Archive for the ‘Middle East’ Category

Dubai debacle & housekeeping

First off hello, I’m back blogging after a hiatus on here, has been a very busy 6 weeks or so since my last post, as have been blasted by a few things, not least amongst them getting Emerging Voice into shape.

So, a quick look around the blogosphere today has shown that markets have attempted to throw off the Dubai Debacle, but it would seem that not everyone has got the message. Some of the best from the last few days include :

Junior Deputy Accountant (comes with language warning) where Adrienne shares her usual eclectic mix with us : It’s a miracle ! The Bailout Will Save us All

The lovely Lynn Berman over at MarketNut gives us a pull down from the main & not so mainstream sites : Dubai Update

The hive mind of Emerging Voice has a myriad of offerings : Contagion to Tower of Babylon

& Josh over at Reformed Broker brings his own brain to focus on the topic : Dubai World & Bear Stearns : Coal Mine Canaries?

there has been plenty of sniggering & much joking about exchanging an island for a goat, but we leave you with this sobering picture

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Jordanian education pressured by asylum seekers

Flag Of JordanJordan is implementing a number of reforms to maintain the high standard of its education network in the face of increasing student numbers, competing calls for state funding and needed modernisation.

The kingdom’s education system has scored well in a series of international assessments, with the World Bank rating Jordan, along with Kuwait, as the leading education reformer in the Middle East and Northern African (MENA) region in 2008. UNESCO also ranked the country 18th out of 94 nations for providing gender equality in education.

Education has long been one of the top priorities for the Jordanian government, which dedicates around 13% of the state budget to the sector every year, with spending on public and private education accounting for 6.4% of GDP.

This focus on education extends to the tertiary system, where around 30% of all students are taking courses in education, the highest single study stream, eclipsing other courses. Given the growing numbers of students entering the system, with some 150,000 commencing their first year of school annually, the demand for teachers is increasing, offering those studying education at university a solid career path.

This year alone, the Ministry of Education appointed 4000 new teachers to meet the needs of the school system, taking the number of teachers and administrative staff in Jordan’s state schools to 90,000.

Though the ministry has been increasing staff numbers, and improving infrastructure through a nationwide programme of building new schools and upgrading existing facilities, the downturn in the economy has had a flow-on effect on the country’s education system.

While the Jordanian economy is expected to continue its expansion this year, with both the government and the IMF predicting GDP will grow by around 3%, this is well down on the 6% rise in 2008. This slowing of the economy has seen many families becoming more cautious, with an increasing number withdrawing their children from private schools and enrolling them in public ones.

There are some 1.6m students currently in the Jordanian education system, three-quarters of who are enrolled in the state’s 3300 schools, with the remaining 400,000 attending one of the 2400 private institutions across the country. However, according to reports in the local media, almost 11,000 students formerly attending private schools have transferred into the state system this year due to what was described as “economic considerations”. This comes on top to the 31,000 students who moved to public schools in the 2008/09 academic year.

According to Fayez Suidy, the director of the ministry’s Private Education Department, economic pressures are the underlying cause of students leaving the private segment.

“Each year, parents decide to move their students from public to private schools and vice versa, but financial matters remain the main reason behind the transfers,” Suidy said in an interview with the Jordan Times in late August.

This flow of students back to state schools will increase the demands being put on the public education system, in terms of staff, materials and infrastructure requirements.

Adding to the strain placed on the education system is the large numbers of young Iraqis, children of families who fled their own country, who are now attending schools in the kingdom. In 2007, the Jordanian government approved a proposal to allow Iraqi children living in the country to attend state schools for free, with 24,000 enrolling in the 2007/08 academic year, and 26,000 in 2008/09.

While this is only a fraction of the students attending state schools, representing around 2%, the figure is rising and there is little sign that these students and their families will be returning home any time soon.

Furthermore, according to a recent report by the Private School Owners Association, Iraqi children make up 10% of students attending non-state schools, though this figure is expected to fall due to rising costs, with at least some expected to transfer to the public system.

These pressures could cause the educational budget to be spread somewhat thinly in the coming years, as the growing numbers of students may force the authorities to spend more to provide basic facilities and materials rather than new schools and improved technology.

With the government having to balance the many demands on its limited funds, the country’s education system should remain adequately resourced to maintain present service, but without a major increase in its budget may find it hard to step up a class.

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Egypt urges closer ties with EU for Arab states

CB018560Arab states have much to gain from their European neighbours and vice versa, but the emergence of China and Russia offer new opportunities.Egypt turned a page in its relations with the EU in 2007.
With the signing of the European Neighbourhood Policy (ENP) action plan, Cairo committed to a deeper level of political, economic and social co-operation with Europe, based on common values and objectives. We have agreed to join the EU in promoting stability, prosperity and good governance, and to work for the creation of a free trade area in the Mediterranean basin by 2010.
But now, after many rounds of discussion and on the 50th anniversary of the EU, both parties must ask themselves a basic question: is the ENP the most relevant response to the common challenges that face our two regions going forward? Is it the most effective response to shared problems such as terrorism or climate change? More importantly, will the promise of closer integration with Europe continue to have the same pull on the ‘neighbourhood’ it does today, as new players such as China and Russia court the region with aid, trade and investment?

The greatest pressures that will face Europe over the next 50 years will come from sources outside the union rather than internal ones. The neighbourhood policy tacitly recognises this fact by setting out a framework for deeper co-operation with Europe’s neighbours in the Mediterranean basin. By offering economic incentives in return for co-operation on political, economic, security and technical fronts, the policy seeks to limit the impact on the EU of the effects of conflict, crime and migration – spillovers from a troubled neighbourhood.

That Egypt should sign up for such closer co-operation with the EU is of course natural. Egypt is Europe’s longstanding ally in the region. Today, Europe is Egypt’s largest trading partner, with total trade standing at almost Eur 12,000 million ($16,000 million) in 2006.

Europe is also a significant foreign direct investor in Egypt, with more than £E 22,000 million ($3,860 million) worth of investments in 2006. Under an association agreement with Europe that came into force in 2004 (a forerunner of the ENP action plan), bilateral trade in industrial products is being fully liberalised. Active negotiations are under way to liberalise trade in agricultural produce, critical to Egypt’s exporters, as well as services.

The benefits to Arab states of such economic integration with Europe in terms of jobs, investment and technology transfer are tangible. Trade with Europe is an essential catalyst for economic liberalisation at home: the prospect of access to European export markets acts as an incentive to local industry to try to meet EU standards.

Our ties with Europe are also an asset in Egypt’s efforts to market itself to foreign direct investors. Egypt’s proximity to Europe and our strong economic ties are increasingly persuading investors to relocate their production base and move their operations closer to European customers. Over the past six months,

100 Turkish companies have visited Egypt to begin establishing factories on the Mediterranean coastline from which to export to the EU. A Russian industrial zone targeting light industry exports to global markets including Europe will be open in May. Another project is under way, with German investment, to create the first hub for automotive components to supply Europe’s largest car manufacturers. However, it is worth noting that Egypt and its regional peers have also been boosting economic ties with new partners such as China, Russia and even Kazakhstan.

Today, Middle East companies are as determined as European ones to take full advantage of the opportunities that markets such as China can offer. Egypt and China in 2006 signed a co-operation agreement to boost bilateral trade to $5,000 million by 2010, compared with about $3,100 million today. This includes plans to build the first dedicated industrial zone for Chinese manufacturers in the country. If we stay this course, China should overtake the US to become Egypt’s largest single trading partner over the next five to seven years – not by political design but through simple market economics.

So, when it comes to implementing the ENP, all parties should bear in mind that the world moved on while we were negotiating. With the rise of inter-emerging market investments, Europe’s neighbourhood today has more options in terms of trade and investment than it did just five years ago. This means that the carrots and sticks offered by the EU must also evolve to keep pace with this reality. Closer economic integration with Europe may not continue to be a sufficient incentive on its own.

by Rachid Mohamed Rachid is Egypt’s Trade & Industry Minister

Busy tones in Qatar, as Vodafone & QTel battle for hearts & minds

Vodafone QatarQatar‘s telecommunications sector is becoming increasingly competitive, both domestically and on the international stage.

The recently released Global Competitiveness Report 2009-10, prepared by the World Economic Forum (WEF), ranked Qatar as the most competitive economy in the Middle East and North Africa region, and 22nd overall out of the 133 countries assessed.

The country scored highly in the category of technological readiness, the ability of an economy to adopt existing technologies to enhance productivity. In particular, the WEF cited Qatar’s embrace of new communications technology as a factor that enhanced its competitiveness, saying, “The country has made great strides in harnessing the latest technologies, such as mobile telephony and broadband.”

Those great strides have seen Qatar ranked second in the world for per-capita mobile phone ownership, 37th for broadband internet subscriptions and 33rd for the total number of internet users.

While the willingness of Qataris to make use of the latest technological advances has helped to improve the country’s economic competitiveness at the international level, it is on the domestic stage where things are really heating up.

On March 1, a new era dawned, with Vodafone Qatar launching a limited mobile phone service, thus marking the end of Qtel‘s monopoly on the market. Full services covering around 99% of the country were launched in July.

Not surprisingly, Vodafone Qatar has experienced some teething problems, partly due to having to share some of Qtel’s infrastructure and in part as a result of the unexpectedly high levels of client pick up. In mid-September, Vodafone Qatar announced it passed the 100,000 subscriber mark. Though well ahead of the company’s own projections, and a good start towards its target of taking a 40 to 60% market share within 10 years, Vodafone Qatar still has a long way to go before it can truly rival Qtel, which has 1.9m subscribers on its books.

Despite having just a fraction of Qtel’s subscriber numbers, Vodafone has set out its stall, seeking to challenge the incumbent with different products and pricing packages. And it is the appeal of the new that is attracting at least some of Qtel’s existing customers to its rival, with the two companies basically providing similar services on mobile and internet platforms. Both companies have reduced costs for some mobile phone services and stepped up special offers, including cut-price internet downloads and cheap international calls.

One area that Qtel still retains an advantage in is the fixed-line segment. Though Vodafone is also supposed to provide fixed-line services, a launch date for such an operation has yet to be set, with the company saying in early September it had not as yet been issued the required licence by the Supreme Council of Information and Communication Technology.

Though Vodafone (NYSE:VOD) may have to wait before it can mount its challenge to Qtel’s landline monopoly, the company has racked up a few impressive achievements in the past few months. The entrant’s initial public offering, which was concluded in April, raised $930m, with some 82,000 individual Qatari investors and 273 institutional investors taking a stake in the firm.

While Qtel is responding to the challenge offered by Vodafone, its domestic operations are just part of a much bigger corporate profile, with the company active in 17 separate countries across the Middle East, North Africa and Asia, maintaining a subscriber base of around 52m. The company has declared its objective of becoming one of the world’s top-20 telecommunications firms by 2020, an aim it seems on track to achieve.

Despite having raised its debt levels in recent years to fund an ambitious acquisitions programme, Qtel has had little difficulty in rolling this debt over, despite the generally tight liquidity situation. In mid September, it renegotiated a loan of $2bn, arranging a forward start agreement on a revolving credit facility maturing in November, extending the credit by two years.

According to Qtel’s chief executive officer, Nasser Marafih, the company is focusing on consolidating three years’ worth of growth, though it would always keep watch for any opportunities that would augment its portfolio.

Qtel may be an international firm, but much of its recent expansion has yet to be translated into revenue streams. Till they do, Qtel will rely on its original core market to underpin its operations, though now it will have to contend with a competitive Vodafone on the other end of the line.

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