GFH to establish economic zone in Syria
Bahrain-based Gulf Finance House (GFH) has signed a memorandum of understanding to develop an economic zone, power projects and phosphate mines in Syria. GFH signed the MoU with the Syrian Investment Authority (SIA), on behalf of Syria Finance House (SFH), an Islamic bank under establishment with a capital of US$333 million by GFH. The announcement was made at a press conference held on the sidelines of the 5th Islamic Banks and Financial Institutions Conference in Syria. The conference was hosted by GFH. SFH will take the lead in conceptualizing these projects, draw up the necessary plans, structure the financial instruments required to finance these projects, raise the necessary funds and engage developers to commence the work, said a statement. GFH had announced that it’s in an advanced stage of obtaining a license from the Central Bank of Syria for SFH that would operate in both commercial and investment banking activities. “The impressive growth of private banks over the last five years driven largely by deposits has resulted in excess liquidity in the market which could be better utilized in funding the various business and infrastructure opportunities in the nation,” said Gulf Finance House chairman Esam Janahi. “This made a compelling case to use our expertise in emerging markets and Islamic finance to establish SFH and look into infrastructure opportunities like phosphate mining, electricity power generation and developing an economic zone,” he added.
Dubai World's US$26bn debt repayment plan
Dubai World will offer banks a single proposal to repay in full the US$26 billion debt it owes to some 97 creditors, including Royal Bank of Scotland. Officials from Dubai and neighboring emirate Abu Dhabi have been working with restructuring experts to devise a viable debt-restructuring plan. Dubai World, the state-controlled holding company, will propose to repay the debt over seven years, it was claimed by broadcaster Al Arabiya. Implementing the proposal would cause banks to book losses this year due to the differences between the proposed rate and those in the original contracts. Dubai shocked the market in November when it said it would ask creditors to delay repayment on debt linked to Dubai World.
Egypt: Growth impetus
One of the potential winners of the global financial crisis, Egypt has maintained a relatively high level of income from Suez Canal and tourism receipts, spurring a GDP growth rate of nearly 5 per cent. However, on the back of a massive stimulus spending package in 2009, the country is looking to take advantage of low global interest rates and sell government debt. At the start of March, the Egyptian Finance Ministry announced plans to issue between US$1 billion and US$1.5 billion in Eurobonds within the next two months. Morgan Stanley and HSBC Holding have reportedly been hired to manage the issue. "We plan to test the outer limits of maturities. We are testing 20 to 30 years," the finance minister, Youssef Boutros-Ghali, told international press. In its last visit to international markets in 2001, the country sold five- and 10-year Eurobonds worth US$1.5 billion. The announcement of the Eurobonds sale comes on the heels of an IMF Consultation Mission report, released in February, which called Egypt "resilient to the crisis" but recommended that the country take measures towards reducing its deficit, which is expected to reach 8.4 per cent this fiscal year. After averaging around 7 per cent in recent years, Egypt's real GDP growth decelerated to 4.7 per cent in 2009, but is expected to exceed 5 per cent in 2010. The government has targeted halving the deficit within five years, which the IMF believes is not fast enough to achieve private sector growth. According to its report, "A tightening of 1.5 per cent to 2 per cent of GDP would provide an upfront signal to investors that progress towards the medium-term objective is well under way." However, the country is instead aiming for a 0.5 per cent deficit reduction in the next fiscal year. "Our economy has recovered but not fully recovered, so I want to make sure that we are on a self-sustaining momentum before I start really cutting down on the budget deficit," Boutros-Ghali said. "The IMF always says reduce the budget deficit no matter what happens or what the circumstances are. Our problem now is creating jobs." (Source: OBG)
Abu Dhabi SWF sees more global "uncertainty" in 2010
Abu Dhabi Investment Authority (ADIA), considered the world's largest sovereign wealth fund, said the global economy still faces "considerable uncertainty," in its first annual review aimed at enhancing transparency. The fund, believed to have assets of around US$500 billion to US$700 billion, said the sustainability of a global economic recovery was uncertain as governments were considering rollbacks of stimulus measures. "Indeed, the timing and nature of exit strategies, will probably dominate the economic debate and outlook for quite some time," Sheikh Ahmed bin Zayed al-Nahayan, ADIA's managing director, said in the 2009 review, adding: " ... considerable uncertainty remains about the outlook for 2010." Economic recovery may be slower in developed markets, with higher interest rates and taxes hampering growth, Sheikh Ahmed wrote in a letter published in the first annual review. The secretive US$3 trillion SWFs, which invest national windfalls for future generations, have faced pressure to open their books and enhance transparency. Such funds have come under scrutiny as concerns grew in Western capitals that investments were made with political rather than commercial motives. Leading sovereign funds formed the International Working Group of Sovereign Wealth Funds in 2008, announcing a set of 24 principles and best practices, known as the Santiago Principles. In a statement, ADIA said the latest initiatives, including a revamp of its website (www.adia.ae) with more information, underscores the fund's commitment to the Santiago Principles.
Qatar Investment Authority may invest US$30bn in 2010
Qatar's Prime Minister, Sheikh Hamad Bin Jasim Bin Jaber Al-Thani, has said the country's sovereign wealth fund had invested US$30 billion last year and may match that in 2010, Bloomberg has reported. The Qatar Investment Authority has stakes in companies including Volkswagen, Barclays and J Sainsbury. Speaking at a press conference in Doha in March with Bulgaria's Prime Minister Boiko Borissov to announce a cooperation agreement between the two countries, Sheikh Hamad Bin Jasim Bin Jaber Al Thani said: “We are thinking to invest the same amount this year." He added: “Qatar is ready to invest as long as there is a good return for both sides." Qatar and Bulgaria agreed to establish a joint company to invest in energy, infrastructure and agriculture projects, and signed accords on energy cooperation and taxation. Qatar, the world’s biggest producer of liquefied natural gas, invests both domestically and abroad to diversify its economy. Qatar Investment Authority, with stakes in companies including Volkswagen AG, Barclays Plc and J Sainsbury Plc, has about US$75 billion worth of investments outside the country, Rachel Ziemba, a senior analyst at RGE Monitor in New York, said in January. Qatar, with the world’s third largest gas reserves, expects its economy to grow 16 per cent this year, from 9 per cent in 2009, as three of the world’s largest gas liquefaction plants come on line, raising its annual production capacity to 77 million tons.
GCC market 'to play key role in global economy'
The trillion-dollar GCC market will be a springboard to help the countries of the region develop as major players in the global economy, Economic Development Board (EDB) chief executive Shaikh Mohammed bin Essa Al Khalifa has said. "All the countries coming together as a single market will also mean that these nations take their proper place on the world's economic scene," he said during a workshop on strengthening integrity in the private sector in Arab countries at the end of March. The two-day event, held under the patronage of Shaikh Mohammed, was organized by the EDB, in co-operation with the United National Development Programme and the Middle East and North Africa Investment Centre. "There is a co-operative mindset that has encouraged us all to work together gradually to transform the GCC into a single market, with falling barriers and rising cross-border trade and investment and employment," he said. "This trillion-dollar market can be a springboard that will help our nations and our companies to take their proper places in the global economy, but we must be aware that increasing success will bring with it greater scrutiny and an even greater need for integrity. We see this as one of our greatest opportunities - with great scrutiny comes greater responsibility and we need to ensure that we work together to achieve this." He said the close relationships between the countries could help them build integrity across the private sector and learn from each other’s examples. "As the private sector grows, we will need two step-changes to preserve its integrity. We will need changes to the approach of both the regulators and the private companies." Shaikh Mohammed said that Bahrain and its fellow GCC members have always seen each other as partners rather than rivals. "We know that one of our greatest selling points is not just what we can do alone, but what we can achieve together." He said the regulators must be given new tools to ensure that what goes on in the private sector is to the benefit of society, that its activity does not put the system at risk. The workshop aims to provide an interactive forum that would support public and private sector representatives from Bahrain, Jordan, Iraq, Saudi Arabia, Lebanon and Egypt.
Abu Dhabi to set up agency for foreign investment
Abu Dhabi plans to set up a dedicated investment agency to attract foreign investment, an Abu Dhabi government official said. 'In line with our five-year strategic plan, the department is working towards setting up a dedicated investment agency to serve the needs of international investors,' said Mohamed Omar Abdullah, under secretary of the emirate's department of economic development. The new agency will begin operations by the end of 2010 and will identify areas of opportunities to attract foreign investments, Mr. Abdullah said. 'International investors have a crucial role to play bringing in expertise, technology and best global practices,' he told the conference.
Iran, Iraq to set up joint free trade zone
Iran and Iraq are due to form a joint free trade zone in the near future to further promote economic cooperation between the two neighboring countries, an Iranian official announced in early March. The Iranian side in a meeting with Iraqi officials offered the initiative for starting a joint free trade zone, and that the proposal was welcomed by the Iraqi side, Khouzestan province's chief MP Mostafa Matourzadeh told FNA. "The existence of a joint free trade zone between Iran and Iraq will facilitate transit of goods," Matourzadeh further explained. He pointed out that a number of plans have also been proposed to form a joint industrial zone at the two countries' common borders. "The industrial zone between the two countries will cause development and growth of products and will also help attract foreign investments in the industrial sector," Matourzadeh added. Iran and Iraq have enjoyed growing ties ever since the overthrow of the former Iraqi dictator, Saddam Hussein, during the 2003 US invasion of the Muslim country. Iran is due to inaugurate a trade center in the northern Iraqi city of Soleimaniyeh by the end of March, an instance of growing ties and cooperation between the two Muslim nations.
Syria: Public investment planned
Details from the draft stages of Syria's forthcoming 11th Five-Year Plan suggest that the government intends to place a renewed emphasis on public investment in the coming years. Speaking to official Syrian news agency SANA towards the end of last month, the deputy prime minister, Abdullah Al Dardari, said the new plan would focus on investment in infrastructure and energy security. "We have signed several contracts worth US$5 billion to produce 5000 MW of electric power by the end of 2013, increasing the generation of electric power in Syria during the next five years by 70 per cent," Al Dardari said. Earlier reports state that the new plan is expected to be ready by next March, and will set ambitious targets of 8 per cent annual GDP growth, and a reduction in unemployment to 4 per cent. By comparison, recent growth levels before the global crisis were averaging between 5 per cent and 6 per cent, while unofficial estimates for unemployment are between 10 per cent and 12 per cent. The Syrian government appears keen to extend the public-private partnership model (PPP) to other areas of infrastructure investment, with the government sponsoring the country's first PPP conference last October in Damascus, where Al Dardari told potential investors that Syria would require in the order of US$50 billion of infrastructure investment over the next five years. (Source: OBG)
UAE company law won't permit 100-pct foreign ownership
The United Arab Emirates new companies law, which is expected to come out in 2010, will relax foreign ownership restrictions but will stop short of allowing 100 percent ownership, an Abu Dhabi government official said. Mohammed Omar Abdulla, undersecretary of Abu Dhabi's department of economic development, made the remarks at a panel discussion. "The new companies law in the UAE will make a relaxation in foreign ownership," he said. "It will not be up to 100 per cent, it will be more than 49 per cent."
Oman: India ties
The past decade has seen India become a significant trading partner for Oman, with bilateral trade rising from US$200 million at the start of the decade to almost US$2.5 billion last year. The year 2010 will see those trade relations become more important, as Oman becomes the first foreign country to establish a joint fund to invest in India. The India Oman Joint Investment Fund (IOJIF) was initially established by the signing of a memorandum of understanding (MoU) in 2008 between Oman's sovereign wealth fund, the State General Reserve Fund (SGRF), and the State Bank of India, India's largest commercial bank. Following round-table talks between the two countries in February however, it was revealed that Oman's minister of national economy, Ahmed bin Abdulnabi Macki, will shortly travel to India to sign a final agreement between the two countries concerning the fund. The IOJIF is anticipated to have initial seed capital of US$100 million, although this figure is expected to rise quickly to US$1.5 billion, as the fund's articles enable it to take on this amount of additional debt and capital through partnerships. The fund is unlikely to find itself short of investment opportunities: India hopes to double levels of bilateral trade with the Arab world over the next four years from its current level of US$114 billion. The Indian government in particular is seeking Arab investment in sectors such as shipbuilding, infrastructure, pharmaceuticals, IT and energy. In total, the government anticipates India will require US$500 billion of infrastructure investment over the next three years. The joint fund is likely to build on existing partnerships between Indian and Omani business. Such previous ventures include the Oman India Fertiliser Company, whose operating capital is shared between the Oman Oil Company and two Indian companies. The Oman Oil Company is also investing in a 6 million ton oil refinery in Madhya Pradesh, India, through its subsidiary, Bharat Oman Refineries. Meanwhile, several Indian companies have expressed an interest in investing in Oman, including Infoline in services, Taj and Oberoi Groups in hospitality, and metals giant Tata, which has floated a subsidiary, Reemal Mining Company, on a 70:30 basis with Al Bahja Group to mine limestone and gypsum in Oman. (Source: OBG)
GCC to grow stronger: IMF
Gulf economies probably will grow at a stronger pace this year than more developed countries, Middle East experts at the International Monetary Fund wrote in the March issue of the fund’s Finance and Development magazine. Non-oil growth of gross domestic product was estimated at 2.8 per cent last year, and the recovery in overall growth in 2010 “is expected to be stronger than in advanced economies,” according to the article on the nations in the Gulf Cooperation Council, or GCC. They include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. “While the GCC’s short-term economic outlook is clouded by the global crisis... the region’s medium-term outlook remains broadly positive, supported by rising commodity prices,” said May Khamis, deputy division chief of the IMF’s Middle East and Central Asia department, and Abdelhak Senhadji, the department’s division chief. Policy makers in the region face the “immediate priority” of cleaning up bank balance sheets and restructuring non-bank companies. In the longer term, “improving corporate governance and transparency will be paramount in view of heightened lender risk aversion, which has put pressure on GCC conglomerates and government-related entities to do a better job of disclosure.”
Iran, Oman to form joint investment company
Iran's Foreign Investment Company (IFIC) Managing Director Mehdi Razavi announced in early March that Iran and Oman plan to establish a joint investment company in the near future. "Iran-Oman joint investment company's fund will be set up in the near future and the executive policies of the fund have already been worked out," Razavi said. He announced that the two countries would hold a 50 per cent share in the US$50 million investment company. Razavi also said that the company would make investments in the different spheres of industry, mines, shipping, transportation, trade, banking, agriculture, commerce, hotel construction, maritime affairs, oil, gas and petrochemistry. "The formation of the fund has already been approved by the Omani government and we are waiting for the approval of the Iranian cabinet," he added. The Iran Foreign Investment Company (IFIC) was incorporated in March 1998 as a Private Joint Stock company with a mission to manage and expand Iranian holdings abroad.
Qatar deputy PM eyes investment in Europe, Germany
Qatar, which already holds stakes in German carmakers Porsche and Volkswagen, is eyeing further investments in Europe, Qatar's deputy prime minister told a German newspaper. "In Europe and especially in Germany there is still a range of interesting companies we will look at," Handelsblatt quoted Abdullah bin Hamad al-Attiyah as saying. Germany, Europe's biggest economy, seemed to have opened up again for foreign investment, having taken a more critical view of the influence of foreign sovereign wealth funds during the grand coalition, he said. "And that is very good. It helps the German economy," he was quoted as saying.