1TheEDGE

From ThE EDiTor

Kelly LewisManaging Editor

Do you have something to say? It is not all about us and we realise that often our readers are in the right place at the right time resulting in great stories. Is there a story that you want TheEDGE to cover? Are we delivering our readership with the content it demands? Are there new sections that you would like to see implemented in the magazine? Or do you simply want to make a comment? If so, send your letters to the editor at:

letters@theedge-me.com

The number stood out immediately: 803That is the number of stories that have been

published in TheEDGE since I launched the publication as its founding editor in July 2009. However, this will be my final Editors Letter to you as I am moving on to new endeavours.

A little over a year and a half ago I walked into the office of Firefly Communications to begin this job. Working with skeleton staff and no inventory as the magazine business calls for stories in the pipeline that are ready to be published, an 80-page magazine needed to be produced in just a few weeks for its summer 2009 launch.

Talk about a challenge! But it was a challenge that was embraced and soon TheEDGE had a small but dynamic team assembled, and we did it, debuting with a cover story on Human Capital. We have now grown into a 104-page publication, which houses some of the most compelling editorial content in the region. Additionally, there have been numerous milestones along the way including the accomplishment of our first year of publication earlier this year.

This amazing group of editors, contributors, freelancers, artists and illustrators has been responsible for the past 17 issues of the magazine and without their tireless support, insight and professionalism TheEDGE would not be the outstanding publication that it is today.

TheEDGE was created to keep professionals operating within Qatars multi-sector business landscape abreast of the latest business trends and market developments. The model was complex and many were sceptical as to what success TheEDGE would achieve in its early days. But without fail, each month, TheEDGE continues to strive for excellence and throughout the issues, literally dozens of people have participated as authors making TheEDGE a product by and for its own audience.

From editorial relationships to supporting advertisers, I would like to take this opportunity to acknowledge and

thank each and every individual that has had a hand in crafting the success of TheEDGE.

Since its humble beginnings, I believe TheEDGE has achieved great editorial diversity. The team at TheEDGE has worked proactively to deliver lively, compelling and informative content month after month, and in doing so has raised the bar for the Qatar media landscape. Additionally, judging by the increased circulation and the growing number of new subscribers, I see that readers have both embraced the seasoned voices in the magazine as well as the new ones and this is just but one positive affirmation that TheEDGE is on track for a fruitful future.

TheEDGE launched with zero subscribers. Now, the magazine has grown to reach more than 8000 loyal readers each month and this will only continue to grow.

The job is not done. TheEDGE will be left in strong hands. The publication will now exist under the direction of new managing editor, Miles Masterson. He is sharp and ready, and he will introduce himself to you in the next issue. Please welcome him with all the support and consideration that you gave me.

And do not worry; I will stay in touch. I will read TheEDGE to stay on top of it all and I ask you all to be in touch as well. This publication grew and transformed thanks to your readership.

For that, I will always be grateful and proud.

Kelly Lewis can be reached at lewis.kelly78@gmail.com

farewellfrom the editor

WhoWE ArE

Firefly CommunicationsPO Box 11596, Doha , QatarTel: +974 44340360Fax: +974 44340359www.firefly-me.com

About TheEDGE:theedGe is an ambitious business magazine targeting professionals operating within Qatars multi-sector business landscape. Printed monthly, theedGe was launched in July 2009 to fill the market void and to provide the business community with insight into the latest business trends and market developments.theedGe is distributed 12 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important audience. theedGe is an authoritative business resource serving both large and small business operators.

theedGe is printed monthly 2010 firefly Communications. All material strictly copyright and all rights reserved. reproduction in whole or in part, without the prior written permission of firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by theedGe or firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in theedGe. the publisher (firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Getty images and/or iStock Photo.

MaNaGING edItorKelly Lewisk.lewis@firefly-me.com+974 55067574

edItorMiles Mastersonm.masterson@firefly-me.com+974 66080447

CoPY edItor Megan Mastersonmegan.masterson@firefly-me.com+974 55348748

reGIoNal SaleS dIreCtorJulia Toonj.toon@firefly-me.com+974 66880228

SeNIor SaleS MaNaGerEmma Land e.land@firefly-me.com+974 33197446

SaleS exeCutIveGiuseppe Ciccarellog.ciccarello@firefly-me.com+974 33842744

MarketING adMINIStratorAzqa Haroona.haroon@firefly-me.com+974 55692471

CreatIve dIreCtorRoula Zinati Ayoub

art aNd deSIGNLara NakhlRena ChehayberRana CheikhaCharbel NajemHadeer Omar

fINalISerMichael Logaring

PhotoGraPher Herbert Villadelrey

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dIStrIButIoN aNd SuBSCrIPtIoNAzqa Haroona.haroon@firefly-me.com+974 55692471

PrINted BYAli Bin Ali Printing Press, Doha, Qatar

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OUT YOUR IMPAC

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PLEASE RECYCLE THIS

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TheEDGE4

CoNTENTS

www.theedge-me.com

CONTENTS

A SPECIAL TRIBUTERemembering the legacy of Grahame Maher of Vodafone.

IN ThE SPOTLIghTThe unconventional age of gas extraction.

mARKET wATCh Key risks and opportunities for MENA countries.

INSIdE EdgE The state of the GCC monetary union.

COvER STORyA look back at the stories that defined 2010.

ECONOmIC BAROmETERWhat the new pension reforms mean for France.

ON ThE PULSE Russias gas shortcomings could mean a Qatari windfall.

SPECIAL fEATUREWhere the smart money will be investing in 2011.

gREEN BUSINESSWhy Conference of the Parties is facing an uphill battle.

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December 2010

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60

fEATURES

TheEDGE6

CoNTENTS

BUSINESS vIEw REAL ESTATEQatars property market prospers.

SPECIAL REPORT Qatar is on target for growth.

BRANd BEATUnleashing the power of creativity to encourage innovative problem-solving.

BALANCE ShEETThe new cost of global business.

LEgAL INSIghTSummarising the Human Resources Management Law.

SPECIAL SECTION: qATAR hEALTh 2010Interviews with leading health sector figures.

hEALTh ANd SAfETyImplementing an effective management system.

INdUSTRy fOCUSEducating the entrepreneurs of the future.

REgULARS

.08. CONTRIBUTORS

.10. LOCAL NEwS

.12. INTERNATIONAL NEwS

.13. NEwS IN NUmBERS

.14. NEwS IN qUOTES

.15. wEB wATCh

.16. BURNINg qUESTION

.20. BUSINESS INSIghT

.26. OPINION

.28. ThINKERS CORNER

.87. TECh TOOLS

.91. LIfE ANd STyLE

.94. EvENTS ANd PROjECTS

.96. TENdERS

.60.

.64.

.66.

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Opening Hours:Saturday - Thursday 7am-5pm

Friday Closed

P.O.BOX 150 Doha, QatarT +974 4421 8601F +974 4417 0351

E isd@jaidah.com.qa

Visit Our New ShowroomLocated in Al Khor opposite side of Al Khor Mall

CoNTriBUTorS

TheEDGE

P.46 SaM PICkerINGManaging DirectorBG2 Global SolutionsLondon, United Kingdom

P.71eMMa hIGhaMAssociateCorporate and CommercialClyde and CoDoha, Qatar

P.71davId SaltPartnerCorporate and CommercialClyde and CoDoha, Qatar

P.60Mark ProudleYAssociate DirectorDTZ, Middle East OperationsDoha, Qatar

P.68Mark lINdleYSenior Tax ManagerKPMGDoha, Qatar

P.49 edward JaMeSoNSenior Business Journalist Middle East and North Africa region

P.46 karIM NakhleSenior Business Strategist Doha, Qatar

P.37 PhIl StraNGeChief Financial OfficerDun and Bradstreet South Asia Middle East

P.30 JaMIe StewartInternational CorrespondentLondon, United Kingdom

P.81Mark keNYoNHealth and Safety Group LeaderURS Qatar LLCDoha, Qatar

the uSual SuSPeCtS...

All contributors to TheEDGE are well-regarded leaders in their respective industries. If you are interested in joining the esteemed panel of contributors, please contact the editor, Miles Masterson at m.masterson@firefly-me.com

P.68Charlotte StuBBSClient Services Creative Action DesignDoha, Qatar

P.64GreG harrIS Editorial ManagerOxford Business GroupDoha, Qatar

P.18/P.40 raChel MorrISFreelance JournalistMiddle East and North Africa Region

P.91thoMaS woolfFounderPTX Performance Training Doha, Qatar

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NEWSiN BriEF

TheEDGE

Qatar worldS NuMBer two for taxAccording to the report, Paying Taxes 2011, Qatar is the second easiest country in the world for paying taxes. Qatar retained its position for the second consecutive year, in a survey compiled by PricewaterhouseCoopers, the World Bank and International Finance Corporation. The survey measures efficiency and cost of taxes in 183 different countries worldwide. Dean Rolfe, Middle East tax leader at PricewaterhouseCoopers, said, Paying taxes in the Middle East has traditionally been, and continues to be, relatively straightforward, although he said the light tax burden in the region is unlikely to continue indefinitely. As governments increasingly need to source revenue to support economic diversification, tax will increasingly be seen as a suitable and effective solution to fund governments financial needs, Rolfe warned. Topping the rankings was the Maldives, with Hong Kong (third), Singapore (fourth), the United Arab Emirates (fifth), Saudi Arabia (sixth), Ireland (seventh), Oman (eighth), Kuwait (ninth), and Canada and Kiribati ( join tenth), rounding out the rest of the top 10.

fraNCeS total eYeS QatarQatar has entered into talks with Frances Total Petrochemicals to build a petrochemical plant in the Arab country. The talks are related to a petrochemical plant that Qatar is planning to build at Ras Laffan, a project initially valued at US6 billion (QR21.8 billion). The proposed complex includes a 1.6-million-tonnes-per-year (tpy) steam cracker and associated units, including two 650 tpy polyethylene plants and a 700 tpy ethylene glycol facility.

eNd of the SPoNSorShIP SYSteM?Qatar is seriously considering scrapping its sponsorship system, potentially following in the footsteps of Bahrain and Kuwait. The government is studying very carefully the issue to ensure that the rights of Qatari citizens, employees and those who come to

LOCAL

work in Qatar are all preserved, said prime minister, HE Hamad bin Jassim bin Jabor Al Thani. Under the system, foreigners are not able to enter or leave the country, or enter new employment unless they have the approval of their sponsor.

NakIlat ShIP faCIlItY oPeN for BuSINeSSThe 43-hectare Nakilat-Keppel Offshore and Marine ship repair facility is officially open for business, and has signed a three-year fleet servicing agreement with Shell International Trading and Shipping Company for ship repair services. The facility, a joint development by Keppel Offshore and Marine and Qatar Gas Transport Company, is located within the Ras Laffan Industrial City, and has been designed to undertake the entire spectrum of repair, conversion and construction for a wide range of marine and offshore vessels and structures. Situated close to the liquefied natural gas (LNG) terminals and Ras Laffan port, the facility will serve the Nakilat fleet of LNG carriers and undertake work for other shipowners, as well as the conversion of tankers to various configurations for offshore production, storage and offloading.

lIBYa-Qatar JoINt veNture YIeldS develoPMeNtWork has begun at The Waterfront, a luxury residential and resort development near Tripoli, under the stewardship of Al-Libya

Al-Qataria (ALAQ), a joint venture between Oyia, a subsidiary of Libyas Economic and Social Development Fund, and Qatari Diar Real Estate Investment Company. Chairman of the ALAQ Board of Directors, Abdul Aziz Al Theyab, said, Libya is one of the fastest-growing business and tourist markets in the region while vice-chairman, Wesam Eledrisi, confirmed, This vision is being achieved with an emphasis on innovation, partnership and raising the standard of living in the Tripoli area. Scheduled for completion by the end of 2012, The Waterfront will be a gated, mixed-use community with a five-star resort hotel, serviced apartments, luxury villas and an upscale retail village.

a New PlaNt for dohaGeneral Electric (GE) has entered into an agreement with Al Farraj to meet the regions growing electricity needs. Under the agreement, Al Farraj will assemble and supply GE electrical equipment to Qatar, the United Arab Emirates, Kuwait, Oman and Jordan, and to support the requirements of the relationship, Al Farraj inaugurated a manufacturing facility in Doha. Al Farraj is a licenced GE electrical distribution panel builder and will assemble GEs low voltage switchgear, critical for the reliability and safety of the distribution of electricity. The new facility will also manufacture electrical equipment, including electrical distribution boards and sub-main distribution panels equipped with GE electrical components.

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NEWSiN BriEF

INTERNATIONAL

duBaI CoNSIderS Sale of BIGGeSt aSSetSWith Dubai World now on sound financial footing, according to chairman of Dubai Supreme Fiscal Committee, Ahmed bin Saeed Al Maktoum, the emirate may consider selling parts of government-owned companies. Prized assets such as DP World, the Atlantis Hotel, and casino operator, MGM Resorts International, were presented as part of a restructuring that could be sold to the public to raise cash. Other state-linked assets such as Emirates airlines and Dubai Electricity and Water Authority have also been subjects of interest. Despite improving balance sheets among Dubais state-owned companies, financial services firm, Dubai Group, recently missed two payments on separate loans, indicating that the emirates debt troubles are far from over.

INCreaSed SPeNdING oN aIrPort SeCurItYLeading consultants, Frost and Sullivan, has confirmed that spending on modernising Middle East airports will increase to US$57.7 million (QR209 million) by 2015. The increase in new airport construction has boosted spending in this sector, with the Middle East Airport Security Market Assessment Report stating that spending in the sector has a compound annual growth rate of 7.5 percent from 2008s US$34.7 million (QR126 million). According to the report, Middle East Market for CCTV and Video Surveillance 2010 edition, the regions market for video surveillance equipment will grow by more than 10 percent in 2010.

IraN IN MaJor oIl dISCoverYAn Iranian state energy firm has announced a major discovery of approximately 34 billion barrels in associated oil reserves at an offshore gas field in the Gulf. Ali Vakili, managing director of Pars Oil and Gas, said that an oil layer was discovered near the southern port city of Bushehr, confirming, this is one of the biggest layers of oil in the country and it is under the reservoir of the Ferdowski offshore gas field. Irans proven oil reserves have

risen by nine percent to 150.3 billion barrels, partly driven by new discoveries, said oil minister, Masoud Mirkazemi. Mirkazemi also announced the discovery of a new gas field in southern province, Hormozgan, one that contains 70 billion cubic metres of gas, 72 percent of which can be exploited.

IrelaNdS BaIloutDebt-crippled Ireland joined Greece in a step that was unthinkable only a few years ago when it was the economic envy of Europe. The country has been brought to the brink of bankruptcy by its 2008 decision to insure its banks against all losses. At the time of going to press, a draft agreement had been reached between international negotiators and Ireland on a bailout worth US113 billion (QR411 billion), loaned to Ireland by the European Union and the International Monetary Fund. A four-year austerity programme, key to securing the bailout, comprises US$13.2 billion (QR48 billion) in spending cuts and US$6.6 billion (QR24 billion) in tax hikes. The programme includes cuts to 25,000 jobs, public sector pay, pensions, and social welfare, a reduction in minimum wage, and a new property tax.

fINaNCIal ProBleMS CauSe duBaI SuICIdeSFinancial problems are the biggest cause of suicides in Dubai, Dubai Police data revealed.

A total of 477 people have committed suicide in the emirate since 2006, with 2008 having the highest number of suicides. Eighty percent of cases were people aged between 20 and 40 years. Doctor Ashraf Ibrahim Hassan, forensic medical examiner of Dubai Polices Forensic Medicine Department, said that as many as 60 percent of cases were due to financial reasons.

ruSSIaS State aSSetS draw foreIGN INtereStForeign investors have expressed interest in buying into Russian state-owned companies, Vladimir Dmitriev has told the BBC. Dmitriev, head of Russias state-owned development bank, Vnesheconombank, said that US$64 billion (QR232 billion) could be raised in the next three years as a result. Russia wants to sell stakes in major banks such as Sberbank, the hydroelectric power operator, RusHydro, shipping giant Sovkomflot, Russian Railways and oil giant, Rosneft, in a privatisation drive to reduce its budget deficit. Finance minister, Alexei Kudrin, confirmed that Russia aims to reduce the states share in top companies and banks to 50 percent plus one share. After three years, we think we will go further, said Kudrin. On most stakes, we will reduce them by a further 25 percent.

12 TheEDGE

13

According to Verdict Research, a retail analysis unit of Datamonitor, the wedding of Prince William and Catherine Middleton may add GBP620 million (QR3.5 billion) to the economy. The event, set for April 29, 2011, will see consumers spending on celebratory treats and memorabilia, as well as an influx of tourists to the United Kingdom (UK). A British retailer has already started selling a GBP16 (QR90) version of the designer dress Middleton wore at the engagement announcement, while the QVC shopping channel saw dramatic increase in sales of the ring resembling that of Middletons, overnight.History shows that royal events have contributed to the economy in the past, including the coronation (1953), the silver jubilee celebration (1977), and the royal wedding (1981). With the royal family already prompting tourists to spend GBP500 million (QR2.8 billion) a year, VisitBritains Paul Eastham says, In a royal wedding year, that figure is going to be massively exceeded. The UK economy could do with the boost. The Bank of England predicts 1.8 percent growth in 2010 and 2.6 percent growth in 2011.

620,000,000

Pic of the Month

Freezing temperatures reached record-breaking lows in Britain before spreading to Europe, making it the chilliest month since 1985, and causing major problems to transport links across the continent.

News in Numbers

This Month in History

TheEDGE

NEWS iNNUmBErS

On his final trip to Iraq as American president, George W. Bush narrowly avoids being struck by

two shoes thrown at him by an Iraqi journalist.

Exxon announces a US$73.7 billion (QR268 billion) deal to buy Mobil, creating

ExxonMobil, the worlds largest company.

Enron files for Chapter 11 bankruptcy.

Bernard Madoff is arrested and charged with securities fraud in a US$50 billion

(QR181 billion) Ponzi scheme.

The last Rolls-Royce Silver Ghost is sold in London, England.

President Herbert Hoover asks the US Congress for a US$150 million (QR545 million) public

works programme to stimulate the economy.

General Electric announces that all communist employess will be discharged from

the company.

Abu Dhabi, Ajman, Fujairah, Sharjah, Dubai and Umm Al Quwain form the

United Arab Emirates.

Time magazines Man of the Year is, for the first time, a non-human, the

personal computer.

The Al Thani family become the rulers of the State of Qatar.

1924

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NEWS iN QUoTES

We will put our feelingsof rage and animosity inour bones.South Koreas marine commander, Lieutenant General Yoo Nak Joon, who vowed a thousand-fold revenge on North Korea. The Korean peninsula is locked in its worst crisis in decades, triggered by North Koreas bombardment of the small border island, Yeonpyeong, killing two marines and two civilians.

The right goal is not to cut our carbon emissions in half. The right goal is zero.Bill Gates, talking to Rolling Stone magazine about his investment in tackling energy issues. Gates, with a personal fortune of US$50 billion (QR181 billion), has invested millions in an array of efforts to halt global warming.

It seems they couldnt resist the temptation to turn a simple one word slip-of-the-tongue of mine into a major political headline.Sarah Palin condemns the media in a Facebook post for seizing on a gaffe she made on a radio show, when she suggested North Korea was an United States ally.

When you put a company in the hands of accountants, you will always get garbage out, because you are always doing sums on how to save money.Qatar Airways chief executive officer, Akbar Al Baker, after Boeing announced that it would revise the 787 Dreamliners schedule following a fire on a test version of the jet. The 787 is already almost three years behind schedule.

Those who make short term bets against Spain will be making a mistakeWe have a deficit reduction plan which is being carried out scrupulously. We are going to be one of the countries that is best at meeting its deficit plan.Spanish prime minister, Jos Luis Rodriguez Zapatero, rules out an Irish-style rescue plan for Spain. The country has an unemployment rate of 20 percent and saw zero economic growth in the third quarter of 2010.

We have exhausted all the terms of negotiations with the Canadians over six years.Sultan bin Said Al Mansuri, minister of economy of the United Arab Emirates (UAE). The UAE, which currently has three flights a week to Toronto, had their request for daily flights denied by the Canadian government. The UAE then forced Canada to close a military base in Dubai, and denied a plane carrying the Canadian defence minister permission to use its airspace.

CARTOON CORNER

TheEDGE 15

WEB WATCh

www.forbes.comWhat is it? Broken down into three regions the US, Europe and Asia this website is the central portal for all of the Forbes companies vast enterprises and describes itself as the home page for the worlds business leaders.

Why should you log on? The sheer volume of information on this website is staggering, from stocks and market news, to investment advice, sports news and political coverage; you name it, it seems to be on www.forbes.com

TheEdges guide to websites in the region and around the world of interest to the Qatar and Middle Eastern business community.

www.kippreport.comWhat is it? Positioning itself as the Middle Easts only online business magazine ostensibly as opposed to those that have print versions duplicated on the web Kippreport contains a comprehensive overview of the regions business environment.

Why should you log on? While hyper-local coverage is somewhat lacking on the site case in point the Qatar page Kippreports strength nevertheless lies in its extensive and information rich news and opinion, and the site maintains a level of objectivity arguably above that of many regional online media outlets.

www.qfba.edu.qaWhat is it? The Qatar Finance and Business Academy is aimed at enhancing the knowledge base of the countrys business community, through both extensive training and shorter courses, and this easy to navigate website contains information on the QFBA.

Why should you log on? Positioning itself not only as a Qatar institution, a mission statement of the QFBA is to strive not only to bring global relevance, but also serve as a networking platform, therefore any local businesses looking to improve their productivity would do well to investigate their site and offerings further.

www.i360institute.comWhat is it? The brainchild of Kamal Hassan, Innovation 360 Institute works with companies and government entities throughout the Middle East to bridge the gap between innovation strategy and execution.

Why should you log on? This website contains a incredible depth of information in blogs, video blogs, case studies, insights and research data, etcetera, centered around the topics of innovation strategy, execution and leadership.

www.upstartnation.bizWhat is it? Upstart is a United States (US)-based website aimed at entrepreneurs between the ages of 20 and 40 years old and claims to focus on nurturing the emerging leader, in other words the CEOs and moguls of tomorrow.

Why should you log on? With the highly developed American entrepreneur spirit, this website contains scores of articles and blogs that might regardless be of interest to the Middle Eastern start-up entrepreneur or SME business owner, such as How to Sell a Small Business and How to lead like Oprah.

BUrNiNGQUESTioN

16 TheEDGE

Technology is a powerful engine of economic growth and competitiveness. By enabling innovation, technology can create new companies, industries, opportunities, and jobs. In addition to its societal benefits, technology-led innovation is a fundamental driver of our business and is a core driver for Microsoft in Qatar. Microsoft was founded on innovation and we continue to rely on it to grow and strengthen our business.

Some of our recent products and solutions exemplify this innovation-led approach. For example, our latest smartphone, Windows Phone 7, breaks the current smartphone convention to help people quickly and easily find and consume information and services from the Internet and applications.

In such competitive times, there are greater expectations for rapid collaboration and knowledge-sharing on a global scale with employees, external business partners and customers across a variety of devices. Our innovation-led approach has driven us to develop a comprehensive cloud computing solution portfolio to benefit customers. This has enabled us to offer the strongest product line-up, which taps both the power of the cloud and the desktop.

At Microsoft we are not just about all work and no play. The fantastic response we received about our Kinect for Xbox 360 is another instance of our innovation-led approach.

In 2011, we will continue to further Microsofts mission of helping people and businesses throughout the world realise their full potential. We will be working hard to enhance and improve technologies to make IT accessible for our customers with innovation being a pivotal element to make all of this possible.

Qatar is developing its infrastructure to support a knowledge-based, diversified economy and looking to meet its energy demands, while promoting sustainability. GE is committed to support Qatar achieve energy and water use efficiency with innovative solutions that will also promote environmental sustainability.

At GE, we view innovation as redefining what is possible. It drives the development of our products and services for the energy sector. Our strategy is to support customers growth through delivering GEs advanced energy technology solutions, and being closer to our customers through our 11 offices, 13 facilities and 1500-strong workforce in our Middle East Energy business.

On the power side, GE is working closely with customers in Qatar and around the region to deliver advanced technology solutions that are tailored to the regions needs, and benefit from its available natural resources.

In our water business, GE is developing water management solutions, including wastewater reuse, to ensure that this precious resource is managed efficiently. This is in line with our global commitment to invest in cleaner technology, with an additional US$10 billion (QR36.3 billion) investment announced towards research and development by 2015.

We are committed to constantly evolving our technology and delivering innovative solutions which can meet the regions challenge of creating a sustainable energy future while building on our 35-year successful heritage as a growth partner to Qatar.

Innovation is critical for Gulf Bridge International (GBI). We thrive on innovation; we drive innovation and are driven by innovation. When we officially launch in 2011, we will facilitate innovation across the region benefiting consumers and businesses alike.

As a business, GBI is committed to creating an innovative business model. As the first carrier neutral regional submarine cable operator in the Gulf, we are promoting an open access approach, which will provide greater choice and flexibility to our customers.

All companies are impacted by the environment in which they operate and GBI is no exception. Innovation in domestic telecom regulations around the Gulf will drive demand for greater international bandwidth connectivity. New business sectors, such as financial services and media that are investing in the region require faster and more resilient communications links, and to address this need, GBI will invest in innovative technology which will enable us to quadruple the capacity of our network in the future.

GBI will facilitate the delivery of the content and applications for the innovative products and services that consumers use. Two years ago, few people owned a smartphone, now they are increasingly common and the applications that have been created to run on these phones are bandwidth hungry. Data centres, which historically have resided in the United States are now looking to be establish regional presences. This innovative approach creates opportunities for GBI.

In summary innovation is the lifeblood of our industry, we are creating new business models and investing in new technologies, which are facilitating greater innovation across the region.

INforMatIoN teChNoloGY

eNerGY aNd reSourCeS

SuBSea CaBle oPeratIoNS

MohaMMad haMMoudICouNtrY MaNaGerMICroSoft Qatar

JoSePh aNISPreSIdeNt Ge eNerGYMIddle eaSt

ahMed MekkYBoard MeMBer & CeoGulf BrIdGe INterNatIoNal

hoW Will iNNovATioN plAy A rolE iN yoUr CompANy iN 2011?Q:

iNmEmoriAm

Doha was stunned at the death last month of Vodafone Qatars CEO Grahame Maher, after a short illness. Rachel Morris looks at his legacy and the future of one of the countrys biggest brand names.

GrahaMe Maher

Grahame Maher burst onto the Qatar telecommunications and business scene in his typical dynamic but unassuming style in 2008. Rarely seen wearing a traditional business suit, he was affectionately known by some in the media as the

man in the t-shirt. Maher was an active sportsman and member of his adopted community, which soon embraced him back.

Maher headed Vodafones New Zealand operations in the 1990s and early 2000s, after joining Vodafone in Australia in 1996. Following his stint as head of Vodafone New Zealand, he returned to Australia in 2001 to take on the role of chief executive officer (CEO), before heading up Vodafone in Sweden and the Czech Republic, and then Vodafone Qatar.

A key figure in Vodafones international operations, Maher headed to Qatar in 2008 after the company and its partner, Qatar Foundation (QF), won the contentious auction for the second telecoms licence in the country.

When a partnership such as that of Vodafone and QF pay QR7.7 billion for the rights to operate a mobile phone network, the expectations are always going to be high, especially when it was openly stated that the company aimed to be the number one brand in Qatar within three years of launch.

But in his typical down-to-earth style, after a few bumpy patches, Maher won over the country and insiders speak of him being welcomed into majlis and into the inner sanctum of the business society in Doha, an honour few expatriate businessmen have experienced.

He was not only well regarded as an astute businessman, people saw him as a friend, [and] there was a lot of respect for him as a person, said one respected Qatar business figure.

While much has changed in Qatar, it was rare to hear someone of Mahers standing talk openly about the effects of monopolies on customers and business practices. The companys Bye Bye Qtel, Hello Vodafone mantra ahead of their official launch in March 2009, which saw Vodafone staff tie their Qtel sim cards to balloons and symbolically release them, unsurprisingly raised hackles in some sectors. This kind of stunt, put in context, was mild but unusual in Doha, and typical of Mahers confidence.

In response to what it saw as negative campaigning, Qtel said, Although Qtel has welcomed the new entrant, based on its support for the liberalisation of the communications sector for the benefit of the country and customers, the company was surprised at the statements and slogans made by the competitor. Qtel has pledged to avoid resorting to such tactics, which surprised and offended a large section of the community.

In one of the last markets still dominated by one player, establsihing the Vodafone brand even with the backing of QF was always going to be an uphill task.

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iN mEmoriAm

Nevertheless, in a sense, up until his passing, Vodafone Qatar was very much a reflection of Mahers character. Each product launch had to be different than the last, in keeping with the theme of making a world of difference, keeping the media, if not consumers, entertained.

In the interim, chief financial officer (CFO) and board member John Tombleson will be the acting chief executive of the company that is still reeling from the loss of its charismatic leader.

As acting CEO, Tombleson, a New Zealander, has 25 years of experience in the business and financial transformation sector and will lead Vodafone Qatar in the interim. In the next 12 months, Vodafone will have to deal with not only new leadership at the top, but also the commercial reality of operating a second telecoms license in Qatar.

On Tomblesons teams plate for 2011 is the hopeful resolution of the impasse over the entry of Virgin Mobile Qatar (VMQ) into the local market.

Vodafone and Maher were vocal opponents of the launch of VMQ, which ictQatar ruled in July 2010 had breached several sections of the Telecommunications Act.

We are taking legal action for the damages this has caused our shareholders, said Vodafone Qatar chairman, HE Sheikh Abdulrahman bin Saoud Al Thani, earlier this year.

Also on the companys agenda is growing its customer base. At the time of Vodafones entry into the market, Qatar was already a mature market, with a whopping 169 percent mobile penetration as of September this year, making growth potential difficult for an operator trying to add new subscribers.

Mid-2010, Vodafone Qatar reached the milestone of 600,000 subscribers, and is expected to have more than 750,000 by the end of 2011, thanks mainly to population growth and their targeting of the pay-as-you-go market.

Vodafone Qatar initially launched their products by targeting the labour and service workers with generous free minutes and flexible payment plans, but is moving towards strategies to lure the top end of the market, namely Qataris and expatriate professionals.

Vodafone already has a 22 percent share of the mobile customer market, with 37 percent of the population of Qatar now connected to Vodafone. The company has a 19.5 percent share of the mobile revenue market for the September quarter, and saw average revenue per user increase by seven percent to QR112 compared to the previous six-month period.

With a US$1 billion (QR3.6 billion) initial public offering in 2009, Vodafone Qatars share performance has been slightly disappointing, with its price down 3.5 per cent since the end of June this year, but

shareholders will be expecting a stronger performance in 2011 as the company moves beyond its brash start-up status.

Grahame Mahers death was and still is being mourned not just by his team members at Vodafone Qatar, but also by the wider Qatar business community.

He will be remembered as someone who literally changed the business landscape of Qatar. His loss is understandably especially keenly felt in the company in Qatar he built from scratch.

Only days before his passing, he led a Vodafone training seminar, typically throwing himself into the task.

Grahame himself made a difference to the lives of everyone he touched, the company said in a statement the day the shocking news was announced. He was a great CEO, coach, mentor, and friend. We will all sorely miss his inspiration and vision, his passion and energy, and his love for all the people he worked with.

reSt iN PeACeIn his typical down-to-earth style, after a couple of bumpy patches, Grahame Maher won over the Qatar business community, and insiders speak of him being welcomed into majlis and into the inner sanctum of the business society in Doha, an honour few expatriate businessmen have experienced.

BUSiNESS iNSiGhT

20 TheEDGE

Banking on the Middle EastAs we enter into a qualitatively different phase of banking Kelly Lewis spoke with Doctor Reinhold Leichtfuss, senior partner and managing director for Boston Consulting Group (BGC) in Dubai, and leader of BCGs Financial Institutions practice in the Middle East, to discuss the findings from the BCG Middle East Banking Performance Index.

Can you give an overview as to the revenues, profits and loan loss provisions for the Gulf Cooperation Council (GCC) and evaluate why some countries have fared better than others in 2009/10?

For many years, we have seen a very strong growth in revenues and profits in the Middle East. An exception to this was last year and in the first half of 2010, when we witnessed a period of slower growth, most definitely in revenues, and even a decline in profit. It appears as if we are more or less stagnating now in the revenues, which leads to our thesis that we are facing a new market reality and one of a slow growth environment, which will present new challenges for the banks. Overall we are still seeing a few differences between the countries...all the various countries [surveyed] had, in general, very strong roles and almost all of them over a five-year period witnessed double digit growthQatar actually recorded the highest with 22 percent. However, in 2010 it looks like we are clearly entering the pace of single digit growth. Still, Qatar continues with quite a high growth rate of around seven percent. With regards to profits, profits have become more stable in most countries, but in some countries profits have been declining, however, Qatar is still on a good upward trend.

Venturing into 2011, is there an air of optimism for Qatar and the broader GCC market in general?

Actually we see that in most of the countries a number of banks were able to reduce their loan loss provisions in the first half of 2010 as compared to the first half of 2009. This has been one major factors that has left people in the region optimistic and assuming that the worst of the crisis is behind us. Therefore, especially in those countries where we see the strongest gross

domestic product (GDP) growth, we are indeed cautiously optimistic that things are getting better in the financial sector again.

The report highlights that operating expenses are decreasing in Kuwait, Bahrain and Oman, are stable in United Arab Emirates (UAE), but are increasing in KSA (Saudi Arabia) and Qatar. What is escalating the operating costs in some countries as opposed to the countries that are witnessing a decline?

Quite a number of banks are working on the cost side of businessthey want to get their operating expenses under control, especially in markets where continued growth is expected. If you look at Bahrain, for example, where we see quite a decline, we do have a numbermaybe the highest share of investment banks and they have had to re-structure quite a bit in the course of the financial crisis. Still, in Qatar, we expect to see continued high growth and banks are preparing to capture that market share. Additionally in Saudi, the government is spending quite a lot in large-scale projects and in infrastructure, therefore, banks will compete against each other to win these projects, which means there needs to be investment into such capabilities, which in turn will increase the operational costs. Ultimately this means that there will be some slight differences between the banks in the various countries.

Can you discuss why international banks revenues have recovered faster this year as compared to Middle Eastern banks, but yet still remain at a lower revenue and profit index level their Middle East counterparts?

We must be aware that Middle East banks performed much better during the global financial crisis and that overall, they have been

much less affected because they had lower, if at all, exposure to the derivatives markets, or to the United States (US) real estate markets. Therefore, during the years 2007/08/09 Middle East banks continued to grow, whereas Western banks have been hit hard since 2007. Western banks are now recovering. For us, if we look at 2008 and 2009, it is not surprising that they are coming up strongly as this is the result of a much lower base index.

From the report, what trends have you identified for the GCC public and private banking sector?

On the one hand we are seeing slowing revenue growth, which is largely driven by reduced growth in finance, both in corporate banking as well as in retail banking. Keeping in mind that this growth has been extraordinarily high in the past especially in the years from 2003 to 2008 it was very high and it could not continue like that. At the same time the profit pressure began, we also witnessed another large trend in the form of robust growth in loan loss provisions in line with strong credit growth. Additionally, comparing the various markets, this is not surprising after periods of strong loan growth as you always experience, at some point in time, increasing loan loss provisions. I think even when we look to the future, it is becoming more interesting because we are now entering into a phase of a slow growth environment overall, slow in this region still means single digit growth, which maybe higher than in most mature markets. Therefore, we may witness single digit growth rates in the range from five to 10 percent, which is quite a decline compared to past years, but still higher than in mature markets like Europe or the United States. What this means for banks is that the intensity of the

Banking Sector

BUSiNESS iNSiGhT

TheEDGE 21

competition will increase quite significantly because in the past when markets were growing strongly, every bank could more or less grow with the tide, but in a slow growth market, banks have to fight much stronger for market share because if they want to grow over proportionately, they have to steal market share from their competitors.

The report finds that revenues and profits remained relatively stable for banks in KSA, while banks in the UAE and Oman experienced a decline in profits, and banks in Kuwait, Qatar and Bahrain increased their profits. Can you discuss the reason for the contrasting figures between countries and banks?

Actually this has always to do with where the banks are coming from and how the developments were in previous years. For example, in Saudi we must be aware that the financial sector had achieved very high profits especially in 2006 when there was the brokerage boom. Since then, profits have basically remained more or less stable, with maybe a slight decline as Saudi had reached such profits in 2006 already. Additionally, in the UAE, profits kept growing until 2008... Kuwait on the other hand experienced revenue growth until 2007 followed by a sharp decline in 2008, which was largely driven by one or two banks. Kuwait is now coming again back from a pretty low level in the past two years. Meanwhile, the most stable development we are seeing is in Qatar. This is being driven by the plentiful resources of the country and in the past few years we have been witnessing a continuous increase in profits.

While the industry is recovering steadily from the economic crisis, the times of strong growth in the region are over. In a slow growth environment what are the competitive advantages that are required to succeed?

Banks have to become better at sharpening their capabilities and their positioning. It starts with competitive positioning in the markets. Most banks traditionally have tried to deliver everything to everyone through intensified competition. More and more we are seeing it a necessity that banks communicate to their customers convincingly why they should bank with their bank and not with other competitor banks. Additionally, to fully win-over customers, banks must be superior to their competitors by exercising spirited sales power and a paramount service culture. However, banks need to consider their cost position and the cost position is very much driven by the quality of processes. Quite

a number of banks are already entering into projects and programmes on how they can increase their productivity and improve their overall processes end-to-end.

As the GCC banking sector remains an overcrowded market, will we likely see merger and acquisition (M&A) activity and alternative revenue streams as playing are larger role?

We have observed that in many markets globally, once you are entering a slower growth environment, banks have to think more intensively about their option of M&A rather than just their organic role if they want to increase shareholder value. Therefore, we think that over the next three to five years we will see intensified M&A activity in Middle Eastern countries.

As pressure on revenue pools will endure, it is inevitable that further cost reduction measures will be unavoidable. Where do you anticipate to see bulk of the cost reduction measures carried out?

I think it will be across most cost categories. Lets consider the productivity of labour in the Middle East banksfor example, more can be done with the same number of employees in most of the regional banks, which would increase cost efficiency. Assuming there is a growing asset stock and growing revenues, even at lower staffing levels, this would increase productivity for banking operations, which would ultimately be visible in both in the front and back office as well as in the corporate centre.

Should the GCC revisit the mission of public banks to emphasise their catalytic and countercyclical leveraging capacity?

Overall I am not so sure as to what extent they act counter cyclically. We hear of this discussion taking place in a number of countries be it in the area of granting more loans, rethinking performance during a downturn as well as employment levels to act counter cyclically. Actuallypartially banks are doing that and at the same time we think that

banks always have to act economically. So in many countries we are observing, as well as in the Middle East, that banks should grant more loans, this is right on the one hand, but on the other banks have to look at risks very carefully they cant just make provisions on loans because somebody is demanding themthey cant run open-eyed into losses two years after that. However, as economic entities they have to act very carefully at the same time when granting loans.

On another note, we are also seeing a few public banks that are quite actively pursuing new loan growth and granting more loans than they did in the past, and by that also contributing to the economy.

In the wake of the financial crisis, many government and regulatory bodies globally have sought after solutions to address lessons learned in order to create a more robust, risk-aware financial sector. How are the resulting changes in both the structure and requirements of regulatory supervision playing out in the GCC banking sector, and what will the impact likely be on stakeholders?

Well, the most visible and the important measures are certainly in the area of the minimum capital requirement. Actually, it may have also been that quite a number of banks were going through the capital markets in order to collect more capital to weather the economic storm better because requirements will be higher in the future. The Middle East banks in comparison always have quite a good capital-to-adequacy ratio, whereas most of the European banks or American banks where capital-to-adequacy ratio is around 10 percent, many Middle East banks had 12, 14 or even 16 or more percent, so overall they had a higher cushion, but nevertheless few will also need more capital. In addition, the conditions to do derivatives business, etcetera will also be changed, but that will affect Middle Eastern banks to a somewhat lower degree because they have not been as engaged into these business areas as most global banks have been in the past.

once you enter a slower growth environment, banks have to think more intensively about their option of mergers and acquisitions, rather than just their organic role if they want to increase shareholder value.

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22 TheEDGE

Private equity powerThe private equity (PE) industry in the region has grown at an unprecedented rate in recent years. However, on a global scale PE remains a relatively young and small asset class in the Middle East. Kelly Lewis spoke one-on-one with Ahmed Youssef, a partner with Booz and Company (B&C) Middle East, to discuss the companys recent report Global Private Equity Initiative and to establish how PE in the Middle East is a growing contender in emerging markets.

How many PE funds are there in the Gulf Cooperation Council (GCC) region and which counties have raised the most capital through their PE funds in the region to date?

As of June 2010, there were 140 registered PE firms in the region. Typically the PE funds were raised to target the GCC and the broader Middle East North Africa (MENA) region, so you cannot really separate them in terms of countries. But, if you are talking about the source of capital that is a different storythe source of capital is something that is definitely not published, but I would assume the largest contributor is probably Saudi Arabia in terms of where the capital is coming from, given simply the sheer size and the countrys gross domestic product (GDP).

How much does the PE industry contribute to the GCC financial sector annually?

It depends how you count contribution, typically you look at the contribution as funds raised and investments. Therefore, if you consider, for example, PE activities as a percentage of GDP it is very low. If you look at the investments as a percentage of total GDP in GCC countries it probably ranges from 0.2 to 0.3 percent as a maximum. The percentage of total GDP to GCC countries is quite low if you compare it to say the United States (US) and some European countries where the contribution is actually between two to three percent and sometimes more in active years. Therefore, contribution has been very limited over the past few years and much less so in 2009, and of course for 2010, where we have not seen a lot of transactions.

Are you seeing PE transactions starting to increase and recover now?

Definitely, I think we are going to see transactions increase going forward and we are already starting to see it in the market now. I think in 2011 and 2012 we will see more and more transactions due to several reasons. One reason is that there is capital, sometimes the PE firms have the capital to invest, at least the ones that still have good relation with the investors. The second reason is due to the fact that PE capital is becoming more attractive for sellers, previously PE capital was either already in abundance in a business, or companies would approach the banks where capital was abundant and cheap. Now that capital is expensive and scarce with the banks, it is much more challenging to get a loan and it puts more strain on a businesss cash flow. Equity capital becomes more attractive and hence PE capital becomes more attractive, and then finally there are good businesses in the region and the long-term fundamentals of the region are good. There is a growing wealthy population, there is a lot of infrastructure spending, which is creating the need for companies to continue to grow and in turn requires capital. Therefore, the future for PE capital buying and for PE banks looks bright.

What are the key differences in the way that PE funds operate in the GCC as opposed to PE funds in Europe or the West?

Firstly there are some structural differences in the way many of the PE firms in the region have been establishedthis is more a technical matter, but still an important one. Various PE firms have been setup more like investment companies and hence, they do not have

close-ended funds and debt is taken at the investment company level, therefore, there is no real clear timeline for exits. But in general, PE investing in the region is very similar in terms of what PE firms do globally. However, in some cases it is different, for example, one of the differences within this region is in the ability to get a controlling share in the business, so here most of the sellers are family businesses and many times these family businesses do not want to be controlled. Secondly, the use of leverage, I think here, unlike in many Western markets where you can utilise the leverage capacity and where there are developed financial institutions, you cannot really take as much leverage, and typically regional countries tend not to take as much leverage as they do internationally on their operating companies. Thirdly, it is the level of transparency of the markets. In Europe, for example, there is available and transparent information about the state of the market and about companies operating in the market, whereas here there really is no transparent information made readily available. Without transparent information is makes the due diligence process definitely more expensive and of course it exposes a business to more risk. Additionally, another challenge exists in the availability of good management. Typically, once PE comes into a business in the West they have a tendency to push the management team very hard, they try to squeeze the management team and if they do not perform they change them. Here it is not as easy to change a management team, the human capital market regionally is not that fluid and it is not as developed.

Private Investment

BUSiNESS iNSiGhT

TheEDGE 23

To what extent do the gaps in the regions legal and regulatory frameworks, and the difficulty in obtaining transparent economic data, hold back the development of the regions PE firms?

There are two parts to this, the transparency in general, which is not always the fact that you cannot get transparent transactions, but it is more so a question of does transparency exist? Many of the private companies that operate in the region do not necessarily have very developed financial systems to be able to provide the most accurate, and the most up-to-date financials. But in general, in regard to the overall regulatory framework, I think the GCC has come a long way and I dont think that the regulatory legal framework could have been established any faster. We have to give credit to the GCC countries for that, but at the same time there are still areas, particularly in regard to ownership rights and the various ownership levels, which can be further improved in a bid to develop the PE environment. For example, if there is a legal dispute to be settled or an agreement to be enforced, in some GCC countries it could take years to be able to resolve such an agreement. This is detrimental for a PE firm, which has a close-ended fund and wants to exit the business within a certain period of time. Therefore, the issue of how disputes are managed is an important one.

Another issue is bankruptcy, having a clear and fast bankruptcy process, which enables PE firms, in the case where they face risky exposure to companies that have not performed well, to be able to liquidate assets and to recoup some of their returns.

Which sectors have been identified as the largest growth areas for PE in the region?

PE firms have to consider more the long-term fundamentals. One fallacy that various PE firms had conviction in was that they invested in short-terms sectors in the past few years. However, looking forward there are a few obvious fundamental themes that will come into effect such as a growing, wealthier population, which will in turn translate into new demand for consumer services across multiple sectors. Another theme, which is more driven by government spending on infrastructure and development, is the demand for services and materials. However, the danger here is not to enter into too many cyclical types of services, but rather

develop bespoke services such as specialised building and construction materials, and more operation and maintenance services for large infrastructure and developments requirements these are areas where PE firms can continue to look at moving forward.

How has PE activity changed in the Middle East in light of the economic downturn?

It has changed, but I do not think it is just because of the economic downturn. In the period of 2007/08, there was a frenzy where we witnessed a lot of fund raising for PE funds, which was happening irrespective of how the markets were performing this produced an oversupply of funds compared to the size of the market demand. So the economic downturn resulted in the clean up of a lot of these oversubscribed funds. However, thats the negative take, but overall the positive outcome from the downturn has been in the grounding of both investors and sellers expectations, which have been draw closer together if you like in regard to being able to make deals happen. Sellers expected perpetual growth, looked at the multiples in the equity market and then expected very high valuation. The buyers on the other hand, were seeking low valuation because they expected also very high returns. So now the sellers are expecting much lower valuation and the buyers are actually expecting more reasonable returns. So the gap between them has shrunk, therefore, we are hopefully going to see more transactions, which will revive the PE markets moving forward.

Prior to the economic downturn in the region, Gulf Investment House said fundraising activities were at their peak estimating that between 2005 and 2008 US$20 billion was raised by Middle East funds. However, more than half of that has not been invested and constitutes around US$11 billion in dry power. What impact could this un-invested capital have on the market?

The uninvested capital is a bit misleading in a way because investors have committed, but not all of it has been called. Therefore, investors might relinquish on their commitment. But let us assume they do not, this availability of capital could place pressure on PE firms to invest very quickly over the next two to three years, which might actually lead to an increase in PE activity and hopefully not result in a rise in valuation, and in increased competition between PE firms.

The report finds that in 2009 there were around 40,000 high net worth individuals (HNWI) in the Middle East and that their wealth shrunk from a peak of US$1.7 trillion in 2007 to US$1.4 trillion in 2008, recovering to US$1.5 trillion in 2009. In the GCC, Qatar featured among the five countries whose wealthy were worst affected by the downturn. Why did the HNWI in Qatar suffer greater than many other GCC countries?

Actually it depends, any economy, regardless of Qatar or not, that has been very small by itself and then is exposed to a lot of international investment has probably been affected the most. Lets compare investing in the local GCC markets where the financial impact has been less as compared to investing in international markets, therefore, you are likely to be impacted more if you are more exposed to international marketsQatar by nature is a smaller economy and it is smaller in terms of its concentration of HNWI and hence, a lot of the investments have most likely been directed outwards.

So there were not any specific trends that were happening with those HNWI in Qatar?

No. It has more so been is the simple factor that GCC economies were impacted less than foreign economies, but HNWI that invested abroad suffered a greater financial impact as a resultwe found that while Qatar has a lot of domestic wealth, the options for investment were limited and, therefore, HNWI chose to invest abroad and were also ultimately exposed to more risk.

Many of the private companies that operate in the region do not necessarily have very developed financial systems to be able to provide the most accurate, and the most up-to-date financials. But in general, in regard to the overall regulatory framework, I think the GCC has come a long way

changIng customer servIceCustomers can help shape an organisation, therefore there is nothing more important for a company than for it to understand the true value of its customers. Many entrepreneurs say cash is king, but it would be more accurate to say customers that bring cash are king.

Customer service has often been described as the provision of service to customers before, during and after a purchase. The phrase is often looked at as one word, yet it is only when the words customer and service are linked together in the mind that it brings any real meaning, one greater than the sum of its parts.

The world has changed drastically of late. Falling oil and real estate prices and tightened credit have created shock and uncertainty among the public and organisations alike. Now more than ever, companies need to deliver customer-centricity and focus on their needs and wants. We have experienced the most challenging operating environments in the region in more than 30 years and as a result, customers have become immeasurably significant, arguably like never before.

As customer requirements keep changing and become more sophisticated, there is a need for companies to adapt and pursue their customers in order to retain the opportunity to serve them on an ongoing basis. If a company fails to serve the customer to their satisfaction in a competitive environment, the customer will shop elsewhere. Simply put, customer service is about satisfying the ever-changing expectations of the customer in order to keep their loyalty. This is where adaptation comes in to play and why research must be a continuous part of the business cycle, so companies can continuously learn this changing behaviour and attitudes of customers, and act quickly to outperform their competition.

A companys success eventually depends on how it generates and offers

A companys success eventually depends on how it generates and offers a superior level of service. Time and again, it has been proved that retaining an existing customer is always more profitable than creating a new one and it is now clearly understood that it is much more costly to establish business with an unknown potential client.

Standard Chartereds new brand promise called Here for good is about the banks commitment to its customers and people

HAyA MAsHHoodHead of Corporate Affairs

About the Author:Haya Mashhood was appointed Head of Corporate Affairs for Standard Chartered Qatar in July 2008. Before this appointment, she was the Head of Shared Distribution for the Consumer Bank at Standard Chartered.

Mashhoods key responsibilities include internal and external communications, shaping the strategy for the banks

sustainability agenda in country, while liaising with external analysts and the media.

She joined Standard Chartered Bank in 2006. Before her appointment, Mashhood gained nearly a decade of experience with another international bank, holding various positions within personal financial services, customer relations, service quality and corporate affairs.

Mashhood is currently studying for her MBA degree specialising in human resource management.

standard Chartered BankDohaState of Qatar

Phone: +974 44248450Fax: +974 44248110Email: Haya.Mashhood@sc.com

Address:Standard Chartered Bank Abdullah Bin Jassim Street PO BOX 29, Doha, Qatar.

of customers first. This is an expensive short-term endeavour but works out in the end to be more beneficial for an organisation.

Change is inevitable and is bound to happen as time passes by. It is up to companies to decide how to adapt to the changing trends of customers in order to sustain themselves in this ever-changing business environment.

Many of the most successful companies, including Standard Chartered Bank and Toyota, have survived local and global downturns because we kept changing product offerings and strategies according to customers changing needs.

There are no guidelines for a business to remain successful and customers ultimately determine success. The larger the target market, the more a business should grow. It is for this reason that companies should use customer service as a unique tool to win over customers and steal market share from the competition.

Failing to meet customers needs and wants will most certainly ensure a companys downfall.By Haya Mashhood

a superior level of service to its customers beyond what is offered by the competition. Time and again, it has been proved that retaining an existing customer is always more profitable than creating a new one and it is now clearly understood that it is much more costly to establish business with an unknown potential client.

Customer loyalty is attained through long-term partnerships solidified over time and this is important for all organisations. Understanding customers needs and anticipating what is required will give a company a competitive edge and allow them to stay ahead.

It is important to make customers feel different and feel appreciated and this can always be done through customer service or through offering some unexpected services or features. It is about providing what no one else does and offering a level of service, which exceeds the needs of customers. The day of product focus has all but been outpaced by customer focus and putting the needs

The world has changed, now more than ever we need to deliver customer centricity and focus on the needs and wants of our customers as we have experienced the most challenging operating environments in the region in over 30 years.

opiNioN

SolvING GloBalChalleNGeS IN the

By Matthias Catn

century

Many of the worlds challenges, such as climate change, trade liberalisation and development, seem stuck in inadequate

international institutions. However, we can solve them if we focus on people rather than states, and expand our understanding of international relations to be truly multidimensional by including business and non-governmental organisations in the equation.

The world is facing a substantive number of challenges. An agreement on how to stop

climate change seems far off, despite no shortage of international meetings. The next Conference of Parties (COP) of the United Nations (UN) Framework Convention on Climate Change will take place this month and it remains to be seen whether it will yield more results than the last meeting in Copenhagen in 2009, which raised hopes, but failed to deliver.

Meanwhile, bickering over trade imbalances and currency interventions continues. The positions are clear: the United States (US) wants countries with a large

surplus to reduce it and accuses China of artificially keeping its currency, the renminbi, low. China and other surplus countries, including Japan and Germany, oppose the idea of an international framework.

The Millennium Development Goals were adopted with much fanfare by the UN Millennium Summit in 2000 and were hailed as a great achievement of the international community: A firm commitment towards the developing world to enhance living conditions around eight specific, measurable goals. However, four years before the 2015 target

TheEDGE 27

opiNioN

year, progress on many fronts looks bad, particularly in Sub-Saharan Africa.

And the list goes on. The international community is unable to solve the problem of a potentially nuclear-armed Iran and nuclear proliferation in general, the conflict between Israelis and Palestinians lingers on, the critical overfishing of the seas and other global challenges remain unresolved.

aN INadeQuate fraMework of INStItutIoNS

A great part of this inability is due to inadequate institutional arrangements. This is most obvious with the UN. The Security Council with its five permanent members US, France, United Kingdom, Russia and China reflects the geopolitical reality after World War II, not that of the 21st century.

Similarly, voting rights in the Board of Governors of the International Monetary Fund (IMF) gives Western countries an advantage at the expense of emerging countriest.

Yet, the problem is not just about outdated institutional arrangements. The G-20 was created as a new informal body to overcome shortcomings of other institutions that were either too exclusive, such as the G8 group of leading economies, or too unwieldy such as the UN General Assembly.

Yet, with the exception of a few agreements in 2009 in the middle of the financial crisis, the group did not make concrete progress on any issue, except for some fairly vague declarations of intent.

foCuSING oN PeoPleBy solving global challenges, we are

trying to improve the conditions of life for billions of people and to ensure the future of humanity. It is about people, but most of the discussion is about states.

This is where the concept of human security comes into play. Human security focuses on the human being and aims to protect it from vaious threats.

It was defined in the 1994 UN Development Programme Human Development Report as freedom from fear and freedom from want. The report defined seven dimensions of human security: Economic, food, health, environmental, personal, community and political security.

Critics have argued that this is too broad a definition to be useful, and that human security should deal with protecting populations from

direct physical violence only, such as genocide, ethnic cleansing and war crimes.

This is the narrower idea behind the responsibility to protect, an international norm that was triggered by the genocide in Rwanda in 1994. It stipulates that states have a responsibility to protect its citizens from violence and that the international community is obliged to assist countries in doing so and ultimately intervene if a country fails to provide protection.

Canada, for example, is an advocate of this narrower concept, whereas Japan which is traditionally much more reluctant to talk about military intervention sees the broader concept of human security as a pillar of its foreign policy.

Ultimately, though, the usefulness of a concept is determined by the question of whether it contributes to the solution of a problem. To remind you, the problem is an increasing amount of global challenges problems that no single country can solve on its own against the backdrop of inadequate institutions and mechanisms of international cooperation.

the GloBal redeSIGN INItIatIveOver the past 18 months the World

Economic Forum (WEF) has embarked on an ambitious undertaking, the Global Redesign Initiative. We reached out to global leaders from business, governments, international organisations, academia and society, and asked them how they would reform the global cooperation system to help solve the challenges outlined above and others. Some 1500 experts participated in this endeavour, resulting in 58 concrete proposals across nine thematic areas from economic issues to security, development and the environment.

The proposals address issues as diverse as how to protect the worlds oceans and how to give incentives to private enterprise for investing in clean-energy products. What many of them have in common is that they go beyond traditional international relations. It is no longer just the sovereign state that is a legitimate actor business and non-governmental organisations have a crucial role to play, too.

MultIdIMeNSIoNal GloBal CooPeratIoN

Richard Samans, Klaus Schwab and Mark Malloch-Brown from the WEF have identified four building blocks for a reformed, extended system of truly multidimensional international cooperation:

(1) High-level political commitments and objectives, such as the UN Millennium Development Goals; (2) Multilateral legal

frameworks and institutions, such as the Nuclear Non-Proliferation Treaty; (3) plurilateral coalitions involving different groups of stakeholders, both public and private; and (4) information metrics to assist with prioritisation and decision making. An example for the latter is the Intergovernmental Panel on Climate Change (IPCC), a body of international experts set up by the UN to provide independent, reliable information about climate change. The IPCCs role was recognised with the Nobel Peace Prize in 2007.

While international cooperation needs to be improved in all of these four dimensions, plurilateral coalitions are the least developed. This is where most progress can be made. Having smaller groups of countries move ahead on a specific issue with the help and active involvement of other actors, such as business and non-governmental organisations, can help unblock stalled processes. The Global Redesign Initiative has a number of proposals that would enhance human wellbeing and human security through this kind of arrangement.

For example, Sustainable Energy Free Trade Areas (SEFTAs) would create special free-trade areas for clean energy products and thereby give incentives to business to invest by offering a larger, easy to reach market. The New Humanitarian Business Model would bring business, governments and community organisations together to provide assistance to countries in emergency situations.

The Global Civilian Nuclear Fuel Cycle Partnership would be a global public-private partnership to manage the civilian nuclear fuel cycle as a means of reducing the risk of nuclear weapons proliferation.

We have a good chance to solve the key global challenges that we are confronted with today. But to do so we need to move away from the traditional, state-centred concept of international cooperation. A focus on human beings through the lens of human security and a new perspective through multidimensional international cooperation, which includes non-state actors in the equation, will help break the deadlock that we are currently facing.

Doctor Matthias Catn is associate director for the Global Redesign Initiative at the WEF in Geneva. He is writing in a personal capacity and the views expressed in this editorial do not necessarily reflect those of the WEF and its members. Catn can be contacted at matthias.caton@weforum.org or through his website at http://www.caton.de

ThiNKErS CorNEr

by Sofia Kluch and Jessica StutzmanSince 2007, Silatech has aimed to address the main challenges facing young Arabs in their entry into the labour market. Its efforts are organised across three pillars: Access, Mindset, and Policy.

The Mindset axis aims to improve societys recognition of and support for young peoples contributions to societys economic and social capital. Towards this end, the Mindset Index measures the perceptions of young Arabs and the general public across the Arab world that relate to Silatechs Mindset axis.

Across the Arab League, when young Arabs aged 15 to 29 years are surveyed, the same variables drive Silatech Mindset scores for young men and women.

When education levels are high (in other words, some secondary and post-secondary education) and a countrys economic conditions are positive, the factors boosting the Mindset scores are nearly identical for both young men and women. However, within middle- and low-gross domestic product (GDP) countries in the region, differences in the factors that impact young men and womens Index scores become readily apparent.

To compare Silatech Index scores across countries, Gallup grouped countries into categories according to 2010 estimates of GDP per capita provided by the International Monetary Fund (IMF). Countries fall in one of three GDP categories: high GDP (GDP per capita of at least US$23,000, or QR83,000), middle

GDP (GDP per capita ranges from US$2600 to US$23,000, or QR9400 to less than QR83,000), and low GDP (GDP per capita of less than US$2,600, or QR9400).

In the high-GDP group, 90 percent of young men and 93 percent of young women agree that boys and girls should have equal access to education. Taking a closer look at middle- and low-GDP countries, however, it is only among young women that equal access to education is a predictor of higher Mindset scores. While the region has succeeded at narrowing the gender gap in enrollment at all levels of education, there is still ample room for improvement in some countries in the quality of education received.

Given that equal access to education is a predictor of higher Mindset scores for women, one could theorise that awareness of job-hunting services and organisations might similarly positively affect Access Index scores.

Silatech has focused its efforts along the Access pillar aiming to improve young peoples access to demand-driven and market-oriented skills training and job placement services, and to improve micro-,

small-, and medium-sized enterprises access to capital, business development services, and markets. Young women across all income and education groups are less likely than young men to be aware of such job-hunting services or organisations. This awareness, or lack thereof, could foreshadow barriers for women aiming to enter the job market.

Overall, countries within the Arab League have some of the lowest female labour-force participation rates in the world, coupled with high unemployment rates among young people and women in general.

Though several factors explain labour-force participation differences across genders in this area, it is clear that young women lack awareness of job-seeking resources more so than their male counterparts. Challenging economic conditions all but erase the gender gap in the low-GDP country group, where awareness of such services is lowest. Fifteen percent of young men and just 10 percent of young women are aware of job-seeking services, compared with 39 percent of young men and 24 percent of young women in high-GDP countries.

MINDSETHigh-GDP country Middle-GDP country Low-GDP country

Young Men

61

7060

61

Young Women

61

7260

62

YoUNG ArABS miNDSET ANd ACCESS SCorES driVeN more By ECoNomy thAN GENDEr

It is worth noting that young women with higher levels of education are more likely to score higher on the Access Index if they are also aware of job-hunting services and organisations.

LOOKINg AhEAdIn the face of conventional wisdom, it is not

gender, but economic conditions that predict whether young men and women in the region have similar Mindset and Access scores. It is only when examining middle- and low-GDP countries that differences in these scores and predictors are found.

To move forward and raise scores, particular attention must be paid to the importance of equal access to educational opportunities for both genders.

To increase Mindset scores, having equal access to education is paramount, especially for women in middle- and low-GDP countries.

In addition, organisations and support networks addressing the needs of young people in the region should focus their efforts on increasing awareness about job-seeking resources among all young people.

Ultimately, the findings indicate that the keys to increasing scores on the Mindset and Access Indexes are based on having a strong economic foundation on which to grow, as seen in the high-GDP countries. Countries in the Arab League can make progress toward that goal by emphasising the importance of equal education for both genders, and increasing awareness of job-seeking services and organisations, particularly among young women.

ThiNKErS CorNEr

TheEDGE 29

60% 74% 60%

High-GDP countries men

High-GDP countries women

Middle-GDP countries men

Low-GDP countries men

Middle-GDP countries women

Low-GDP countries women

Yes, AwareNo, Not Aware

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

64% 84% 88%

39% 24% 37% 32% 15% 10%

High-GDPcountries

UAEQatarKuwaitSaudi ArabiaBahrain*Index score from 2009

Middle-GDPcountries

TunisiaAlgeriaMoroccoJordanSyriaIraqLibyaLebanonEgypt

Low-GDPcountries

DjiboutiSomaliland (region)SudanMauritaniaPalestinian TerritoriesComoros

Yemen

6867*66

59

53

494438353426252422

52*5141322825

19

ACCESS INDEX SCORES

High-GDPcountries

QatarUAEKuwaitSaudi ArabiaBahrain*Index score from 2009

Middle-GDPcountries

AlgeriaTunisiaSyriaJordanMoroccoLibyaLebanonEgyptIraq

Low-GDPcountries

DjiboutiSomaliland (region)SudanMauritaniaYemenPalestinian TerritoriesComoros

83*79777069

696866

6563616055

45

73*6966

655352

50

MINDSET INDEX SCORES

T he Anadarko Basin is a 130,000-square-kilometre (km) geological feature that straddles the southern states of the United States (US). Prior to 1978, natural gas that was known to lurk deep underground in the basin remained untouched.

It was not purely a long-term strategic decision to leave such a huge reserve underground. Successful extraction of the fuel would have resulted in a considerable income stream for both the individual states and the nation as a whole. But the technology simply did not exist to force such an extraction at a cost-effective price. The industry had not evolved far enough to take such a step, and the incentives were not in place to encourage the breakthrough.

The reserves were, at the time, what we have come today to label unconventional natural gas. However, post-1978, the landscape, both from a metaphorical market perspective and the literal Anadarko Basin perspective, began to change.

The development of energy-bill regulations and the introduction of the US Natural Gas Policy Act, provided the economic spark that the industry needed to search for and extract unconventional sources of natural gas. Previously unseen levels of investment into deep exploration and drilling materialised, and the first shipments of gas from within the Anadarko Basin made it to the market.

Today, the energy landscape looks remarkably different. The continued development of unconventional gas extraction techniques has already had a huge impact on the global market including in Qatar, which sits on the worlds third most generous gas reserves behind Russia

and Iran with the gradual development of a supply glut. And the impact is set to be considerably greater in the years ahead.

According the International Energy Agency (IEA), the glut of global gas supply capacity is forecast to exceed 200 billion cubic metres (Gm) next year, and persist for longer than previously forecast.

We expect the global gas glut to peak sometime soon, but we think the glut itself will continue for around 10 years, said IEA chief economist, Fatih Birol, speaking at last months launch of the consumer nation watchdogs long-term World Energy Outlook (WEO).

The IEA report contained three potential roads down which global climate change legislation may progress, each more stringent in terms of carbon reduction than the previous. The impact of the overhang, which Birol attributed to a surge in US unconventional gas production and LNG capacity, is such that gas is the only fossil fuel for which demand is projected to be higher in 2035 than in 2008 in all three of the IEAs climate-change legislation assumptions.

But not all within the industry would agree. Qatar energy minister, Abdulla Al Attiyah has suggested that the glut could end as early as 2013 which would be great news, of course, for Qatar.

gLOBAL COmPETITIONQatar has, over the previous decade, pumped billions of riyals into its natural gas industry,

becoming in the process the worlds foremost producer and exporter of liquefied natural gas (LNG) natural gas that has been converted into liquid form. The sector has for some years been the driving force, the engine room, behind the Qatari economy.

The collapse in oil prices in late 2008 and the financial crisis cut the countrys budget surplus and slowed the rate of investment and development projects in 2009, as was the case in

The arrival on the energy scene of unconventional gas could prove more of a threat to Qatars growth than the financial crisis did.

What was once unconventional gas is becoming increasingly conventional due to huge advances in extraction technology. As a result, the global energy landscape is changing drastically. Jamie Stewart questions what the role of Qatar will be in the new hydrocarbon economy.

iN ThE SpoTliGhT

the unconventional age

iN ThESpoTliGhT

TheEDGE 31

Gas will be the only fossil fuel for which demand will greater in 2035 than in 2008.

almost every industrialised nation that year. But gross domestic product (GDP) growth in Qatar still registered over nine percent for the year, thanks to the ability of the government to protect the banking sector via the overflowing income from LNG exports.

But the arrival on the energy scene of unconventional gas could prove even more of a threat to Qatars growth and long-term economic diversification plans than the financial crisis did.

The country continued to invest in its LNG infrastructure, albeit at a reduced rate in 2009, and state-owned giant QatarGas is hoping to begin production from its LNG Train 6 before the end of this year, and from its Train 7 by early next year. But will these shiny new facilities be utilised to their full capacity?

The development of recovery techniques of unconventional gas has moved at such a pace since the late-1970s, that what was unconventional is no lon