The World Cup and Economics

Goldman Sachs brings out a great guide every 4 years about the World Cup. If you want demonstrate intellectual prowess concerning the beautiful game as you comment to the nearest stranger in the convention centre, I would recommend their guide.

The World Cup and Economics (2.15MB, 59 page download)

Come on Ingleezi!

Sheikh Mohammed on the Oil Revenue

It is not a question of large and accumulating revenues, but it is one of suitable investment environments in Arab countries. Arab investors definitely prefer to invest in Arab countries, but do all Arab countries offer an encouraging investment environment? Improvements were made in some Arab countries, but they were extremely slow improvements. In my opinion, the size of Arab and non-Arab investments in Arab countries hinges on the improvement of the investment environment, and here I mean stability, legislations, procedures, transparency, and skilled human resources, because the greater the improvements, the greater the flow of investments.

I finally got to read the interview in full. What I really want to read is his ">book when it is translated.

Why Abu Dhabi is what it is

After the crazily inaccurate Asia Times article on Dubai, it was refreshing to read the Economist's succinct article on Abu Dhabi:

Super-rich Kuwait sits uncomfortably close to unruly Iraq and obstreperous Iran, and Saddam Hussein's invasion in 1990 burned up much of its fortune. Saudi Arabia pumps far more oil, but must split the proceeds among lots more people, quite a few of them bellicose Islamists. Tiny Qatar is underpeopled and rolling in cash, but its erratic foreign policy irritates Saudis, Americans and others one should not annoy. Even Abu Dhabi's neighbour Dubai, the glitzy boomtown that is another of the seven United Arab Emirates, is troubled by the grumbles of abused foreign workers.

Great intro to the region and to the article.

Corporate Blogging

Don't really know how I got lured into the deep dark world of blogging, and it hasn't even been that long, althoguh it feels like a lifetime. For tech corporations this whole arena is getting to be particularly important. So much so that IBM has a "blogger in chief" to blog on their intranet about the blogosphere. The most recent newsletter from freepint carries an interesting interview with Christopher Barger. Robert Scoble does a similar job for Microsoft but blogs to the outside world about general thoughts. Can you imagine if Etisalat did the same? That would be interesting. Especially if they had a comments section!

Phony Job Ads in Dubai

I have recently been looking into the recruitment industry in the Middle East for the reason that I get a lot of enquiries from those that are interested in getting a job out here. There has been increased interest in the job market here in the UAE. With financial services companies establishing presences, with tourism increasing year on year and with all the projects talked about in the press, people are tempted to move to the UAE. Many are interested in the potential of lifestyle and savings despite the cost of living increase in comparison to, say, 5 years ago.

If you are not looking for a job or looking into the industry or know how the industry works - you won't really see what I believe is going on. And of course, if you get super excited by seeing the ideal job being advertised, you might get all starry eyed by that new glam job that could be yours in a couple weeks.

Before I unveil my concern, here's a very generalised overview of how recruitment agencies generate revenue.

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Recruitment agencies make money in a number of ways but mainly through the following:

Job Advertising - an agency will advertise your job for a company for a fixed fee and handle all the bits a pieces, potentially break down those candidates that meet the requirements and provide you with a list of suitable CVs.

Job Placement - similar to Job Advertising, but are only paid if they place a candidate, for which they are paid a percentage of the first year salary.

Executive Search - similar to Job Placement, but usually poaching key individuals with proven track records. This is sometimes called headhunting.

Candidate Database Search - clients can search through a full database of those looking for jobs, under specific terms, either for period of time, or for number of employee's details, or for a number of searches.

Value Added - provision of additional services that an employer may potentially be interested in, such as training, or jobscreening, pre-interviewing and the like, as well as services to job seekers such as CV preparation, interview techniques for example.
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With an increased number of jobs available in the UAE and the Middle East, it could potentially be lucrative to be in this industry as the middle man. I have already voiced my concerns about jobsindubai.com as well as how jobs are advertised. There are a number of reputable agencies in Dubai, some of which I have provided on a spreadsheet on the main grapeshisha site, but this is what you need to be aware of. There are a number of so called "agencies" trying to enter the market. To be reputable, they believe they need to offer a Candidate Database Search to employers. So this is what is happening. They are doing a few things, two of which are:

1. Harvesting CVs from international sites, posing as potential employers and pulling those CVs of job seekers who would consider Dubai or the Middle East.

2. Advertising in the press, with dummy jobs to lure jobseekers to send in their CV for specific areas.

This is concerning because while you may be looking for a job, all they are doing is spending a little money advertising in newspapers (that really don't charge too much) both here and abroad, just to be able to sell your data to employers later.

While this may not be an issue to some, I believe that this is an unethical practice of entering the market, and one that is unregulated. While this may be the de facto way of entering the recruitment industry for some, it screams of unprofessional behaviour to others. Some say that this is obvious, but others are unaware that this is going on. All I wish to do is to point this out to those looking for jobs in Dubai, the UAE or the Middle East in general. I'm neither tied to any of the recruitment firms, nor do I hope to be - I just hope that, at some point in time, someone cracks down on this practice and forces some old fashioned hard work to enter an industry. I won't name any names, for fear of being libelled, but next time you look at the job section of your paper, just think which jobs are actually real.

Good Luck with the job search!

IMF on the UAE

To get some semblance of the UAE economy and what is really going on, you can always rely on the IMF. Mohsin S. Khan, Director of the IMF's ME and Central Asia Department is the one who is talking the sense, without any rhetoric. The highlights that I feel are important are these:

1. Inflation
"There has been an inflationary pressure in some countries in the region, the UAE being the principal one. It needs to be controlled. One part of it [inflation] is the rising consumer price index. The other is being felt in the form of the asset price increases stock market and real estate."

2. GDP Growth Rate
To a question about GDP growth rate, he said IMF projects it at 10.5 per cent this fiscal, over 8.5 per cent during 2005. During 2004 its seen at 9.7 per cent coming down from 12 per cent in 2003.

3. Reforms are necessary
He said that oil-rich countries in the Gulf region were aware that if they miss the chance to “utilise this period to undertake those reforms and develop the private sector (they) will be back in the 1990s.”

4. Non-oil economic growth
Non-oil economic growth in the GCC states has registered some 8.6% in Saudi Arabia in 2005, compared to 8.3% in Qatar and 7.8% in the United Arab Emirates, according to the IMF’s Regional Economic Outlook, which was published in May.

5. Services are the future
“The future lies in the private sector development of services and knowledge economy.“(In) information technology ... that is where jobs are going to be created by the private sector,” he added.

6. Investment strategy
For countries like the UAE, which does not have the scope of witnessing large-scale industrialisation nor the adequate population to sustain a large industrial production with domestic consumption, the ideal growth model would be the one that relies a lot on foreign investments and investing abroad.

7. Credit Expansion
He showed IMF's concern over the massive credit expansion which was seen enlarging by 45 per cent during last year, it had its huge impact on inflation.

8. CPI needs to be revised
He said that during his discussions with the UAE economic managers, he raised the issue of inflation estimates which are not indicative of the price hikes and particularly the rent hikes. "We (IMF) have asked them to broaden the scope of CPI and offered our technical assistance to prepare a new index," said Mohsin S.Khan.

10. Oil Prices
According to IMF estimates oil prices will hover around $60 until 2011. That will shower the Middle East economies with a huge amount of investible surplus.

In sum: The UAE and the region has a prime opportunity to build the region, but needs to be aware of the pitfalls that could be grave.

From:
KT - IMF tells UAE to revise its CPI
GN - UAE economy will grow 10.5%, says IMF
AFP - Gulf countries aware energy windfall won’t last: top IMF official
GN - UAE needs to control inflation, says IMF director
IMF May 2006 Regional Report

Sukuk's go large

I have been watching Sukuk's for a while now, and they seem to be getting more and more prevalent. A Sukuk is essentially a hybrid bond The most popular structure of a Sukuk is the so-called Sukuk Al Ijara, based on an Islamic leasing transaction and resulting in a tradable certificate with constant returns based on rent instead of interest. Large sukus have been lined up this year, most notably for the Dubai Ports World Takeover of P&O. The next biggest one for the UAE will fund the new Jebel Ali Airport. Watch out for sukuks, they're all over the place. And watch how all the small banks will try and fund all the projects. Let's just hope that they are regulated.

NRIs in the UAE

Before I moved here, I knew what an NRI was but didn't actually know it by the term. Since moving to the UAE, it is probably safe to say that the non resident Indian splits into three classes, the blue collar, the white collar, and the filthy rich. And those that are loaded have got a lot of money to spend either here or back home. No wonder NRI's are targetted like crazy. The penny just dropped. The lightbulb just went on. DUH!

Somebody change the record

Make something topical, and everyone will jump on the bandwagon. I'm afraid, internet research will only get you so far, and then you may start making factual errors, faux-pas and get a little politically incorrect. But, all in all, you could write a piece that covers most stuff, talks a little on strategy, but basically repeats what we have heard elsewhere a dozen or so times.

Asia Times Article

Real competitiveness

The GCC as a region really needs to be considered as power on a par with what is going on in China and India right now. There is steady growth here, all driven by the high price of oil and a construction boom. Money is being ploughed back into the economy. Construction activity for the GCC for 2006 is about $30bn, with already committed amounts of $180bn for 2007-2009. That is simply construction on an unprecedented scale.

If we look at the next couple of years, the UAE, Kuwait and Qatar will be roughly around the $30,000/head/annum mark. That is a phenomenal amount.

(Oh yes, keep your eye on what is going on in Kuwait - it's the dark horse in this long race)

0.75*5=[Hotels(2010)]/Dubai

Surely, this will price out the average tourist, or really, will Dubai become the number 1 luxury destination. If you had told me that 75% of hotels would be 4 star and above, then I could see the logic in that. As it is this will result in:
- Dubai pricing itself out of the market,
- A reduction in room price resulting in lower revpar
- A reduction in standards.

Personally, easy hotels at the cheap and cheerful end of the market have a big demand, as well as the plush types.

I don't think it is doable. However, as with all things in Dubai, time will tell. If grapeshisha still exists in 2010, let's see if the prediction comes true.

The third language of Sharjah is....

Russian! Or maybe the Russian's are big nude offenders in Sharjah.



From Willy's Blog

Is Dubai Competitive or Incompetitive?

On entering work today, I was greeted by my office boy with my papers repeating the word "incompetitive". Sounded pretty bad, I must say, but on reading the headlines, I finally understood what he was talking about. "The Dubai in World Competitiveness Report", (which I must admit I struggled saying) was jointly published between IMD and DED. Now IMD is a good business school, and one of the best in the world. They do this competitiveness report thing every year, and I hadn't seen Dubai on this years list, so I had a bit of a gander on IMD's site to find the abstract, which of course didn't show Dubai, because it was a separate report to see where Dubai "fits in" to the world. Slotted in where it is, yes, it shows that Dubai is competitive. I went to the DED website to see what they had to say. It appeared as if the news had surfaced too quick. Nowt. However, there was something about a Data Universal Numbering System (D-U-N-S Number), which looked as if it could be a great sleep remedy for my current insomnia problem.

Now, this report is based on hard data and opinion. I am not disputing any of this, but something has got to be suspect. The opinion is from 200 CEOs of top private companies, no doubt UAE National Businessmen - which would defy the object of teh report. Here's the thing - I am not doubting that Dubai is very competitive, and probably deserves to feature pretty high, but some things just don't make sense. I found this particularly amusing:

The report ranks Dubai as one of the top ten competitive economies in several sub-factor ranking. These include 5th place in the criteria of ease of doing business, employment (2nd place), fiscal policy (1st place), public finance (9th place), labor market (8th place), adaptability of government policy to change in the economy (3rd place).

Remember, while these are sub factors, they are compared against the best in the world. And to place Dubai as number 1 on fiscal policy, when really there isn't one and employment at number 2, despite the problems that have surfaced only recently after years of bubbling - I'm sorry, it just sounds ludicrous.

Now despite the weight of the findings, something like this really gets my goat, and I can't trust the underlying data. Maybe my office boy was right all along - "incompetitive"!

PS. If anyone has the report with all the data, send it my way. If the data is indeed non suspect, I'll take it all back.

Stock Market Consolidation

The merger (but really it is a takeover) between NYSE and Euronext was pretty big news, and it looks like superpowers are being created among the borses.

Something that shocked me was the revelation that DIFX might be purchasing DFM. Globally not such a big deal, but locally, this has a huge WOW factor. ADSM must be shuddering in its shoes.

But really, is this such a surprise?

My Current Pre World Cup Mood

Peter Crouch does the Robot Dance (viewer discretion advised)

Two dates for this year: 7th August and 6th June

Some Muslims, mainly from the Indian subcontinent, place emphasis on the number 786, citing that the Arabic letters of the opening phrase of the Qur'an, Bismillah al-Rahman al-Rahim, ("In the name of God, the Compassionate and Merciful") sum to the numerical value 786. Some, therefore, may be looking forward to the 7th of August this year.

Others, especially some from Michigan, are looking forward to a party in Hell on the 6th of June.

Spread the money

The John Laing takeover by Emaar is newsworthy, because it continues the investment that Dubai is making across the pond, even after the DP World furore. However, a $30bn dollar investment in Pakistan's economy is a massive investment by Dubai. Go East, that's where the growth is.

Move over Kofi

The speculation has started regarding who will be Kofi Annan's successor when he stands down at the end of this year. Many are pointing to the East, saying that the next UN Chief, the world's chief diplomat, should come from Asia, showing a big shift in importance of what is happening on the world stage whether or not this idea comes to fruition.

Another move is on the cards as The UN regional headquarters in Dubai have been asked to shift away from where they currently sit which is where Business Bay will be built:

One site identified as a possible new home for the U.N. is a warehouse park under construction on Dubai's desert outskirts, 20 miles from the city's glitzy center. The park, next to a seaport and new airport, makes sense for U.N. agencies dealing in aid airlifts. But for diplomats like Ivo Freijsen, chief of the U.N.'s regional office for emergency relief, the move would be like shifting U.N. headquarters in Manhattan to an industrial district in New Jersey.

Maybe, they'll just move to Qatar or Abu Dhabi. Full Story

The Dubai Bubble Response

Most of the press who have focussed on Sheikh Mohammed's interview with Asharq Al Awsat have talked that the UAE will not pay a prace in negotiations with the US. Read a bit further and HH quashes the bubble specualtion.

Commenting on the fast-paced growth of Dubai, Sheikh Mohammed dismissed analysts' fears of a bubble about to burst. 'If we had listened to talk of the bubble we would never have done anything ... if you ask those who are speaking of the bubble what they mean, you would get a 'bubble response' that has no relation to economics or development or science or reality,' he said.

In terms of economic development and growth, I think he is absolutely correct. But,if you define a bubble, it's all to do with specualtion frenzy. And that is exactly what happened when many people threw their hard earned money into the pevious bubble that burst.

In totality, the bubble on Dubai won't burst unless something goes very wrong, but there will be lots of little bubbles bursting along the way. Maybe you canjust call them "corrections".

Blogging your Auction - Maktoob mustbe watching

I'm not sure that the Middle Eastern market is mature enough to follow this lead, but it is interesting to note how ebay is moving to include blogs as part of their strategy for letting sellers market themselves. I'm not sure how it will fare, but maktoob must be watching to see which way this will go for the sakes of souq.com. Maktoob are in an enviable position of being a leading player in a developing market, with the ability to see if trends become long term in the western market, before applying them in places such as the UAE, Jordan etc. An interesting dynamic - how will a large player enter this Middle Eastern market? Takeover? Brand Power? Cash Power?

Qatar is the next Dubai

As I mentioned, Dubai is topical. Link it in with something else and it'll get good coverage. Dubai has overshadowed what's been going on elsewhere, especially in Abu Dhabi. Qatar has probably fared worse. Its planning is a lot better than Dubai, from what I know, and yet has not got much media attention. Perhaps because there is no controversy factor. It would just need the Emir's there to try and take over NASA or something like that,and it would be on the map.

Is Qatar the next Dubai - NYTIMES