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Tuesday, 5 May 2009

GCC to be world's fifth largest economy

The Gulf Cooperation Council (GCC) is on track to be ranked the world’s fifth biggest economy by 2018, a senior government minister said yesterday.

Addressing a session on the second day of the annual Doha Forum on Democracy, Development and Free Trade, Qatar's Minister of Economy and Finance HE Yousef Hussein Kamal said: “I say that the GCC will be the fifth biggest global economy by 2018 because when you take all the six countries and when you have all these resources and with right planning you can do it.”

At the national level, he said Qatar was investing in developing human capital and “leaders of innovation.

TPG highlights buy-out woes

US buyout group TPG has highlighted the tough conditions facing the buy-out industry in a letter to investors disclosing it had considered 140 leveraged buy-out deals in recent months – and agreed to none. The letter, sent last month, described LBO deals as “useful at some times during the cycle but not at other times”. Having agreed to none in the six months to March 31, TPG said it has shifted its focus to investing in debt at a discount.

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'Dubai's $20bn bond will restore market confidence'

The $20 billion (Dh73.4bn) bond issue launched by the Dubai Government in response to the global financial crisis will provide the stimulus needed to restore confidence in the emirate's economy, says a new report.

"This bond sale is a way for Dubai to raise money at a cheap rate and provide the government with the necessary funds to substitute for the liquidity that has dried up globally and meet all upcoming financial obligations," said the study by the Dubai Chamber of Commerce and Industry.

"The bond will give government entities access to funds to meet the commitment to finish all infrastructure project, boost government spending and clear the way for more focus on some of the stimulus programmes.

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Central Bank to address banks on adequacy rules

The Central Bank said yesterday it would consult with the country's 52 banks on its plans to introduce stiffer capital adequacy rules to ensure they have sufficient funds to deal with any financial problem.

After a board meeting, the Central Bank said it would also contact banks to seek their opinion about a proposed law governing dormant accounts, which are usually savings account that show no activity for a specific period of time.

A statement said the board also heard a report by Central Bank Governor Sultan bin Nasser Al Suwaidi on "some prudential ratios which are necessary for banks to avoid major risks during financial crisis".

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UAE nuclear projects worth $41bn contracts

The UAE peaceful nuclear programme will generate contracts worth more than $41 billion (Dh150bn) and the 123 Agreement signed between the UAE and US in early 2009 would create important economic opportunities for US companies involved in the development of nuclear energy.

A report on the economic benefits of US-UAE 123 Agreement said the UAE nuclear programme would generate contracts worth more than $41bn benefiting American companies that could participate as suppliers or as central leaders in consortiums bidding on projects. The contract would also improve bilateral trade and investment relations between the two countries.

"Even though the plants would be located in the UAE, those contracts would create jobs in the US.

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Truth, lies and the ‘club of Pinocchios’

A vexed finance minister in Nigeria once observed that three government departments each had widely varying estimates for how much oil was being produced in the country, a critical flaw for a nation that depends on oil for almost all of its hard currency.

She might have added that all three estimates were wrong, because a good portion of the nation’s output is siphoned off pipelines or tapped from abandoned well heads by smugglers before anyone has had a chance to measure it.

In Venezuela, I remember a well publicised but ultimately unsuccessful lawsuit alleging that the brother of the head of the national oil company had hived away millions of barrels of crude oil in a storage tank on the shores of Lake Maracaibo by tampering with the meters at nearby fields.

Sukuk sales to pick up

Global sales of Islamic bonds, known as sukuk, could reach US$10 billion (Dh36.7bn) in 2009 after picking up in the second half of the year, Standard Chartered said on Monday.

That would mean a return to levels last seen in 2005, when new issuances reached $10.76bn according to Islamic Finance Information Service (IFIS). In the first three months of 2009, new issuances stood at $1.8bn, one third less than in the year-earlier period.

“We expect a pick-up in the next six months based on conversations with our customers,” Afaq Khan, chief executive officer at Standard & Chartered’s Islamic banking unit Saadiq, told reporters.

Bahrain ends sponsor system

Bahrain will implement a new labour law that allows foreign workers to switch jobs without the consent of their employer, Majeed al Alawi, the minister of labour, said yesterday.

The new law, known as Decree 79 for the year 2009 – the first of its kind in the Gulf – was adopted following three years of deliberation and with input from the Bahrain Chamber of Commerce and Industry (BCCI). It will be implemented beginning in early August.

“I am an executive power. I do what the legislature asks me to do and if I do it wrong, then take me to court,” Mr al Alawi told a press conference in Manama yesterday as he announced the start of the three-month countdown till the law goes into effect.

MGM Mirage Earnings Fall 11%

MGM Mirage reported its first-quarter profit dropped 11% from a year earlier, but the casino company said it saw signs of improvement as Las Vegas weekend hotel occupancy and rates stabilize.

The company's profit was lifted by the sale of its Treasure Island casino in Las Vegas to investor Phil Ruffin for $775 million. But it wasn't enough to offset steep declines in spending by business travelers as corporations continue to cancel conventions and meetings. Earnings fell to $105.2 million, or 38 cents a share, from $118.3 million, or 40 cents a share, a year earlier. Results included a gain of 44 cents a share on the Treasure Island sale.

MGM Mirage, controlled by billionaire investor Kirk Kerkorian, has been in turmoil in recent months as it struggles to pay down more than $14 billion in debt while casino revenue continues to decline in a global consumer recession. The company is currently considering selling off additional properties to raise enough cash to meet looming obligations.

Dubai ruling family deny claims in $1.9 bln suit

Lawyers for members of Dubai's ruling family denied Monday all claims made by an Iranian businessman who is seeking $1.9 billion (1.2 billion pounds) in compensation for the alleged seizure of his company.

The Dubai-based claimant, Shahram Abdullah Zadeh, filed the suit in March alleging that his business had been taken over by Sheikh Hasher Maktoum al-Maktoum and his son and daughter, according to case documents obtained by Reuters.

The civil suit is likely to be closely watched in Dubai, home to many Western banks and a regional business hub.

Comment: Saudi detente with US faces tests

On the surface it was a love fest, a day of celebration by an estranged couple who had finally reconciled, and were now happily planning a common future.

One after the other, American politicians and officials lined up at a recent Washington conference to praise the 2002 Saudi Arabian peace initiative on the Arab-Israeli conflict as historic, unique and bold.

William Burns, the US under-secretary of state for political affairs, outlined how the interests of his country and Saudi Arabia largely coincided and described America’s relationship with the kingdom, and the rest of the Gulf, as “unshakeable”.

Yemen hopes gas will fuel recovery

It is the project many said could never be built: a $4bn gas facility on the southern coast of the Arabian Peninsula, in one of the world’s poorest and most unsettled countries.

Yet this summer the developers of Yemen LNG expect to launch their first cargo of liquefied natural gas into the Gulf of Aden, on the first leg of a 9,000km voyage to South Korea. It will be the climax of a risky, and at times implausible venture that has been 14 years in the making.

“We are extremely pleased to have got this far,” says Joel Fort, general manager of Yemen LNG.

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UAE aims to ease plight of foreign workers

As the United Arab Emirates launched its first labour and human rights conference in co-operation with the United Nations, Saqr Ghobash, the minister of labour, last week announced a raft of measures that aim to tighten compliance with existing regulations.

“The UAE has the political will to meet its requirements,” he said. “We do not imagine we are perfect – we know there are challenges but we are tackling them in terms of legislation and execution of those laws.”

The treatment of workers during the petrodollar and credit-fuelled construction boom has become a growing irritant for Dubai. Campaigners say the city is a magnet for the trafficking of construction, domestic and sex workers.