Growing Grapeshisha

Finally a landmark for the newsletter!

Currency Reevaluation and The Waning Dollar

Have you noticed how your dirham is not going as far these days. The Dollar is on a slippery slope, and even the Canadian Dollar is looking like a better pegging partner. For those unhedged and converting to sterling or euros, there must be a cursing of a high order, every time the red downward arrow of decreasing power appears on your screen. You may even be feeling it in the supermarket, but have just dismissed this as our good old friend - cost of living.

Kuwait's lead in revaluing is a bold one, but needed in the run up for a single currency. I suspect that the UAE will follow suit by the end of the year, if not sooner. And this will happen. Why:

1. Dollar denominated exports versus non Dollar pegged currency imports.
Although no immediate reaction was available from the UAE central bank, a banking industry source told Khaleej Times that while more than 90 per cent of the country's direct export revenues are dollar denominated, there is a significant amount of imports (approximately 70 per cent) denominated in euro, yen and other Asian currencies which are not directly pegged to dollar and that is causing big losses to the country in imports involving cross currency transactions. (source)

2. Non intention to drop the Dollar peg prior to a Common Currency
Since the issue of abandoning the current dollar peg has frequently been mooted, the notion that such a decision might happen prior to the planned 2010 introduction of the GCC single currency has seemed unlikely. (Source)

While there are sceptice who dont think the rest of the Gulf will follow, it looks likely that Saudi will follow, which could lead to a riple effect. This was surprising, but it was a smart move and a good ongoing interim approach to the single currency in 4 years. 2-5% is the prediction with further moves. I would say that if it is not higher that now, there would need to be further reevaluation over within the next 12 months, with no respite for the dollar any time soon.

Rich Arab Travellers

Some interesting stats from the New Horizons in Shared Ownership report which is all about time share in the Middle East. Here are a few for your perusal:

# Destinations chosen for leisure travel are selected for choice as a "family solution" rather than activity or adventure travel.

# Shopping is the principal activity.

# 40% of Saudi Arabians take household staff with them on trips; 46% of UAE travelers take their parents.

# Travel is definitely a "group" experience.

# There's a new trend of religious timeshare in the Islamic centers of Makkah and Madinah as these destinations are popular for Muslim pilgrims.


Travel, as a concept, is completely different across the world. Culture plays a big role in daily lives, which is reflected above.

Stock Market Volatility

To give you an understanding of how drastic the recent fall is, I pulled off the DFM and ADSM graphs off gulfbase

Here is the 3 year change. Remember, this shows percentage change. (DFM in black and ADSM in red)




Here is the one year change.



This is epic. I suspect there will be some sort of stabilising intervention by the government soon. It's getting to that stage.

Halal Hub

All things to all people

UAE halal hub partnership
MISC Integrated Logisitics Sdn Bhd (MILS) will enter into a partnership with a Dubai-based logistics company to set up a halal hub in the United Arab Emirates. MILS chief executive officer Hilmi Mohd Nashir said the partnership would help the company to enhance its presence in the global logistics scene, particularly in West Asia. An agreement between the two parties will be signed in Kuala Lumpur on May 18.

I am waiting for Halalland (the new food park), Halal Heights (a ocean front property with a strict entry policy) and Hello Halal (the new socialite magazine).

Where is the Haram Hub?

Thursday round up

The Lounsbury at Aqoul provides a good analysis of the FT article on cannibalism of the freezones and competition of the main cities to be the Middle East's Financial Centre.

I like Loundsbury's final paragraph:

Now, it is a pity Wallace focused exclusively on the fin sector, although that is presently the buzz as the Khalij has stupid amounts of liquidity and all the world's scum are circling about like buzzards around a corpse looking at ways to get a piece of the action.

M&J's Halt the Hype talks of the risk of borderline sustainable projects, quoting the tradabrabia article. M&J also goes on to look at the viability of the UAE to become a first world country:

The term "First World" refers to so called developed, capitalist, industrial countries, roughly, a bloc of countries aligned with the United States after World War II, with more or less common political and economic interests: North America, Western Europe, Japan and Australia.

In terms of industrialisation, I think that there’s a long way to go before the UAE will be seen on that list of countries, especially taking into consideration the other listed criteria such as Human Development and Freedom of the Press. As well, the recent DP World saga caused damage to the “common political and economic interests” which still has some healing to do.

Mama Duck gives the logic "on the street" view:

It’s not all about the money, not for the people who live, work, raise families and support the economy here. Well, not for most of us; but the handful like DI's landlord, whose idea of good business practice is a 40,000 Dh. rent increase could well screw it for all of us, Emiratis and expats alike.

In other news, the Central Bank has asked the financial institutions to report their level of exposure to the timbling stock markets. If some accurate data is obtained from this exercise, it will make for some very interesting. With large numbers of investors borrowing significantly to invest in the hype of ridiculously unsustainable growth in the markets, I wont be surprised, if many of the banks have been compromised. Oh, and by the way, DFM has reached a new 15 month low.

I think the recommendation to move to more Euros is a sound one, especially with the dollar on the wane in recent weeks. But what about the man on the street. For people living here, the Dirham loses its value, as the Dollar dies.

Finally, Fahad's highlighting of the Wudu Washer is worth a peek.

What I really am itching to find out is what went on in the FTA talks over the last two days, is Chilton on holiday, and how many people are in the "hate Modesh" camp. The worm needs a rebrand. On a bad day, I would prefer to see this guy. I can't help thinking that Modesh has a dark side.

The Weekend Happy Dancing Feeling

Luxury Submarine

If Hydropolis, the underwater hotel becomes a reality, there could be some peeping toms peering into your window, if the luxury submarine from Exomos drives by.

Dubai Ports World Redux

Despite what happened with the P&O deal, DPW are ready to go back and try and enter the US market:

"Once (the) process is changed and new legislation comes in then we are ready to go back," Mohammed Sharaf, the chief executive of the container-port operator controlled by the Dubai government, told AFP in an interview.

No doubt the US critics will be out in force to hit back at this intention. But you can't knock DPW for effort. This is the stubborness that got them to number 3 in the world. This is the time for the US to sit up and change, before other economies come into play to join the superpower status.

The 2nd Mover and a Tale of Two Cities

The news that public transport will be arriving to Abu Dhabi shortly will be good news for those that live there. While the replacement of the taxis had always been talked about, the real need was for a public transport system of buses and a new fleet of taxis has been a long time coming. With plans for a metro system for the city which will also link up with the Dubai metro, Abu Dhabi is just a couple of steps behind on the city modernisation front. And that is just it. The second mover advantage, or "wait and see" strategy is good for Abu Dhabi.

"We are learning from their experience of the Dubai Metro and other public transport projects"

It doesn't need to lead on projects like this with all the oil that is available. It can glean off the knowledge that Dubai gains, and most importantly, can learn from Dubai's mistakes. Dubai will always have that international prominence, and Abu Dhabi will always be that slightly different. It's beneficial that these emirates aren't competing like for like - what results is a benefit for the whole of the UAE in totality.

What goes up

If Andrew Shouler is writing it, I'm reading it. He sums up very eloquently about the ups and downs of the stock market:

Unfortunately, it is typical of stock markets everywhere that retail investors arrive and leave too late. People may turn instead to money managers, but it is difficult to blame those who don't, considering their reputation (in Western markets) for under-performing the market index, but profiting themselves anyway. Moreover, even spreading your investment across the market in mutual funds doesn't help if your timing is wrong and the whole market drops. The bottom line is that short-term speculation is riskier than drip-feeding your savings for long-term investment.

But here isa worrying thought: If, like he says, "A vibrant stock market is an integral part of a well-functioning market economy", how will they get them to invest their money again

Dubai Dreams

Picked up this standard overview fare from dubai@random (which, by the way, is fast becoming the blog I look forward to most). This got me thinking. It would seem that there is now, more than ever the same old reporting being repeated over and over again from a few international papers. I would guess, that they have a few facts, and regurgitate them with a different spin every time. They're probably not too sure what is fact or fiction. And I don't blame them - Dubai seems likes someones's dream. That would be Sheikh Mohammed's.

The Blackpool of Arabia?

That's a bit harsh. I prefer Vegas without the Gambling.

Here's a great quote for you:

"In the nineteen years I've been working in the Dubai, I've never seen the Maktoums fail in any big project, so don't write off all this building as a bubble," said Mike Derrett, a consultant to Dubai World Trade Centre.

Excellent article from the Telegraph

Pressure on Labour Rights

The fact that the resumed free trade talks between the US and UAE will be closed to the press, mean that some significant discussions and probing will be under way. With human rights at the forefront, along with other obvious topics, this could be the first real time that pressure has been put on the UAE, officially, to intervene in the mistreatment of workers:

A US embassy official, describing ties with the UAE as "extensive and positive," said human and labour rights issues were being discussed, irrespective of commercial interests.

At some point, your voice will be heard.

Centre of the Modern World

How Dubai compares to New Zealand. Good overview video for the uninitiated to Dubai. But, as always, there is either a bit of spin, or some misconception. Supposedly, spin and misconception make for better news.

Kiwis part of Dubai's boom

Labour Camp Tours

Let me play devil's advocate for a minute. If there was admittance that there was a problem regarding conditions, we could follow the slum tour approach and let tourists see the 'other' Dubai, for a fee. That money could go to the workers. If it's catching on in Delhi, Rio, NYC, for example, this could be a chance for reality to be more real. Big Bus Tours - it's time to bring out a new route!

Kempinski goes Islamic

Tailoring to markets is an obvious strategy, yet, rarely implemented as big brands choose to bulldozer their Western successes. The hope, when tackling the Middle East, is that a little translation, a Middle Eastern product or two, and you are ready to roll. And if the product gets acceptance in Dubai, then it will probably do acceptably in other areas of teh region.

What Kempinski have done with their new brand Shaza, is to say, yes, we've done well with our brand, and now it is time to tailor to the market. But why Kempinski are especially smart is that they are tapping the Islamic Finance market to get investors who only really want to invest in Islamic-financed projects.

"I don't think that one would ever imagine a day when a pub in Dublin would be smoke-free, or in London for that matter," said Christopher Hartley, chief executive officer of Shaza Hotels and former senior vice-president for marketing of Kempinski. "The need to light up in a hotel lobby is gone. People have got used to it. The same thing could well happen for a beer in a minibar."

On top of this, Kempinski are market leaders not followers. Watch the trend follow what they do. Asked if the group was prepared for ridicule from critics in the West, Mr Hartley said, "Anyone who criticises and ridicules it has no understanding of the region's culture."

Diversifying with Doncasters

What's next? First P&O, then Doncaster - I think that the strategy of going abroad is a sound one, and its initial investments in Daimler Chrysler and the Tussauds Group were wise moves.

The takeover is the latest foray into Britain by the Dubai government, which is increasingly keen to use its oil revenues to diversify into a wide range of businesses. DIC already owns the Madame Tussauds operator Tussauds Group, and is the third largest shareholder in DaimlerChrysler.

Doncasters was formed from businesses including Rolls-Royce's Ross & Catherall division and Honeywell's Precision Casting Foundry. Its aerospace clients include Boeing, Pratt & Whitney and Rolls-Royce, while its gas turbine operation sells to Alstom, GE and Siemens. The company, which has a total of 4,700 employees in Europe and North America, also has growing automotive and medical technology businesses.

The thing is, that the diversification is not just overseas, DIC's strategy remains equally spread within the region also, and this, in itself balances off the portfolio quite nicely.


More from
the Independant
Reuters

Form Filling Falsely

While I am dubious about Mr Millsand his links with Berlusconi, I can see how things went pear-shaped with his application for business in Dubai:

"They say I filled out the Dubai application wrongly," Mr Mills told Legal Business. "In the form I said I have no money laundering procedures in my firm, because I don't handle client money. But the reason they rejected me, and so offensively and unnecessarily, was the fact that I'd given false answers. It was absolute nonsense that I had given false answers."

Based on "official" translators that I have experienced, this really could have got lost in translation.

Internet Censorship

If you thought that internet censorship was bad in the UAE, it would appear that it is tame in comparison to the proxy in place in Pakistan. Including a ban of blogger/blogspot, they also ban Wikipedia! Apparently there are quite a few Grapeshisha readers there, and I was asked to highlight their cause. I am not sure what I can do apart from post their press release:

BLOGSPOT APPEARS TO BE BANNED AGAIN IN PAKISTAN
6th May 2006, The Don’t Block the Blog team (Dr. Awab Alvi & Omer Alvie) & Society Against Internet Censorship in Pakistan (formerly known as The Action Group Against Blogspot Ban in Pakistan - AGABBIP) regrets to inform the free world that the Government of Pakistanappears to have resumed the blocking of the entire blogspot domain. Reports have come in from a number of cites around the country that the entire Blogspot domain is blocked in its entirety. Just recently only three days back, specifically on the 3rd of May, the Pakistan Telecommunication Authority had lifted the entire ban, allowing all internet users unrestricted surfing to the 10 millions websites hosted on the blogspot.com domain. It appears as if the three day relief was just to appease the United Nations in its annual 3rd of May celebrations for the Freedom of Press.

The PTA (Pakistan Telecommunication Authority) had initially blocked access to the blogspot domain on the 3rd of March 2006, due to a Supreme Court decision dated 2nd March 2006 instructing the PTA to ban 12 offending websites which highlighted the blasphemous cartoons on the Prophet Muhammad (PBUH). In adherence to the Supreme Court ruling, all 12 sites were blocked including one that was hosted on the blogspot domain. But rather than block the offending blogspot website, the PTA blocked the entire domain (www.blogspot.com) which happens to be one of the most popular blog hosting domains hosting approximately upwards of ten million blogs globally.

We strongly oppose this blanket ban on any website, and ask the world to join hands to peacefully protest the censorship of the internet.

Good luck with the fight for free speech!

Arabic Superheroes - The 99

Before the Danish cartoon fiasco, this is the what I thought cartoons were all about. This was announced some time last year and according to the ITP article:

Kuwait’s Teshkeel Comics has revealed the identity of the world’s first superheroes based on Islamic culture. Called The 99, the comic books, which will have both English and Arabic editions, are due to go on sale across the region from June.

The profile of the UAE superhero, Noora the Light, says this:

Dana Ibrahim was a sheltered, rich kid who grew up with all the material things a girl could want. Designer clothes. Big houses. The latest mobile phones. Everything except love from her father.












Surely this could be the X-Men of the Middle East?

ITP Article
Teshkeel Comics
The 99
Noora the light

Beautyland - for the vain only

Is this taking it a little too far? The latest project to be announced by Dubailand is Beautyland, "premier location for the most exclusive and comprehensive range of beauty, natural treatments, luxury spa facilities, and products."

Mohammed Abdulrahim Al Fahim, said that some of Beautyland's main attractions and components include a Beauty Museum and a Beauty Academy as well as Designer and Branded Beauty commodities, managed by international designers. "There will also be office space and conference facilities for associated businesses and beauty consultants, production facilities for tailor-made fragrances as well as a Boutique Hotel," Mohammed Abdulrahim said.

Again there seems to be viability for the niche, and again, there is nothing like it in the world. But, the name? - it sounds somewhat discriminatory.

Me - I'm looking forward to the beauty museum, but I don't think I'll be good looking enough to get in. Maybe, there will be Beastland for me.

Newsletter: Islamic Finance

A Basic Guide to Islamic Finance

Islamic finance is becoming more and more prevalent, not only in the UAE and the Middle East, but also in the West. On request, we give you the bare bones guide to Islamic Finance to understand the basics behind the concept.

Read the full article

Coverage of the basic terms:
Islamic Finance, Sukuk, Riba, Shariah, Murabaha, Ijara, Musharaka, Mudaraba, Istinaa, Sukuk, Takaful.

Although not fully specific to the UAE, the subject is topical to the UAE, as well as a number of Western countries. Hope it provides some level of understanding.