Monday, May 12, 2008

Tsunami To Hit Gulf Economies?

Sheikh Mohamed Bin Issa Al Jaber has created one of the world’s biggest hotel empires. But the Saudi tycoon isn’t keen on doing business in the Middle East.

Sheikh Mohamed Bin Issa Al Jaber is not one to mince his words. He talks about being “scared” of the future of Gulf economies, fearing a “tsunami” of inflation, and “10 years of decline” for the property market in the region.

And when he speaks, most people tend to listen: the sheikh’s massive MBI Group spans a hotel empire, food company, oil and gas division and now even an airline, which have helped bring in revenues of US$2bn and profits of US$267m from his hotels division alone in 2007.
BENEFACTOR: Dar Al-Hekmah College in Jeddah is one of the institutions that Sheikh Al Jaber supports.

BENEFACTOR: Dar Al-Hekmah College in Jeddah is one of the institutions that Sheikh Al Jaber supports.

It has contributed to a US$6bn personal fortune, making him one of the world’s 200 richest individuals, and Number 11 in the Arabian Business list of richest Arabs.

But unlike most of his Arab colleagues on the list, he is outspoken in his assessment of what he calls the “hype” that surrounds the Gulf-wide real estate-fuelled economic boom that is transforming city skylines from Dubai to Doha.

“Hype” is a word he uses a lot during our two-hour conversation at his luxury offices, minutes away from the Place de la Concorde in central Paris.

It is what concerns Al Jaber most these days. Although his presence in Europe has made him a regular guest at state functions, Al Jaber is noticeable by his absence in the Middle East.

He recalls last being in Dubai “some years back” and apart from AJWA Group and a few real estate projects, has few operations in the Gulf. Four of his 10 offices are in Europe. And it is obvious why.

“There is too much hype going on. I am very scared about the market in the Middle East. Three years ago I was giving warnings of the hype of the stock market and people had to find the truth for themselves.

When it came it was difficult. And still the market is facing risk. But now the other problem is the real estate market. People are in denial because of their own self interest.

“It makes people sometimes make the wrong judgments. They don’t want to think of any corrections that might happen,” he says.

Al Jaber is quick to point to the mega projects across the Middle East, and one by one takes me through them: their cost, their current value, and the likely demand for them.

Throw into the mix inflation of over 10% in many Gulf states, and by Al Jaber’s calculations, very dark days lie ahead for regional economies.

“If we think that the inflation we are experiencing today is the maximum, then we need to think again because we are going to experience a tsunami in the next 12 months. The problem is the lack of transparency and people always want to see things in the best way. People don’t want to predict this. But they should think about the worst case in order to enable them to plan better,” he says.

Just who are the “people” he is talking about? “Governments of course and business people. Greed is fuelling the market — greed on the business side. All these people had had a shock three years ago [in the markets] but they are still living in denial,” Al Jaber says.

Recent history suggests he is wrong. In most Gulf capitals, property prices continue to rise and people still queue up in the early hours of the morning whenever big developers in Dubai announce new units for sale.

“Yes, but there is an end coming to the rise in property prices. They are now trying to stop increases in rent. At the same time they want to keep the growth they have. The two cannot work against each other. If the growth they are predicting comes, then inflation will grow in parallel. You cannot put a ceiling on prices.

“The problem they are facing is inflation and it is greater than what people can cope with,” he says.
So just how bad does Al Jaber predict things will get? Pretty bad.

“Either people will leave the cities — in which case the entire demand will crash. Or the price of developments has to be corrected. In 12 months from now, maybe before — and I hope this will not happen — but if the correction begins it will lead to 10 bad years,” he says.

“We are in grey areas. Yes there are huge opportunities. There are countries with huge populations, but the way things are going, this is going to hurt everybody. The hype has crossed the whole region.”

The chic Sheikh

MBI International also owns a hotel empire including the Tremoille Hotel in Paris.

There is no doubt Al Jaber is convinced of his own theories. I ask him if he would allow his own son to buy property in the region. He replies with a sharp “no!”. What about the Gulf stock markets? “No! No!”

“People came to the stock market under the impression that they can make quick profits and that is the mentality. But at the same time some companies just started selling the market big news which never actually materialised.

“There is a serious lack of transparency and accountability. The only solution for the region is to apply taxation. If you do not have a taxation law you cannot have accountability. That would correct the books,” he says.

If Al Jaber is predicting a doomsday scenario, then rather smartly, he is making sure he is nowhere nearby if and when it happens, as he stresses he has no plans to extend his empire in the Middle East.

“I need to do business where I can sue the government. That is my basic principle. Maybe in the past I would have but now I have grown to different principles,” he says.

Al Jaber started his empire by acquiring four hotels in France in 1988, and quickly extended his collection to 36 in France and 75 worldwide.

In addition to his hospitality activities, Al Jaber runs the AJWA Group for Food Industries based in Saudi Arabia and Egypt, a real estate company called Jadawel International and a rice milling company in Egypt. It is clear that Al Jaber has his fingers in a lot of pies.

He spends 80% of his time in Europe overseeing his group — based out of a lush Parisian mansion, and he is looking for further expansion in the US and Europe.

“You could say things are going well right now,” he says with a hint of a smile.

“I am self-made. I have been doing this job for exactly 30 years. I move slowly. I don’t move without a reason, there has to be synergy. At MBI, we are not a short-term investor and we prefer the mature markets rather than hype,” he says.

“This is all the result of careful planning,” he says, adding: “It’s been steady growth in the last few years. Some of our investments are maturing and revenues and profits have increased. The other side is faster growth on assets.

“It was always planned that we would only enter the market when the opportunities were there. In 2005/6 we did not make much in acquisitions then in late 2007 we took the opportunities in the real estate side.”

Most recently MBI International has taken a controlling stake in Austrian Airlines. “I have to understand every part of the business.

“I learn the business first. I studied Austrian Airlines carefully and I saw there are opportunities that will come after I take it, and ways that I can grow it in Eastern Europe and Middle East,” he says.

The whole MBI International Group “is likely” to list in Europe next year or early 2010, Al Jaber says, with pre-listing activities such as convertible bonds being issued likely to get underway this year.

These days however, it is far more than just business Al Jaber is involved in. Al Jaber is well-known for his philanthropy in the Middle East.

He has funded scholarship programmes at some of the world’s best-known educational institutions and has also been a supporter of Arab-Israeli reconciliation, including through the Olive Tree Educational Trust at London University.

“I have a strong belief that nobody can be forced into peace unless they reconcile their problems.

“No power on earth can force people to do that,” he says, adding: “People have to sit, talk, understand and respect each other and that’s what they have been doing for five years.”

So does he believe that there will be peace in his lifetime? “I don’t know how long I will live,” he deadpans without elaborating further.

Al Jazeera International is losing the plot

The news of the release of Al Jazeera cameraman, Sudanese national Sami Al Haj, from Guantanamo after six years in American detention offset a negative coverage of Al Jazeera in Western media - especially highlighting tension in its English-language channel.

Release of Al Haj was good news to all journalists and rights groups that campaigned to free him and Al Jazeera opponents were reluctant to use the event to repeat American and Israeli allegations accusing the Qatar-based media outlet of being a mouthpiece for "terrorists".

Good news then, yet it coincided with a case in front of a London industrial tribunal in which a British ex-employee of Al Jazeera claimed unfair dismissal and sought hefty compensation for alleged discrimination.

The claimant's husband, Steve Clark, also resigned recently from his position as head of news at Al Jazeera International. He was not the only senior journalist at the channel to leave recently in a sign of a growing tension there, and that prompted negative coverage in American and British media about Al Jazeera.

Press reports and comments meant to say that the launch of an English satellite channel in November 2006 exposed latent problems; as if employing British and American journalists caused a conflict of cultures and interests.

That does not look to be the true story at all, though the English channel really did not have the impact anticipated based on the experience of the main Arabic channel launched 12 years ago.

After long delays, postponements and over-budget the English channel from Al Jazeera was expected to be the main media outlet providing news service in English from an Arab perspective and satisfying non-Arabic speaking customers in different parts of the world who used to watch only pictures on the main Arabic channel during Afghanistan and Iraq wars.

Unfortunately, this did not happen quite as expected and in some instances the new outlet is not much different from the BBC World satellite channel and even less than CNN and similar international news stations.

Editorial line

The idea behind Al Jazeera International is a great one, but it seems that putting it into practice was not that right. Watching it, you cannot see why you tune to it except for it is called Al Jazeera while content and editorial line is not the Al Jazeera we know.

It seems now that internal tensions are a bye-product of a blame-game between the Qatari owners and the expatriate management of the channel.

Whether the owners and the board of Al Jazeera network failed to put a concrete mission statement and clear goals to the foreign executives they hired, or those executive were not up to the job and did everything their way - which led to current situation - is an internal issue for Al Jazeera.

What concerns the audience is the output and getting what they expect from the renowned Arab media organisation.

Problems with Al Jazeera International should not mean that the idea of having an Arab media outlet in English to tell the world how we see it is not workable.

And these problems should be put into context, as it is consistent with the main Arabic channel of Al Jazeera losing some of its esteem already. In the last couple of years, Al Jazeera faced many challenges with its reaction to them reflected in its output.

First, it is no longer alone as the news only channel in the Arab world. Second, regional and international political shifts affected its editorial line - worth noting that Arab media is heavily politicised, with editorial and political intermingling a lot.

More than a decade ago, when first launched as the only free and much independent news channel in the region, Al Jazeera attracted tens of millions viewers.

Criticism from the Americans, the Israelis and Arab governments bestowed more credibility on the channel. Few years ago, senior officials in Washington, London, and Cairo or elsewhere were keen to appear on Al Jazeera to express their views and positions.

It is no longer the case now. In a drive to adapt to pressures and political shifts in the region, the channel seems to be diluting its line and bowing to accusations of populism and less professionalism.

Regrettably, its response is costing it the interest of viewers and not making up for the loss by getting those dedicated viewers of LBC or Dubai TV.

Dr Ahmad Mustafa is a London-based Arab writer.

Price of privilege

Who wants to live forever?" goes the song. The human psyche has an amazing knack for convincing us that once we accumulate power, we will live forever.

The strange thing is that if we put that theory to the test, we will find that it fails miserably to fulfil its promise. But we continue to pursue this idea even when we know that the road it leads us down takes us through hell and never leads to heaven.

We look at people with privilege as lucky or happy because of our perception that they must be powerful. Powerful enough to get things done, or have things done for them. We envy them and get jealous when we think why them and not us.

Yet when was the last time we truly looked at the lives of the rich and famous to see what kind of a life they lead? Are they genuinely happy or are the trappings of glamour and a lavish life just a facade to a rather unfulfilled life full of pain and anguish?

The reality is usually somewhere in between. So what exactly are we jealous of or envious about?

The truth is that our envy stems from our perceptions rather than the reality (though there are those that say that perception is reality).

Take for example any rock star or football player's life. When we see the obnoxious amount of money they spend on trinkets and add to that the times these people have been taken for fools by others, you soon see that it is their human vulnerabilities that stand out.

They start to question whether people like them for themselves or because of their money and power. They get anxious and become easily agitated when things don't go their way. Yet they pursue this lifestyle despite not knowing where it will eventually lead them.

Let's talk about the average Joe who becomes, by some stroke of luck, rich and famous. A constant with almost all people who have accumulated a significant amount of wealth is that they need to ensure that everyone around them knows it.

Throughout history we can see examples of the wealthy flaunting their good fortune. In the 17th and 18th centuries, European merchants who amassed great wealth would go out of his or her way to buy a title: In their minds that was the title of accomplishment that they needed to prove that were indeed the cream of society.

Their wealth was not enough if they had no title to go with it.

This scene is being played out again in our time and here in the Gulf. Those who have made significant financial gains in the last few years are going out of their way to be seen as part of the elite clique.

A perfect example is the spending of millions of dirhams on so-called exclusive license plate numbers that appeal only to the vanity of the buyer.

Worse still are the sons and daughters of the merchant families who feel that they too must throw money about to get respect of their peers, rather than earn it through intelligent hard work and contributing something positive to the world.

How many times have we seen people who have accomplished nothing being lauded by the press just for throwing money at lifeless objects?

Once again, need I mention how much money has been spent on license plates just so that people can show how rich they are? These same people say it is for charity yet our religion specifically forbids such acts because they smack of hypocrisy.

If charity was their aim, they could have just as easily given away the money to their charity of choice anonymously. But they choose to give away money publicly, not because they are generous, either because they want society to talk about them or to ensure someone more important pays them some attention.

We have an Arabic saying that advises, "be different and you will be noticed."

So the next time you see a rich, powerful person don't be jealous or envious. Because while you can pop to the store, he cannot, believing himself to be above common acts or irrationally fearful of his life.

He is a prisoner of his social position. That is the price of privilege.

Mishal Kanoo is the deputy chairman of Kanoo Group.

Khairy's debate on royal address riles opposition

Fauwaz Abdul Aziz | May 12, 08 8:56pm
Khairy Jamaluddin's (BN-Rembau) maiden speech while debating the royal address lived up to expectations - that it would turn riotous - as all hell broke loose in the house today after he let fly a litany of offending remarks about the Pakatan Rakyat coalition.

He started civilly enough by talking of matters of common agreement such as the tragedy in Burma following the cyclone, the planned restructuring of the Anti-Corruption Agency and the proposed commission for the appointment and promotion of judges.

Even when he touched the Malaysian Commission on Anti-Corruption and plans to enact legislation to protect whistleblowers, the only interjection was from Dr Siti Mariah Mahmud (PAS-Kota Raja), who remarked that there were no such plans to enact the latter.

He (photo: right) also proposed several measures to reduce time spent on government procurement processes and to increase their transparency, as well as recommendations to ensure that government subsidies and other funds reach the ‘strategic' sectors and the poorer sections of the population.

Things started picking up, however, the moment he turned to the issue of rising oil prices.

Criticising PKR de facto leader Anwar Ibrahim for citing his own track eight-year record as finance minister to prove that oil prices can be kept low, Khairy said Anwar had sought to "fool" the people by comparing his times with the current global economic situation.

Crude oil during Anwar's time as finance minister cost between only US$12 and US$26 per barrel, while current oil prices have exceeded US$120 per barrel, Khairy noted.

"What was so difficult during his time? World oil prices were very low. Don't thump your chests (out of pride) while fooling the people," he said.

Saifuddin Nasution Ismail (PKR-Machang), at this point, stood up to seek clarification, but was turned down by Khairy: "Sit down. We can debate on this later."

About ten minutes later into his speech, Karpal Singh (DAP-Bukit Gelugor) also interjected - by asking whether Khairy should be allowed to read out his speech - but was similarly, albeit cordially, turned down.

Khairy's politeness was absent by the time Nga Kor Ming (DAP-Taiping) got up to object: "Don't you understand this language? Sit down," said Khairy.

Turning the heat on

It was when Khairy turned to the last two pages of his speech, which were dedicated to his criticisms of Pakatan, when the heat in the Dewan was turned up.

"They accuse BN leaders as being arrogant and elitist, that BN should look itself in the mirror. But after only two months as Yang Berhormat, who are the ones so proud and arrogant in this house... as to predict and pronounce that they will take over Putrajaya in a matter of months?

"Who is actually betraying principles of democracy by offering BN MPs to jump parties, by seeking to form government through the back door? Who are the ones not looking themselves in the mirror?" he asked.

At this point, several Pakatan MPs were already standing up and voiced their object aloud without waiting to be given permission to speak.

Ignoring them still, Khairy went on talking of the tensions between PAS and DAP over the issue of Islamic state. Taking a swipe at Pakatan Rakyat by writing it off as only a ‘public relations' exercise, Khairy said on matters of fundamentals there was no agreement.

PAS projects itself as a strong Islamic party, but appears to be only a "toothless lion", fearful of its own partner, said Khairy.

"My question is, does PAS agree with member of parliament from Ipoh Timor (Lim Kit Siang) who's calling for the social contract to be reviewed and to deny any differences between bumiputeras and non-bumiputeras, between Muslims and non-Muslims?

"Will they leave (DAP to make) the call without answering it? Just let it blow pass with the wind? Like talking to a wall? This is the same silence that has met Bukit Gelugor (Karpal) upon his insult of the institution of the Malay Rulers in this August house," said Khairy.

By this time, all hell had broken loose. While other Pakatan MPs were shouting at Khairy, Karpal raised a point of order and called for action against Khairy for "misleading the house." His objection was turned down by the deputy speaker.

Continuing on with his speech amidst the uproar on the side of the opposition parties - and BN backbenchers returning the favour and cheering Khairy on - the latter riled them up even further by deriding their respective state governments.

"The Islamic state in Kelantan and Kedah; Malaysian Malaysia in Penang; the puppet government in Perak; and the pork project in Selangor. While each is sleeping on the same bed, on the same mattress, on the same pillow, each one of them dreams of different things," said Khairy.

He also reserved a particularly offensive label for the PKR in Selangor when he referred to the state government's pig-breeding project by using the same abbreviation and labeling it as ‘Project Khinzir Raksasa' P-K-R (giant pork project).

No semblance of decorum

Ignoring Zulkifli Nordin (PKR-Kulim Bandar Baru) who called for a retraction, Khairy went on reading his speech even as the house lost all semblance of decorum.

"Don't be afraid Rembau!" shouted Zulkifli (photo). Zulkifli was unable, however, to elicit a reaction from Khairy - who had proceeded to talk of Pakatan Rakyat's wild dreams of "flying carpets and turbans", "flying rockets" and "flying pigs".

Mahfuz Omar (PAS-Pokok Sena) said: "If Rembau is going to read his speech without allowing (for us to get) clarifications, he might as well just read his speech in his own house!"

It was when Zulkifli resorted to the same tactic used by Khairy and shouted out ‘Babi Negeri!' (Pig of the country) - however Khairy and other BN backbenchers shouted and demanded a retraction.

In the end, the uproar that overwhelmed the house meant Khairy had to wind up before completing his speech, which he did by referring to Dr Mohd Hatta bin Md Ramli (PAS-Kuala Krai), who had previously cited a famous adage on politics.

"If Kuala Krai said ‘absolute power corrupts and absolute power corrupts absolutely, the act of PR proves that ‘even a little power corrupts very quickly!" said Khairy.

If Women Were To Rule The World...

Hillary Clinton is still in the running for USA presidency even though she may not be the Democrat candidate after all. If she ever makes it to the White House, it will be a historical moment.

USA is the most powerful country on planet earth, well, even as proxy to the Israel and with a woman as its president, USA may have different styles of administration. Her husband, the former president will be the first husband....well, not sure what to call Bill.

What about DS Dr. Azizah? Will she be the next PM of Malaysia? Same situation for DSAI, first husband....nothing is impossible!

In today's Gulf News, there is a good article.

What would it be like if women ruled the world?
Over the past 10 days, the question has been put by newspapers to all sorts of people.

The question was prompted by the extraordinary photo of Jose Luis Rodriguez Zapatero's new Cabinet in Spain, which showed the prime minister surrounded by nine women.

They were not just any old women, but glamorous, pregnant, long-haired, elegant, proper women. So in a Spanish-style brave new world entirely run by pregnant women in floaty tops inspecting the troops in Afghanistan, what would it really be like?

We all think we know the answer to this question. But in truth we don't have the foggiest idea what life would be like if women ran the show. So far we have only isolated, untypical examples and no control experiments.

No big companies are entirely run by women. Some charities are entirely run by women but, then, the sort of women who go into charities aren't representative.

The only other professions that are predominantly female - hairdressing and nursing - are almost as hierarchical as the army, but they aren't representative either.

Individual examples seem to knock the idea of the caring, sharing team player on the head. Think Boudicca, Elizabeth I, Margaret Thatcher, Carly Fiorina. But they are four women, and four women out of a global sample of many billions are not statistically significant.

An article in the spring issue of London Business School's journal argues that there is little evidence to support our favourite female stereotypes. For a start, it says 91 per cent of women don't particularly like pink - a fact that should be pointed out to Silvio Berlusconi, who complained that the Spanish Cabinet was "too pink".

Even the stereotype that women managers tend to be interested in childcare and flexible working turns out to be incorrect.

Fewer than half of women team leaders in the UK have children, whereas 96 per cent of male team leaders do. Stereotypes concerning differences in ability also turn out to be unfounded.

There are some differences in spatial awareness, but the article says these can be offset by sitting a woman down at a computer for a 10-hour stint playing computer games.

The only difference that the author, Elisabeth Kelan, is prepared to countenance is the way women explain their success. If you talk to a man and a woman doing identical jobs, the woman is likely to talk about luck and coincidence. The man will congratulate himself on his skill.

Does this mean a world run by women might be nicer? On the contrary: everyone would be endlessly having to shore up each other's flagging confidence and say that no, your back does not look big in that. There would be much anti-boasting, with everyone competing to run herself down. One might quickly feel nostalgic for the vain strutting of the male leaders.

If women were in charge, they would probably snap out of the hopeless-me act. But there is an even more tiresome act that I don't think women can snap out of. And that is complexity.

Men are emotionally transparent and easy to please in fairly reliable ways. Women are not. My guess is that the main difference if women were in charge is that office politics would be more subtle, and far more lethal.

Apart from this, the only difference I will admit is that the small talk at business lunches might indeed be more botox than baseball.


(Not sure what had happened to blogspot as some features went missing bold the words, font sizes and upload photos)

I received an SMS from KL just now from a Bosnian friend who is a top gun here in the UAE,

I am attending Halal Forum in KL this morning and I am shocked to see orthodox Serb Dr CEDOMIR NESTOROVIC (though 'from' Paris) chairing first session on SHARIAH and HALAL!!??
Total ignorance and insensitiveness of organizer!

Who is Dr Cedomir Nestorovic?

I googled and did not find any other information except he is a professor at ESSEC Business School.