Middle East Business News Review – 8 August

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Photo – Vahid Salemi/AP

Middle East Business News Review – A look at today’s important financial news and business updates from the Middle East and North Africa

GCC to emerge as solar energy hub in near future

Solar energy will dominate the upcoming renewable energy development in the Gulf region, a newly published research report said on Wednesday.

The Gulf Cooperation Council states, largest producers of oil and gas in the world, have started to focus on diversifying power generation sources and will be including renewable sources of energy in their energy basket, the study said. It added that increasing pressure on the natural fossil fuel resources due to the growing population and economy as one of the major reasons for the policy shift.

Saudi Arabia, UAE, Kuwait and Oman have all targeted 10% of power production from renewable sources of energy by 2020 and are rapidly moving towards realising their targets, the report entitled ”GCC Renewable Energy Sector Analysis” by KuicK Research revealed.

Middle East investment up despite unrest

Total foreign and domestic investments in Arab states registered an increase last year despite widespread unrest, the Kuwait-based Arab Investment and Export Credit Guarantee Corp. said on Wednesday.

The investments, both private and government, soared by 1.2% to $496 billion in 2011 from $490 billion in the previous year, the organisation said in a report without providing details on the foreign share.

Algeria, Qatar, Saudi Arabia and the United Arab Emirates accounted for 63% of the investments, or $312.5 billion, said the report which covered 21 of the 22 members of the Arab League.

McDonald’s Middle East region July sales hit by Ramadan

McDonald’s global same-store sales were flat in July as the fast-food chain posted declining sales across all three of its regions. It cited a negative impact from the shift in timing of Ramadan as reason for dip in Middle East sales.

The corporation said it expected global sales at restaurants that have been open at least 13 months to be positive in July, but below the second quarter. Meanwhile, analysts had projected a 2.3% increase, according to Consensus Metrix.

The Asia/Pacific, Middle East and Africa region posted a 1.5% decrease, while analysts’ projected a 1.4% rise. Positive results in Australia were outweighed by ongoing weakness in Japan. Late last month, McDonald’s said it had expected July same-restaurant sales to rise, but not as much as the 3.7% gain reported for the second quarter. Expectations were low ahead of the results.

South Korea to resume Iranian crude imports in Sept – sources

South Korean refiners plan to resume buying crude from Iran in September after ironing out difficulties of a European Union embargo that restricted shipping oil imports, government and refining sources said on Wednesday.

According to industry sources, South Korean refiners, like their Chinese counterparts, have asked Iran to deliver crude on Iranian tankers, placing the responsibility on Iran for insurance, and effectively sidestepping a ban in the EU on insurers from covering Iranian shipments.

South Korea was the first major Asian consumer of Iranian crude to announce a halt in imports in July due to EU and US sanctions that aim to choke Iran’s oil income and curb its nuclear programme. The West accuses Iran of developing weapons, which Tehran denies.

Embattled Syria govt posts ‘promising’ economic figures despite unrest

The Syrian Investment Agency on Wednesday released its sixth annual report on investment in the country, which includes number of projects, their overall costs, and the job opportunities they provide, without giving any details of the losses suffered during the 18-month long uprising.

In a press conference, Director of the Agency Abdelkarim Khalil said the report focuses on the period of the 10th five-year plan which is 2006 to 2011, asked the government to devise a new investment law that is comprehensive and up to the standards of the national regional planning project.

The report covered 182 projects in 2011 with an estimated investment cost of SYP 96,645,000,000 ($1.4bn), with overall 1,196 projects from 2007 to 2011 completed at an estimated cost of SYP 879,474,000,000 ($13.4bn).

UAE banks may reconsider lending to Brits after High Court case

UAE mortgage lenders may be reluctant to lend to British expatriates, with some considering demanding power of attorney so they can foreclose on defaulters’ properties, after an Abu Dhabi bank failed in its attempt to extradite a British woman who had defaulted on her mortgage and absconded to the UK.

The UAE initiated extradition procedures against former UAE resident Amanda Allen, who defaulted on an AED2.38m (US$647,989) mortgage with Abu Dhabi Commercial Bank (ADCB).

Abu Dhabi airport contractors near $1.1bn finance deal – sources

The consortium building Abu Dhabi’s new airport terminal is close to securing a AED4bn (US$1.1bn) financing deal, which will be mainly Sharia-compliant, banking sources said on Wednesday.

Turkey’s TAV Insaat, Dubai’s Arabtec Holding and Athens-based Consolidated Contractors Company were awarded a US$2.9bn contract in June to build a mid-field terminal in the emirate.

Saudi Arabia aiming for 10% share in global petrochemical sector

Saudi Arabia is maintaining its progress in both the oil and nonoil sectors. In fact it is aiming for a 10% global share in petrochemicals, said Said Al-Shaikh, senior vice president and group chief economist at the National Commercial Bank (NCB ) during the release of Saudi Arabia Business Optimism Index (BOI) for Q3, 2012 at the NCB headquarters in Jeddah.

The Kingdom’s petrochemical industry has become a strategic one with large exports and was emerging as the second largest after oil. The BOI survey for the quarter, which is the joint effort of the Dun & Bradstreet South Asia Middle East Ltd. (D&B) and NCB , shows that despite aggravated global risks moderating the strength of optimism slightly, businesses in the Kingdom remain resilient for Q3, 2012.

Saudi Binladin issues $267m Islamic bond

Saudi Binladin Group, the kingdom’s largest construction company, issued a SR1bn ($266.6m) Islamic bond, known as a sukuk, as the firm expands its operations, Clifford Chance said on Wednesday.

The murabaha sukuk was issued by Saudi Binladin Group (SBG) Sukuk Ltd and guaranteed by the full group.

The Jeddah-based firm issued the sukuk, its third since 2010, on July 31. Clifford Chance and Al Jadaan & Partners advised HSBC Saudi Arabia on the issuance of the bond, guaranteed by Saudi Binladin Group, the law firm said in an emailed statement.

$2bn target set for Oman tourism

The Sultanate has not yet converted its tourism sector into a reliable a real industry that can contribute significantly to the Gross Domestic Product, but the value of investments in the sector is expected to touch $2 billion in the next phase, with 50 per cent of the investment projects awarded to Omani government and private enterprises and the other 50 per cent to foreign investors.

Tourism Minister Ahmed bin Nasser al Mahrazi said that an assessment study of 41 tourism projects shows that three of the projects have been operated, 9 are under implementation, 3 began to be set up, 19 not yet started, 5 are cancelled and 2 to be opened during this year. “This means that 65 per cent of the projects have not yet seen the light”, said al Mahrazi. The minister pointed out that the projects were expected to provide 15,000 additional rooms in case they were implemented to be added to the existing 12,000 rooms.

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