The GRC Gulf Business Weekly Report - Gulf Research Center

The GRC Gulf Business Weekly Report - Gulf Research Center

The GRC Gulf Business Weekly Report - Gulf Research Center


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<strong>The</strong> <strong>GRC</strong> <strong>Gulf</strong> <strong>Business</strong> <strong>Weekly</strong> <strong>Report</strong><br />

May 13-19, 2006<br />

Sona Nambiar, <strong>Business</strong> Editor, <strong>Gulf</strong> <strong>Research</strong> <strong>Center</strong><br />

Environmental activists in Bahrain stepping up a campaign to protect the coastline, Iran building its first<br />

solar automobile, the UAE signing an MoU to stockpile its oil in South Korea, Saudi Arabia announcing<br />

plans to award new telecom licenses and set up a risk-free fund for low income nationals, and the Qatar<br />

Chamber of Commerce and Industry welcoming the first woman to its executive body were some of the<br />

<strong>Gulf</strong>'s business highlights last week.<br />

Bahrain<br />

Bahrain's environmental activists are going all out on the streets. <strong>The</strong>y are drumming up public support for<br />

an urgent campaign to save the Fasht Al Adham and Sitra coastlines from being reclaimed and<br />

environmentally destroyed. Environmentalists say that they are angry over plans to develop Fasht Al<br />

Adham, an area known as one of Bahrain's richest areas in terms of natural environment and biodiversity,<br />

for a housing project. <strong>The</strong>y also say that established factories have already reclaimed more than 75 percent<br />

of the Sitra coastline. Sitra, which has a flourishing environment full of palm trees and natural springs, has<br />

now lost most of its natural surroundings, claim the activists. Sustainable developments that address and<br />

integrate the environmental needs of their surroundings seem to be the need of the day, not just in Bahrain,<br />

but in the region.<br />

Meanwhile, Bahrain-based Investcorp signed an agreement to acquire OREFI Participation, headquartered<br />

in France. OREFI is a leading European distributor of industrial parts. <strong>The</strong> transaction, which is subject to<br />

various approvals, is expected to be finalized in June. Bahrain gained on the media front too. <strong>The</strong> Middle<br />

Eastern broadcaster Arab Tourism Channel will move its headquarters from Dubai to Bahrain and soon<br />

relay out of the island.<br />

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Saudi Arabia<br />

Last week, Saudi Arabia announced that it would award one or more new licenses for fixed and mobile<br />

services by end-2006. It also said that it will set up a risk-free fund for low-income Saudis who want to<br />

trade on the stock market. Media reports quoted King Abdullah as saying that the fund would be limited to<br />

a maximum investment of SR 500,000 and that small investors "will be able to buy and sell for two years;<br />

if they win, then this is their luck with God's will. And if they lose, then their capital is preserved with us."<br />

On the other hand, Saudi Arabia’s shopping malls have gone on record as saying their visitors are<br />

spending more time browsing through stores than buying. <strong>The</strong> bourse crash changed the lives of thousands<br />

of Saudis, and now sales registers show 20 percent drops. Some malls are offering discounts of up to 70<br />

percent to pull in traffic.<br />

Meanwhile, the Saudi government’s plans to launch the Development Bank next year are causing concern<br />

in the local banking industry, which is already facing foreign competition. <strong>The</strong> government says it plans to<br />

float 70 percent of the bank’s capital (SR 15 billion), making it larger than any of the 11 banks operating<br />

in Saudi Arabia; the new bank will have almost the combined paid up capital of the top two banks – stateowned<br />

National Commercial Bank and private bank Al-Rajhi. PIF, the General Pension Organization, and<br />

the General Organization of Social Insurance (GOSI) will each hold a 10 percent stake in the venture. <strong>The</strong><br />

planned IPO will allow every Saudi to become a shareholder, says industry sources.<br />

UAE<br />

Last week, UAE Minister for Government Sector Development Sultan bin Saeed Al Mansoori made it<br />

clear that the privatization of the telecom sector was not on government's immediate agenda. He said that<br />

the UAE was committed to the liberalization of the telecom sector by 2015 under commitments made to<br />

World Trade Organization (WTO).<br />

On the energy front, the UAE and South Korea signed a series of accords, including a memorandum of<br />

understanding (MoU) on stockpiling Emirati oil in South Korea. <strong>The</strong> MoU, whose terms have yet to be<br />

finalized, stipulates that South Korea will rent out facilities for the stockpiling of UAE crude oil. <strong>The</strong> two<br />

sides signed a total of six MoUs, including one on energy cooperation, in addition to an agreement on<br />

economic, trade, and technological cooperation. This deal will give the UAE a marketing gateway to<br />

Northeast Asia, one of the fastest-growing markets for oil consumption.<br />

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<strong>Gulf</strong> <strong>Research</strong> <strong>Center</strong><br />

Meanwhile, the UAE removed some restrictions on share buybacks, hoping to encourage companies to<br />

add some support to tumbling stock markets. <strong>The</strong> official WAM news agency said that new rules would<br />

allow companies to purchase up to 10 percent of their own stock. On the commodities front, the Dubai<br />

Gold and Commodities Exchange (DGCX) said that it could be trading eight to ten currency futures<br />

contracts over time, and is in an advanced stage of preparedness for the introduction of fuel oil and steel<br />

futures. DGCX plans to begin trading euro-dollar, yen-dollar, and sterling-dollar future contracts in June.<br />

And within the next 18 months, international investors can participate in another IPO – Dubai Ports World<br />

(DPW), the world’s third largest container port operator. It was not revealed where the shares would be<br />

listed or how much of the company would be sold.<br />

On the real estate front, a developer said that an acute shortage of contractors in the local market was<br />

forcing him to invite construction companies from outside. Axon <strong>Gulf</strong> chief executive officer June Kim<br />

said that he has seen delays in projects due to shortages, and that this affected developers' relationships<br />

with their clients. His company plans to invest around $1 billion in different projects in Dubai.<br />

Meanwhile, Dubai Properties unveiled Dubai's latest tourist landmark, the Dh 50 billion Culture Village,<br />

which will be built along the Dubai Creek.<br />

Qatar<br />

Last week, Ibtihag Mohammad Al Ahmadani, a young and active businesswoman, was elected to the<br />

board of the Qatar's Chamber of Commerce and Industry. It is the first time in Qatar's history that a<br />

woman has been elected to the Chamber's executive body. She is married to a diplomat and a mother of<br />

four children, said a media report.<br />

Iran<br />

A month after Iran’s oil ministry granted a license for its first euro-denominated oil bourse, Venezuela’s<br />

president, Hugo Chavez, said that he would consider pricing his country’s oil in euros instead of dollars.<br />

“That is an interesting proposal made by the president of Iran,” Chavez told Britain’s Channel 4 news.<br />

“We are free to choose too between the dollar and the euro.”<br />

Iran will soon make headlines for a different reason. "Persian Gazelle,” the first solar automobile in the<br />

Middle East region, is on its way to Isfahan. <strong>The</strong> car, powered by solar energy, has been designed and<br />

produced by students from the University of Tehran. <strong>The</strong> single-passenger car will make a trip from<br />

Tehran to Kashan and then Isfahan, after which it will come back to Tehran. <strong>The</strong> designers have been<br />

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invited to join the 20 best research teams of the world at the Massachusetts Institute of Technology (MIT)<br />

to cooperate in building of future solar cars.<br />

Sources: Regional newspapers and agencies<br />

*****************************<br />

<strong>The</strong> <strong>GRC</strong> "<strong>Gulf</strong> <strong>Business</strong> <strong>Weekly</strong> <strong>Report</strong>” is published online in Dubai, United Arab Emirates by <strong>Gulf</strong><br />

<strong>Research</strong> <strong>Center</strong>, as part of the <strong>GRC</strong> <strong>Gulf</strong> <strong>Business</strong> <strong>Weekly</strong> Bulletin Series. <strong>The</strong> opinions expressed in this<br />

publication are excerpts from regional newspapers and news agencies and do not state or reflect the<br />

opinions or position of the <strong>Gulf</strong> <strong>Research</strong> <strong>Center</strong>.<br />

© <strong>Gulf</strong> <strong>Research</strong> <strong>Center</strong> 2006<br />

<strong>Gulf</strong> <strong>Research</strong> <strong>Center</strong>, 187 Oud Metha Tower, 11th Floor, 303 Sheikh Rashid Road, P. O. Box 80758,<br />

Dubai, United Arab Emirates, Tel.: +971 4 324 7770, Fax: +971 3 324 7771, E-mail: sales@grc.ae,<br />

Website: www.grc.ae.<br />

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