Category: Finance

Kuwait Eyes Taxing Expatriates’ Remittances, Privatizing Hospitals, Schools

The government is planning to impose taxes on expats’ remittances and companies, and privatize healthcare and education.

According to informed government sources, a special ministerial committee has already prepared a package of economic and financial reform legislations to be presented by the new Cabinet and referred to the new parliament in mid-December.

The sources explained that the government aims to start executing its economic reform plan early and that it expects fierce confrontation in this regard with the new parliament. But it insists on pushing ahead with economic reform as the most important topic on the government’s agenda, along with security and the GCC security pact.

The sources stressed that the government believes that privatizing education and healthcare is a must, while the opposition considers this as unconstitutional. The sources also emphasized that the health sector’s privatization is inevitable and that hospital management would be offered to international specialized companies, starting with Jaber Hospital. The sources added that school privatization would experimentally start with one school per educational area. 

Moreover, the sources said the government will also propose cancelling the current form of subsidies and direct them only to those with limited income. ‘The agenda also includes imposing a 10 percent tax on companies and a 5 percent tax on expats’ money transfers,’ the sources concluded.

Separately, the administrative court yesterday rejected a petition claiming that the formation of the election committee was illegal and urged the court to abolish it. The petition was filed by lawyer Hani Hussein and former MP Abdulhameed Dashti, both of whom were disqualified by the election committee along with 45 other candidates. The ruling means that the committee, formed by the interior minister of judges, is legal and its decisions of barring and accepting election candidates are in line with the law. 

Hussein however said that this ruling is not the ‘big surprise’ verdict that could delay the Assembly elections. Hussein reiterated on his Twitter account that yesterday’s ruling is not related with the other case that will be heard on Sunday, but he declined to reveal the nature of that case. The election committee’s decisions to bar Hussein and Dashti have been upheld by the administrative and appeals courts and are widely expected to be supported by the court of cassation, whose rulings are final. Dashti’s registration had been rejected by another court because he failed to submit his nomination papers in person because he has been outside the country for the past several months claiming he was undergoing medical treatment.

In another development, leading opposition figures contesting the election yesterday urged voters not to vote to any member of the dissolved Assembly, because they completely surrendered to the government against the interests of the Kuwaiti people. ‘We hope that the reformist MPs will be the majority in the next Assembly’ The Kuwaiti people will emerge victorious in the election,’ former Islamist opposition MP Bader Al-Dahoum said at the election rally of Islamist candidate and former MP Jamaan Al-Harbash.

Speaking at the same rally, former opposition MP Shuaib Al-Muwaizri said the country is facing a very dangerous period. ‘It is a choice between living in a state of masters and slaves or in the state of the rule of law,’ Muwaizri said. Harbash said Nov 26 is a day of rage against what the government and former Assembly members did against the opposition. ‘We are in a bottleneck. I tell them the response is coming and the Kuwaiti people will send you a clear message,’ he said.

‘The former ‘bogus’ MPs will fail. We will change the face of the Assembly and will reclaim the Assembly chamber,’ Harbash vowed amid wild applause from the huge crowd. The former lawmaker did not rule out the possibility of the new Assembly getting dissolved, but he insisted this will not change the opposition’s resolve. He said that since 2006, it has been one election after another.

‘They want you to get frustrated from the election process, but we will not be,’ he said. ‘Today, we are fighting against the funds they are pumping (in the election). Do not vote for any member of the previous Assembly. We have accepted the challenge and on November 26, they will hear the response of the Kuwaiti people,’ Harbash insisted.

Both Harbash and Dahoum said they will vote for Muwaizri as the next speaker if they get elected.  Muwaizri, in addition to former MPs Abdullah Al-Roumi and Ahmad Al-Mulaifi, have said they will contest the speaker’s post against outgoing speaker Marzouq Al-Ghanem, triggering a key battle in the next Assembly.

Average sales prices witness nominal 1% drop;

Rents set to fluctuate further in Q4 while sales prices expected to remain stable;

Silver lining for investors as apartment yields reach 7%, villas stand at 5%

07 November 2016
Rental rates for both apartments and villas in Abu Dhabi have been directly impacted by the current macroeconomic challenges, witnessing declines of up to 3% in Q3, according to the latest research report from leading international property agency, Chestertons MENA.

Continued cost cutting and downsizing in the oil and government sectors has caused increasing economic uncertainty, job cuts and, in many cases, a drop in employment allowance, forcing residents to seek cheaper and smaller options.

Robin Teh, UAE Country Manager/Director Valuations & Advisory UAE, Chestertons MENA, said: ‘Due to the continuing instability in the job market, demand has weakened in the last few months with major demand arising from the middle and low income groups focusing largely on the affordable housing segments of the Emirate. 

‘Further drops in rents are expected, in line with the trend in neighboring Dubai.’

Al Bandar remains one of the most expensive areas to rent in the Emirate at AED185,000 for an average two-bedroom apartment, despite an AED8,000 reduction compared to Q2 2016. While at the opposite end of the scale, similar sized apartments in Al Ghadeer are commanding an average annual rent of AED72,000, down AED3,000 from the previous quarter. 

In terms of the villa market, there was an average drop of 3% across the villa communites covered in the Chestertons report.  Three bedroom apartments in Al Reef, Al Raha Gardens and Khalifa City declined by 3% while similar sized units in Saadiyat Island declined by a marginal 1%.  Five bedroom apartments had th highest drops reaching up to 5% in both Al Reef and Al Raha Gadens.  There was a marginal decline of 1% in the overall residential sales prices, with areas such as Al Ghadeer and Al Reef showing no signs of apartment price depreciation. The average sale price of apartments is AED1,330 per square foot; and AED1,080 per square foot for villas.

Meanwhile, Abu Dhabi still remains an attractive destination for investors, with gross rental yields reaching as high as 8.5% in the apartment sector; and 7% for villas.

Teh said: ‘The capital’s position as a safe haven for investors has been consistent in recent years, offering returns of 5.5% and above. This has remained true throughout 2016 with overall gross rental yields at a constant level to date within the report coverage areas. Al Ghadeer and Al Reef Downtown remain the most attractive locations for investors with yields between 8% and 9%. Villas in Al Reef and Al Raha Gardens provide the highest yields between 6% and 7%.’

The report also stated there were approximately 1,000 units delivered in Abu Dhabi during Q3 and a further 3,000 units are scheduled to enter the market by the end of 2016. Some of the major developments due for completion by 2020 include: The Square ‘ Saadiyat Island, New York University Villas, Mayan Yas Island and The Island Abu Dhabi.

However, Teh cautioned: ‘There is a slowdown in the completion rate of housing supply compared to 2015 due to the current market conditions forcing developers to delay completion dates.’

mydala.com, India’s leading local services marketing platform, has announced expansion plans for the UAE market and is launching operations in Dubai.

Announcing the expansion, Anisha Singh, Founder & CEO, mydala, said, ‘Dubai with its high internet and smartphone penetration is a mature market – shoppers are very savvy when it comes to getting the most bang for their buck. More transactions are happening in the offline world and mydala is a pioneer in enabling online to offline retail for our merchants. Our goal is to help more Emiratis save money on things that they like to do! We are very excited to bring mydala to Dubai and know that Dubai will love us as much as we love Dubai!’

mydala will power deals for a range of categories like restaurants, health and beauty, activities and many more. Some of the brands that will be showcasing their deals on mydala are Cha Cha Chai, Chicking, O2 Spa, Swasthya Ayurveda, Tim Hortons, to name a few. 

In India, mydala has 50 million visitors and 5 million transacting customers monthly and enables over $46 million of retail every month. The company is also the largest mobile commerce platform in the country doing over 6 million transactions per month with 85% of these from mobile platforms. 

Listing underlines Nasdaq Dubai’s stature as world’s largest exchange for Sukuk

Sukuk oversubscribed 3.2 times by regional and international investors

Dubai – Ahmad Saad, Deputy CEO of Sharjah Islamic Bank (SIB), rang the opening bell today to celebrate the listing of a 500 million US dollar Sukuk on Nasdaq Dubai.

The listing adds further momentum to Dubai’s growth as the global capital of the Islamic Economy and underlines Nasdaq Dubai’s stature as the largest exchange in the world for Sukuk listings by value, currently standing at  43.0 billion US dollars.

The bell-ringing took place in the presence of Abdul Wahed Al Fahim, Chairman of Nasdaq Dubai and Hamed Ali, Chief Executive of Nasdaq Dubai; and senior executives of SIB.    

Ahmad Saad, Deputy Chief Executive Officer of SIB, said: ‘Our listing on the region’s international exchange supports our visibility among global and regional investors as well as providing first class regulatory standards. The Sukuk was issued on September 8, 2016 and was oversubscribed by 3.2 times; it follows two earlier Sukuk listings by SIB on Nasdaq Dubai in April 2013 and April 2015, each of 500 million US dollars.’

His Excellency Essa Kazim, Governor of Dubai International Financial Centre, Secretary General of Dubai Islamic Economy Development Centre, and Chairman of Dubai Financial Market said: ‘SIB’s listing demonstrates the continuing growth of Dubai as the global Capital of the Islamic Economy, under the initiative launched in 2013 by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minster, and Ruler of Dubai. This expansion is supported by the UAE’s long tradition of pioneering the development of Islamic finance and the depth of its expertise in the Sharia’a-compliant capital markets sector. ‘ 

Abdul Wahed Al Fahim, Chairman of Nasdaq Dubai, said: ‘SIB’s listing underlines the close and mutually beneficial connections that the exchange enjoys with leading Islamic financial institutions. Nasdaq Dubai is committed to further enhancing its Sukuk listing procedures and framework, to ensure streamlined access to the exchange for issuers.’

Hamed Ali, Chief Executive of Nasdaq Dubai, said: ‘As the leading exchange for Sukuk, Nasdaq Dubai provides an environment that is dedicated to meeting the requirements of issuers and  investors both before and after listing. We will continue to introduce new initiatives to support the sector and look forward to welcoming many more regional and international Sukuk issuances.’

About Nasdaq Dubai
Nasdaq Dubai is the international financial exchange serving the region between Western Europe and East Asia. It welcomes regional as well as global issuers that seek regional and international investment. The exchange currently lists shares, derivatives, Sukuk (Islamic bonds), conventional bonds and Real Estate Investment Trusts (REITS).

The majority shareholder of Nasdaq Dubai is Dubai Financial Market with a two-thirds stake while  Borse Dubai owns one-third of the shares. The regulator of Nasdaq Dubai is the Dubai Financial Services Authority (DFSA). Nasdaq Dubai is located in the Dubai International Financial Centre (DIFC).

Qatar-based Abuissa Holding, one of the leading conglomerates in the Middle East, expanded its operations in Dubai with the opening today of its first restaurant in the Emirate, Divan Patisserie at Dubai Mall. The company manages diversified business interests in segments ranging from arts and photography to high-end retail, distribution and F&B.

Divan Patisserie is a well-known Turkish brand, starting in 1956 with one shop in the Divan Istanbul Hotel and now having grown to more than 200 restaurants throughout Turkey and greater Europe. The new restaurant at Dubai Mall is only the second Divan Patisserie in the Middle East, following an opening in Doha, Qatar in 2015.

Nabil Abu Issa, Vice Chairman, Abuissa Holding, sees great opportunity for growth in Dubai. ‘Our long history in this region is unparalleled, and we manage an incredible portfolio of brands and businesses representing hundreds of industries and companies across three continents. Divan Patisserie is only the first of many retail and restaurant concepts we plan for the UAE,’ he said. 

Other brands within the Abuissa Holding portfolio include high-end fashion brands Brooks Brothers, Elie Saab, MCM, Cole Haan and Aigner. In addition to international brands, the company manages its own lifestyle house brands focusing on jewelry, home furnishings, electronics and fashion.

‘Dubai is the economic engine that fuels strong growth throughout the entire Middle East, said Fawaz Idrissi, CEO Abuissa Holding. ‘As the fashion and retail hub of the Middle East, we see unlimited opportunity to bring the world’s best brands here. Paired with our company’s unique culture and commitment to the communities we serve, we know that our customers and stakeholders will greatly benefit.’

Dubai, UAE — Qatar Navigation (Milaha) Q.P.S.C. recently announced its financial results for the nine months ended September 30, 2016.  

Key financial highlights:

Operating revenues of QR 1.99 billion for the nine months ended September 30, 2016, compared to QR 2.30 billion for the same period in 2015

Operating profit of QR 513 million for the nine months ended September 30, 2016, compared to QR 686 million for the same period in 2015

Net profit of QR 759 million for the nine months ended September 30, 2016, compared to QR 959 million for the same period in 2015

Earnings per share of QR 6.68 for the nine months ended September 30, 2016, compared to QR 8.44 for the same period in 2015

Milaha Maritime & Logistics’ overall revenue declined by 13%.  The Port Services unit continued to be negatively impacted by lower revenues from ancillary services, non-containerized general cargo, and RORO.  In addition, despite growing market share and volumes, the Container Shipping unit was negatively impacted by rate pressure.

Milaha Gas & Petrochem’s revenue grew by 24% as a result of the full period impact of the investment in two LNG carriers made in the second half of 2015.

Milaha Offshore’s revenue declined by 17%.  Weakness in oil prices and the resulting cuts in investments by the oil and gas majors continued to weigh down results in this segment.

Milaha Trading’s revenue dropped by 26% driven by lower heavy equipment sales as compared to the high levels witnessed last year.

Milaha Capital’s revenue declined by 21% with lower dividend income from the first quarter continuing to hamper full segment results. 

‘Due to the weaker macroeconomic conditions and volatility in our core sectors, we continue to operate in a challenging environment. In the face of these difficult times, however, Milaha remains focused on investing for the future and pursuing the best growth opportunities domestically and internationally,’ said H.E. Sheikh Ali bin Jassim Al Thani, Chairman of Milaha’s Board of Directors.

For his part, Mr. Abdulrahman Essa Al-Mannai, Milaha’s President and CEO, said: ‘Shipping is experiencing some of the most difficult conditions we have seen since the financial crisis. Despite these difficulties and the drop in earnings relative to the same period last year, Milaha’s net profit margin remains a healthy 38%.’

UAE – Ajman Chamber of Commerce and Industry has signed a Memorandum of Understanding (MoU) with Coface Emirates Services and National General Insurance Company (NGI) to extend trade credit solutions and risk management services to member companies of the Chamber. 

The agreement, signed by H.E. Abdullah Omar Al Marzouqi, Executive Director of Membership Registration and Transactions Services at Ajman Chamber, and Massimo Falcioni, Chief Executive Officer for Middle East at Coface, aims to support the Chamber members that have existing or are planning to expand into trade business, providing a safer business environment.

Under the terms of the MoU, Coface will be providing business information, updates on payment behaviour, financial analysis, country risk assessments, and sector risk assessments. The agreement is backed by NGI, a fully accredited national insurer, which will offer protection for the trade receivables of companies.  The MoU will allow concerted effort amongst the three entities in organising a number of meetings and workshops providing relevant information that will benefit the member companies in order to achieve export growth.  

H.E. Al Marzouqi, said: ‘The signing of the Memorandum of Understanding reflects the keenness of Ajman Chamber in providing a safe investment and trade environment amongst its members. This is aligned with our objective of forging partnerships with various government and private agencies to improve the quality of services for our members and affiliates, in order to grow their business sustainably.

‘Massimo Falcioni, CEO Middle East Countries at Coface, said: ‘We are very pleased to partner with Ajman Chamber of Commerce and Industry in sustaining the economic and export interests of its member companies. We, at Coface Emirates Services, are glad to extend the full range of our expertise in trade credit management and risk information services. This is reinforced by the detailed country and sector risk assessments based on our vast database on more than 80 million companies and international presence in 100 countries. Company members will definitely be able to leverage on our proficiency through this new partnership and the collaborative activities in the coming months.’

Dr. Abdul Zahra Abdullah Ali, CEO of NGI, added: ‘The Emirate of Ajman has ambitious plans for trade growth and we are honoured to be the chamber’s partner that specialises in providing comprehensive insurance for trade receivables, creating a more protected business environment. We foresee that this association will lead to greater benefits for all stakeholders, including the chamber members.’

Abraaj and Indorama Corporation partnering to create a global fertilizer leader in Africa

Indorama Corporation is one of the world’s fastest growing petrochemical companies 

Lagos, Nigeria, 13 October 2016: The Abraaj Group (‘Abraaj’ or the ‘Group’), a leading investor operating in global growth markets, today announced that it has acquired a minority stake in Indorama Fertilizers B.V. (‘Indorama Fertilizers’), the largest urea fertilizer manufacturer in Sub-Saharan Africa, through its Funds. The stake was purchased from Indorama Holdings B.V. Netherlands, a wholly owned subsidiary of Indorama Corporation (‘Indorama’), one of the world’s fastest growing petrochemical companies with operations in Asia, Africa, Europe and North America.   

Indorama Fertilizers operates a world-class, 1.4 million metric tonnes per annum urea manufacturing facility based in Port Harcourt, Nigeria. The plant has been developed to global environmental, social and construction standards. It plays a key role in supporting the agricultural sector in Nigeria by providing a reliable supply of fertilizers for local farmers, thereby enabling import substitution and supporting the diversification needs of the Nigerian economy. Indorama Fertilizers is also advantageously located to serve neighboring West African countries and key Western hemisphere markets, including North America, South America and Europe.

The fertilizer industry is expected to experience long-term demand growth as increases in populations and incomes drive demand for food. Urea is the most widely used fertilizer globally and continues to grow in market share due to its high nutrient content and ease of handling and storage. Within this context, Indorama Fertilizers is uniquely positioned to become a global fertilizer leader, given its execution capabilities, competitive production costs, and the strength of its management team. Indorama Fertilizers will establish Nigeria’s reputation as a key producer and exporter of fertilizer, channeling foreign exchange into the country, while also enabling Nigeria to meet the significant requirements of the domestic fertilizer market. 

Abraaj, which has been investing in Africa for the past two decades, will use its expertise and networks to support Indorama Fertilizer’s market penetration and future expansion plans, as well as help ensure best-in-class corporate governance.

Commenting on the investment, Arif Naqvi, Founder and Group Chief Executive, The Abraaj Group, said: ‘This is a landmark transaction for Abraaj in Sub-Saharan Africa. We are privileged to be partnering with Indorama Corporation to create a global fertilizer leader in Africa. Since establishment, Indorama Fertilizers has led the local market in an industry characterized by high levels of demand and insufficient supply of quality fertilizer in the region. Having successfully invested in the fertilizer business in North Africa, we look forward to leveraging that know-how and working with the management team in developing the company’s route-to-market infrastructure, build its network and support its capacity expansion and product diversification plans in the region.’ 

Commenting on the investment, Sri Prakash Lohia, Founder and Group Chairman, Indorama Corporation, said: ‘We are pleased to welcome The Abraaj Group as an investor in our fertilizer business as we endeavor to create a world-class manufacturing and distribution network for fertilizers in the African continent, to meet the needs of underserved farmers and help propel the growth of the agricultural sector even further.’

The Abraaj Group has been present in Africa for two decades and deployed c. US$3 billion on the continent to date in a range of sectors including healthcare, financial services, logistics, consumer goods, and food and beverage. In 2015, Abraaj raised US$1.3 billion for its Africa focused-Funds.