The GRC Gulf Business Weekly Report - Gulf Research Center ...

The GRC Gulf Business Weekly Report
June 24-30, 2006
Sona Nambiar, Business Editor, Gulf Research Center
The IMF urging the GCC countries to create a sound fiscal statistics mechanism, Bahrain deciding not to
penalize the funding of “armed struggle” against foreign tyrants and closing its private radio station,
Kuwait stepping up efforts to protect intellectual property rights (IPR), Dubai’s Techno Park seeing a new
tenant focusing on solar energy products and solutions, the US Senate Finance Committee approving a
free trade agreement with Oman, Qatar passing a new Commercial Companies Law, and the Reliance
Group investing in Saudi Arabia to set up two submarine fiber optic cable landing stations were the
highlights of the Gulf business scene last week.
Bahrain
Last week, Shura Council members planned to vote on a new money laundering law, including an
amendment stipulating that "armed struggle against foreign tyrants, oppression, or colonization" is not
terrorism. Meanwhile, councilors begged to differ. They had earlier postponed voting, after the parliament
removed the term "armed struggle" from the definition of terrorism. They said that the law in its current
form was not in line with the country's efforts to combat money laundering. They said the article should
cover all terms related to terrorism, including the term removed by parliament. However, they backed all
the other articles in the law.
On the media front, Bahrain’s information ministry stopped broadcasts by Sawt Al Ghad (owned by
Delmon Media), the first privately held radio station due to a series of “violations.” The ministry also
revoked an agreement between Bahraini state-run radio and television and Delmon Media. He cited the
owners’ failure to present evidence from a bank that their company had three million dollars of capital,
their tampering with their transmission airwaves and “other violations.”
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Although a draft law regulating audiovisual media in Bahrain is still before parliament, the information
ministry licensed Sawt Al Ghad on the basis of internal bylaws "in a bid to open the market to investors,"
said officials. 10 license requests for private radio and television stations are pending with the ministry.
But the newspaper Al Waqt quoted Sawt Al Ghad’s director, Raja Sawaya, as denying that the company
had violated any licensing terms. Delmon was considering making a formal protest. It is owned by
Lebanese investors with Bahraini, Kuwaiti, and Saudi partners, and had been preparing to launch a private
television channel.
Kuwait
The Kuwait government has stepped up efforts to protect intellectual property rights (IPR) in the country,
and has intensified its campaign against software piracy. This included raids on two computer companies
in Kuwait City. According to reports, a reduction in the piracy rate in Kuwait by 10 percentage points
between 2006 and 2009 could double the size of the country’s IT industry to $830 million, create 667 new
job opportunities, and raise Kuwait's GDP by $357 million.
Oman
The US Senate Finance Committee approved a free trade agreement with Oman last week. This was
despite Democratic complaints about the Bush Administration decision not to include a provision barring
goods made with forced labor. Senator Ron Wyden complained: "This Oman agreement isn't on a fast
track. It's on a supersonic track."
Qatar
Last week, Qatari Emir Sheikh Hamad bin Khalifa Al Thani endorsed a law allowing two new types of
companies to be set up in the country under the Commercial Companies Law. The law became effective
immediately after being issued. The two new types of companies that have been allowed to be formed are
single-ownership and holding companies. Before the new law, six types of companies were allowed under
the Commercial Companies Law (No. 5) of 2002.
Meanwhile, new legislation (Law No. 16 of 2006) says that the Qatar Financial Market Authority
(QFMA) will issue extensive rules to regulate the buyback and resale of shares by listed firms. The new
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law permits promoters to own up to 60 percent equity. Earlier, the upper limit earlier was 45 percent. This
means that listed companies will be allowed to buy back up to 15 percent of their own listed shares.
The law also amended the provisions of the Commercial Companies Law No. 5 of 2002 governing
companies that wished to go public and launch initial public offerings (IPOs). Its rules have been made
tougher to ensure fair play and transparency. Companies have, however, been given the choice of
abandoning their IPO plans if they fail to mobilize the required funds from the public during a launch
period of four weeks (maximum). An IPO is to remain open for a minimum of two weeks, and in the event
of under-subscription, an extension may be granted by the minister of economy and commerce for another
two weeks. Alternatively, the company launching the IPO will have the right to reduce the capital it
wishes to mobilize from the public via an IPO.
On the IT front, Microsoft unveiled its first community education, research, and development projects at
Qatar Science & Technology Park in Doha. The world's largest IT company will work closely with
university and government partners in Qatar to deliver many of the programs, which will bolster
computing skills and capabilities in the country. Microsoft, which is already a tenant of QSTP, will invest
around $4 million in six pioneering technology-related projects at the science park over the next year.
Saudi Arabia
The Indian conglomerate Reliance Group has invested $60 million in Saudi Arabia to set up two
submarine fiber optic cable landing stations in Al Khobar and Jeddah to facilitate access to international
bandwidth. The investment was made through FlAG Telecom, Reliance’s subsidiary in London, under its
Falcon project, which will connect the Kingdom and other Gulf states to the 53 countries around the world
served by the Reliance fiber optic cable network. Besides greatly enhancing the international bandwidth
capacity from the current level of 8-10 gigabytes to 2.56 terabytes, the Falcon Project will provide a host
of value-added services, such as video-on-demand, triple play (audio, video, data), and video conferencing
services, on a commercial basis. The project will connect the Gulf countries, including the Kingdom, to
India, Egypt and the rest of the world. The project will be completed by October 2006.
First it was bird flu. Now Saudi Arabia's poultry sector is facing a serious threat from imported poultry
products flooding the market. The Saudi Society for Poultry Producers has asked the ministry of
commerce and industry to save the industry from impending collapse. "The incessant flooding of imported
poultry products has inflicted a severe blow to the industry as a whole, resulting in the closure of several
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poultry stores in various parts of the Kingdom," said Abdullah Bakar Qadi, chairman of the society.
Domestic investments worth more than Dh 30 billion are at a risk if steps are not taken to control poultry
imports, he said.
"The foreign exporters, especially those from Europe, are getting support from their governments in
various ways, and these include exemption of customs duties, programs for financing exports, extending
long-term loans at low-rate of interests and the like," said Qadi. He also drew attention to the laws, which
were passed by the Shura Council, and approved by the Council of Ministers, against the flooding of the
local market with foreign products. According to Qadi, the society is following up a petition lodged with
the concerned Permanent Committee on the Flooding of Products.
UAE
Last week, the International Monetary Fund (IMF) urged the six Gulf Cooperation Council (GCC)
countries to work for the creation of a sound fiscal statistics mechanism to ensure the success of their
planned monetary union. In a new study on monetary union, the IMF said the process of creating a strong
statistical system in the GCC would require professionalism and institution-building at the national and
union levels. It cited IMF Managing Director Rodrigo de Rato as saying that the GCC should consider
creating an institution along the lines of Eurostat in the European Union.
Peak oil theories are being taken seriously by some. Solar Technologies will invest Dh 50 million in a
facility in Dubai to develop solar energy products and solutions. The company will design and assemble
solar thermal power plants, solar thermal air conditioning solutions, and other solar thermal solutions for
medium and large projects. It will occupy a total land area of 400,000 square feet at Dubai Techno Park,
and will also feature a research and development center to design and build solar power plants. “The
increasing stress on various energy resources today has made it imperative to opt for alternate sources of
energy, and solar energy has proven to be extremely viable in this regard," said Abdullah Al Banna, vice
president for sales and marketing at Techno Park. The company will target municipalities, energy and
water distribution companies, telecommunication companies, metros, large real estate developments,
industrial facilities, and energy projects in the UAE, Oman, Qatar, Kuwait, and Bahrain.
Meanwhile, Dubai Healthcare City (DHCC) unveiled its second phase, an extension of the existing
healthcare community, with total investments of Dh 4 billion. The new phase covers a total area of 19
million square feet.
The stock markets did not look quite as healthy. Dubai’s stock market fell to its lowest level in more than
18 months on June 25, wiping out all gains from a surge in 2005.
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However, Dubai jumped 50 places from last year to rank among the 25 most expensive cities in the world.
According to the annual Mercer Human Resource Consulting Cost of Living Survey, the city tied for the
25th spot with Helsinki in Finland.
The survey ranked 144 countries, measuring the comparative cost of more than 200 items including
housing, food, and transportation. However, it primarily reflected the cost of living for people living a
Western lifestyle in the cities ranked.
Iran
The first L90 automobile rolled off Pars Khodro’s assembly line last week. Iran’s Pars Khodro and
France’s Renault signed a final amended version of the contract for the production of the model on the
same day.
In an ironic decision for Opec’s number two exporter of crude oil, Iran said it will stop importing petrol in
September and begin rationing it.
Sources: Regional newspapers and agencies
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The GRC "Gulf Business Weekly Report” is published online in Dubai, United Arab Emirates by Gulf
Research Center, as part of the GRC Gulf Business Weekly Bulletin Series. The opinions expressed in this
publication are excerpts from regional newspapers and news agencies and do not state or reflect the
opinions or position of the Gulf Research Center.
© Gulf Research Center 2006
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