Archive for the ‘Regional News’ Category

Doing Business 2010: Reforming through difficult times, which features the latest ranking of economic competitiveness (published on Thursday by the International Finance Corporation – The World Bank), contains some especially positive news for The Kingdom of Saudi Arabia and the United Arab Emirates.

As for Saudi Arabia, the Kingdom moved up two spots to number 13, surpassing Iceland and Japan, respectively, while inching closer to a coveted top-10 spot. The Kingdom is striving to become a top-10 competitive economy by 2010 (which coincides with next year’s Doing Business). TradeFlow21 managing partners Lewis Nescott and Steven Towns recently met with officials at the Royal Embassy of Saudi Arabia and had a very productive discussion — including the unequivocal significance of the Kingdom’s “10 x 10″ goal. See the next edition of Trade and Transactions, TradeFlow21′s monthly e-newsletter, for more details. (Contact us for a free subscription.)

Meanwhile, the United Arab Emirates continued its impressive climbing of the rankings in recent years, moving up 14 spots to number 33. Among Gulf Cooperation Council (GCC) members, only Saudi Arabia and the UAE improved their competitiveness in the ranking. While other GCC members also instituted reforms, the global landscape is quite competitive and therefore, on a relative basis, they lost some ground.

Following is a list of select countries with their 2010 rankings and year-over-year change.

Top-10
1. Singapore
2. New Zealand
3. Hong Kong, China
4. United States
5. United Kingdom
6. Denmark
7. Ireland
8. Canada
9. Australia
10. Norway
* Among the top-10, all were unchanged except a switch in places between the U.K. and Denmark.

GCC
13. Saudi Arabia (+2)
20. Bahrain (-2)
33. United Arab Emirates (+14)
39. Qatar (-2)
61. Kuwait (-9)
65. Oman (-5)

“BRIC”
89. China (-3)
120. Russian Federation (-2)
129. Brazil (-2)
133. India (-1)

Although the value of the deal was not disclosed, it appears the acquisition of Maktoob is a timely one for Yahoo!, as it positions itself to grow its emerging markets segment fueled now by one of the world’s youngest, most dynamic, and highest-growth regions. A surge in internet usage in the Middle East is driving annual growth in on-line advertising of 25-50%, according to Yahoo’s Sr. VP of Emerging Markets.

clipped from online.wsj.com Yahoo Buys Maktoob Arabic Portal DUBAI (Zawya Dow Jones)–Yahoo Inc. (YHOO), said on Tuesday it agreed to buy Arabic online portal Maktoob.com as it seeks to add the Middle East to its expanding strategy for the fast-growing emerging markets. Yahoo has 44 million users a month in the North Africa and Middle East region, Nilsson said. Maktoob.com has over 16 million users, according to the company. Yahoo and rival Google, which already has Arabic internet services, are competing to tap the Arab World’s fast-growing population of over 320 million and high per capita gross domestic product, one of the highest in the world. “Saudi Arabia and Egypt offer tremendous size and growth opportunities that we will be looking at in addition to other countries in the Middle East,” Nilsson said.

In the Wednesday (8/5) edition of RGE Monitor, the analysts at Roubini Global Economics (headed by Nouriel Roubini, aka Dr. Doom), suggested that there are in fact some regional and national bright spots despite a global oversupply of overwhelmingly uninspiring economic indicators. Since we at TradeFlow21 are primarily interested in accessing markets in the Middle East and North Africa, we’ll re-post a summary of what RGE had to say about the region:

Overall, countries in the Middle East and North Africa (MENA) region were relatively sheltered from the financial spillovers, but suffered from reduced demand. Expansionary fiscal policies throughout the region and effective – if belated in some cases – financial sector support offset the export and investment weakness. The GCC countries most reliant on foreign financing to fund credit expansion, such as the UAE, are suffering the sharpest effects. However, past savings provide a cushion. In the long-term the region’s growth outlook depends on the price and effective deployment of its hydrocarbon endowments.

Among the countries that RGE specifically mentioned in its regional summary include Egypt, Qatar, and Lebanon. Egypt seems to be managing quite well partially thanks to its counter-cyclical monetary and fiscal policies. Cylicality (pro-cylicality in particular) is something that was discussed as a feature in the July edition of our own Trade & Transactions. (See our About Us page for contact information if you’d like to subscribe). Meanwhile, Qatar is expected to be one of the fastest growing economies in the world, according to RGE. The Qatari government has made the right moves thus far to shore up the domestic banking and property sectors, while its sovereign wealth fund is eying outbound opportunities. Finally, Lebanon, one of the few positive exceptions among so-called frontier markets (along with Morocco and Tunisia) has had sustained success in attracting capital inflows. At the same time, stability has allowed for growth in real estate and tourism, says RGE.

Last week, the Financial Times reported that a UAE state-linked investment firm planned to acquire a 32 percent stake in Sir Richard Branson’s civilian space venture, Virgin Galactic.  Aabar investments will initially shell out $280 million, plus another $100 million for development of a satellite launch-capable spacecraft. Aabar will also build a science center and spaceport facilities in Abu Dhabi. The implications of this venture cannot be overstated. They are as vast as space itself. The Virgin-Aabar alliance is perhaps a harbinger of the future for a region where cash-rich nations, backed by solvent banks and sovereign funds, aggressively pursue the next generation of disruptive technologies derived from aeronautical research and exploration. The potential commercial as well as military (i.e. security) advantages of a successful space program could dramatically alter the geo-political landscape of the greater Middle East, creating dynamic economies where stakeholders also share in maintaining regional security.

Lufthansa, Germany’s largest air carrier, continues to build its routes into the Middle East in line with its corporate strategy to broaden links to the oil-producing region. Al Bawaba reports that, this summer, Lufthansa will increase its capacity servicing the region by 40 percent. Thierry Antinori, Executive Vice President Sales and Marketing, Lufthansa German Airlines, said: “The markets of the Middle East and the Gulf are viewed as an excellent opportunity to further develop our route network and position Lufthansa as the number one choice for business travellers.” 

In his first address to a joint session of Congress on Tuesday night, President Obama committed to work with G-20 nations to “restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe.” This was certainly good news for Dubai World, which recently invested $400 million to construct east Africa’s ”most modern, highest capacity container port” in Djibouti. The Doraleh Container Terminal is expected to serve the undeserved and expanding markets of east Africa, including Kenya, Tanzania, and Ethiopia. Its strategic location will permit products to flow more efficiently from all corners of the earth, creating a new Middle East-Africa corridor of trade and opportunity.

In the past twelve months, nuclear Pakistan has survived a constitutional crisis that led to the temporary suspension of rights, the assassination of a beloved former prime minister, and the resignation of a contentious president.  With nations throughout the wider Middle East, including the Gulf, now pumping billions into banks and stock markets in an effort to blunt the blows from the global meltdown, Pakistan’s modest, emerging economy is also in need of a bailout.  A fast-sinking rupee has created a balance of payments crisis, which has reportedly prompted the Pakistani government to seek $4B in aid from the World Bank and other industrialized countries, including the United States and China.  See article in Financial Times, Pakistan calls on lender to help anchor rescue package.

2008 GDP for the GCC is set to surpass $1T (+36% yoy) along with an impressive doubling of cement capacity by 2010, not to mention similar increases expected in petrochemicals, natural gas and other industries. Economic and investment boom time indeed. Although on the flip side, inflationary pressures will continue to persist. Dollar depeg doldrums…

clipped from archive.gulfnews.com Oil revenue of Gulf Cooperation Council (GCC) members is likely to cross $600 billion in 2008, prolonging the economic and investment boom in the region for the medium term, according to a report by Gulf Finance House.

The emirate continues its broad expansion into the global airlines market as strong petroleum prices boost its purchasing power. In all, $25B was laid down for major orders for the ME as the region continues to grow its network of airway carriers. See the Reuters report (7/14).