Economy

Syria: The Right mix

Oil, for a long time, has formed the backbone of the Syrian economy even as the country diversifies into new sectors. However, with the oil sector facing maturing production, the government has begun to increase its focus on gas and transport, while overhauling its legal framework in a bid to spur new investment. While in decline, oil still accounted for a significant 23 per cent of government earnings in 2008, some 20 per cent of the country's export revenues and 22 per cent of its GDP, according to the IMF. Oil production for Syria peaked in 1995, when it was producing an average of 610,000 barrels per day (bpd). Production has dropped, with average output for 2008 having nearly halved to an estimated 369,000 bpd. The decline in production is less a factor of reserves being depleted, and more that the rate of new investments has slowed. The country's Ministry of Petroleum and Mineral Resources recently announced that Syria has proven oil reserves of 7.2bn barrels. Yet total current production is considered too low a figure compared to the estimated reserves available.

UAE sees no compromise leading to monetary union

The United Arab Emirates sees no compromise possible now that would allow it to rejoin plans to create a Gulf Arab monetary union, UAE central bank governor Sultan Nasser al-Suweidi said. "We have certain concerns with the GCC monetary union (and) we don't want to act as a stumbling block," Suweidi told reporters on the sidelines of a meeting of Arab central bank governors in Abu Dhabi. "We don't see compromise at this point. "Gulf Arab monetary union plans were thrown into disarray in May when the UAE, the second-largest Arab economy, broke ranks with Saudi Arabia, Kuwait, Qatar and Bahrain by withdrawing.

Qatar tops Gulf in new competitiveness list

Qatar has edged ahead of the UAE to claim the title of the Gulf region's most competitive country, according to a new ranking published by the World Economic Forum (WEF). Qatar was rated 22nd overall in the list of 133 countries, which was topped by Switzerland. The world's largest producer of liquefied natural gas tipped the UAE to the best in the Gulf title with the Emirates coming in 23rd. Both countries have moved up the global list since 2008 with Qatar jumping four places and the UAE up eight places. All the other GCC countries fell in the competitiveness rating. Saudi Arabia dropped one place to 28th, Bahrain came in at number 38 (from 37 in 2008), Kuwait was ranked 39th, a fall of four places, and Oman was the 41st most competitive nation, having been rated 38th the previous year.

Oman and Uzbekistan to step up industrial, trade and investment co-op

Oman and Uzbekistan are planning to step up industrial, trade and investment cooperation, according to the talks held recently between Uzbek and Omani officials. The Omani team was led by Minister of National Economy Ahmed bin Abdulnabi Macki, and the Uzbek delegation was headed by Minister of Foreign Economic Relations, Investments and Trade Elyor Ganiyev Macki, noting that the two countries had signed agreements to avoid double taxation and encourage joint investment, said the sultanate was keen to enter into joint investment ventures with Uzbekistan.

ADCB has US$609m exposure to Saudi groups

Abu Dhabi Commercial Bank (ADCB) holds more than US$600 million in exposure to two Saudi conglomerates, the biggest official disclosure of potential losses for any bank since trouble erupted at the family business. ADCB expects to book additional provisions in the near future to cover its exposure, according to a debt prospectus published by the lender and dated September 17, but only made public in recent days. ADCB, the United Arab Emirates' third largest lender by assets, holds 1.487 billion dirhams (US$404.8 billion) in exposure to Saad Group and 751 million dirhams (US$204.5 million) to Algosaibi, according to the prospectus. The two Saudi family businesses are undergoing a massive debt restructuring that has sent shockwaves through the regional banking system.

UAE shines on wealth index

The UAE and Switzerland led the global wealth ranking with millionaire households accounting for 6.1 per cent of all households in both countries - almost nine times the global average, according to the latest Global Wealth report by Boston Consulting Group (BCG). "The rise in oil prices has been a major driver of economic growth in the GCC region, but governments have also been diversifying their economies to develop sustainable income sources beyond the oil industry," the report said. A World Wealth report released earlier by Merrill Lynch and Capgemini showed that the number of millionaires or high net worth individuals (HNWI) in the UAE shrank by 12.7 per cent to 67,000 last year. Across the Middle East, the total HNWI population dropped to 373,600 and their wealth declined 16.2 per cent to US$1.4 trillion. HNWIs are individuals with assets of at least US$1 million (AED3.67 million), excluding their primary residences and consumables.

Four foreign banks to open branches in Iran

Four foreign banks have received the initial permits to open branches in Iran, the head of Organization for Investment, Economic and Technical Assistance of Iran said early in September Behruz Alishiri said that four banks from Saudi Arabia, Malaysia, Qatar, and India plan to establish branches in Iran. The banks are allowed to start activity with the minimum registered initial capital of US$300-400 million, Alishiri explained. The Qatari bank will be officially inaugurated during the planned visit of Qatari ruler to Iran, he added. He went on to note that the Indian and the Malaysian bankers will soon travel to Iran to receive final permissions. Iran-Europe Trade Bank was the first foreign bank branch in Iran which was inaugurated on January 2005 in Kish Island, southern Iran, with an initial capital of 160 million Euros.

Saudi sharpens legislation to improve business

Dr. Awad Al-Awad, Governor for Investment Affairs with the Saudi Arabian General Investment Authority (SAGIA) expects “steps taken in collaboration between judicial authorities in the Kingdom to result in the establishment of specialized commercial courts before the end of next year. "Al-Awad stressed the need for highlighting the World Bank’s recent report, which elevated the Kingdom’s global ranking gauging the easiest places to do business around the globe. The WB’s International Finance Corporation announced the Kingdom advanced three positions in business-related activities coming 13th out of 183 countries included in the report.

Brain drain costs Arab world US$1.5bn per year

Stopping the widespread emigration of human capital can save talent-exporting Arab countries around US$1.57 billion annually, says a new report quoting an Arab League study. About 100,000 scientists, doctors and engineers leave Lebanon, Syria, Iraq, Jordan, Egypt, Tunis, Morocco and Algeria annually, a report from TalentRepublic.net said quoting statistics from the Arab League, ILO, UNESCO and other Arab and international organizations. 70 per cent of the scientists do not return home, while about 50 per cent of doctors, 23 per cent of engineers and 15 per cent of scientists move to Europe, United States and Canada, the report said. The TalentRepublic.net report pointed out that around 70,000 Arab university graduates emigrate annually to search for jobs overseas, while about 54 per cent of Arab students studying abroad do not come back to their home country to seek job opportunities.

Moody's outlook for Saudi banks remains stable

Moody's said that its stable outlook reflects the sector's resilience and its ability so far to absorb the adverse effects of the global financial crisis and deteriorating macroeconomic conditions, in its new Banking System Outlook on Saudi Arabia. Moody's stable outlook for the Saudi banking system expresses the rating agency's view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. It does not represent a projection of rating upgrades versus downgrades. Moody's believes that the banking sector will benefit from the Saudi Government's continued commitment to supporting the economy with an expansionary budget and numerous infrastructure projects.

Saudi central bank says Saad in local debt deal

Saudi Arabia's central bank governor said that troubled Saad Group has struck an agreement with Saudi creditors to repay syndicated and bilateral loans. Asked how he felt about an agreement between Saad and local creditors, Saudi central bank governor Muhammad al-Jasser said: "Any agreements are good ... This is something between the creditors and the borrowers. My understanding is they have agreed to settle." The reported deal, which has left international creditors in the cold, drew the ire of the United Arab Emirates, which said 13 banks in the country were exposed to Saad and Ahmad Hamad Algosaibi and Bros Co (AHAB).