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Business digest(Gulf, The (Bahrain) Via Acquire Media NewsEdge) AVIATION: Gulf Air in Embraer move Bahrain's state-owned airline Gulf Air has leased two Embraer 170 planes from the Brazilian manufacturer, and said it could order more as it shifts its focus to shorter routes. The airline said in a statement it had signed a lease with Embraer for three years, with an option to extend this by another five years. "If our customers like it, and we think they will, we will order more," Gulf Air chief executive Samer Majali said during a press conference. The airline also announced the sale of two Airbus A340 aircraft to US-based Apollo Aviation Group as part of efforts to realign its fleet to a new strategy focusing on regional routes. INANCE: Malaysian deal Bahrain Financial Exchange (BFX) and Bursa Malaysia Berhad (Bursa Malaysia) announced the signing of a Memorandum of Understanding (MoU) to develop a commercial agreement between the two exchanges to provide Islamic financial products and strengthen bilateral ties. Additionally, both exchanges have pledged to jointly work on increasing awareness on investment opportunities in Islamic markets. "This is a major step towards consolidation in the Islamic finance world. As Malaysia and the Middle East are the leading centres of Islamic finance, and as both exchanges come together on a single platform, this will add to the strength of this industry," said Bursa Malaysia's chief executive Dato' Yusli Mohamed Yusoff. INVESTMENT: $1bn bond Bahrain plans to issue a $1 billion sovereign bond with a 10-year maturity, its central bank said, with a banking source saying the issue will mostly target US investors. "The Bahrain government is issuing around $1 billion in conventional bonds, the yield is market driven and the maturity is 10 years," the Central Bank of Bahrain said. "The issue is part of Bahrain's sovereign budget process." In 2009, Bahrain had a budget deficit for the first time since at least 2005 as average oil prices remained below its estimated budget break-even of about $70 to $80 per barrel. The size of the deficit is yet to be published by the government. Oil revenues account for 75 per cent of government income. BahmaniBANKING: System facing 'crisis' Iran's state-dominated banking system has $48 billion in non-performing loans and it is on the verge of a crisis, the Islamic Republic's Central Bank governor said, according to a report. "How would it be possible for the banking system to show any profit with $48 billion worth of loans in arrears," the Ettelaat newspaper quoted Mahmoud Bahmani as saying. Referring to a lending spree in recent years, he said: "Of course, the reality must be accepted that the opening up of the banking system's resources in the past few years has brought them [the banks] to the brink of crisis." WEALTH FUND: Plan for oil revenue Iran's government wants to set up a new National Development Fund, to which at least a fifth of the country's oil and gas revenue would be transferred, the official IRNA news agency said. The proposed fund would help turn Iran's "natural wealth into sustainable and productive assets", the national broadcaster stated. OIL: Exxon, Shell sign contract US oil major Exxon Mobil and Royal Dutch Shell signed a final contract for the development of Iraq's 8.7-billion-barrel West Qurna Phase One oilfield. The partners, who will work with an Iraqi state-run oil company, won the right to develop the supergiant field in negotiations with the oil ministry last year following Iraq's June oilfield auction, the first since the 2003 US-led invasion. The companies plan to increase output from the oilfield to 2.325 million barrels a day (b/d) from 279,000 b/d at present. IRAQ: Central bank to cut rate The Iraqi Central Bank is likely to lower interest rates from their current seven per cent, but the extent of any cuts will depend on inflation, the bank's governor said. Sinan al Shibibi also said that he does not expect any major disruption to the country's economy from an upcoming election in March, seen as a crucial test for Iraq as it tries to pull away from conflict. The central bank brought down interest rates from nine per cent last June in line with a fall in inflation. INVESTMENT: $7bn to buy stakes Kuwaiti lenders have discussed a proposal to set up a "financial stability" fund with capital of up to KD 2 billion ($6.97 billion) to buy stakes in firms, according to a Kuwaiti newspaper. "It is designed to first buy stakes in big operational firms in the market, besides buying assets in firms," al-Qabas said in an unsourced report. The fund, which would be set up through banks and government investment, will be worth between KD 1 billion and KD 2 billion, it said. Troubles at several prominent investment firms in the Opec member, including Global Investment House and Investment Dar, prompted the government to approve a $5 billion stimulus package last April to help weather the global economic downturn. BILL: Bid to boost transparency Kuwait's parliament has initially approved a much-delayed bill to set up a stock market watchdog, in a move to boost transparency and attract more foreign investors. Home to the Arab world's second-largest stock market, Kuwait is the only Gulf state which does not have a dedicated authority to supervise its bourse, which has been plagued with irregularities in prices and disclosure. "It will add a big push to the economic path... This law will place the Kuwaiti market on a par with the developed countries," Ahmad al Haroun, minister of trade and industry, told parliament before the initial vote. The authority will oversee initial public offerings, mergers and acquisitions and will have the power to impose fines of up to KD 100,000 ($348,600) and prison sentences of up to five years, for violations. OIL: Al Noor expansion plan State-run Petroleum Development Oman (PDO) has invited bids for the engineering and procurement contract (EPC) to expand its Al Noor oilfield in the south of the country. Contractors will supply and install an additional new gas dehydration train along with gas injection compression facilities and associated injector wells, associated piping and utilities at the existing Al Noor production station, the firm's website said. The bids for the project will close on 9 February. Al Noor is one of PDO's biggest oilfields and started production in 2000. PDO is Oman's largest oil producer and an affiliate of Royal Dutch Shell. BANKING: Muscat sees Q4 loss Writedowns on a stake in a Pakistan bank and higher loan impairments plunged Bank Muscat into a fourth-quarter net loss of OR 6.7 million. Shares in Oman's largest bank, which analysts forecast would have a net profit of OR 2.69 million rials, ended up 0.5 per cent, roughly in line with the Muscat index, following the announcement. Bank Muscat said in November it would have to write down the value of its investment in Pakistan's Silkbank. The Omani bank held a 35 per cent stake in Silkbank but decided not to take part in its rights issue, leading to a writedown of OR 20.3 million and cutting its stake to 8.5 per cent. The bank reported a full-year net profit of OR 73.7 million, down 21 per cent from OR 93.7 million in 2008. For 2010, the bank said "the anticipated increase of oil prices and favourable financial, economic and monetary policies augur well for the national economy". PETROCHEM: China talks Qatar Petroleum International (QPI) is in talks with Chinese oil firms to set up a major olefin joint venture in China's southern Hainan island, a local official said. QPI is negotiating with Shide Group, a private company based in Dalian, and a major Chinese oil firm to invest 38 billion yuan ($5.56 billion) to build the plant in Yangpu, according to Shi Zhen, head of the Investment Promotion Bureau of Yangpu Economic Development Zone. Shi declined to identify which oil firm was in discussions. QPI will provide liquefied petroleum gas as feedstock for the petrochemical complex and when completed, the plant will have a total capacity of 3.9 million tonnes of olefins a year, Shi said. "This is one of our medium and long-term project and I think at least three years are needed before production can be launched," he added. Qatar, the world's largest exporter of liquefied natural gas (LNG), has sealed multi-billion-dollar pacts to supply China with the clean-burning fuel. TELECOMS: Vodafone sees losses Mobile operator Vodafone Qatar said it made a nine-month operating loss of QR 497 million ($137 million), due to increased operational costs. The Qatari unit of Vodafone said it made a loss of QR 186 million on earnings before interest, taxes, depreciation and amortisation expenses (EBITDA) in the nine months to end-December. The company posted revenue of QR 217 million on an increase in its customer base. The company said it more than doubled its customer base in the last quarter with 353,580 customers as of 31 December. ECONOMY: Spending hike ruled out Saudi Arabia will resist pressures to increase spending, as the country aims to keep its fiscal reserves at a "good level," the country's finance minister said. Ibrahim al Assaf also said economic indicators gave cause for optimism for the Saudi economy but more broadly he sounded a note of caution, saying the Group of 20 richest nations should not rush into withdrawing their economic stimulus packages just yet. "It could lead to another dip in the world economy," he said, at a conference in the Saudi capital, Riyadh. Saudi Arabia, like other nations, boosted spending on infrastructure, education and healthcare last year seeking to underpin economic growth and has repeatedly warned of the need to keep stimulus packages in place and against early exits. DAR: Bond issue to help finances Saudi Arabia's Dar al Arkan Real Estate will use the proceeds of an Islamic bond issue to help finance SR 2.7 billion ($720 million) of capital expenditure during 2010, a prospectus for investors showed. "Management expects Dar to make a total of 2.7 billion riyals of capital expenditures during 2010 principally related to development of the Al Qasr and Shams Ar-Riyadh masterplanned communities," the prospectus said. Dar took an international roadshow to the United Arab Emirates as it looks to drum up investor interest across the Middle East, Europe, Asia and the United States. Deutsche Bank, Goldman Sachs and Unicorn Investment Bank are arranging the sale. Dar operates in capital-intensive land development and homebuilding activities in the still-opaque and immature Saudi housing market, one ratings agency has observed. DUBAI HOLDING: Ratings blow Standard & Poor's pulled its rating on a unit of Dubai Holding, dealing a fresh blow to the Gulf Arab emirate's financial reputation and drawing fresh scrutiny from investors. The ratings agency cut Dubai Holding Commercial Group (DHCOG) to B from BB+ and then withdrew the rating altogether, citing its "materially weaker" cash position and a lack of information. "It was certainly a very severe note, and seems to lend credence to the doubts that have been expressed about Dubai Holding for some time," said David Butter, director for the Middle East and North Africa at the Economist Intelligence Unit, in London. Dubai rocked global markets on 25 November when it sought a debt delay on $26 billion linked to its flagship conglomerate, Dubai World. DHCOG – the holding firm of Dubai Holding's property, business parks and hospitality units which includes the planned Tiger Woods golf resort – dismissed the S&P announcement which it said contained inaccuracies and factual errors, and said the ratings agency did not understand its operations or its relationship with the Dubai government. TELECOMS: TRA lower tariff vow The United Arab Emirate's Telecomm-unications Regulatory Authority (TRA) has launched a new competition framework which it hopes will lower prices of telecom services, the watchdog's director general said. The new framework will have the TRA study various sectors of services offered by mobile operators du and Etisalat and would determine whether any licensee has market power in each of those sectors. "For example, if we find there is fair competition in the Blackberry services sector we would then allow the operators to introduce packages straight to the market without being preapproved by the TRA," Mohamed Nasser al Ghanim said." This new framework will help increase the level of competition in the market and in turn will drive prices down, all to benefit consumers," he added. Al Ghanim downplayed the possibility of adding a third operator in the near future. REGION: Currency 'in 2015' A single Gulf Arab currency could be launched in 2015 if countries from the Gulf Co-operation Council (GCC) speed up the process, a senior official from the bloc's secretariat said. Rulers endorsed the much-delayed monetary union last month despite the pullout of the United Arab Emirates – the GCC's second-largest economy – and Oman. Policymakers from Saudi Arabia, Kuwait, Qatar and Bahrain are currently expected to set a timetable for the creation of a joint central bank, but launching the single currency is still a distant prospect. "I personally expect the single currency to be launched in 2015, if we step up the efforts and the work of various committees," Mohamed al Mazrooei, GCC assistant secretary general for economic affairs, said. Mazrooei's comment is the first from the GCC secretariat that sets a potential new timetable for the single currency's launch after the bloc abandoned an initial 2010 deadline. (c) 2009 www.tradearabia.com www.thegulfonline.com Provided by Syndigate.info an Albawaba.com company |