Construction, telecoms and banking: building on the back of oil.SUSTAINED HIGH OIL PRICES OVER the past 18 months have fuelled a construction boom in the Gulf Cooperation Council (GCC GCC: see Gulf Cooperation Council.
(compiler, programming) GCC - The GNU Compiler Collection, which currently contains front ends for C, C++, Objective-C, Fortran, Java, and Ada, as well as libraries for these languages (libstdc++, libgcj, etc). ) states. State owned oil companies and government investment funds Noun 1. investment funds - money that is invested with an expectation of profit
assets - anything of material value or usefulness that is owned by a person or company have sought a variety of investment targets and much of the excess oil income has been targeted at real estate. Almost all forms of property development have been affected, from residential, tourist and office developments, to road, port and airport projects. As a result, the region's 23 cement producers collectively registered a 109% rise in profits between the first half of 2004 and the same period in 2005.
This has boosted the fortunes of the construction companies that feature in the TME See Tivoli Systems Management Software. Top 100, such as Southern Province Cement Company of Saudi Arabia Saudi Arabia (sä`dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. and Egypt's Orascom Construction Industries, as well as real estate specialists such as the UAE's Emaar Properties Emaar Properties (Arabic: إعمار), the Dubai-based Public Joint Stock Company and one of the world’s largest real estate companies, is listed on the Dubai Financial Market and is part of the Dow Jones Arabia Titans Index. and Makkah Construction and Development Company of Saudi Arabia. Emaar is by far the most successful property developer in the region, with a market capitalisation Noun 1. market capitalisation - an estimation of the value of a business that is obtained by multiplying the number of shares outstanding by the current price of a share
market capitalization of $46.3bn.
Two of the biggest airport projects are in Doha and Dubai. A huge 5,500-acre site has been set aside next to the existing Doha airport for the New Doha International Airport This article or section contains information about a planned or expected new airport. (NDIA NDIA National Defense Industrial Association
NDIA New Doha International Airport (Qatar) ), including a large area of land reclaimed from the sea. The combined facility will have the capacity to handle 17m passengers a year, up from just 4.5m at present. The new site is being developed to enable the eventual expansion of the project to 50m passengers a year by 2015, making it the biggest airport in the Middle East, at least until the expansion of Dubai International Airport Dubai International Airport (IATA: DXB, ICAO: OMDB) (Arabic: مطار دبي الدولي) is the international airport serving Dubai, the largest city of the United Arab Emirates. is complete.
Dubai already serves almost 22m passengers a year but capacity will reach 58m passengers a year if the Phase 2 development programme is completed as scheduled by the end of next year. Over $2.5bn is being invested in the construction of a new passenger terminal and a huge new cargo terminal, which is expected to be operational by 2018. While Dubai has made its name as a hub airport for passengers travelling between many different parts of the world, it is hoped that the Cargo Mega Terminal will enable it to assume the same position with regard to the transportation of cargo.
Apart from investment from within the region, some money is entering the property market from further afield as it becomes increasingly easy for non-residents to buy property in many Gulf economies. Some investors have been attracted by the jumbo financial developments that are becoming increasingly popular in the Gulf. The Dubai International Financial Centre The Dubai International Financial Centre (DIFC) is a near-shore financial hub for the MENA containing a capital market designated as a financial free zone in Dubai. It is established to create an environment for growth, progress and economic development in the UAE and the wider (DIFC DIFC Dubai International Financial Centre ), the Bahrain Financial Harbour (BFH BFH Bundesfinanzhof
BFH Battlefield Heroes (gaming)
BFH Bus Fare Home
BFH Benign Familial Hematuria
BFH Benign Fibrous Histiocytoma
BFH Bitch from Hell
BFH Big Freaking Hammer ) and the Qatar Financial Centre Established in March 2005, the Qatar Financial Centre (QFC) is a business and financial centre located in Doha, providing legal and business infrastructure for financial services. (QFC QFC Quality Food Centers
QFC Queueing Flow Control
QFC Quality Feedback Card
QFC Quality Fulfillment Committee (PostEurop)
QFC Quantum Flow Control ) all offer a mix of hotel and residential facilities to complement their core business functions. At the same time, hotel room occupancy rates are at their highest levels for a decade, so major international chains, such as the Fairmont, Raffles and Ritz-Carlton groups, are all investing in large hotel complexes. In Dubai alone, around $500m is being invested in hotels that should open within the next two years.
Growth in the Middle East's telecoms sector has been strong, if not spectacular. Sector profits with the Gulf Cooperation Council countries increased 16.1% from about $6.08bn in 2003 to $7.06bn in 2004. This is somewhat ahead of the far more modest growth experienced in the mature markets of Europe and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. but not as rapid as that recorded by developing regions such as sub-Saharan Africa.
This is because the Middle Eastern telecoms market taken as a whole lies somewhere between these two extremes: mobile coverage in some countries in the Gulf has almost reached saturation point saturation point
1. Chemistry The point at which a substance will receive no more of another substance in solution.
2. The point at which no more can be absorbed or assimilated. but there is still plenty of room for expansion in states such as Syria and Jordan. Beyond such markets, most expansion over the next few years will come from the rollout of new services. The penetration rate of mobile technology has improved rapidly over the past five years, but many consumers still opt for basic packages.
Emirates Telecommunications Corporation (Etisalat) in the UAE (Uninterruptible Application Error) The name given to a crash in Windows 3.0. In subsequent versions of Windows, a crash was called a "General Protection Fault," "Application Error" or "Illegal Operation." See crash in Windows and abend. has a penetration rate of 88%, for example, while Batelco in Bahrain has 500,000 subscribers out of a total population of 700,000. MTC mtc - A Modula-2 to C translator.
ftp://rusmv1.rus.uni-stuttgart.de/soft/Unixtools/compilerbau/mtc.tar.Z. in Kuwait and Qtel in Qatar have proved almost as successful. Such success has enabled telecoms companies to greatly increase their presence in the TME Top 100 Companies. Saudi Telecom Company Saudi Telecom Company, STC (Arabic: شركة الإتصالات السعودية (STC STC Supplemental Type Certificate (FAA)
STC Society for Technical Communication
STC Subject to Change
STC Surf the Channel (website)
STC Sound Transmission Class
STC Singapore Turf Club ) is ranked in second place this year, with market capitalisation of $75.6bn and net profits of $2.4bn in 2004. Etisalat is the only other telecoms firm in the TME top 10, with market capitalisation of $28.1bn and net profits of $935m for the same year.
The biggest trend across the region at present is the process of opening up previously restricted markets. Where the mobile subsidiaries of the state owned, monopoly telecoms companies once dominated the market, some states have offered additional licences to domestic and foreign operators, while others plan to do so in the near future. This process has engendered a greater degree of competition, both on price and services offered.
The Saudi Arabian market is still the biggest in the region, with 8m mobile subscribers and 4m landline customers, but with a penetration rate just touching 42% there is plenty of room for expansion. STC has faced competition in the mobile sector since May this year, when Ettihad Etisalat launched its Mobily offshoot with lower tariffs for basic packages. While the impact of the new competition has yet to be fully assessed, the government has announced plans to offer a third mobile licence, as well as a second landline licence before the end of next year. STC looks set to face a stiff test on both telecoms fronts over the next two or three years.
Jordan has a penetration rate of about 30% but has adopted the most liberal investment environment in the entire region. There are already four telecoms operators but the government has now decided that all operators will also be able to offer landline services to subscribers. This should not only result in lowering the landline charges currently levied by Jordan Telecom Jordan Telecom is a privatised company, now belonging to the Jordan Telecom Group (JTG). History
The history of Telecommunications in Jordan can be traced back to early 1921. but should also help the government in its plan to greatly increase Internet access See how to access the Internet. across the country. The level of competition has already had an impact on technological investment and the country's third GSM operator, Umniah Mobile Company, was launched in July. The Jordanian success story demonstrates that it is not just the size of a country's economy that determines the success of its telecoms sector.
According to figures from Global Investment House, the banking sector in Gulf Cooperation Council (GCC) states has registered a 66% rise in profits over the past year. This is a remarkable figure, but almost exactly in line with the rise in the stock market value of the largest 30 listed companies in the region. The financial sector dominates the TME Top 100 and banks from the UAE and Saudi Arabia pack the upper reaches of the ranking. Growth areas include project finance, Islamic banking and consumer mortgages, but commercial lending continues to lead the way.
As in the construction sector, the banking boom has been fuelled by high oil prices. Money has flooded into the Gulf providing vast surplus liquidity over the past few years. And the region as a whole has benefited as a result of changes in the investment environment in many countries. The combined market capitalisation of the GCC-listed companies increased from $120bn in 2000 to $522bn last year, a massive rise by any measure. The oil boom has added yet another element to the mix and, if sustained, could change the face of the banking and financial sector for a long time to come.
The combined capitalisation of all banks in the Middle East and North Africa region reached $70.64bn in 2004, up 38% on the 2002 figure, while their total consolidated assets increased 29% over the two years to reach $790bn. Profits have increased even more rapidly and several banks, including Qatar National Bank, Emirates Bank International and National Bank of Abu Dhabi recorded profit increases in excess of 70% for the first six months of this year. However, as a result of being heavily capitalised, the current boom in banking does not seem to have resulted in unsustainable growth and the region's banks do not appear to have overreached themselves.
Apart from boosting the economic fortunes of the banking sector itself, the level of surplus liquidity has enabled the region's banks to greatly increase their lending. Where unbudgeted for oil income was once invested in London and New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , a far larger proportion now remains within the oil producing states or is invested elsewhere in the region, in North Africa and the Levant Levant (ləvănt`) [Ital.,=east], collective name for the countries of the eastern shore of the Mediterranean from Egypt to, and including, Turkey. . The economies of the GCC states are expected to grow by an average of 25% this year, largely on the back of high oil production and prices, in addition to the banking sector's ability to help use much of the money in investing in other sectors.
Snapshot of GCC Telecom Operators--1H 2005 Country Bahrain Kuwait Oman Qatar Batelco MTC NMTC Omantel Qtel Population (m) 0.7 2.8 2.4 0.7 Penetration Rate 78% 77% 34% 0.62 Subscribers 0.5 10.6 * 3.9 * 0.8 0.5 Total Revenue 279.1 776.5 534.8 331.2 371.6 1H 2005 (US$m) Net Profit (US$m) 113.4 308 87.2 102.2 159.3 Market Cap 2 9.3 3.2 4.5 7 P/E ratio 13.9 17.6 19.7 21.4 22.4 Country Saudia Arabia UAE Etihad Etisalat STC Etisalat Population (m) 22.7 4.3 Penetration Rate 42% 88% Subscribers n/a 13 4.1 Total Revenue 15.5 4254 1688 1H 2005 (US$m) Net Profit (US$m) -222 1576 574 Market Cap 17.4 77.8 31.7 P/E ratio n/a 23.4 28.3 Source: Company reports, Global Research. * Includes subscribers in other countries where they operate