Author: OBG Admin

Peter Wong-Deputy Chairman and Chief Executive-HSBC

Change is in the air: A major merger and several potential IPOs look set to reshape the sector

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Saleh bin Nasser Al Jasser had an exceptionally busy week in June 2014. On June 19, 99% of shareholders attending an extraordinary general meeting (EGM) gave their approval to what Al Jasser described as the biggest corporate merger in Saudi Arabian history between the National Shipping Company of Saudi Arabia (Bahri) and Vela International, a subsidiary of the Saudi Arabian Oil Company (Saudi Aramco). Al Jasser, the Bahri CEO, valued the deal at $1.3bn and said that it would give the combined company the world’s third-largest supertanker fleet, with 32 very large crude carriers (VLCCs). Just a week later, on June 26, Prince Fahd bin

Pham Hong Hai-CEO-HSBC Vietnam

Flying high: Working to keep up with demand in aviation

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The aviation sector in Saudi Arabia is growing rapidly. In 2013 annual passenger numbers topped 68m for the first time. In the decade since 2003, the Kingdom’s four main airports – Jeddah, Riyadh, Medina and Dammam – have all recorded annual double-digit passenger growth. Medina, expanding most rapidly, achieved an average annual growth rate of 15%. At the same time, the liberalisation of the domestic market and gradual moves towards privatisation of the state-owned carrier, Saudi Arabian Airlines (Saudia), have brought the prospect of additional investment and competition to the sector. The International Air Transport Association (IATA) expects Saudi Arabian international passenger traffic to rise

Emmanuel Macron-President of France

Keeping things moving: Upgrading logistics infrastructure in line with demand

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While construction teams can expect to be busy building railways across Saudi Arabia for the next few years, the vast majority of internal freight transport in the Kingdom is currently carried by road. Goods bought by companies and consumers, whether they be imports or domestically produced, are shipped along the country’s 59,000 km of asphalted roads, as are the materials being used to develop the country’s infrastructure. According to the Central Department of Statistics and Information, 195,565 new trucks were imported into Saudi Arabia in 2012, compared to 89,582 in 2003, representing a 118% increase in less than a decade. In its report on first-quarter

Mohammed El Etreby-Chairman-Banque Misr

Shared services: Expanding urban public transport is a government priority

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Consumer petrol prices in the Kingdom are the second-cheapest in the world behind Venezuela. Given this and the size of the country (2.15m sq km), it is unsurprising that it also has a strong car culture. As such, the prospects for public transport might seem limited, but the government has a clear commitment to improving public transport in cities as a means of easing congestion and making it easier for citizens to get to work. RIYADH METRO: Perhaps the best illustration of the government’s intent is happening on the streets of Riyadh. The capital is set for major changes over the next decade with the

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

A new era: Mortgage legislation is set to transform the market

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Long awaited, and under discussion for more than a decade, a mortgage law, or rather set of laws, is set to be introduced in November 2014. It will usher in a profound shift in the sector that could help to channel the vast demand and purchasing potential of the Kingdom’s 30m citizens into the housing market. At present, only around 30% of Saudis own property, a result of the deep disconnect between purchasing power and residential unit sales prices. A GROWING PORTFOLIO: Much like the formal housing market, home financing in the Kingdom remained a small and underserved market for many years. As of the

Mohammed El Etreby-Chairman-Banque Misr

Room to rent: The office market is set to see a large increase in inventory

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With the Saudi economy growing strongly, residential property is not the only real estate asset expected to show potential in the coming years. The commercial office segment should also be driven by the same fundamental demand dynamics that are propelling other aspects of the industry forward. Expansionary fiscal policy underpinned by large oil receipts continues to drive economic growth in the Kingdom. The government’s commitment to infrastructure development as a platform for diversification and private sector expansion could stimulate additional office demand over the next decade. According to the National Bank of Kuwait, the Saudi non-oil economy grew at a rate of 8% per annum

Chaim Zach-Managing Director and CEO-Agric International Technology and Trade; Kabiru Rabiu-Group Executive Director-BUA Group; and Aliyu Abbati Abdulhameed-Managing Director

Strong assets: Property funds are growing in popularity

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As the real estate sector grows and investors look for more opportunities, real estate income funds and trusts are beginning to emerge. The investment environment is starting to develop as people look beyond shares as a way of growing capital. Equities are still the main vehicle for investment, with the stock market posting returns of 11% in the three years to the beginning of 2013. The debt market is also taking off thanks to the rising popularity of sukuks (Islamic bonds), issuance of which increased by 470% between 2008 and 2013, to reach a total of SR40.01bn ($10.7bn) in the latter year. Funds are also

Sheikh Ahmad Duaij Jaber Al Sabah-Chairman-Commercial Bank of Kuwait

Stay for a while: New visa regulations give Umrah pilgrims the chance to extend their visit and explore the Kingdom

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Good news came for pilgrims and the tourism industry in November 2013, when it was announced that a new visa allowing Umrah pilgrims to travel domestically after completing their religious rituals would be issued for the 2013/14 season, a move which is expected to be a boon to tourism and associated industries. Often referred to as the “lesser pilgrimage”, the Umrah is not incumbent on Muslims who are financially and physically able, as the Hajj is, but it is nonetheless highly recommended, and the government

Pham Hong Hai-CEO-HSBC Vietnam

Working together: Public-private partnerships are seen as the way to develop the industry

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Of the SR100bn ($26.66bn) that the government’s tourism strategy estimates will be needed over a 10-year period to develop the industry, the state expects to cover about a third, with the remaining two-thirds to be provided by the private sector. Public-private partnerships (PPPs) are seen as the way to achieve this, and thus the government is working to encourage and facilitate them as much as possible. As part of its efforts to consolidate the industry, the Saudi Commission for Tourism and Antiquities (SCTA) has entered into strategic partnerships with 88 state and private organisations. Assistance for investors is available, including providing statistics, carrying out feasibility

George Richani-CEO-Al Ahli Bank of Kuwait

Improved transparency: Developing corporate governance and disclosure standards for public companies

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Since its formation in July 2004, the Capital Markets Authority (CMA) has taken various measures to improve corporate governance and disclosure standards for Saudi Arabian public companies, which has also resulted in the improvement of such standards among private companies that may seek to be publicly listed in the future. PREPARING THE GROUND: The CMA adopted the Corporate Governance Regulations in November 2006, and since then through a series of board resolutions has made more and more of its rules binding. In addition to being applicable to publicly listed companies, the CMA extended the application of the Corporate Governance Regulations to non-publicly listed financial institutions