Issac John / 29 May 2012
The Dubai International Financial Centre, or DIFC, said on Monday that deposits out of the global financial hub have grown in the past three years at an average annual rate of 39 per cent to reach $12.8 billion at the end of Q1 2012.
Loans and advances of DIFC’s regulated entities rose over the same period at an average annual rate of 40 per cent to reach $14.7 billion.
Assets under management at DIFC-based companies remained steady, and recorded $8.1 billion during the period.
Abdulla Mohammed Al Awar, chief executive officer of the DIFC Authority said the numbers were testament to the successful growth in the breadth and depth of financial activity within DIFC due to the diverse services provided by the regulated firms. “As one of the global financial hubs, it is natural that we are observing an influx of new companies from around the world, especially banking and financial services firms, who are attracted by the vast opportunities the region offers.”
“Our effort toward enhancing DIFC’s legal and regulatory framework as well as its physical infrastructure positions DIFC as an ideal platform for regional and international growth,” said Al Awar.
He said DIFC continued to grow steadily as one of the world’s established financial centres. “As of March 2012, the DIFC community comprised 861 active registered companies (322 regulated and 539 non-regulated companies); already two per cent up on 2011 numbers.” Dr Nasser Saidi, Chief Economist at the DIFC, said the hub is the only international financial centre that collects and publishes financial activity data of its registered entities.
“What the data clearly shows is that DIFC entities have witnessed continued real growth over the past three years, despite the international financial crisis and regional events. “Deposits and credit growth rates of DIFC-based companies have also been substantially higher compared to those of the GCC area banks. We expect higher growth to continue as DIFC-based companies expand their activities further.”
The DIFC is home for 21 of the world’s top 30 global banks, 8 of the top global money managers, 6 of the 10 largest insurers and six of the top 10 law firms in the world.
The DIFC statistics are collected from different sources.
The DIFC Economics team and the Dubai Financial Services Authority provided data and estimates. Other information, including data on deposits, credits, and assets under management outside the DIFC, were collected from monetary and statistical authorities’ websites and other databases.
issacjohn@khaleejtimes.com
Tuesday, May 29, 2012
Al Maliki holding Iraq to ransom
Democracy is not served by political instability and pushing for a military showdown with Kurds
The roots of Iraq’s present political conflict lie in the 2010 elections. But in reality, the problem started since the establishment of the country in the 1920s. Almost a century has passed, but these conflicts have not been resolved.
The problems between different Iraqi blocs are numerous and varied. However, the most dangerous of them is the conflict between the government in Baghdad and the Iraqi Kurdistan government. Some say that it is a conflict between Kurds and Arabs though Iraqi governments prior to 2003 saw it as a form of Kurdish mutiny.
Kurds consider the conflict as a struggle for gaining their legitimate rights in their land.
Iraqi governments, in both the monarchy and the republican eras, tried to resolve the conflict through force. The results were devastating as the clashes depleted Iraq’s human and financial wealth. The struggle also obstructed Iraq’s development plans and contributed to undermining its national security, leading to interference from neighbouring countries.
Iraq’s political atmosphere was never devoid of dangerous tensions, but after the downfall of the Baathist regime, it has entered a new phase that is threatening to destroy the foundations of democracy.
Prime Minister Nouri Al Maliki is at the centre of these developments, and has been targeted by many. He has clashed with fugitive vice-president Tareq Al Hashemi, deputy prime minister Saleh Al Mutlaq, chairman of Al Iraqiya bloc Eyad Allawi, president of the Kurdish province Masoud Barzani and Sadrist leader Muqtada Al Sadr. Al Maliki is probably having problems with those in his own Al Dawa party.
Political survival
It is difficult to see Al Maliki emerging unscathed from these conflicts as all these forces are closing in on him in a joint attempt to get him out of office.
Playing on the interests of the US and those of regional powers, which served him well in recent years, will not ensure Al Maliki’s political survival, as finding a substitute is not very difficult.
The opposition has lately become more influential and has begun to take the initiative.
It recently held a meeting that was also attended by Al Sadr. A memo was sent by those who met in Arbil to the Iraqi National Alliance (INA), giving them two weeks to reply and threatening a no-confidence motion if they failed to comply. The two weeks went by, and another meeting was held in Najaf. The INA was given another week to choose a new prime minister.
Members of parliament threatening to go ahead with the no-confidence motion against Al Maliki constitute a majority in the house. However, whether or not they actually go ahead with this decision is not guaranteed. Each lawmaker has a number of issues that decide his or her position, and some of those are personal and related to re-election. Other factors that may influence the decision may relate to the power vacuum Al Maliki’s dismissal may create.
The INA expressed its backing for Al Maliki as a reply to the Arbil ultimatum. It also pointed out that it does not mind instituting reforms if Al Maliki can continue as prime minister.
In the midst of all this, the prime minister decided to turn the tables and transform the struggle into a conflict with the Kurds.
Al Maliki, accompanied by ministers from the federal government arrived in Kirkuk on May 8 to hold a cabinet meeting. His visit was preceded by military forces, who had orders to drive away any militia.
The struggle has become extremely tense.
Kirkuk drama
Al Maliki chose Kirkuk as a battleground so as to announce from an Iraqi city that includes every component of Iraq’s ethnic and sectarian groups that the demand of the Kurdish province to include Kirkuk is unacceptable to his government. And that the Constitution’s item 140 — relating to Kirkuk determining its future — is not applicable.
Thus, Al Maliki decided that the differences, and the mechanisms to solve them, will not be settled through the constitution. He was also very clear about freezing it until the end of his tenure. All this will serve Al Maliki’s opponents, who accuse him of being autocratic.
Al Maliki’s shortsightedness is dangerous as it contravenes the strategic alliance between the State of Law and the INA.
Al Maliki is pushing towards a military a showdown with the Kurds at a time when they are stronger than ever before — locally, regionally and internationally.
He is betting that his dangerous step will break the opposition alliance against him, as he thinks he will be seen as fighting a national battle. He is also betting on other smaller alliances with those who have already walked out on Al Iraqiya.
Al Maliki’s statements about freezing the constitution raise concerns about his seriousness regarding democracy in Iraq. Talking about freezing the constitution is akin to a coup against the political process in Iraq. It is like declaring a state of emergency, wherein the government does what it pleases.
Dr Mohammad Akef Jamal is an Iraqi writer based in Dubai.
Opportunity still in the air across the GCC
Abu Dhabi accounted for 70% of the $20b in contracts awarded between first quarter and third quarter of 2011
Dubai: Investment opportunities worth more than $500 billion (Dh1.83 trillion) in energy, transportation, education, health care and other critical sectors of economic development continue to beckon for contractors in the Gulf, industry experts said.
"GCC countries have significant trade surpluses which they are planning to invest in order to diversify their economies' dependence on oil revenues and also to develop their countries and satisfy the demands of their people following the Arab Spring. The region certainly is expected to continue to offer a lot of opportunity for contractors," said Rizwan Shah, managing director, Corporate Finance, and leader of Deloitte's Capital Projects Advisory services practice for the Middle East.
Despite grappling with challenges and delivery issues related to current projects, major opportunities remain prevalent in Saudi Arabia, Qatar, Abu Dhabi and Iraq this year.
Shah said the UAE is ranked the second largest market with investments worth $9 billion allocated to buildings, infrastructure and energy in the first quarter.
Abu Dhabi in particular accounted for 70 per cent of the $20 billion in contracts awarded between first and third quarters of 2011.
Driving this growth, with over $12 billion in awarded contracts, the emirate is placing "particular attention on transport, utilities and social infrastructure," Shah said.
Of the biggest investments currently underway is Qatar's plan to spend $100 billion in preparation to host the 2022 World Cup and Saudi Arabia's capital spend programme approaching $400 billion over the next ten years.
Laurie Voyer, CEO and managing director of Al Habtoor Leighton LLC, said: "The market is probably best described as challenging. The challenges we're facing now, as described above, will remain for the foreseeable future."
Area of growth
However, he said significant opportunities still exist — particularly in Qatar, Saudi Arabia and Iraq — and for those who are able to demonstrate that they can deliver to an international standard, the region can still be an area of growth."
Backed by vast oil-based reserves and government stimulus packages, Deloitte's latest report said that the economic prospects of the GCC region have remained positive despite ongoing political unrest in the wider Middle East.
"The oil and gas exporting countries, such as Saudi Arabia, Qatar and Abu Dhabi, have an additional objective which is the need to diversify their economies away from the traditional petrochemical and hydrocarbon industries.
"This is also driving infrastructure spending in these countries.
"These countries are now looking at how to take advantage of existing strengths to develop upstream industries — and the focus has shifted to construction," Shah said.
Construction contracts alone worth $40 billion were awarded to contractors in the first quarter of 2011, 47 per cent of which were in the energy sector.
"The region certainly is expected to continue to offer a lot of opportunity for contractors," said Cynthia Corby, audit partner Deloitte Middle East and leader of the construction industry for the UAE.
The report indicates that there are vast opportunities across the Middle East, with longer term infrastructure investment plans for the region estimated to be in excess of $1 trillion.
In terms of projects in the pipeline across the Middle East, the majority are social (36 per cent); 29 per cent power-related; 13 per cent in transport and 13 per cent in oil and gas.
Budget value of contacts to be awarded in Saudi Arabia in 2011 onwards is set to increase to $35 billion, as compared to $25 billion in 2006.
The government is undertaking grand investments, with plans nearing $400 billion in five years, demonstrating an increasing trend of projects that will need to be awarded in the coming years ahead. The construction market is therefore expected to be one of the most buoyant in the world.
Qatar holds an eight per cent share of the value of the regional projects. Projects planned to be underway in the future are valued at approximately $230 billion
South Africa - State fiscal watchdog warns on spend plans
The Finance and Fiscal Commission has cast doubt on the effectiveness of infrastructure spending to create jobs and redress poverty unless it is supplemented by other critical policy interventions.
The government and state-owned companies plan to spend about R845bn on infrastructure over the next three years, which they expect will contribute significantly to meeting the government job-creation target of 5-million jobs in 10 years. This spending is also key to the government’s New Growth Path policy and Industrial Policy Action Plan.
The commission, an independent body established by the constitution to make recommendations on fiscal policy and to assess the effect of government policies, urged the adoption of job-creation policies such as giving incentives to companies that create employment, enhancing productivity and promoting the informal sector.
The commission also argued in its 2013-14 submission for the division of revenue, tabled in Parliament on Friday, that the failure of the government, business and trade unions to reach a social compact on job creation needed "urgent redress".
Acting chairman and CEO Bongani Khumalo stressed at a media briefing yesterday that the report was intended to promote innovative initiatives to enhance economic development. The commission noted that "the negligible impact on growth of interventions such as an expansive infrastructure strategy or expanded public expenditures has important implications for fiscal policy".
The commission’s researchers examined several studies on the effect of infrastructure spending on projects such as roads, sanitation, electrification and dams on economies in sub-Saharan Africa. They found that while some were beneficial for poverty reduction, others actually caused poverty.
"At the very least, the finding suggests government interventions that emphasise infrastructure alone will make little impression on employment. Therefore, such interventions are not an adequate basis for introducing new economic sectors or raising the capabilities of existing economic sectors," the report read.
"Rather than replacing ageing infrastructure, new infrastructure should be used as a catalyst and long-term solution for economic development and job creation.
"The analysis shows clearly that fiscal policy (infrastructure and current expenditures) alone is not going to solve job-creation problems unless complemented by other interventions.
"New investments are required that allow shifts towards jobs and knowledge-intensive production and provision of government services. In all cases fiscal policy needs to be consistent with long-term fiscal objectives and take into account the limits of direct public-sector employment."
Department of Trade and Industry director-general Nimrod Zalk said the department would not disagree with the commission’s assessment that a wide range of interventions was needed to create jobs.
"Public investment will create important opportunities to either create new industries or generate a step change in production and employment in some existing industries. This includes establishment of an industry to supply components into renewable energy generation as well as to build rail rolling stock, both for the South African market and for export," Mr Zalk said yesterday
Investment Solutions chief strategist Chris Hart said yesterday infrastructure spending was "an important component, but not a necessary component" of job creation.
Such spending would not automatically produce spinoffs for economic growth and job creation as commonly assumed. Many examples show ed it had not generated growth, notably in Europe. The critical issue was decent economic leveraging off the spending, Mr Hart said.
"Infrastructure is only one aspect, but the government has pinned its entire strategy on infrastructure and virtually very little else. This one can see by the way they allocate resources," he said.
The commission recommended that companies that excelled in job creation should be rewarded and the Public Investment Corporation should direct its investments into such JSE-listed companies.
ensorl@bdfm.co.za
South Africa set for massive infrastructure drive
South Africa will spend billions of rands on new infrastructure in the coming years, focusing on rail and road projects, economic links in five regions in the country, new universities and refurbished hospitals, President Jacob Zuma said in his 2012 State of the Nation address.
Addressing Parliament in Cape Town on Thursday evening, Zuma announced that he would convene a presidential infrastructure summit to discuss the implementation of the government's plan with potential investors and social partners.
The government's massive infrastructure plan would be driven and overseen by the Presidential Infrastructure Coordinating Commission which was set up in September last year.
The plan brings together ministers, premiers and mayors of the country's metropolitan areas under the leadership of Zuma and Deputy President Kgalema Motlanthe.
"We will use the project management expertise gained during the 2010 Fifa Soccer World Cup to make this project a success," he said, adding that the commission had identified and developed projects from state-owned enterprises as well as government departments.
"These have been clustered, sequenced and prioritised into a pipeline of strategic integrated projects," he said.
Projects in five regions
The projects in the five regions are:
- The development and integration of rail, road and water infrastructure in the Waterberg and Steelpoort in Limpopo.
- Improving the movement of goods and economic integration through a Durban-Free State-Gauteng logistics and industrial corridor.
- A new south-eastern node that will improve the industrial and agricultural development and export capacity of the Eastern Cape region, and links with the Northern Cape and KwaZulu-Natal.
- The expansion in the North West of the roll-out of water, road, rail and electricity infrastructure.
- The improvement of infrastructure, including rail, on the West Coast.
In Limpopo, Zuma said the improved infrastructure would help unlock the enormous mineral belt of coal, platinum, palladium, chrome and other minerals, in order to facilitate increased mining as well as stepped-up beneficiation of minerals.
"Using the developments in Limpopo as a base, we will expand rail transport in Mpumalanga, connecting coalfields to power stations," Zuma said.
"This will enable us to decisively shift from road to rail in the transportation of coal, which has caused a deterioration of the roads in Mpumalanga."
He said the eastern parts of the North West would also benefit from the greater focus on infrastructure connected to mining and mineral beneficiation.
Zuma said the development of the Durban-Free State-Gauteng logistics and industrial corridor would help connect the major economic centres of Gauteng and Durban and Pinetown, and connect these centres with improved export capacity through our sea-ports.
"In this regard, I am pleased to announce the Market Demand Strategy of Transnet, which entails an investment, over the next seven years, of R300-billion rand in capital projects," said Zuma, adding that R200-billion had been allocated to rail projects and the majority of the balance, to projects in the ports.
He said among the list of planned projects, the expansion of the iron ore export channel from 60-million tons per annum to 82-million tons per annum.
"It also includes various improvements to the Durban-Gauteng Rail corridor and the phased development of a new 16-million tons per annum manganese export channel through the Port of Ngqura in Nelson Mandela Bay," he said.
He said the Market Demand Strategy would result in the creation of more jobs in the SA economy, as well as increased localisation and black economic empowerment (BEE).
"It will also position South Africa as a regional trans-shipment hub for Sub-Saharan Africa and deliver on Nepad's regional integration agenda," he said.
He added that the government had also been looking at reducing port charges, as part of reducing the costs of doing business.
"The issue of high port charges was one of those raised sharply by the automotive sector in Port Elizabeth and Uitenhage during my performance monitoring visit to the sector last year," he said.
"In this regard, I am pleased to announce that the Port Regulator and Transnet have agreed to an arrangement which will result in exporters of manufactured goods, receiving a significant decrease in port charges, during the coming year, equal to about R1-billion in total.
Zuma said the development of the south-eastern node in industrial and agricultural development and export capacity of the Eastern Cape region and expand the province's economic and logistics linkages with the Northern Cape and KwaZulu-Natal.
"In the former Transkei part of the Eastern Cape, we are committed to building a dam using the Umzimvubu River as the source, in order to expand agricultural production," he said.
Added to this, he said the Mthatha revitalisation project, which is a presidential special project, is proceeding very well.
"Work is at an advanced stage to improve water, sanitation, electricity, roads, human settlements, airport development and institutional and governance issues."
Zuma said the expansion infrastructure in the North West would include the upgrading of 10 priority roads.
On the West Coast, the government would focus on expanding the iron-ore rail line between Sishen in Northern Cape and Saldanha Bay in the Western Cape, which he added would create large numbers of jobs in both provinces.
"The iron-ore capacity on the transport-side will increase capacity to 100-million tons per annum," he said, adding that this would help to feed the developing world's demand for iron ore.
Hospitals, universities
The government had also identified infrastructure projects which would help to lay the basis for the National Health Insurance system such as the refurbishment of hospitals and nurses' homes.
Zuma said R300-million had been allocated for the preparatory work towards building new universities in Mpumalanga and Northern Cape.
Another infrastructure project with great potential is South Africa's bid to host the Square Kilometre Array radio telescope in partnership with eight other African countries.
Zuma urged South Africans to support the country's bid, with the winning bid expected to be announced next month.
The country would also champion the North-South Road and Rail Corridor on the continent, which is part of the African Unions's Nepad Presidential Infrastructure Championing initiative.
"The massive investment in infrastructure must leave more than just power stations, rail-lines, dams and roads. It must industrialise the country, generate skills and boost much needed job creation," said Zuma.
Zuma said water infrastructure is also being attended to, with five new water augmentation schemes are on schedule.
Zuma listed these as the Olifants River Water Resource in Steelpoort in Limpopo Province, the Vaal River Eastern Sub-System in Secunda in Mpumalanga, Komati Water Augmentation Scheme in Nkangala in Mpumalanga, the raising of Hazelmere dam in KwaZulu-Natal and the Clan William Dam in Clan William in the Western Cape.
Added to this nine out of the country's 25 dams have been rehabilitated.
He said to boost energy capacity, the government would continue searching for renewable energy sources, especially solar electricity and biofuels as we implement the Green Economy Accord with economic stakeholders.
The government wants to install one million solar geysers by the 2014 financial year, and had so far installed more than 220 000 solar geysers nationwide, said Zuma.
"We have outlined a busy infrastructure implementation programme for now until 2014 and beyond," Zuma said.
"I would like to appeal to all our people to join hands as they always do, as we deal decisively with the triple challenges of unemployment, poverty and inequality. Nobody will do this for us, it is in our hands. And we are all equal to the task."
Funding
Speaking on the night, the leader of the opposition Lindiwe Mazibuko, although welcoming the announcement by Zuma of the infrastructure projects, said it was not clear from where the funding for the infrastructure projects outlined by Zuma would be sourced.
"In fact a quick look actually shows that we are about R300 billion short, so I'm curious to see how that will be dealt with in the budget," said Mazibuko.
Her concern on where the funding would come from for the infrastructure projects was echoed by Cope leader Mosiuoa Lekota, who added that corruption in the procurement system also risked raising the cost of these projects.
Minister of Finance Pravin Gordhan announced that South Africa has the money to spend on the infrastructure projects in the five regions outlined by President Jacob Zuma. "We already know that for the past five or six years that for every three-year period we have had something around R800 billion to R900 billion being spent, largely by our state-owned enterprises (on infrastructure).
"So we've demonstrated the ability to bring resources in which is what will be required to get these projects going," Gordhan told BuaNews, stressing that these key infrastructure projects would be developed over a number of years.
Among other things, the projects would help develop better economic links between outlying areas and the main urban centre and to make it easier for companies to export and do business locally, he said.
"If we get this right it means that many areas of the country will have a heightened level of economic opportunity and there will be all sorts of job opportunities and there will be opportunities for people to manufacture the things that go into the investment in the infrastructure development that has been outlined," he said.
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