and efficient.

• Excellent multi-modal connectivity by sea, land and air which Jafza offers, by virtue of its location between the region’s biggest container port (Jebel Ali Port) and the International Airport (Al Maktoum International Airport). Dubai International Airport is just 35 minutes’ drive away.

• Outstanding physical and economic infrastructure that meets the precise requirements of multi-nationals who use Jafza facilities to serve the region.

• Strategic location midway between Asia, Europe and Africa, the fastest growing producing and consuming markets.

• The political and economic stability the UAE offers.

I then wanted to know what kind of support services Jafza provide to businesses, since companies need continuous support from the inception to the smooth running of operations. Mr. Ibrahim was quick to oblige on this and highlighted the following points:

Company formation: Jafza allows companies to be formed under the following categories:• Free zone Company (FZCO): FZCO

34 MARCH 2014

registrat ion al lows for mult iple shareholders and is essentially a Limited Liability Partnership within the free zone.

• Free zone Establishment (FZE): FZE registration allows for a single shareholder and is a Limited Liability Partnership within the Freezone.

• Branch of a Company: A branch is considered a legal entity of its parent company. A company established outside of the Jebel Ali Freezone may establish a branch within Jafza.

• Offshore Company: Jafza also allows the formation of an Offshore Company

by individuals or corporate bodies, as a non-resident company, with a corporate legal entity.

issuanCe of liCenCes:Jafza as a regulatory agency offers licences to its customers under the following three categories:• Trading: A trading licence allows the holder

to import, export, distribute and store items specified on the licence. In addition to this, there is General Trading Licence, which allows the holder access to a wider range of activities and a broader range of

items on the licence.• Service: A service licence allows the holder

to carry out the services specified on the licence within the Freezone.

• Industrial: An industrial licence allows the holder to import raw materials, carry out the manufacture of specified products and export the finished product to any country. In addition to this, there is also the National Industrial Licence, issued to manufacturing companies with at least 51% Arabian Gulf Co-operation Council (AGCC) ownership, with condition that the value added to the product in the Free zone must amount to a

35MARCH 2014

TRAdE TALK

INTErVIEW

minimum of 40%. This licence allows the holder the same status as a local or AGCC inside the UAE.

Jafza continues to take various initiatives to support its customers in achieving their growth aspirations, such as developing platforms like strategic customer forums, which focus on exploring ways to enhance growth opportunities for Jafza customers in different industry sectors. In order to support its customers in exploring growth opportunities overseas Jafza now invites customers to accompany take them in their industry specific road shows they conduct in potential markets across the world and the trade exhibitions Jafza participates globally.

Jafza’s other services include: Advisory and updating: Jafza assists its customers in setting up a business and selecting desirable sites or locations for their venture. It also helps them to determine operational requirements and, additionally, keeps them updated on various developments in their specialised business sector.

Business matching: This service helps companies leverage opportunit ies of joint ventures and other mutually beneficial partnerships in the local and international market.

After getting all the details about the free zone, it was time for me to pick his brain on what 2014 holds for this region when it comes to trade. To this, he said, “Economic outlook for the Gulf Co-operative Council (GCC) remains quite positive and vibrant in 2014 despite social unrest and ongoing political turbulence in some parts of the Middle East region. Recently released Qatar National Bank Group Economic Outlook Report predicts GCC economic growth to increase to 4.7% in 2014 from 3.7% in 2013. The IMF has also revised its economic growth forecast to 4.4% in 2014 from the aggregate economic growth of 3.7% in 2013.”

Mr. Ibrahim also pointed out that the continued large infrastructure investment is expected to drive economic growth in 2014

in the region. According to the IMF the GCC has recorded an exceptional growth of 6.4% in the past two years.

More than USD 4 trillion is expected to be spent by countries in the GCC region in the next 10 years on developing economic infrastructure that will enable these countries to diversify their economies from oil to non-oil sectors. This development will not only provide huge boost to industrial and trading activities in the construction and infrastructure development sectors but also other economic sectors such as FMCG, food, healthcare, transport and more, that will come under pressure to meet the rising demand of the affluent population in the import driven region. This is an opportunity for multinationals in

infrastructure development and all other above referred economic sectors.

“As a trade and logistics hub of the region Dubai and Jafza stand to be benefited the most from this economic surge in the region. Countries in the wider Middle East region will continue on their path of economic transition on the back of vibrant GCC growth outlook which will continue to act as engine for regional growth. The fact that the UAE and Qatar will host two major global events has given further push to non-oil economic activities in the region. Expo 2020 in Dubai and FIFA World Cup 2022 in Qatar have given the stock market in the region a huge boost in terms of investor confidence,” he opined.

Other than the UAE and Qatar, according to Mr. Ibrahim countries in the wider Middle East region comprising West Asia, Africa and the CIS offer promising opportunities since most of the countries in the region at present, to a great extent, rely on imports for all its needs

and requirements. Most of these countries wish to develop their economic infrastructure and capabilities to become self-reliant not only in terms of their basic needs but also other non-oil economic activities designed for robust economic development.

Moving on to investment, I asked him about the future trend in Jafza, to which he remarked, “In the next 5 years we expect significant growth to come from Asia, Europe and Americas. Since most of the countries in the region, that Jafza as a hub serves, are focused on building social and economic infrastructure, construction, machinery and equipment, FMCG, healthcare, transportation and logistics sectors are expected to attract investors. Dubai’s bid to host Expo 2020 has given further boost to the region’s

strategic focus on building infrastructure which in turn has evoked greater interest of multinationals in this rapidly growing and potent region and in Dubai and Jafza which are globally acknowledged business and logistics centres of the region.”

As we came to the end of our conversation, I wanted to know about his future plans for EZW, and he was quick to add, “EZW is currently focused on consolidating its key strengths and further enhance its capabilities as the region’s trade and logistics hub. Multibillion facility and infrastructural projects are currently underway in Jafza which include AED 2.75 billion Jafza One - the convention centre complex, multimillion LIU-11 (Light Industrial Unit-11), road development and access gate projects.”

There is no doubt that these projects will further contribute to strengthening Jafza’s position as the trade catalyst of the Emirate. and the region It’s just a matter of time…

7300 number of companies in Jafza

36 MARCH 2014

Trade Services

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TRAdE TALK

INTErVIEW

Souad Al Hosani is a woman of many talents and has created a name for herself in the world of business. In a conversation with Aparna Shivpuri Arya, she speaks about her favourite project – Nexus Business Services, which is a

one-stop-shop for foreign business looking at operations in the UAE.

of business set up

It doesn’t take one much time to figure out that Souad is a bundle of energy, full of ideas and suggestions and this trait isn’t

recent. Souad told me that she has always been actively involved with all student boards and programmes in her University and during her teenage years. “My father had always supported me and tried to brighten up my knowledge by taking me to his business meetings. In 2009 during my internship at the UK embassy I noticed that there is a dearth in the information available for foreigners to set up a company in the UAE. There is where I have started my own companies Nexus Business services and Nexus agencies. The vision of the company was to assist foreign companies and individuals from A to Z on all the needs to establish a presence and relocate in the UAE.”

Currently they have around 35 multinational companies and some are even Fortune 500 companies in the world. They have evolved by partnering and creating representative offices around the globe such as: South East Asia, Russia, Ukraine, Europe, South America and the whole GCC.

Going back in time, I asked her about her struggle as an entrepreneur, to which she remarked, “The challenges I have faced as an

entrepreneurs had been scattered during the years but the way to handle and face them is a challenge by itself. In the first year, I had to get a loan from my father along with my savings to start the company. The cost involved in setting up the company was a fortune therefore as a student, my savings were not sufficient.”

Souad further elaborated and said that while the first few months, the challenge is to set up a company, post that the challenge is to promote the services and engage with potential clients.

“It takes you few meetings and sometimes you end up providing services at cost price to sign to get clients. This is a phase each business has to face in order to promote it services and help find more clients. Few years later, it all comes down to having efficient employees, who can handle the work. Patience, ability to listen and commitment is a huge part of success.”

Souad also pointed out that networking and meeting people is important for promoting a business along with the ability to prioritise. “Nowadays, the biggest challenge is financing which hopefully venture capitalists might be able to sort. The ones who face the challenges and still go on to achieve their dreams are

real entrepreneurs. My biggest challenge was my self, being a young female individual I never thought I would be able to fight against other big companies and names. Also don’t be afraid to fail cause that will only brighten up your knowledge and you develop yourself by experience.” True words of wisdom spoken through experience.

Moving on, I wanted to know more about her business and the services offered. Souad was happy to elaborate. “We are a one stop shop for foreigner companies who wish to establish a presence in the UAE. Our services included company formation, PRO services, Relocation services and business development. We know how daunting it is to come to a foreign country and try to setup a business. We have our own in house lawyers, who assist companies in their legal formalities and our own business Centre. All or our clients are in our business Centre therefore we create a relationship with them, which they appreciate.”

So what advice would she give to foreign companies interested in setting shop here? “We always advice our clients to come and visit the UAE itself and see if their products/services will be something needed in the UAE or GCC. Every Emirate has its own rules

The A-Z

38 MARCH 2014

and regulations therefore we advise in the best way possible. We outline the company’s goals and their future plans before we advise them in which Emirate they should set shop and which company formation is best for their company’s activities. There is no difference between each Emirate, it really depends on the product or service a client is willing to provide in the market.”

Tapping on her practical knowledge, I asked her if she was optimistic about the investment climate in the UAE and she was quick to point out that after winning the Expo 2020 , there are a lot of new opportunities in every Emirate. Being a member of various business councils in the

UAE, Souad has also helped in bridging the gap between local and foreign businesses. “I have been on the board of the AMCHAM (American chamber of commerce in Abu Dhabi) for nearly seven years. I was nominated as the first Emirati board member and I still enjoy every moment of it. We are also members of the British, Canadian, Swiss, IBWG, BeNeLux, the Arab Swiss Chamber of Commerce and the German Arab Chamber of Commerce. Those ties increase the relationships between different countries and allows you to meet people from the entire globe.”

As we came to the end of our conversation, I wanted to know about the future plans for

this dynamic organisation. “Our plans are to visit countries with the Department of Economic Development in Abu Dhabi and the Department of Trade in Abu Dhabi. Also we are participating with every event with the Abu Dhabi Chamber of Commerce. We will focus in expanding our business centre and on marketing our companies in magazines such as yours. Also, we are considering establishing our own offices in Qatar and Saudi and in Dubai,” Souad replied with a smile.

Well, as I finished my interview, I was left with no doubt that setting up business in the UAE has definitely become easier thanks to Nexus.

39March 2014

TRAdE TALK

LOGISTIcS

Geoff Walsh, General Manager, DHL Express, KSA, speaks to Aparna Shivpuri Arya about the trade scene in the country.

The robust economy

P lease tell us a bit about DHL’s operations in KSADHL started its operations in KSA

back in the early 70’s and was the first logistics provider to establish a presence in the Kingdom. Today DHL Express KSA is the market leading express provider with over 40 service points, 3 gateways and 5 service centres across the kingdom.

H ow, a c c o rd i n g t o y o u , i s t h e economy doing?Overall the KSA economic growth in 2013 was fuelled in part by government spending, which fed into the construction, industrial, transport and general government service sectors as well as the development of infrastructure.

The hydrocarbons sector showed an improvement over its 6.3% y-o-y decline

in the first quarter, but it was still down by 3.7% in the April-June period, as oil production remained below 2012 levels, a result of declining prices and production volume.

In a report, published in July 2013, the IMF projected GDP growth of 4% in 2013 and 4.4% in 2014.

Analysts predict a trade surplus of USD 190 billion in 2013, down from the unprecedented level recorded in 2012 which amounted to USD 6,245 billion.

How do you see the trade situation in KSA?Trade in and out of the Kingdom is growing at a very steady yet strong rate. The main trading partners with KSA are the United States (14% of total exports and 12.6% of imports), China (12% of exports and 13% of imports) and Japan (13% of exports and 6% of imports).

For a company looking to trade in the KSA, as a logistics company, what advice would you give?The most important advice we at DHL would offer any company looking to trade with KSA is to understand the evolving customs clearance process and make sure all paperwork and necessary documents are all provided. We being the international specialists can offer the right advice and support to help facilitate this process and avoid shipments being held at customs, hence why more and more companies are looking to work with DHL

What specialised services do you provide?At DHL Express KSA, we offer the whole range of logistics solutions that cater to

any business of any size. From pre-9 am deliveries to import express and dangerous goods deliveries, as well as door-to-door deliveries. Some of the unique offerings we provide to our customers are medical express, which are temperature controlled shipment for the life sciences sector as well as “Same Day Express” which caters for extremely urgent deliveries that require immediate attention.

Within the GCC, which countries is KSA mainly doing trade with and in what products?The UAE is the largest country trading with KSA, followed by Oman and then Kuwait. The products being traded are a mix between re-exports (23%) and non-oil products (34%) such as automotive spare parts, mechanical appliances and electronic equipment.

What major infrastructural facilities are available in KSA for smooth movement of cargo?DHL Express announced in 2012 an investment of over SAR 80 million to bolster three new gateway terminals at King Khaled International Airport in Riyadh, King Abdulaziz International Airport in Jeddah and King Fahd International Airport in Dammam, KSA, these three state of the art facilities are set to be opened in 2014.

This investment has been set in place to meet the increasing demands of DHL’s services in KSA, the largest trading partner for UAE and the wider GCC region. The terminals will support the expansion of trade by increasing connections between KSA and the UAE, Asia and the United States.

Geoff Walsh, General Manager, DHL Express, KSA

40 MARCH 2014

TRAdE TALK

FINaNcE

Western Union Business Solutions team gives us an update on currency movements in March 2014.

usDThe USD had a lack luster February, with the US Dollar Index dropping some 7.7% before reaching a bottom late in the month.

Looking back, some reasons for the rather potent decline in the greenback, was the lack luster economic data that was released throughout February. Right out of the gate, non-farm payrolls and unemployment released February 7th missed the expected target; the US added only 113,000 jobs to the economy while forecasts called for a gain of 175,000. February marked the second month of weak job growth as market participants felt similar disappointment in January.

Following the disappointing jobs report, investors and traders were hit again with a discouraging retail sales number, with some economists’ specifically citing concern about the weak online retail sales numbers. These weaker than expected data releases helped dent optimism for the USD as traders began to speculate as to the speed with which the Federal Reserve would continue its tapering of its bond buying program (otherwise known as quantitative easing).

Further speculation arose around whether Federal Reserve members would cite any concern about the recent slump in economic

numbers in the release of its Open Market Committee meeting minutes. Fortunately for USD bulls, the publication of the minutes late in the month helped give the USD some strength and stemmed its February fall to an extent. The minutes pointed to a consistent and ongoing taper and cited little concern over the recent slump in underlying economic figures.

Looking ahead to March the core themes for the USD will be relatively similar to February’s. The key questions are whether the US economy can keep up with expectations, as well as if the recent slump in economic data will continue and if so, affect the speed of the Federal Reserve’s taper. With these questions still fresh in traders’ minds, it will be interesting to see if the overcrowded Bulls in the USD slowly get pushed out or whether the recent February fall in the Dollar is just a hiccup in the year of what is expected to be largely bullish for the greenback.

Heading into March, it looks as though the Dollar is consolidating as investors wait to get a cleaner look as to where it might head. Look for March 7th to be the break out period as the release of the unemployment report should act as a USD catalyst, sending it with conviction in either direction. Expanding on this, the unemployment data will again generate

interest as it will either confirm or repute the hypothesis that the recent unseasonably cold weather in many regions is responsible for the hiring slump. These numbers may well give a cleaner picture of the health of the US economy, as well as where the USD will head in the month of March.

eur The laundry list of reasons to short the Euro has not diminished but the various negative aspects hanging over the single currency seems to have been priced into markets. If so, this pricing could allow for higher levels to be tested, if only in the short-term. An attempt to break above the 1.40 or even 1.42 levels in Euro/Dollar could even be targeted in front of the European Central Bank’s (ECB) March policy meeting. Mario Draghi has warned more than once that the March meeting will be important for the ECB to determine the path its monetary policy will take next. His comments were heard at the February press conference and repeated once again at the end of the month and they have increased expectations for some form of policy action in March.

Despite the words of warning that suggest additional policy steps could be taken, the Euro established and maintained a strong uptrend against the US Dollar and Japanese

Money matters- III

42 MARCH 2014

Yen for most of February. Aside from inflation figures, the growth outlook for the Eurozone continued to be described as a prolonged and slow recovery with uneven aspects. The ECB could therefore continue talking about taking action without actually doing so. The question for traders is how long will the Euro’s upward trend continue. While a short burst of activity that could be triggered by a lack of policy action from the ECB in March (since investors are now expecting something), the Euro’s upside could well continue to be limited for a number of reasons.

First, while the medium term outlook for the Euro and Eurozone remain challenging, there have been developments that are going to be taken into consideration as investors gear up for outcome of the EU parliamentary elections in May. The Euro will still have to navigate the possibility of another Greek write down in the coming months, contend with slow structural reforms (particularly in France) and grapple with deflation fears. All of this will continue to be a drag on growth and limit the Euro’s ability to advance, even if the Eurozone’s positive current account, lower labour costs and the ECB’s OMT backstop are currently seen as factors supporting the currency. The other development that garnered little press recently, but could have a more severe impact in the run up to the EU Parliamentary elections in May took place in the small Alpine nation at the heart of Europe.

Switzerland, which is not even a member of the EU nor does it use the Euro, had a referendum on immigration in February. The former head of the Swiss National Bank, Hildebrand, has correctly pointed out that the referendum could have broader and more adverse consequences to the Eurozone than many may think. Dimensions of integration throughout the Eurozone may no longer enjoy broad support, as was witnessed in the Swiss vote. Free and open labour markets are one of the fundamental elements associated with the EU and a disruption could cast doubts over the demographic legitimacy of the economic union.

The Euro’s upside trend could therefore come reverse quickly if a shift in the ECB’s monetary policy is seen in March. Policy action at the ECB could be supported by arguments

forward guidance framework, linking future rates to inflation and the economy’s output gap. In other words, more people may have jobs now but the economy is still producing much less than it should be whilst inflation may fall further.

How soon this output, or productivity gap, will close is a more difficult development for investors to predict. However, what’s key is that the BoE took an important step forward towards tighter monetary policy and, more importantly, moved ahead of its counterparts. Carney said that when rates rise, they will only rise gradually. When central bankers begin talking about rate hikes, it’s a strong signal for traders to buy a currency.

A flood-related slump in upcoming UK economic data, plus a continued fall in inflation levels, will present obstacles to sterling gains in March. Meanwhile, the Euro continues to outperform expectations. UK data on the services sector on March 5th and consumer price inflation on March 25th could facilitate a longer lasting pull-back in the pound’s uptrend. What the Federal Reserve in the United States says and the way future US economic data speaks to the market will be other important factors to watch. The US economy may soon bounce back sharply from its own weather-related slump, which would support the US Dollar.

Nevertheless, Sterling is trading near four-year highs against the US Dollar, hit one-year highs against the Euro last month, and is hovering near five-year peaks on a trade-weighted basis. This suggests that British exporters hoping for sterling weakness need to seriously reassess their strategy unless UK economic data in March paints a completely different picture to the BoE’s 3.4 % GDP prediction for this year. Right now, the outlook for BoE policy is turning hawkish, meaning the outlook for Sterling remains bullish.

Key Data/eventsMarch 5: Services purchasing managers’ index survey (Feb)March 6: Bank of England policy announcementMarch 11: Industrial output (Jan)March 25: Consumer price inflation (Feb)March 19: Unemployment rate (Jan)March 27: Retail sales (Feb)

of weak price pressures and with inflation much weaker than the central bank’s target of 2%, it remains entirely possible that acting to loosen monetary policy would be within the central bank’s mandate. If such policy measures would collide with stronger than expected US economic data at the end of Q1 and beginning of Q2 then the February uptrend could be rather prodigiously revered.

upComing CritiCal eventsMarch 03: EUR February Manufacturing PMI March 04: EUR January PPI March 05: EUR February Services PMI March 05: EUR January Retail Trade March 06: EUR ECB Monetary Policy Committee meetingMarch 12: EUR January Industrial ProductionMarch 18: EUR January Trade Balance March 31: EUR March Flash HICP

gBpBritish exporters with incoming currencies should be very concerned about a stronger pound over the coming months after the Bank of England (BoE) finally opened the door towards an eventual rate hike. The BoE’s forward guidance turned into somewhat fuzzy guidance in February’s Inflation Report, as Governor Mark Carney tried to push back against expectations of higher interest rates. Nevertheless, the pound spiked to a four-year high against the US Dollar in what may turn out to be a game-changing announcement for Sterling.

Following a faster and stronger UK economic recovery than many had estimated, expectations were high in front of last month’s Inflation Report. Markets rightly predicted a change in the BoE’s forward guidance strategy. UK unemployment had just fallen sharply to 7.1%, just 0.1% shy of the bank’s 7% threshold, at which point policymakers had said that they would consider raising borrowing costs.

Carney announced robust UK gross domestic product (GDP) forecasts, lifting the previous 2.8 % economic growth projection for 2014 to 3.4 %. The economy grew just 1.9 % in 2013. With employment rising quickly, Carney dropped the Bank’s close link between the jobless rate and interest rates. Instead, the governor launched a new and more complex

43MARCH 2014

TRAdE TALK

FINaNcE

How will 2014 shape up in terms of opportunities for the Islamic finance industry? Ahsan Ali, Global Head of Islamic Origination, Standard Chartered Bank, gives us a lowdown on the prospects

for Islamic finance in 2014.

against the backdrop of volatility in the global financial markets, 2013 was markedly a positive year for

Islamic finance. The Islamic capital markets in particular had their fair share of opportunities to demonstrate resilience and prominence amid a challenging economic environment.

Although there was a dip in new Sukuk issuances from May to September, in line with bearish investor sentiment on emerging markets triggered by US Fed tapering fears, this was quickly overcome in Q4 by an upswing in issuance activity from sovereigns, banks and corporates. A key contributor to this slow-down in Islamic issuance in 2013 was the uncertainty surrounding the tapering of the US Federal Reserve’s quantitative easing program which sent shockwaves across markets shaking investor confidence, in turn leading to a three-month government “shutdown” from July to September.

So what does 2014 look like?

a long-term view of the marKets As we progress in the New Year, there is no denying the fact that the long-term prospects for the Sukuk market are looking up. Over the past five years, we have seen a tremendous compounded annual growth rate in the Sukuk market, and although there was a dip from 2008 to 2009 due to the financial crisis, the market bounced back again in 2010. Overall, the direction is positive. There will always be some blips and low periods of issuance, as we have seen; but overall the market momentum is positive on a long-term basis.

The domestic currency markets of Asia and the GCC continue to grow from strength to strength, having been largely unaffected much by the negative sentiment plaguing the international markets. Issues such as exchange rate volatility are expected to be nothing but a slight bump in the road,

especially for highly-rated companies and sovereign-linked issuers. Companies would always have financing needs, capital needs for further growth, and would be looking at the full spectrum of instruments, either bank financing or capital markets instruments such as Sukuk and bonds.

Investors are also more resilient than what the market generally expects, having the ability to adjust to the new realities of the market and the current environment. We expect to see International issuances coming back to these markets (Asia and GCC). As far as local currency markets are concerned, investors are unlikely to be overly impacted by the volatility because they are a function of local market liquidity. The local markets in Malaysia and KSA, for example, will not be affected by external factors.

How sustainable then are the Islamic c a p i t a l m a r ke t s ? Fu r t h e r m a r ke t development, especially in the project

Lookingat the

crystal ball

44 MARCH 2014

f inancing space wi l l create more opportunities and sustainability in the market. At present, the Middle East lacks an active secondary market especially for asset-backed instruments similar to mortgage-backed securities or asset-backed securities. In KSA for instance, there is great demand for housing and project financing. The governments in the GCC have also committed to large public spending on infrastructure, and the Sukuk market, if rightly developed, could fund these projects which require huge financing needs.

Investor mentality in terms of trading securities has also proven to have evolved over the last five years, aided by the growth of the Islamic capital markets and increasing availability of issuers and the size of the overall Sukuk market. In markets such as Malaysia, there is already an active trading market for Sukuk, due to the wide variety of domestic and international issuances available and the size and depth of the Sukuk market.

Developments in the global market in terms of multiple issuances from the same issuer has also enabled a better trading performance for these securities; allowing investors to switch in and out of tenors if they so desire. There are now different types of issuers across the credit spectrum, and investors can switch form one credit to another. The size of the market is also big enough now, with most of the issuances above the benchmark USD 500 million size, and many crossing the USD 1 billion mark. All these factors have contributed to growth in trading over the last year, and being one of the largest market-makers in the international Sukuk space, we have seen lots of flows. There is a healthy size of trading currently being done, and things are definitely improving and hopefully this will be comparable to the conventional bond market in a few years’ time. Overall, we expect the growth to be sustainable, and the market momentum positive for Sukuk.

synDiCateD finanCing is on the riseIn addition to capital markets, Islamic syndicated financing will also continue to

Recent data from Dealogic shows that more than half the Islamic financing facilities signed in 2013 carried tenors of at least 10 years, a significant leap from the 20% recorded in 2012. From the pool of Islamic financing issued in 2012, the largest share was held by facilities with maturities of 0-3 years (35%).

This shift towards Shariah compliant papers of longer maturities is attributed to the increased number of long-term infrastructure projects underway and the lingering after-effects of the financial crises which opened the eyes of investors to the advantages of longer-term financing; and it is anticipated that this trend will continue in 2014.

exCiting new marKets will grow in their prominenCe in islamiC finanCe Beyond the Middle East, Malaysia and Indonesia , tradit ional ly viewed as strongholds of Islamic Finance, industry participants have kept their eyes on Africa in recent years, especially over the last year, as countries such as Nigeria and Kenya reaffirm their Islamic finance ambitions through strong political will.

Currently, most of the African countries are in early stages of Islamic finance and Islamic capital market development. We expect to see some issuances coming from this region in 2014, and are optimistic that these issuances can act as catalysts to quicken the pace of market development in this region. All the above taken into account, the general sentiment is that 2014 will be a fruitful year for Islamic finance.

be a major theme in 2014, especially in the light of massive infrastructure investment across key Islamic markets including Dubai, KSA and Qatar, and in the broader Gulf region as economic growth in the GCC is expected to rise to 4.7% from 3.7% in 2013, boosted by expected non-oil sector infrastructure spending.

It is projected that the infrastructure sector could be worth up to USD 2.5 trillion as Middle Eastern countries commit themselves to development plans. These include Kuwait, with a USD 108 billion economic development strategy and Oman, which recently affirmed that it will continue its infrastructure projects in a bid to diversify its economy. The Sultanate has also allocated USD 4.7 billion for development projects in its 2013 budget. Major projects are also in the pipeline for Qatar, as it will host the FIFA World Cup 2022, and Dubai following its win of the Expo 2020. This spate of infrastructure funding needs will indeed spur the Islamic capital markets in the region.

longer-term funDing will show appealIn March 2013, Emirates, a leading international air carrier, issued a 10-year USD 1 billion Reg S Senior Unsecured Sukuk due in 2023. Standard Chartered acted as joint global coordinator and joint lead manager. The innovative issuance represented the first ever amortising Sukuk executed in the international markets as well as the first Wakalah structure based on rights to travel and services relating to passenger routes operated by Emirates.

ABoUTAhsan Ali is Managing Director and Global Head of Islamic Origination at Standard Chartered Bank. Ahsan is responsible for the global Islamic Origination business at Standard Chartered Saadiq, the Bank’s Islamic banking arm. Prior to joining Standard Chartered Bank, Ahsan worked with Citigroup in Dubai.

Ahsan holds a Masters in Business Administration from the Indian Institute of Management, Calcutta and a Degree in Mechanical Engineering from the Indian Institute of

Technology, Delhi. He is also a Chartered Financial Analyst (CFA).

45MARCH 2014

TRAdE TALK

INTErNaTIONaL TraDE

While there has been much excitement about Dubai winning the Expo 2020, it would be interesting to know what will be the impact

of this mammoth event on the trade and investment scenario in real terms. Dr. Mohammed Al Zarooni, Director General, Dubai

Airport Free Zone (DAFZA) gives us an analysis

TheExpo 2020

effect!

46 MARCH 2014

a fter years of dedicated planning and commitment to secure the Expo 2020, Dubai has once again

become the focus of global attention. Vision, progress, potential and ambition have made this dynamic city of ours a place like no other, and its unique status as a safe haven for trade and industry makes it an ideal commercial hub in terms of strategy as well as geography.

The consequences for hosting the third largest non-profit event in the world – after the Olympics and the FIFA World Cup – are immense. We are already seeing a renewed surge in investment and confidence in UAE businesses as a whole and Dubai in particular.

We have seen a city, an Emirate and a country united in victory and the entire population of Dubai, whether Emirati or expatriates, celebrate with a very real sense of pride. The emotion we saw when Dubai was announced as the winner of Expo 2020 is ongoing but it is also beginning to translate into tangible results.

The Expo is the oldest of its kind, lasting for 6 months every five years. In 2020, Dubai will follow hot on the heels of the most revered and progressive economies in the world including Germany, Japan and China and the 2015 edition, to be held in Milan, Italy, provides Dubai with the perfect opportunity to observe, experience and learn from the event to ensure the highest standards are achieved.

Government departments and private sector businesses continue to attract massive investments into Dubai and the UAE in general through their own initiatives and incentives, but the Expo will provide the biggest drive ever to establish new trade and commerce ties.

In the short term, we will witness an influx of overseas investments from the entire spectrum of businesses, from SMEs to multinational corporations and government entities. In the medium term, with the run up to Expo 2020, we will see the larger businesses looking to have a more established presence, and in the long term, when the Expo has taken place, we will have

they need in order to profit from working out of Dubai. With 1,600 companies from across the globe and covering a vast number of key industry sectors, including aviation, freight and logistics, IT and telecommunications, pharmaceuticals, engineering, food and beverage, jewellery and cosmetics, Some of the world’s most recognised brands have situated their Middle Eastern hubs with us and consistently reap the benefits of being in an emerging and exciting market.

With this in mind and the sheer volume air traffic that will be needed to prepare for the Expo 2020, never before has our location next to Dubai International Airport

played such a key role. With unrivalled access to 24-hour logistics services and world-class transport facilities the free zone also provides direct access to a number of government services, including Immigration, Customs and the Chamber of Commerce – helping to streamline red-tape and provide clear processes and guidelines.

The infrastructure that will be needed for Expo 2020 will lift Dubai to new heights of global business potential. Already, the Emirate is one of the most attractive business propositions in the world in terms of logistics, and with the estimated USD 7 billion worth of investment that is earmarked for further development, Dubai will become an obvious choice for the world’s most influential corporations and governments to have a presence.

As a matter of prestige and in terms of tangible investment, being awarded Expo 2020 is, without doubt, one of the landmarks of Dubai’s incredible journey and an event that will go down in history as one of our crowning glories.

an increase in FDI from those countries who have seen for themselves the incredible benefits of operating from Dubai – and those are just the direct business investments. Of course we have much more to look forward to in terms of travel, tourism and retail, which in their own right are immensely beneficial to the Dubai economy.

According to Institute of International Finance, a Washington-based association of 450 global banks and financial institutions, hosting the Expo 2020 is expected to add at least 1.5 percentage points per year to Dubai’s real GDP growth over 2014-2020, leading to an annual growth of 5.5%. And in a recent report from Standard Chartered it

is estimated that 300,000 new jobs will be created including 80,000 in the construction sector alone, with 90% expected to come between 2018 – 2021.

Many overseas businesses are already aware of the advantages Dubai has to offer, but being aware is very different than actually seeing those advantages in operation. People will come to understand that our free zones are not a minefield of bureaucracy, but a straightforward, easy to navigate means of working from the Middle East’s most vibrant economy, with the most advanced infrastructure and zero corporate and personal tax. Suddenly, the business dream becomes a personal reality. At Dubai Airport Freezone Authority (DAFZA), we offer full turnkey solutions which manage visas, office equipment, driving licences, bank accounts and everything in between, so that our clients can concentrate on their businesses from day one.

For nearly 20 years, we have been offering our customers the essential tools

And in a recent report from Standard Chartered it is estimated that 300,000 new jobs will be created including 80,000 in the construction sector alone, with 90% expected to come between 2018 – 2021.

47MARCH 2014

CoUnTRy FoCUS

BahraIN

Abdulrahman Al-Baker, Executive Director of Financial Institutions

Supervision, Central Bank of Bahrain, speaks to us about the financial landscape

in Bahrain and what the future holds.

Bahrain’s financial landscape

48 MARCH 2014

Code is a set of high-level principles for companies, their boards and management to follow, complete with directives and recommendations on applying each principle and is the latest step in a much longer track record for effective regulation to benefit business.

One reason it has been successful is that our nation’s sovereign wealth

fund, Mumtalakat, voluntarily complied with it even ahead of its official launch at the start of 2011, and supported the implementation of it across its portfolio. This commitment to transparency has been recently recognised by the Linaburg-Maduell Transparency Index ratings, where Mumtalakat is rated in the top-third of all organisations surveyed and second in the GCC.

All this means that we have one of the most advanced corporate governance frameworks throughout the GCC region. We will continue to strive for the very best in corporate governance, not only because it benefits our business, but because through this we will assist the Kingdom of Bahrain to maintain its reputation as one of the best

regulated, transparent and most attractive places to do business

How important are financial services to Bahrain’s economy?The financial services sector in Bahrain has a track record going for over 40 years, as the Kingdom began the process of diversifying its economy away from oil production. It is one of the strongest and most developed sectors of Bahrain’s economy and now represents 17% of GDP with over 400 licensed local, regional and international financial institutions.

An open-market economy; stable and prudent macroeconomic and fiscal policies; a strong regulatory framework in line

It is one of the strongest and most developed sectors of Bahrain’s economy and now represents 17% of GDP with over 400 licensed local, regional and international financial institutions.

Bahrain has once again topped in the Index of Economic Freedom, for being the most economically

free country in the MENA region. Overall the Kingdom is ranked 13th out of 178 countries, just one spot below the USA. According to the report, Bahrain has improved its economic freedom in a number of categories, such as financial freedom.

Bahrain has been appreciated for its open market environment along with very few tariff and non-tariff barriers. Abdularahman Al-Baker elaborates on this in our interview.

In 2010, the Central Bank of Bahrain (CBB) helped formulate a new corporate governance code for all public companies operating in Bahrain, reflecting the corporate governance principles developed by the OECD. Please tell us how has that impacted the companies and the private sector? Bahrain’s new Corporate Governance Code, which I’ll refer to from now on as the Code, is the latest evolutionary step in the efforts to create a legal and regulatory environment that is supportive, firm and fair, and which provides the support to make doing business both in and from Bahrain easier.

The Code was originally launched in March 2010 by the Minister of Industry and Commerce, HE Dr. Hassan Fakhro, and is designed to strengthen the country’s position as the most established financial centre in the region and the gateway to the USD 1.4 trillion Gulf market.

Described as the completion of an 8-year journey in its own right, the

13th rank of Bahrain on the Index of Economic

Freedom, out of 178 countries

49MARCH 2014

with best international standards; and a notably well-qualified local workforce have supported the growth of the financial services sector in Bahrain.

Banking is the cornerstone of the finance industry, though it is now diversified into all aspects including funds, insurance, reinsurance, Islamic finance, assets management and capital markets. It is backed by the highest regulatory and supervisory standards in the region – both conventional and Islamic.

The Kingdom is also home to leading regulatory bodies for Islamic finance, such as the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Liquidity Management Centre (LMC) and the International Islamic Financial Market (IIFM).

The strengths that Bahrain offers are well-suited to the way that the international financial system is changing.

We see the main drivers of growth being in corporate finance, retail banking, insurance and wealth management and private banking – more in growing the broad base of financial services in the region than big international deals. Bahrain is particularly well positioned

for this because our workforce means that businesses can locate their back-office operations here with skilled, bilingual local staff. So, for example, Standard Chartered bases most of its regional call centres here and American Express, E&Y and Axa all have regional administrative facilities based in Manama. Likewise, they can use Bahrain as a location for a sizeable operation in the region, such as Legal & General, which employs approximately 100 people in Bahrain.

How has the financial sector changed or has been impacted because of the global financial crisis?A combination of the global economic crisis and its specific impact on the financial services

sector did have had some impact on overall banking assets, but the strengths that helped establish Bahrain as a financial centre are the same that we expect to continue to attract businesses in the future. Bahrain’s tried and tested regulation, access to the GCC market, highly-skilled local workforce and liberal business environment remain unchanged and will continue to create sustainable growth in financial services for the long term.

Clearly, the volatility of the international financial system has made things more challenging for any international financial centre, but Bahrain’s sector is well positioned given economic growth in the GCC and the wider region and it’s tried and

tested track record. Growth in Bahrain’s financial services industry will continue to be driven by growth in the local and regional economy – as institutions across the GCC and the MENA region expand and as an increasingly accredited and institutional investors in the region need more sophisticated ways to manage their money, we are confident that Bahrain’s broader financial services industry will continue to expand.

The success of recent conventional and Islamic bond offerings underlines the international financial community’s confidence in Bahrain’s economic strategy. Furthermore, the stronger momentum of the economy has been supported by a

clear pick-up in lending by Bahraini retails banks. New lending was minimal in the first half of the 2011 but began to experience a sharp, sustained pick-up since mid-2011 and accelerated through much of 2012.

As one of the highest regulatory bodies, what measures have you taken, besides the governance code, to ensure that the economy is sound and safe for foreign investors?In Bahrain, we manage our financial structure and institutions with regulation that has stood the test of time. As the single regulator for the financial sector in Bahrain, the CBB ensures that these regulations are also transparent, and prudent.

The ultimate aim is regulation that steers market participants towards proper corporate governance. This is because investors want their money and their reputations protected.

But this sort of regulation will only work if the public and private sectors work together and our commitment to partnership extends to the financial institutions – local, regional and global – who have located in Bahrain.

The CBB has a reputation for consulting widely in devising its regulations and applying them uniformly, with no exceptions. We listen to the industry before we act, and one reason why our financial regulation works better than others is that we discuss changes with the market participants before we impose them on the industry.

Currently, our focus has been on ensuring robust capital adequacy requirements are in place, and ensuring that the environment is supportive for emerging financial services sectors, such as Islamic finance, insurance and assets management.

CoUnTRy FoCUS

BahraIN

The Kingdom is also home to leading regulatory bodies for Islamic finance, such as the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Liquidity Management Centre (LMC) and the International Islamic Financial Market (IIFM).

We see the main drivers of growth being in corporate finance, retail banking, insurance and wealth management and private banking – more in growing the broad base of financial services in the region than big international deals.

50 MARCH 2014

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