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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MyStockVoice.com is now alive & kicking

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It’s taken a while & it’s been an interesting experience, but am pleased to say that we released MyStockVoice.com into public beta. For me personally, there have been a few challenges, “assisted” along the way by re-locating with my family from Switzerland to Slovakia.

The team at Connection Services who have designed & support the MSV platform have been excellent, especially when responding to an ever changing set of requirements. MyStockVoice started as this WordPress blog, where I could muse on my views on Emerging Markets & BRIC economies. A conversation with a friend who works in the City (London) encouraged me to look at doing something a little more. The original format, was a forum, then a newswire service & now it’s a fully fledged blog publication platform. So you can imagine how happy my colleagues at CSL were, when I tripped back every few months & said “right, this is what we are doing now”

Our aim at MSV is to provide an ever widening audience with value insights into what is rapidly becoming a major topic for hedge funds, investment managers & retail investors alike : BRIC & Emerging Markets. International stocks traded on US exchanges are becoming ever more popular, especially via Depositary Receipts (ADR,ADS,ADN) , for the more cautious or long minded, a number of ETF (Exchange Traded Funds) have sprung up to service the appetite to take part in these growing economies.

Covering all the major regions, MSV provides focussed channels into a variety of sectors & also specific categories for Macro Econmics, ADR & ETF investing. We are pleased to be working with some well established names from the investment community, along with faculties such as Knowledge at Wharton, the Economics Faculty at Beijing University, Skolkovo Business School in Moscow & Cranfiedl University in the UK.

Our strapline is “your community … your voice”  & to reflect this, we will be bringing our readers plenty of new unique content. Much of my time in the last two to three months has been spent contacting individual bloggers & also online media services that are based in the regions covered. In this way, we can present a “blend of thought”, that will allow our subscribers to formulate informed opinions on their own particular areas of interest.

So, enough jawing from me, but to close, Alex, Chris & myself would like to thank the team at CS & all the people that have had input into the project. We sincerely hope that you enjoy the MSV experience & are always open to new ideas, partnership opportunities & most of all feedback.

Many thanks

Paul

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Libya : now a white sheep for IOC’s

LNGLibya has become an attractive investment destination for UK and US companies, which are returning to the North African oil exporter to secure a share of the country’s largely under-explored gas and oil reserves.

BP (NYSE : BP) recently announced it would begin exploration activities in Libya by the end of the year. “We’ll start seismic acquisition in the third quarter of this year. Seismic will take about a year for the offshore and two and a half to three years for the onshore,” Peter Manoogian, president of the company’s exploration division in Libya, recently reported. He said he was “very optimistic” about prospects in the Ghadame and Sirt basins, two of Libya’s five major basins, where BP secured exploration rights to over 54,000 sq km last year.

Sirt onshore has been the country’s most productive basin to date, having given up over 20bn barrels of oil equivalent, while offshore deepwater Sirt is presently unexplored. The formation is described by the company as “a buried rift with multiple play opportunities similar to those found in the North Sea” – and hopes it will mark a continuation of the onshore Sirt basin.

BP’s other new well will be located in the Ghadame Basin, an onshore field split into two concessions, North and South. The North concession alone is the size of Kuwait, and is a geological extension of Algeria’s lucrative Alrar gas field. Manoogian reported the company is targeting natural gas accumulations and said that, if exploration is successful, production could begin as early as 2018.

BP’s investment in Libya marks a return to the country following a hiatus of more than 30 years. BP withdrew from Libya when the country’s oil industry began being nationalised by Colonel Qadhafi in 1971, and the state-run National Oil Company (NOC) was established to manage the industry. The BP/Bunker Hunt Sarir field was the first to be nationalised, although it was not until 1974 that an agreement was finally reached between BP and the government regarding the settlement of assets.

Not all international oil corporations ceased operations in Libya though. For instance, Spain’s Repsol and Italy’s Eni maintained assets held in conjunction with NOC. The majors were, however, further kept away by Anglo-American sanctions, following the 1988 bombing of Pan Am flight 103 over Lockerbie. The US lifted those sanctions in 2004, and two visits by British Prime Minister Tony Blair in 2004 and 2007 have seen deals signed not only with BP, but also Shell, BG Group and ConocoPhillips.

The BP deal itself was signed in May 2007, and will see the company invest a minimum of $2bn in Libya in coming years. BP will be working with government partner Libyan Investment Corporation (LIC) and NOC. The latter hopes to expand Libya’s oil production to 3.5m barrels per day by 2020, from current figures of 1.835m (2006), and also to aggressively expand gas production. It is already having some success, with Libya’s 2005-06 annual increase in gas production (the last year for which figures are available) showing a 31% rise – the highest in the world.

For its part, BP also hopes to correct a slide in oil production. Output fell 3% last year to 3.82m barrels per day. Capital expenditure by the company has not increased in real terms for a number of years now, and will be pressured further by the company’s efficiency plans, which are expected to cost $1bn this year. In this respect Libya represents an excellent opportunity for the company. The Sirt basin is Africa’s largest, containing an estimated 22% of the continent’s 300bn barrels of reserves, while Ghadame is already of proven viability.

Libya’s position as an energy supplier is likely to see its strategic importance to Europe increase in coming years. Given the growing risk associated with supplies from Russia, it may well join neighbouring Algeria as a perceived safe haven, particularly with regard to natural gas.

Royal Dutch Shell (NYSE : RDS.A)  also decided to return to Libya and signed a contract in 2005 to invest between $105m and $450m in the Marsa Al Brega LNG plant. Shell hopes to increase LNG output at the plant from the current level of 0.7m tonnes a year to 3.2m. Depending on its success in discovering new gas fields in its Sirt concession, Shell may construct another LNG plant at Marsa Al Brega.

LNG offers Libya the opportunity to exports its energy products further afield than is currently possible through traditional pipeline technology. By switching production to tanker-based transport, Libya will be hoping it can open up new markets in northern Europe. In furtherance of this policy, a Joint Announcement of Cooperation was signed between BG Group and NOC in May 2007. The British gas specialists will work with NOC to study optimum methods of supplying natural gas to domestic and export markets.

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