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Finance
Private
sector Page 7
Page 4
New legislation is
opening up the
stock market and
banking sector to
foreign institutions
and investors
Businesses are
profiting from their
proximity to Iraq
and improving the
region’s outlook
Telecoms
Page 17
Over the next five
years the Middle
East will be one of
the fastest-growing
communications
markets in the world
Our World
This supplement to USA TODAY was produced by United World Inc.: 3rd Avenue 350 PMB #244 New York N.Y. 10010 - Tel: 212.286.8117 - Fax: 212.286.1984 www.unitedworld-usa.com
WEDNESDAY, JUNE 30, 2004
FACTS & FIGURES
Kuwait
Time for
business
A program of diversification and reform is
making the national economy more robust
■ THE STATE of Kuwait is a rels or 10% of world reserves.
small but crucial U.S. ally Kuwait is the most oil depenin one of the most important dent country in the region. Apregions of the world. It is a coun- proximately 46% of its GDP is
try slightly smaller in size than earned by the hydrocarbon secNew Jersey, located between tor, with oil products accountdesert, marsh, and sea at the ing for over 95% of total exports
northern end of the Persian Gulf. and 90% of government revOne hundred years ago, the enue. Much of the remainder
Kuwaitis were a seafaring na- comes from investments in fortion, renowned for their pearl- eign assets worth approximatediving skills and the trade which ly $100 billion, about
they plied across the
three-fourths
of
oceans in dhows to In- Kuwait’s proven which are owned by
oil reserves two governmental india, Africa, and all
amount to
round the Arabian
stitutions, the Kuwait
peninsula. Then, in approximately Investment Authori1938, oil was discov- 10% of world ty and Kuwait Petroered and commercial reserves or 98 leum Corporation.
priorities changed.
The majority of its
Today, Kuwait is billion barrels citizens earn salaries
one of the most open economies paid for by government revin the Middle East. It is also the enues. This means the budget is
gateway to Iraq and is playing a vulnerable at times of falling oil
crucial role in its reconstruction. prices. However, a program of
The proven oil reserves which economic diversification and relie under Kuwaiti sand amount form launched after two years of
to approximately 98 billion bar- economic contraction at the be-
President Bush and Kuwaiti Prime Minister Sabah have built a lasting friendship and alliance
ginning of the decade has made
the economy more resilient. In
2003, it grew by 3.8% and is expected to repeat that performance
this year and grow by 4.1% in
2005 and 4.7% in 2006. Longterm forecasts predict that inflation will creep up to 2.46% in
2005 and thereafter will remain
under 2% as far ahead as 2008.
The 2003 parliamentary election tipped the balance in favor
of pro-government candidates,
lending impetus to a program of
reforms. These include the abo-
lition of most restrictions on foreign ownership and investment.
The Kuwait Stock Exchange
is being opened to foreigners and
the banking sector is gradually
welcoming international participants. There are even plans to
open the upstream oil sector to
foreign companies. Private investment is also being encouraged in IT, telecommunications,
and light industry. The Kuwait
Free Trade Zone will be the first
in the region to be run privately.
Since the toppling of Saddam
Hussein’s regime in Iraq last
year, Kuwait has played a crucial role in supporting the reconstruction of its large northern
neighbor. The disruption to trade
caused by the conflict may have
inflicted some short-term economic damage but the longerterm effects of the war are
looking positive. Many foreign
investors have decided to use
Kuwait as a base for their Iraqi
operations and Kuwaiti firms
are resuming age-old economic ties across the border.
KUWAITIZATION OF THE LABOR FORCE
New law will maximize national potential
KPC
■ A PROJECT to introduce
Kuwaiti nationals into central
roles in the country’s rapidly
growing private sector is galvanizing the economy and speeding
up the diversification process.
In the past three years, the
number of Kuwaiti nationals in
the private sector has increased
rapidly. This change has been
driven by the Kuwaitization Law
Incentives encourage firms to
train and employ Kuwaitis
that provides incentives and quotas to encourage the training and
employment of Kuwaitis in key
industrial posts.
There are, however, still a
large number of foreigners in
the labor force. More than 81%
of the 1.4 million-strong labor
force are non-nationals. Figures
released by the Public Authority for Civil Information show
that at the end of June 2003 the
total population grew 5.1% to
2.48 million. But the number of
expatriates grew by 6.2% to
1.57 million.
In other words, Kuwaiti nationals count for less than half
the total population. Expatriates
from other Arab countries count
for 35%, South Asians for 9%,
and Iranians for 4%.
What these figures do not
show is that alongside its oil
wealth, Kuwait’s other greatest
strength lies in its human resources. The state provides free
education through to university
and even graduate level. Consequently, it has one of the most
highly-skilled populations in
the world.
The Kuwaitization of the labor force is helping nationals
find high value-added jobs in
IT, services, and finance.
Kuwaitis now constitute 80%
of the labor force at the Central
Bank of Kuwait, which is perhaps the highest percentage of
Kuwaitis working in any government institution. At the
Kuwait Finance House, 43% of
employees are Kuwaiti nationals, accounting for 84% of managerial positions.
Country name: State of Kuwait
Capital: Kuwait
Currency: Kuwaiti dinar (KD)
Independence: June 19, 1961
(from UK)
National holiday: National Day,
February 25 (1950)
Location: Middle East, bordering
the Persian Gulf, between Iraq
and Saudi Arabia
Area: 6,880 square miles, or
slightly smaller than New Jersey
Coastline: 310 miles
Climate: Dry desert; intensely
hot summers; short, cool winters
Natural resources: Petroleum,
fish, shrimp, natural gas
Population:
2,183,161 (July 2003 est.)
Note: includes 1,291,354
non-nationals
Population growth rate:
3.34% (2003 est.)
Ethnic groups: Kuwaiti 45%,
other Arab 35%, South Asian 9%,
Iranian 4%, other 7%
Religions: Muslim 85% (Sunni
70%, Shi’a 30%), Christian,
Hindu, Parsi, and other 15%
Languages: Arabic (official),
English widely spoken
GDP: $36.85 billion (2002 est.)
GDP per capita: $17,500
(2002 est.)
Inflation rate: 2% (2002)
Industries: Petroleum, petro
chemicals, desalination, food
processing, construction materials
Expor ts: $16 billion f.o.b.
(2002 est.)
Impor ts: $7.3 billion f.o.b.
(2002 est.)
Export commodities: Oil and
refined products, fertilizers
Impor t commodities: Food,
construction materials, vehicles
and parts, clothing
Internet country code: .kw
Internet users: 200,000 (2002)
Source: CIA – The World Factbook
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Our World
Distributed by USA TODAY
Wednesday, June 30, 2004
2
WATER RESOURCES
INTRODUCTION / Kuwaiti support for the war against terrorism has cemented its close ties with the United States
Liquid assets
The foundations for regional stability
Getting enough water for its
two million inhabitants to
drink, wash, and irrigate crops
and gardens has been little
short of a miracle for Kuwait.
From April to October, it does
not rain at all in this desert
country, and the total conventional fresh water resources
amount to less than one-sixth
of what are needed.
So the Kuwaitis turned to
the salt sea. They commissioned the first distillation plant
in 1951. Now, some of the
world’s largest and most sophisticated sea water desalination facilities – using either
multi-stage flash distillation
or reverse osmosis technology – satisfy almost 90% of demand for drinkable water.
Three large municipal wastewater treatment plants provide
water for irrigation.
WOMEN IN BUSINESS
A question
of history
Women have always played an
important part in Kuwaiti business life. Today, many have
leading roles in the banking and
finance sectors. The reason for
this is historical, says Ms. Wafa
Mohamed Al-Rasheed, Manager of the Technical Bureau
Department of the Kuwait Stock
Exchange for the past 18 years.
“Before the oil era, the men
were absent for eight months of
the year during the summer to
dive for pearls. They then traveled to India and Africa to sell
them and to buy goods such as
wood and spices. While their
husbands, brothers, and fathers
were away, women had to manage their households financially and to provide for their
families. This is how the role of
women in finance started.”
Kuwait’s strong
links with the U.S.
are the basis for
the Gulf’s economic
and diplomatic
development
■THE CLOSE relationship between the United States and the
State of Kuwait has become one
of the economic and diplomatic cornerstones of development
in the Gulf. The commitment
that both countries have shown
toward this relationship has
opened up a stable and prosperous future for the whole region.
“I’m very optimistic about the
future,” says Dr. Mohammad S.
Alsalem Alsabah, Kuwait’s
Minister of Foreign Affairs.
“Trust was the major issue that
was an obstacle to wider Arab
economic cooperation,” he says.
“The collapse of the Hussein
regime in Iraq has created new
opportunities and horizons.
There are new potential areas of
cooperation on both sides, he
adds. “It has also challenged us
MOHAMMAD S.
ALSALEM ALSABAH
Minister of Foreign Affairs
proved that he was successful.
“It is important for the world to
understand that Kuwait has been
an indispensable U.S. ally,” he explains. “They have a great debt to
the U.S. because of the role we
played in their liberation. But the
U.S. now has a reciprocal debt to
Kuwait for the strong support the
Kuwaiti people have given in the
war against terrorism. They supported our efforts in Afghanistan
very courageously and have
proved to be an indispensable
member of the coalition because
of the support they provided in
the liberation of Iraq. This has not
been without risk for Kuwait. They
were really almost alone among
Arab countries in speaking out
and defending the work of the
coalition before, during, and after Operation Iraqi Freedom. We
recognize that they have taken
risks with their Arab neighbors.”
The Northern Oil Fields Development Project is attracting interest from U.S. oil firms
to reform the way we have been
doing business for the last 15
years. The mentality now is one
of reform and progress. We cannot continue to do things the
old-fashioned way.”
The immediate aftermath of
the invasion disrupted the political relationship between many
Arab countries. But Dr. Alsabah
thinks this was necessary: “Saddam Hussein was like a cancer
growing in the Arab body and
poisoning the relationship between Arab countries. The removal of that cancer was a major
victory not just for the Arab people but also for regional stability and global security.”
The relationship between the
U.S. and Kuwait has always been
strong and was cemented most
firmly in the first Gulf war when
the U.S.-led international coalition liberated the country from
Hussein’s forces in 1991.
“Frankly, security has been the
dominant factor in our relationship over the past 14 years. But
the U.S. can certainly provide
more than security to Kuwait. It
can provide opportunities, technology, knowledge, education,
and an example of good management and good governance,”
says Dr. Alsabah, who has
a Ph.D. in economics from
Harvard University.
Changes along these lines are
already under way. The nation
has opened up and liberalized its
educational institutions, so foreign universities are now being
founded in the country. The government sets strict guidelines to
make sure they meet the minimum standards of excellence.
“Kuwait is a place where you
can raise your children and
where you can make a lot of
money,” he adds.
A lot of U.S. business people
have already got wise to this situation, according to Richard Jones,
U.S. Ambassador to Kuwait. “The
economy really seems to be growing,” he says. For the past year the
hotels have been so packed that
the embassy has sometimes struggled to find enough free rooms to
accommodate visiting congressional delegations.
“What’s new in the current situation is that Kuwaiti capital is
coming back, but Kuwaitis also
realize that they can use foreign
capital successfully to help develop their country even further.
Kuwait is already a developed
country but its population is growing rapidly,” he says.
“I arrived here just two weeks
after 9/11. I knew we were going
to have to rely on Kuwait in the
war against terrorism. So my goal
was to take our countries’ relationship to a higher level of greater
strategic cooperation,” says Ambassador Jones. Events have
RICHARD JONES
U.S. Ambassador
to Kuwait
Trade Indicators
Inflation and GDP
15,000
6
12,000
4
9,000
2
0
3,000
-2
0
’00
’02
’01
’04f
’03e
’06f
’05f
’08f
’07f
’00
’02
’01
’04f
’06f
’08f
’03e
’05f
’07f
Current Account Bal. $m
Trade Balance $m
Inflation %
GDP Growth %
TRADE WITH THE U.S.
Trade plans will put Kuwait on the map
■ STRONG U.S.-Kuwait trade
is underpinned not only by vital
commercial interests but also by
the close mutual understanding
and respect which the two countries share.
U.S. technology is highly respected in the Kuwaiti market
and local businesses have adopted these standards. U.S. companies are successfully winning
a significant share of defense-related contracts in the country,
which has been declared a nonNATO ally, giving it a privileged
relationship with the alliance.
The countries have also recently
signed a Trade and Investment
Framework Agreement (TIFA),
which will lead to the establishment of a U.S.-Kuwait Council
for Trade and Investment. The
agreement has been accompanied
by a new visa regime making it
a lot easier for foreign business
people to enter the country. Under this new plan, where visas are
granted at the airport, the government now allows 34 different
nationalities into Kuwait.
“The TIFA is an agreement to
talk about the issues that would
be involved in a free-trade agreement,” says U.S. Ambassador to
Kuwait Richard Jones. “It is a
preliminary step but an important
one because it means that Kuwait
is on the agenda of the people who
work on our trade policy, particularly at the U.S. Trade Representative’s Office.”
“I think the main benefit for
Kuwait is that it will put the country on the map for American investors, especially because of the
changes in Iraq. There will be a lot
more interest in this part of the
world and you will get a lot of companies that may be a little bit reluctant to plunge right into Iraq. But
Kuwait is an ideal location because
it has good infrastructure, modern
communications, comfortable
housing, and so on,” he says.
In addition, there are many opportunities in Kuwait itself. A
large project attracting U.S. interest is the multi-billion dollar Northern Oil Fields Development Project,
formerly called Project Kuwait. The
constitution forbids foreign ownership of natural resources but the
government has found a way of
bringing in investors without ced-
ing this vital ownership. Many U.S.
oil companies including ChevronTexaco and ExxonMobil have expressed interest in the project.
Companies that win government purchase contracts worth
more than $50 million have to invest 35% of the value of that contract in the country. “From a
Kuwaiti point of view, it is a form
of insurance because all of a sudden it is not Kuwaiti money that’s
invested in these oil facilities, it is
British, American, French, or
whatever,” he continues. “This
gives the companies an interest in
asking their government to protect the facilities. Kuwait will have
major companies with a long-term
commitment to it, which is good.”
The U.S. Commercial Service
of the American Embassy in
Kuwait provides services and support for U.S. firms to enter and expand their presence in the Kuwaiti
market. The office also serves as
a resource for Kuwaiti firms interested in importing U.S. products.
U.S. Commercial Service
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WORLD MARKET RESEARCH CENTER
6,000
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Our World
Wednesday, June 30, 2004
Distributed by USA TODAY
FINANCE / With up-to-date legislation and technology, Kuwait is ready to face increased competition and to become the gateway to Iraq
As foreign institutions
enter the market, the
sector is poised for
dramatic expansion
■ BANKING plays a key role
Al-M
ulla
Gro
up
in Kuwait’s economy and is perhaps the most important after
oil. As foreign-owned financial
institutions enter the market for
the first time, the sector looks
poised for a dramatic period of
expansion.
The sector was already thriving in the country before the
government decided to open it
up to international competition.
“For the last three years, the
Kuwaiti banking sector has enjoyed excellent conditions, registering historic records since
its establishment. These years
have seen huge levels of liquidity in the system, relatively
high levels of capital adequacy,
and high levels of ratings in
Kuwaiti banks,” says
His Excellency
Sheikh
Salem Abdul-Aziz Al-Saud AlSabah, Governor of the Central
Bank of Kuwait (CBK).
At the end of December 2003,
the CBK said that the Kuwaiti
assets of domestic banks had increased by 1.5% compared to
the same period in 2002. These
assets included private sector
loans of $33 million and public
sector loans of $10 billion in addition to inter-bank deposits of
$9.5 billion and foreign assets
valued at $8.5 billion.
A number of foreign banks
have already approached the
CBK to request official licenses to open branches inside
Kuwait since the government
passed the regulation in March
2004 allowing them in. They will
be entering one of the most advanced banking sectors in the
Middle East region with some of
the most up-to-date legislation.
The parliament recently passed
a Monetary and Central Bank
Regulating Law described by
Sheikh Al-Sabah as an important step in the development of
banking legislation in Kuwait.
“The law keeps the system
up to date with developments in the
SALEM
ABDUL-AZIZ AL-SAUD
AL-SABAH
Governor of the Central
Bank of Kuwait
international field of banking
supervision,” he says.
It will help to free up the financial services sector and ease
future commitments in the sector
resulting from general trade agreements. It will also allow the Central Bank to exchange data and
information with supervisory authorities outside the country and
search branches and companies
registered under Kuwaiti banks
outside the country.
These changes permit the
implementation of the agreement
reached at the Higher Council
of the Gulf Cooperation Council (GCC) in 1997 that allowed
national banks to open branches in other GCC countries.
The Central Bank of Kuwait,
was established in 1969 and it
has been awarded the highest
rating in the Middle East. It has
also adopted almost all the international standard measures
related to the banking sector.
These include the Basle Banking Supervision Committee recommendations. The bank issues
the Kuwaiti Dinar, controls the
banking system, directs credit
policy to assist social and
economic progress, and assists
in the growth of national income. It also acts as a banker
and financial advisor to the
government.
But perhaps most crucially,
its role in the banking system is
to regulate liquidity. Whenever
there is a shortage it injects liquidity and when there is a surplus it absorbs it. This function
has been central to the prudent
fiscal and monetary policy that
the country has been pursuing
over the past few years. The results of this policy have been a
strong emphasis on freemarket trade and low inflation
rates, despite fluctuations in
global oil prices.
“Solid and efficient monetary
and supervisory policies have
resulted in a relatively stable
exchange rate for the dinar, despite the extraordinary situation
that Kuwait has endured for the
past 14 years, such as the destruction caused by the previous
Iraqi regime,” says Sheikh
Al-Sabah.
“The banking sector suffered
greatly from the Iraqi invasion.
But it has now regained a very
healthy position and has
received a high rating from the
Kuwait Finance House
Financial institutions
prepare for the challenges
of a liberalized market
The Central Bank of Kuwait has a vital role in the country’s prudent fiscal and monetary policy
international agencies. These neighbor is presenting Kuwait
show that Kuwaiti banks have and its banking sector with new
recovered from their problems challenges. “The region finds itand are considered among the self in a new environment with
best in the Middle East,” he adds. expanded economic opportuniKuwait’s adequate infra- ties and new challenges, espestructure, sound and
cially as the cost
Kuwait has
up-to-date banking
of reconstructing Iraq
one of the
and finance sector,
is estimated at $36
and its advanced most advanced billion.”
financial
communication sysThe CBK Governor
tems qualify it to be sectors in the adds that within
the international
Middle East Kuwait itself, there are
commercial gateway
many investment
region
to Iraq. The CBK is
opportunities that will
already providing technical as- need strategic partnerships,
sistance to its counterpart in especially after forthcoming
Baghdad.
amendments to the tax law
But the reconstruction of its are approved.
“Kuwait is pursuing a structural reform program to enhance
the role of the private sector in
economic activities. It will attract foreign investors and generate a much needed acceleration
in non-oil growth,” he said.
“The Kuwaiti government
welcomes any serious foreign
investor from any friendly country. When we talk about globalization, American public opinion
and business people should perceive Kuwait in the context of
its culture, which is very open,
especially because most Kuwaitis have traveled abroad as merchants, and quite a high number
have also studied overseas.”
ISLAMIC BANKING GLOSSARY
Islamic Financial Services Council –
Founded in 2002, this international body
issues guidelines to Islamic financial
establishments with regard to Shari’a
principles. Kuwait is one of the main
member states.
Usury
– In the West this is the practice
of lending money at a high rate of interest.
Islam forbids lenders from charging interest
at all.
Murabaha
– The bank buys the commodity or real estate property and then sells it
on to the customer at cost plus an agreed
profit mark up. This higher price can be paid
monthly to the bank over a period of years.
Ijara
– The bank buys the commodity or
property and sells it on to the buyer for
the same price with payment spread over
several years. At the same time the customer pays the bank rent, which is how it
makes its profit.
Istisna’a
– This is a sale agreement
under which a contractor agrees to produce a product and to sell it to the contractee for a certain price and method of
settlement, which could be in advance, by
installments, or deferred to a future time.
Sukuk bonds – The name given to
Islamic bonds. The international market
only took off in the last year but will soon
be worth more than $2 billion.
Zakat – The Muslim obligation to make
an annual charitable donation calculated
as a percentage of total wealth.
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Distributed by USA TODAY
Our World
Wednesday, June 30, 2004
4
Al-Mulla
FINANCE / A new legal framework allowing foreign investors to own and trade stocks has raised interest in Kuwait’s financial markets
■ KUWAIT Stock Exchange
trade stocks. Until 2003, this
(KSE) can claim to be the most opportunity was only open to
successful financial market in citizens of other Gulf states.
“I am very pleased to have inthe world. A gain of 24.11% in
its Global General Index during ternational investors involved,”
2002 was trumped by an in- says Ms. Wafa Mohamed Alcrease of 63.9% in 2003. Trad- Rasheed, Manager of the Teching activity increased five times nical Bureau Department of the
Kuwait Stock Exchange. “I have
over this same period.
Last year will go down in the witnessed the evolution of the
history books as one of the most exchange and I know what I am
important periods in the last talking about. It is a very good,
three decades for the market. solid market and people who
It saw stability returning and have been investing with us
make tremendous
confidence building
among local investors KSE is the only money. Why should it
exchange in only be local people
after the threat from
Saddam Hussein was the world with a who benefit? We have
removed. The market special trading opened up to international investors beclosed at the end of
floor for
we will gain as
2003 at a record high
women and an cause
much from them as
of 170.78 points. The
higher oil prices, low- in-house court they will from us.
“The boom we are having here
er interest rates, improved corporate profitability, and increased is emerging partially from the
liquidity that were responsible companies and partially from
for this performance are contin- the management of the stock
uing to drive the market this year. market,” adds Ms. Al-Rasheed.
What makes this such good For the past two years, many of
news for foreign investors is that the quoted companies have benfor the first time they have been efited greatly from signing conallowed a part of it. Last year, tracts with the U.S. army and
the government introduced a providing it with facilities as
new legal framework allowing the liberation of Iraq was preall foreign investors to own and pared and carried out. This led
Rising investor
confidence
boosts trading
Exchange profits from regime change in Iraq
to good results and high dividends. But that is not all that
has happened.
“We have almost had a revolution here. First, we introduced
the automated trading system.
It was the first in Arabic that we
have ever implemented. Then
we signed a new contract for
upgrading this system and have
already started doing so. It will
be completed by the end of the
year. It can already make 50,000
transactions each hour,” says
Ms. Al-Rasheed.
Markets are not only judged
by liquidity but also by their
rules, regulations, transparency,
and credibility. Investors want to
know that protection is in place,
that information is delivered on
time, and that there are safeguards against insider trading.
All these things are being seen
to at KSE. It is the only stock
exchange with its own
in-house court.
“As far as international investors are concerned, we are
working now on our regulations
to implement the insider-trading
law,” she explains. “When KSE
started in the 1980s companies
disclosed information once a
year. Now they report every
three months. Any individual or
company that owns more than
5% of an enterprise must disclose their identity. Companies
that have signed contracts or
have news are obliged to disclose this information before or
after trading hours. We have to
be very strict with the listed
companies,” she adds.
While all this has been going
on, KSE has not forgotten to
respect the local proprieties and
customs of Kuwait and also to
involve the whole population.
It is the only exchange in the
world with a special trading
room for women. This is not because they are not allowed in
the main room but because it
gives women a more relaxed
working space.
“The major floor was always
packed with men, so women hesitated to come and join them because they were a minority. So
we decided to open up a place for
them where they could deal with
women workers and sit among
themselves. It is like a salon,”
explains Ms. Al-Rasheed.
“Every time I go to the trading floor, with the majority of
men staring at me I feel uncomfortable,” she says. “With
the opening of the new floor we
opened 4,000 new accounts,
which means it was a success
story in itself.”
KSE closed at a record high of 170.78 points at the end of 2003
INVESTMENT DAR
Wide-ranging portfolio maintains broad consumer appeal
■ TEN YEARS ago few business
people were interested in Islamic finance, even those in the Gulf.
The success of companies such
as Investment Dar has changed
this forever.
Investment Dar was established
in 1994 as one of the first Shari’a-compliant investment companies in Kuwait. It was the first
to be established with a full feasibility study. This document was
so comprehensive it was
later the guideline used by the
Central Bank as a benchmark for
any new company deciding to
enter the market. The group as a
whole is already a holder of the
ISO 9001 international quality
standard certificate and was the
first Islamic company to obtain
this prestigious recognition of its
high level of service.
“People used to laugh at us
when we talked about Islamic
banking,” says Adnan A. AlMusallam, Chairman and Managing Director of Investment Dar.
“Today, most of the international banks have sections for Islamic
banking. Anyone who wants to
work
in
this
region
has to have Islamic products on
offer. We want them to consider
Investment Dar as one of their first
choice partners.”
It is an invitation hard to resist.
In 2003, Investment Dar’s stock
price surged by 50% and by the
end of the third quarter net profits had already registered an impressive 250% increase on the
previous year.
The company has achieved
these results by offering a wide
range of financial services but remaining strictly within Islamic
laws at the same time. It grants
credit facilities to consumers,
manages financial transactions,
and acts as broker and trader of
securities. It incorporates and
manages investment funds and
portfolios and develops its clients’
cash supply.
The company performs these
functions through three major
subsidiaries. The first manages
the real estate and commercial
finance businesses. The second
deals with portfolio and fund management and all international investments. The third manages the
traditional retail finance business.
Over the next few years, the
company plans to move to the
next stage of its consolidation
ADNAN A. AL-MUSALLAM
Chairman and Managing
Director of Investment Dar
and focused expansion. A major
reorganization will transform it into a holding and supporting company with several business units
– each one being a profit center
specializing in its own line of
business.
To begin with, the company
was only active in one sector.
“We decided to start as a retail finance company with the aim of
becoming a full investment company and also a bank whenever
the regulations would allow it,”
says Mr. Al-Musallam. “After the
Gulf war, we anticipated a boom
in the car finance business so we
entered the vehicle leasing and finance business. For the first three
years we only did car financing.
Then, we went into commercial
and real estate financing and housing,” he explains. At the outset,
the company chose to finance
consumers regardless of the difficulties and obstacles they faced.
In line with this they adopted new
Islamic formulas which had never been applied or used in Islamic
sales contracts before.
“Our strategy for this period
was to put the company on solid
ground. We thought the best way
was to do the financing first because you mostly get repeat customers,” says Mr. Al-Musallam.
“We also started a real estate
investment here in Kuwait, which
has been very profitable. With
the opening and rebuilding of
Iraq, I think it is going to be the
golden age for the real estate market here,” he adds. “The financial
services industry has become very
competitive and there will be no
respite in the future – we will
have three Islamic banks and possibly international competition in
2005 with the opening of the
Kuwaiti market due to the GATT
agreement.”
Investment Dar has also been
expanding throughout the region. It has established a company called Raffidain to focus
on business opportunities in
Iraq. It has a real estate business
in Bahrain and will soon enter
the consumer finance business
in Saudi Arabia.
Meanwhile, it founded a retail
finance company in Qatar, as a
joint venture between Kuwaitis
and Qataris. “We were the managing team for that company. It
is now one of the leading companies there. After three years we
left the management and we sold
our share last year and made a
very good profit.”
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Our World
Wednesday, June 30, 2004
Distributed by USA TODAY
BANKING AND INVESTMENT / Social awareness and financial know-how keep Kuwaiti institutions in the premier league
■ WHEN Ali Hilal Al-Mutairi
first came to Kuwait’s Al Ahli
Bank (ABK), he was determined
to attract the best-qualified team
of financiers in the country.
Over the past three years, the
company has attracted some of
the sharpest talent in the sector
to join a series of new highlyexperienced, motivated, and
skilled teams. “This has helped
the bank to succeed and will
continue to be the main reason
for our future success,” says Mr.
Al-Mutairi, Deputy Chairman
and Managing Director.
“We have a specialized team
to meet the needs of our corporate clients in contract financing,
the trade finance service sector,
and real estate financing. We also have a desk with experienced
dealers to advise on trading products. Exclusive departments for
retail banking have been set up
to develop products, launch sales
campaigns, and measure customer service against standard
benchmarks,” he says.
“Our aim is to be a premier
Kuwaiti bank, offering corporate
and retail banking services, including a wide range of financial
Quality performance
brings high returns
Emphasis on good management and customer service pays dividends
solutions and quality products to
our customers in Kuwait and in
the Gulf. In addition to securing
the highest returns and profits for
our shareholders and customers,
and developing skilled and competent personnel in the bank, we
want to meet our commitments
to Kuwaiti society and contribute
to its overall development,” adds
Mr. Al-Mutairi.
To achieve these targets, he
has developed a strategic plan
and several new initiatives,
which have been implemented
across the bank to change the
way it does business. ABK has
been broadening its customer
base by opening new branches,
introducing electronic banking,
expanding its point of sale
improving performance has led
to better credit quality and a
substantial reduction in non-performing loans. “During my period in charge of the bank,
business and profits have grown
substantially. At the same time,
substantial non-performing assets have been removed and substituted with good yielding
assets,” says Mr. Al-Mutairi.
The amount of bad loans declined by 24.2% in 2003. The
total reduction for the past two
years is nearly half.
The main reasons for the positive performance achieved by
the bank are the far reaching vision and timely strategic initiatives taken by the board of
directors and the executive
network, customizing corporate
products, and improving customer service. The success of
these policies is reflected in its
impressive financial performance. Net profit for 2003 after tax and directors’ fees was
$75 million, an increase of 15%
on the previous year.
ABK’s cost of income ratio
is one of the lowest among
Kuwaiti banks thanks to prudent control of expenses. It is also one of the pioneers in risk
management practices and has
well-developed tools for managing credit, operational, and
market risk.
Its corporate and retail divisions have been the growth
engines whose consistently
ALI HILAL AL-MUTAIRI
Deputy Chairman and
Managing Director of
Al Ahli Bank
management in conducting the
bank’s business.
Each of its main business
divisions is empowered and encouraged to carry out business
within the framework charted out
for “growth with quality”. Several committees set up periodic
reviews and improve actions on
an ongoing basis.
The divisions include corporate banking, retail banking,
operations and technology, financial control, treasury and investments, international banking,
human rights resources, risk management, special asset management, and legal and internal audit.
Last year, the treasury and
investment division launched
two equity funds. The Al Ahli
Kuwaiti Fund’s net asset value
increased by 37.8% in its first
11 months of operation. The
Al Ahli Gulf Fund was launched
in November and saw its unit
price increase by 3.3% within
two months.
ABK is the only Kuwaiti bank
with a branch in Dubai, which
serves Kuwaiti clients with business interests in the Emirates.
Partnerships with global banking
names help provide a global
presence. “Our partnership with
Emirates Airlines – the premier
Middle East airline – reflects our
goal of quality service to our customers,” explains Mr. Al-Mutairi.
ABK has also established a partnership with UBS, which while
focused on the development of
investment products, also promotes the transfer of product
knowledge and expertise.
THE INTERNATIONAL INVESTOR
Al Ahli Bank’s net
profit for 2003 was
$75 million
Al-Ahli Bank
Targeted business is recipe for growth
■ ISLAMIC finance is a question of business. It is as logical
as McDonald’s making their
burgers pork-free so they can
be sold in Muslim countries,
according to Adnan A. Al Bahar, Chairman of The International Investor (TII).
“The economy needs it, many
customers need it. It doesn’t
matter who delivers it. The involvement of both local players
and more global players in the
industry give it credibility. This
helps to make Islamic banking
a more attractive and viable alternative to conventional banking, attracting more customers
and resulting in a even faster
growth rate. ” he explains.
The International Investor is
a premier wholesale Islamic investment bank. It was founded
in 1992 by institutional and private investors and was listed on
the Kuwait Stock Exchange in
1996 and on other regional exchanges shortly afterwards.
It established itself as an Islamic bank during the first wave
of privatization in the Gulf region. “We had foreseen the need
for investment banking services
in the region to support the
growth of capital markets and
facilitate, among other things,
the acquisition of public sector
assets,” says Mr. Al Bahar. “TII
provided specialist Islamic structured finance services and advice to a variety of regional and
international clients,” he says.
The business now operates in
two main areas. Its structured
finance arm embraces a wide
range of investment banking
services including corporate finance, project financing, venture capital, private and public
placements, mergers, and acquisitions.
Its advisory and distribution
service is now one of the main
organizations providing entrepreneurs, corporations, and financiers with the expertise,
knowledge, and tools they need
to efficiently access the rapidly expanding Islamic market.
It provides Islamic structuring solutions, compliance screening, dividend cleansing, Islamic
indices, portfolio and risks management tools, private banking
services, marketing support, and
wholesale distribution networks.
ADNAN A. AL BAHAR
Chairman of The
International Investor
TII does this by tapping its
distinctive competencies, primarily Islamic structuring and
placement expertise, and extensive knowledge of the Islamic financial market place.
It is supported by a growing
network of offices, joint ventures, and strategic alliances.
TII has an established presence in Kuwait, the UAE, and
Qatar. It plans to extend into all
key markets in the Middle East
and North Africa region. The
bank aims to be the premier financial investment institution
in the region and the leading
global Islamic wholesale investment bank. At the same time,
it is moving away from being
exclusively an Islamic bank.
“We have now embarked upon a new strategic direction, using our investment banking
capability and experience to acquire financial serivces companies in the region,” explains Mr.
Al Bahar.
This is a strategy that will
allow the business to achieve
higher-than-average profitability through investing only in
growth sectors. The closest business model in the U.S. is GE
Capital, which owns some
banks, but mainly credit card,
consumer finance, and leasing
operations.
“If you are a bank you cannot
choose not to provide current accounts or credit cards - you have
to provide the whole range of
banking products and services.
But in our case, we can enter only those markets that we think
will provide the opportunities we
need,” explains Mr. Al Bahar.
“This approach allows you
to exit a particular market or divest a specific product without
having to sell or dilute your
own brand. So you can sell a
company in Egypt and buy a
company in Turkey, and all
without closing a branch in the
country.
“I see The International Investor becoming a leading financial services company” he
adds. “We are not only investing in those sectors with the
greatest growth potential, we
are also investing in one of the
world’s fastest growing markets. In other words, we are increasing our presence in the
right markets and the right segments at the right time.”
SUPERIOR FINANCE SOLUTIONS IN KUWAIT
AND THE EMIRATES
Al Ahli Bank has nearly 40 years of experience in providing customers with the
best financial products and services in Kuwait. Diverse solutions ranging from
investment funds and treasury to retail and corporate banking are available
through 14 local branches. A branch in Dubai and plans for regional expansion make
Al Ahli Bank a unique base from which to support all business opportunities in
Kuwait and the Emirates. The provision of corporate services places a particular
emphasis on the financing of construction, real estate, and trade,
helping build a dynamic future for the region.
AL-AHLI BANK OF KUWAIT
Tel: (965) 240-0900
E-mail: marketing@abkuwait.com, www.abk-kuwait.com
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Our World
Wednesday, June 30, 2004
Distributed by USA TODAY
PRIVATE SECTOR / Firms are diversifying their activities and preparing to play a role in the economic transformation of the entire region
A strategy for success
Businesses are ready
to profit from the new
economic landscape
Revised investment legislation makes Kuwait the logical place for
investors to commence or extend their business in the region
ABDULLAH A. AL-TAWEEL
Minister of Commerce
and Industry
HILAL M. AL-MUTAERI
Vice-President of the
Kuwait Chamber of Commerce
and Industry
the petrochemical sector. We are
encouraging foreign investors
to come in. I hope also to open
up the communication sector.
On the financial side, Kuwait is
very strong. Our banking system is excellent and insurance
is also very good. We are opening that market too,” adds Mr.
Al-Taweel.
The Kuwait Stock Exchange
is considered one of the most
profitable in the region and the
world. “I’m encouraging them
to be a regional market. We are
trying to tie Kuwait with the
Hong Kong stock market. I
would like to make Kuwait a
regional market for bonds. This
will be run by the private sector,” he says.
The U.S. is playing an important role in Kuwait’s economic
transformation, for both strategic
and commercial reasons. “We
are very happy that we are so
close to the Americans. They are
helping us and we are helping
them. I think if they are interested in investing in the Middle East
and especially in Iraq, they should
come to Kuwait,” says Hilal AlMutaeri, Vice-President of the
Kuwait Chamber of Commerce
and Industry.
“We know how to do business
with the Iraqis,” says Mr. Al-Mutaeri. As for the location, Kuwait
City is the nearest. We have a
very advanced banking system
and the best central bank supervision in the whole region. The
National Bank of Kuwait has already been given a license to operate in Baghdad. A free-trade
zone on the border has been approved.”
Kuwait is not only full of opportunities, it also has all the necessary infrastructure for foreign
investors. Civil and commercial
law is secular in origin. The role
of Shari’a law is largely limited
to the spheres of family and social behavior.
Revised foreign investment
legislation endorsed by the cabinet in October 2003 raised the
threshold of foreign investments
to 100% of Kuwaiti enterprises
and provided better long-term
protection against nationalization or confiscation of assets.
Ownership interests in mineral resources are still banned under the
constitution but there are 10-year
tax breaks and exemptions from
customs duties on raw materials
for foreign investments. Tax on
profit has also been reduced; there
is now a ceiling of 25% tax on
net profits.
KUWAIT FOUNDATION FOR THE ADVANCEMENT OF SCIENCES
A global leader in scientific research
■ KUWAIT has been pushing
back the boundaries of knowledge for nearly three decades. It
has one of the most enlightened
and richly-endowed scientific
research programs, not only in
the Gulf region, but in the world.
In 1976, when he was still
Crown Prince, His Highness
Amir Jabir Al-Ahmad Al-Jabir
Al-Sabah established the Kuwait
Institute for Scientific Research
as the government arm for applied research.
At the same time, he
suggested establishing the
Kuwait Foundation for the
Advancement of Sciences to support scientific activities in the
country and the region. The condition was that it could not depend on the government for its
existence but would have to get
support from the private sector.
The leading Kuwaiti businesses of the time were not slow
to take up the challenge. “The
Chamber of Commerce called
for a meeting attended by all
the major share-holding companies. There were 40 of them.
They all agreed to support the
establishment of this foundation by contributing 5% of their
annual profits with no conditions,” recalls Professor Ali AlShamlan, Director General.
Those initial 40 companies
have now increased to 600 companies. In 1998, the endowment
topped $1 billion and the Amir,
who is also Chairman of the
Board, decided to reduce the
percentage for donations to 2%
of profits. In 2003, it was
reduced further to 1%. “He
wants to retain that 1%. It shows
that the private sector in an oil
rich country supports scientific research,” says Prof. AlShamlan.
The result is that Kuwait is
now the leading producer of
scientific research in the Gulf
region. The foundation funds
research in all areas of knowledge. It concentrates on priorities such as environmental
protection, pollution reduction,
and the development of water
resources, oil, and petrochemicals. It also investigates cures
for major health problems like
diabetes.
Every year it awards the prestigious Kuwait Prize, worth just
over $1 million. It has established partnership agreements
with major learning institutions
worldwide, including Harvard
University and the Kennedy
School for Government.
NASSER MOHAMED AL
KHARAFI
President of the Al Kharafi
Group of Kuwait
His company’s management
philosophy is to cultivate
self-confidence and encourage
decision making; to foster entrepreneurial spirit and combine
it with strict business disciplines
and the latest in technology and
business methods. “I have people who have been working with
me for 20 and 30 years. Their
children are now working for
me. It is loyalty. They feel it is
their company,” he adds.
The company motto is:
“Highest,
lowest,
largest, and longest.”
They could also add
fastest to this list. The
construction division
of the group, which is
responsible for onefifth of its revenues,
built the National
Assembly building
in record time. It was
HVAC contractor
for the 1,214 foot
Liberation Tower in
Kuwait City, which is the thirdtallest building in the world. It
also built the Al-Muthanna
Complex, the largest building in
Kuwait, which contains 415
shops, 754 parking spaces, and
683 residential units. It installed
more than 60% of Kuwait’s
sewage system and the strategic gas pipeline for the Kuwait
Oil Company.
Last but not least, it built and
operates the biggest sewage
treatment plant in the world,
using reverse osmosis technology from the U.S.-based
company Aionics. “The government did not put in a penny.
It is all private investment,” says
Mr. Al Kharafi. “We were able
to attract American companies
to invest in the equity, not just
provide the know-how. I think
it is a very important step for
business people in Kuwait to attract foreigners,” he adds. Not
only this but the price for the water treatment plant, which gives
pure water for agricultural
irrigation, is cheaper for the
government then when it was
simply disposing the treated
sewage into the sea.
AL-KHARAFI GROUP INTERNATIONAL PROJECTS
Al-Kharafi Group
■ KUWAIT’S ECONOMY is
enjoying an almost unprecedented boom following the
liberation of Iraq. Business opportunities are multiplying. The
whole region is poised to enter
a period of beneficial economic growth and stability.
“It’s an exciting time for
Kuwait and it is very promising.
After the decision to liberate Iraq,
we made a bold decision to go
with the allies. I think we paid a
heavy price for that but in the end
we proved to those who criticized us that we made the right
decision,” says Abdullah A.
Al-Taweel, Minister of Commerce and Industry.
“As the security level has lowered, trade and commerce has
increased. Kuwait is now in the
right position. We are opening
our country to investors coming in to trade,” he adds. “I’m
not only talking about Iraq. Iraq
is an opportunity for the next
four or five years but there are
a lot of other opportunities in
the northern Gulf – in Iran, Jordan, Syria, and central Asian
republics.”
Kuwait is a logical place for
this economic improvement to
begin. It has a long history of
private enterprise dating from
the early 1900s. Before the discovery of oil, it was a commercial center famous for
ship-building and risky sea-going trade. During the 1950s and
1960s, the state took over many
key parts of the economy in
which it was able to invest. Now
the pendulum is swinging back
and private enterprise is being
invited to return. The current
privatization process gains much
of its strength and energy from
the foundations of commerce
that have always existed in the
country.
The other great economic priority is diversification. “There
is already some investment in
Al-Kharafi Group has an annual turnover of $3.6 billion
Al-Kharafi Group
■ DEAL with one part of the
vast and powerful Al-Kharafi
Group – Kuwait’s largest general contractor and the market
leader in the Middle East – and
you deal with the whole group,
according to Group President
Nasser Mohamed Al Kharafi.
He has taken the business
passed on to him by his father and
made it even bigger and more
successful. It now has such vast
resources at its disposal that
bringing in help from outside is
almost completely unnecessary.
“We never hire if we can help it,”
he says.
The Al-Kharafi Group, a multinational and multi-faceted organization, is diverse but not
fragmented. Its businesses stretch
from construction, through manufacturing, investment, commerce, and development to travel,
tourism, and hotels. With an annual turnover of $3.6 billion, it
is the most representative business institution in the Kuwaiti
private sector.
Most of its major subsidiaries
operate autonomously, while
head office operations provide
corporate services and a central
focus for group strategy. There
is continual cross-support
among the companies and divisions. “We have a lot of resources, so we make good use
of them,” says Mr. Al Kharafi.
The privately-owned group
was established as a trading
company more than 100 years
ago and expanded into a gradeA international contractor following World War II and the
construction boom which followed the discovery of oil in
Kuwait. Domestic success propelled the company into foreign
ventures. By the end of the millennium the company employed
more than 10,000 people.
“I am motivated by achievement. I want to leave a legacy
and contribute to the well-being
of humanity,” explains Mr. Al
Kharafi. This drive and ambition
has made him the 77th richest
man in the world and taken the
business to the top rank of companies in the Middle East.
Al-Kharafi Group
One multinational’s
philosophy cultivates
loyalty and profits
The Marsa Alam tourist development is one of Al-Kharafi Group’s biggest overseas projects
Establishing a regional investment hub
■“IF A GROUP like Al-Kharafi
based in a small country like
Kuwait can go international, it
gives a reputation to the country,” says Nasser Al Kharafi,
President of the Al Kharafi
Group, one of the largest general contracting companies in
the Middle East. “My belief is
that it is very important for a
small country to diversify both
geographically and in its business activities.”
This belief underpins AlKharafi Group’s strategy for turning Kuwait into a place from
which to launch investments in
the whole region. According to
Mr. Al Kharafi, Kuwait is ready
to play this role. “Because of our
roads, our democracy, and our
regulations, people can come in
and go out easily. And we have
a sophisticated stock exchange.
The benefits, he says, will be
enormous. “I have a vision that if
we have stability in this region, you
will not find any region richer.
Here you have mining, you have
agriculture, and you have the richest tourism in the world. People
come for the sea and the sun. In
Lebanon, the views are fantastic,
the sea is beautiful, and there is a
lot of history. Syria is the same,
so are Egypt and Jordan. And there
are only a few hundred miles between them. I hope that stability
will come to Iraq so that we will
feel more secure.”
The Al-Kharafi Group already
operates around the globe. It has
operations in Albania, Botswana,
Britain, the Caribbean, Egypt,
Kenya, Lebanon, Lesotho, the
Maldives, Mozambique, Saudi
Arabia, South Africa, Tanzania,
Tunisia, the UAE, and Yemen.
One of its biggest overseas
projects is the huge Marsa Alam
tourist development at one of
the best diving places in the
world on Egypt’s Red Sea coast.
The resort is approximately 125
miles from Aswan, so visitors
can go diving in the sea one day
and visit the monuments of the
Pharaohs the next.
“We wanted to make something
special. We wanted to build a community and to design the whole
area,” says Mr. Al-Kharafi. The
company has built four hotels and
many apartments for sale or rent.
The hotels are being operated by
Sun, which is also an investor.
The marina, the corniche, the utilities, and international airport –
managed by the Airport de Paris
– are already completed.
“Tourism is fantastic. It is one
of the fastest-growing sectors
with high-income potential,” he
adds. The group also owns Four
Seasons Hotels in Lebanon and
Damascus.
Al-Kharafi’s Egyptian businesses include joint ventures
with Heinz, a large poultry farm,
producers of extruded aluminum, insulating materials, and
car brakes, and a company assembling and selling computers
using Korean know-how. In Saudi Arabia the company owns the
biggest meat-processor and the
biggest cake-making operation.
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Our World
Distributed by USA TODAY
Wedensday, June 30, 2004
8
PRIVATE SECTOR / Local companies offer a wide range of partnership opportunities to U.S. investors in Kuwait and beyond
Leading global brands
trade on Kuwaiti
group’s solid reputation
■ WHEN THE U.S. forces Turkish coffee, and has the globinvolved in the liberation and al marketing rights to franchise
rebuilding of Iraq wanted to and develop a famous brand of
establish American restaurants, roasted nuts known as Al Rifai.
Al Rifai is one of the most
there was only one place they
exciting brands of the group, it
could turn.
The Pentagon went to is a concept based on timeless
Al-Homaizi Group, a diverse and Lebanese roasting recipes and
dynamic organization in neigh- diligent preparation techniques
boring Kuwait, which has a long for roasted nuts, kernels, and
and successful tradition of run- seeds including coffee beans.
ning pizza and burger joints. “I Company-wide sales have
am proud of my managers,” says grown by 400% in the past five
years as the operation
Saleh Al-Homaizi,
Al-Homaizi
has expanded throughChairman of AlGroup was
out the region.
Homaizi Group.
“Our aim in all as“The U.S. army chosen to build
pects of our business is
asked for things to be
American
finished in two weeks. restaurants in related to the conWe had to build the
Iraq for the sumers. You have to
maintain the right
whole thing. The first
U.S. forces
quality and the right
one was opened in
Baghdad Airport. We were real- service otherwise you won’t susly following the soldiers as they tain your share or your place in
were going in and we were feed- the market. From the beginning
ing them with burgers and piz- we have always focused on quality, particularly on the restauzas,” he says.
The company had already rant side of the business. This is
proved itself by successfully run- what has helped us grow over the
ning similar restaurants in years and given us a good repKuwait. From a single Pizza Hut utation with the consumer,” says
unit in 1981, it became the mar- Mr. Al-Homaizi.
Al-Homaizi Group also owns
ket leader in the highly competitive fast food market. It and manages a large number
opened its first Burger King af- of sheep stations in Australia.
ter the liberation following the The group’s founder, Yacoub
Al-Homaizi, father of the curfirst Gulf War in 1994.
rent Chairman, developed a
cross-breeding research unit in
Australia, known as the AlAwasi Project. This resulted in
the production of an AustralianArabic sheep, which is available for export to the markets
of the world.
Mr. Yacoub Al-Homaizi still
runs the sheep-breeding operation. “There is demand for
sheep here because we have to
slaughter sheep in accordance
with religious requirements.
“My father went to Australia
SALEH AL-HOMAIZI
and started this business. Then
Chairman of Al-Homaizi Group
it became a huge company, the
biggest in the Middle East. He
It now operates 82 restaurants was also the first person to
including 43 Burger King change oil tankers into live sheep
outlets and 32 Pizza Huts. Ten carriers. We import two million
more establishments are under sheep from Australia every year,”
construction. “There is one main says Mr. Saleh Al-Homaizi.
The company is continuing
reason why we have been working with U.S. brands for so many to expand. Future projects inyears: we are the right partner. clude a plan to take the IKEA
If we weren’t, we wouldn’t have franchise internationally. “The
had this long relationship,” says group is a stable and credible
name in the Kuwaiti market and
Mr. Al-Homaizi.
The Chairman comes from a in the region. It has a record in
deep-rooted Kuwaiti family terms of efficiency and getting
with a strong tradition of con- things done,” he adds. This is
tributing to the country’s social something which he hopes will
and economic welfare. His fam- attract new potential partners
ily business has a turnover of from America.
“If business people from the
$550 million.
“We are always looking for U.S. or any other part of the
new brands, like when we start- world are looking for an
ed a Lebanese restaurant called associate, it would not be too
Kababji,” he says. The group is difficult to recognize Althe sole agent in Kuwait for the Homaizi Group as a good poSwedish IKEA furniture com- tential partner, based on the
pany. It also trades in luxury history, achievements, and repconfectionery, flavored Arabic, utation that we have.”
Serving the interests of the
Gulf region
Committed to
openness and
deregulation,
GIC is set to
become the
region’s premier
investment bank
■ THE GULF Investment
Corporation (GIC) is one of the
largest financial institutions in
the Middle East. It has authorized capital of $2.1 billion
and total shareholder equity
of over $1 billion.
“In the last three years –
including 2003’s normal and
special dividend payments –
GIC has paid its shareholders
84% of the paid-up capital
and still maintains healthy
shareholder equity of $1.1
billion,” says CEO Hisham
Al-Razzuqi.
In the same year, the value
of the company’s total assets
reached $6.7 billion. This was
an increase of 15.3% over the
previous year end. Its income
was $125 million, an increase
of 38.5% on the previous
year. This expansion resulted from growth in both of the
company’s main business
lines – the Principal Investing activities and the Global
Markets business. The average annual rate of asset
growth over the corporation’s
21 years of operation is 14 %.
“We believe the excellent
economic performance of
2003 will be followed by solid economic growth in the
years to come. Our optimism
is based on several factors.
First, we think that removing Gulf Investment Corporation is committed to providing a comprehensive range of financial services
the Saddam threat is very beneficial for investor confidence. Bahrain, Kuwait, Oman, Qatar,
seeks opportunities to promote
Secondly, the underlying eco- Saudi Arabia, and the United
sustainable non-oil development
nomic fundamentals of the Arab Emirates (UAE). Clients
in the Gulf through investment
economy are strong and include governments, quasiin productive economic
promising in terms of oil governmental institutions, pribusinesses. Recent successful
prices, openness to the outside vate companies, and other major
investments include the estabworld, continuous restructur- investors in the region.
lishment of a new card proing, and deregulation of the
cessing company, Delta Gulf
In the past two years, GIC has
economies. The last
Service, and the development
actively diversified its
three to five years GIC’s services income sources into
of a manufacturer, marketer and
support the alternative assets, eqhave witnessed draservice provider of electric coils
development uities, and Islamic
matic changes and
for motors and generators.
a shift to the private
Recently, the company fibanking products. It is
of private
sector,” says Mr. enterprise and established as a renalized a large investment in a
Al-Razzuqi.
stainless steel factory in the
gional financial instiHISHAM AL-RAZZUQI
economic
This powerful
UAE. It also provides comtution with a strong
CEO of the Gulf
growth
and successful orprehensive investment services
capital base, a diverInvestment Corporation
ganization has its headquar- sified business franchise, clear
to regional investors in equity
ters in Kuwait. It maintains strategic goals, an excellent manand debt instruments. Its GCC
a unique focus on the Gulf re- agement team, and dedicated region in the fields of electrici- Equity Fund, launched last year
gion and is committed to pro- professional staff. “We want to ty, metals, chemicals, and has been a stellar performer.
viding a comprehensive range be the Gulf’s premier invest- financial services, and to help
GIC aims to bring foreign inof financial services that sup- ment bank. We partner foreign in developing the region’s cap- vestors into the country and the
port the development of pri- investment houses with innov- ital markets. Also, to invest in region. “We believe that chemvate enterprise and economic ative international products that world markets using a wide range icals and metals represent a
growth.
would otherwise be inaccessi- of instrumentssuch as equities, good opportunity for investors.
Established under the aus- ble to domestic investors,” ex- debt instruments, alternative in- Although our region is capital
pices of the Gulf Cooperation plains Mr. Al-Razzuqi.
vestments, and private equity.” rich, we recognize that we need
Council (GCC), it is owned
GIC’s Principal Investing (PI) foreign investors for their tech“Our strategy is twofold,” he
equally by the governments adds. “To invest in promising business includes a portfolio of nical know-how and manageof the six member states: ventures and projects in the direct investments. The PI team ment expertise.”
Gulf Investment Corporation
AL-HOMAIZI GROUP
KUWAIT FLOUR MILLS
Bakery dedicates itself to the local community and high standards
three-fourths of Kuwait’s bread.
“We import all our food from
the international market, and
here I mean the main grain
Kuwait Flour Mills
■ MAKING SURE his fellow
countrymen have enough to eat
isn’t just a business for Salah
M. Al-Kulaib, Chairman and
Managing Director of Kuwait
Flour Mills and Bakeries, it’s
a duty. His company produces
needed for human consumption and also for cattle,” says
Mr. Al-Kulaib. Managing this
supply and ensuring that it is
always of the highest standard
is both a strategic and a commercial task, particularly as
food is in short supply across
the whole Middle East region
because of the situation in Iraq.
Although Kuwait’s large
neighbor has the potential for
producing food for the whole
Gulf and Middle East area in
the future, it will be importing
most of its food in the next two
or three years, while it recovers from the aftermath of the
Hussein regime. Kuwait Flour
Mills has prepared for this by
developing new factories.
“We can send more grain to
Grain is imported for human
consumption and cattle feed
SALAH M. AL-KULAIB
Chairman and Managing
Director of Kuwait Flour
Mills and Bakeries
Iraq if it needs it. We have already sent 120,000 tons to Iraq.
We gave them all their grain and
flour for the six months before the
Iraqi port of Umm Qasar was re-
opened,” explains Mr. Al-Kulaib.
Since it was founded in 1961,
Kuwait Flour Mills has firmly
established itself as a central
part of everyday life for the
general public. “Baking bread
is a trade which many people
have abandoned because there
is no money in it. We are not
doing it to make money but to
serve the community. It is a basic need. We have all our bakeries in residential areas so we
have to commnicate with our
neighbors and the community.
We are part of them and are
aware of the public,” he says.
The company has the largest
and most modern European
bread factory in the Middle
East, located in the town of
Sabhan. Grain is imported
through an integrated complex
near Shuwaikh port with
wheat-discharging equipment
to pump wheat directly from
ships into silos. It also manufactures a range of other grainbased products such as pasta
and biscuits at specialist factories and produces vegetable
oil from soya and corn.
“We sell our produce at low
prices but never change the quality. We never cheat on quality or
scale,” he adds. “We perform on
time. We are reliable. This is important. We have signed agreements with Burger King and
McDonald’s and we are going
to sign one with Subway, Kentucky, and Hardees. These companies have very high standards.
They have their own inspectors
and we send our products outside Kuwait for evaluation. As
these American franchisees emphasize quality, all their suppliers are under scrutiny. I admire
the way they work.”
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Our World
Wednesday, June 30, 2004
Distributed by USA TODAY
PRIVATE SECTOR / New horizons open up for firms committed to good business practice in their dealings at home and abroad
LOGISTICS
Company celebrates 25 years of commitment to quality and service
■ KUWAIT’S Public Warehousing Company has secured
one of the most unshakeable
endorsements that it is possible to get anywhere in the
world.
The U.S. Defense Logistics
Agency has awarded it the contract for the supply of prime
vendor food and non-food
products to the U.S. Army, Navy,
Marines, and Air Force in
Kuwait, Qatar, and Iraq.
“Why did they choose PWC?”
asks Essa A. Al-Saleh, Managing Director of the company also known as PWC Logistics.
“Because we are cost effective
and we provide a certain degree
of flexibility. Having one logistics provider that covers the
whole region adds a lot of value. Quality is what differentiates
us from other service providers.
We focus on the quality of our
services. So we are always improving our service.”
PWC, which celebrates its 25th
anniversary this year, provides
leading-edge supply chain, ecommerce, customs, price
research and decision-support
solutions to private and public
sector entities worldwide.
PWC
ESSA A. AL-SALEH
Managing Director of
PWC Logistics
“Anybody who has to move
products from A to B can benefit from working with us. We
The regime change in Iraq the region. We’ll be in a position
represents a great opportunity, to offer third-party logistics and
transportation
says Mr. Al-Saleh. “Iraq alone local
represents 25 million people. It has capabilities. Currently, we are opin almost every
oil, agriculture, and
PWC supplies erating
country in the region. In
tourism, which are the
key foundations for a the U.S. armed addition to the logistics
vibrant economy. Iraq forces in Iraq, node, we have in place
will drive a lot of the
Kuwait, and a regional transportation
growth once the secu- Qatar with food conduit that links every
rity situation improves. and non-food single node. This enables our clients to efGiven that engine of
products
fectively stage and move
growth, it is an ideal
time to invest in the region. That’s products through the region.
“We are continuing to build
why we are investing significant
resources – both financial and hu- for the future. We have experiman – in enhancing our regional enced a lot of change over the
logistics network,” he explains. years and this year is no excep“Our strategy is to develop a tion. We are planning many more
fully integrated logistics network things related to our supply chain
whereby we will have a logistics solutions that seek to bring valnode in each and every country in ue to both our local and inter-
can handle all the aspects, from
local traders to multinationals,
passing through the individual
who wants to store his household
furniture,” says Mr. Al-Saleh.
The company has an extensive
regional expansion plan. Aside
from its operations in Kuwait,
it is also active in Bahrain, Qatar,
the UAE, Saudi Arabia, Oman,
and Iraq. Outside the region, it
has offices in Pakistan, China,
Kazakhstan, South Africa, Tanzania, and Kenya.
PWC Logistics was privatized
in 1997. It is now listed on the
Kuwait Stock Exchange with a
market capitalization of over $1
billion. Its shareholder base of
more than 20,000 investors includes prominent private and
public sector organizations.
national customers. This has been
our philosophy from the start,”
says Mr. Al-Saleh.
PWC is ISO-certified and it always seeks to recruit high caliber
individuals. “Time and again we
have been selected by companies
and government agencies to be
their logistics partner in the region.
We are chosen because of the people we employ, our substantial infrastructure spanning the region,
and our systems which provide total control and visibility,” he says.
“Today we have clients who are
not based in Kuwait, Dubai, or
Bahrain but we serve their needs
in this market. They control their
supply chain from their home base
and we manage their inventory
within the local market. They don’t
need to have a presence here.”
A firm focus on ethics
and employee welfare
Building a business on moral values and long-term relationships
Saleh Jamal, set up a small electrical and
domestic appliances shop in the heart of the
old city.
The two fledgling businessmen swiftly
acquired the GEC (U.K.) franchise. In 1947,
they founded an associate company called
Bader Al-Mulla and Brothers. Within a
short time this new company took on the
Chrysler distributorship and followed this
by expanding into other business areas such
as marine products, air conditioning, travel, and equipment supply.
One of the most respected groups in Kuwait, Al-Mulla builds its success on the basis of human
Following the death of the founder in 1955, resources and quality
his son Bader Al-Mulla took over as Chairsheer hard work made the diman until his death in 1969, when his broth- group also operates modern emversification a major success.
er Najeeb succeeded him, and presided over ployee motivation and loyalty
Throughout the 1980s the group
a steady expansion of the group’s interests. programs with comprehensive
continued to widen and improve
Since then, the group has grown to be one profit-related bonus incentives.
the scope of its operations and
of the largest business houses in Kuwait.
These were introduced early
performance. Today, it has a
“Al-Mulla Group means heritage,” says on in the group’s development.
reputation for delivering on its
Najeeb Abdulla Al-Mulla, who is still Group “Despite the fact that we were
promises. It is committed to
Chairman and holds court at the Al-Mulla enjoying considerable success,
seeking new opportunities in
Diwaniya, preserving this unique
particularly in the auinternational markets. It is cerpiece of Kuwaiti family tradition, Al-Mulla Group tomotive sector, we
operates
tified to ISO 9001 standard and
while making it relevant to the
decided to effect a radmodern
represents 34 U.S. agencies.
modern business age.
ical change through
“Al-Mulla Group stands for
Most large families in Kuwait
the formation of a
employee
leadership and excellence” says
multinational board in
have a diwaniya, literally a place
motivation
Mr. Al-Mulla. The company
1978. This was a
where men meet to talk and
NAJEEB ABDULLA
and loyalty
Chairman itemizes his busiunique change in the
discuss social life, business and
AL-MULLA
programs
ness’s achievements. “We have
way a family compapolitics. Even now diwaniyas repChairman of the
become the largest electroresent the main institution in the social life ny is managed,” he says.
Al-Mulla Group
mechanical company, the largest
The new long-term strategy
and fiber of Kuwaiti life. They are the
embodiment of the traditional ideas of Arab was designed to enhance the finance activity. Business was privately-owned financing serhospitality and communication, which are management of the company. It initially limited to financing vices company, the largest opalso preserved in the behavior of the ruling coincided with a major diver- sales of its own products. But erating lease company, and the
family, who mingle freely with the Kuwaiti sification program carried out after acquiring the necessary second-largest car distributors in
with support from the group’s expertise in the field, business Kuwait. I am proud to say that
people.
In most cases these rooms are now very in-house finance company. The was expanded to cover other over the 65 years of the operamodern, with every type of facility to make group entered markets such as car dealerships. In 1985, it ac- tion, the group has consistently
the visit comfortable. The Al-Mulla environmental systems, vehi- quired the agency of one of the endeavored to achieve standards
diwaniya, however, has chosen to remain cle rental and leasing, fire pro- largest nationalized Indian in- of excellence through the printection, office equipment, surance companies. It then en- ciples of professional managemore conservative and traditional.
“Diwaniyas are small gatherings, which security services, engineering tered the field of brokering in ment, customer focus, long-term
are open to everyone. Anyone can walk in products, computers, and in- insurance and reinsurance ser- relationships with business partvices in partnership with the ners, employee welfare and
without being invited. We have freedom of surance consultancy.
above all, the best business ethics
In the same year, Al-Mulla U.K.’s C.E. Heath.
expression with no fear of victimization.
Sound business sense and and moral values.”
It is good to be able to share your thoughts Group started its consumer
with others freely,” says Mr. Al-Mulla.
Al-Mulla Group may be traditional when it
comes to its diwaniya but it has been completely
modern in the structure and expansion of its
business. It is divided into three main divisions:
commerce, finance, and engineering. The
Al-Mulla Group
Al-Mulla Group
■KUWAIT’SAl-Mulla Group is today one of the country’s largest enterprises and is involved in almost every
area of economic activity. It has come a long way from
its original foundation in 1938, when Abdulla Saleh
Al-Mulla, the then Secretary of State, and his partner
Al-Mulla Group’s businesses include vehicle rental and
leasing, fire protection, and an insurance consultancy
KUWAIT
FLOUR MILLS &
BAKERIES CO.
With our strong commitment to quality, we have gained the
confidence of our customers and partners, because we deliver
what we promise, when we promise.
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Our World
Distributed by USA TODAY
Wednesday, June 30, 2004
10
PRIVATE SECTOR / Opening the door to foreign investors
Entrepreneurs
seek foreign
partners
Kuwaiti business
people are ready to
forge joint ventures
with investors and
capitalize on lucrative
opportunities
Civil and electromechanical works
Foreign capital is sought for
projects ranging from power
stations to shrimp farms
Fouad Alghanim & Sons
Automobiles
■ U.S. COMPANIES who
delay in taking the opportunities
which are coming up in the
Middle East at the moment are
making a big mistake according
to Fouad M. T. Alghanim, Chairman of Fouad Alghanim & Sons
Group, which is one of the
three largest contractors in the
Middle East.
“American companies like
to play a ‘wait and see’ game,
which is not going to help them to come here.”
Bubyan is just one of a long
because others will get here
first,” advises Mr. Alghanim. list of projects that could
“An example of this is the pro- benefit from foreign investor
ject to develop Bubyan Island, participation. “There are prohe says. “It could be developed jects coming up in the next eight
into a free-trade zone to com- to ten years that could amount
pete with Dubai.”
to $50 billion,” says Mr. AlBubyan is the largest island ghanim.
off the Kuwaiti coast, at the far
“Aproject for the northern oil
end of the Persian Gulf. It is fields will amount to between $8
very close to the Iranian and billion and $10 billion. A lot of
Iraqi coastlines. From Kuwait work will be done in Kuwait.
via Bubyan Island it would take There will probably be $4
two to three hours to the Iran- billion for local work.
ian border and half a day to
“If we build Bubyan, we will
Tehran, compared to three days have to build Salibya City, where
to Tehran from Dubai. Iraq is people will live. This is a $5 bilnext door. It could
lion to $6 billion probecome one of the Projects worth ject. The eastern part of
major ports serving approximately Bubyan is one of the
the country.
$50 billion will most beautiful beach“This is where we offer exciting es in Kuwait, and the
need international
western part – which is
companies such as opportunities to mostly marshes – can
Americans or Euro- investors over be used as shrimp
peans,” says Mr. Al- the next decade farms. This in turn is a
ghanim. “Kuwait
$6 billion to $7 billion
today stands out in the Arab world project,” he says.
because of its positive relationThe group is in a joint
ship with the United States,” he venture with an American,
adds. “But opening the door to European, and Far Eastern conforeign investment is a major step sortium bidding for the contoward a much more fruitful econ- struction of the huge 2,500MW
omy. I believe that Kuwaitis North Zone Power Station, a
would like American companies project worth $2.1 billion. It is
Healthcare
Oil
Aviation & Airlines
Communications
Investment
Shipping
Hotel & Tourism
International Trading &
Contracting
FOUAD M.T. ALGHANIM
Chairman of Fouad
Alghanim & Sons Group
also bidding for a $500 million
project to build a second
1,000MW gas turbine.
“I feel we have a very good
chance of getting the project because we are fully mobilized
here,” says Mr. Alghanim, who
also lists a handful of forthcoming petrochemical projects
amounting to approximately
$3.5 billion.
It is important for foreign
companies looking to participate
in these projects to have a local
partner. The government gives
priority to Kuwaiti companies, so
it is an advantage for American
or other foreign companies to
forge joint ventures.
The other major opportunity
opening up through Kuwait –
especially for American companies – is access to Iraq.
Kuwait is the gateway thanks
both to its geographical position
and the relationship between
the people of the two countries,
explains Mr. Alghanim.
“We were very close for centuries until Saddam Hussein
came and introduced hatred for
35 years. He brainwashed
young Iraqis into hating not only Kuwait, but any people who
were not under his direct rule
of command. A lot of Kuwaitis are married to Iraqis. They
have homes and assets in Iraq.
We had a company there and a
lot of projects during the IranIraq war,” he says.
“Currently, our company has
quite a lot of business in Iraq.
We are doing a lot of work related to reconstruction, oil
fields, and security. We have a
joint venture with a British
company there. We supply the
material and equipment, they
supply the manpower from
Nepal. We have also done some
work for several U.S. companies. The American people
know by now that Kuwait is a
friend and an ally.”
The Alghanim Group was established in the
mid 1960’s. In phase with the development of
Kuwait, the Group has grown into a
multi-operational body of companies
consisting of a number of fully independent
divisions as well as fully and partly owned
subsidiary companies based in the U.S.,
Europe, Africa and the Middle East.
Ahead of the game
Today the group engages in an increasing
number of diverse commercial enterprises
that include direct representation of
multinational commercial contractors and
manufacturers, civil construction and
contracting, installation and maintenance of
all forms of mechanical, electrical and
electronic equipment, investment project
management, hotel ownership,
telecommunications, aviation projects, real
estate development, industrial production
and general contracting on both the local
and international arena.
FOUAD ALGHANIM & SONS
GROUP OF COMPANIES
PO Box 2118, Safat 13022 Kuwait
Tel: (+965) 242 4775
Fax: (+965) 242 4130/5251
http://www.fmtas-group.com
fasgl@ncc.moc.kw
Fouad Alghanim & Sons
Top players in all fields
The group in a league of its own
From hotels to hospitals, the conglomerate touches lives around the world every day
■ FOUAD ALGHANIM &
Sons Group operates in ten divisions. Much of its business is
now conducted outside Kuwait
in the United States, Europe,
Australia, Africa, and the Gulf.
“My vision is to let the business grow and grow, both locally and internationally. The
more successful we are, the
more successful the country will
be,” says Group Chairman
Fouad M. T. Alghanim.
The expansion of the company is driven by Mr. Alghanim’s
determination. “I get my motivation from my father. He lost
his business twice for political
reasons. But twice he managed to stand on his own
two feet and become
very well known and
very well respected,”
he explains. “My father taught me one thing
– never give up.”
The Civil and ElectroMechanical Division is the
biggest part of the group. It is
currently working on or competing for projects worth approximately $50 billion. These
include the development of
housing programs, commercial
buildings, the installation and
commissioning of pumping
stations, power stations, and
oil pipelines.
The Communications Division
deals with the design, supply,
installation, and maintenance of
telecom systems. It specialises in
secure communication technology and satellite-based systems.
Mr. Alghanim introduced mobile telephones to Kuwait in the
1970s before the cellular system
was even available. “Initially it
was only a car-based system. Then
in the 1980s, I started the Kuwait
Mobile Telephone Company.
Today, it is one of the largest
companies in the Middle East,”
he says.”
Mr. Alghanim also takes personal
responsibility for
the development
of the Health Care
Division. “Medicine runs in my
blood. I studied medicine in America. But I did not
finish my studies because my father died and I had to come back,”
he explains.
Mr. Alghanim created a firm
called Advanced Technologies
Company. It is now the largest
medical equipment supplier in
Kuwait. Fouad Alghanim & Sons
Group is also venture partner
in the Kuwait Medical Center.
It owns several dental clinics
and is about to build another
hospital.
The group’s Automotive Division is the exclusive distributor and agent for
AM
General
Hummer utility
and recreational
vehicles. It provides sales parts
and service to the
Ministries of Defense and
the Interior and to the private
sector. It also deals in Volkswagen, Audi, Lamborgini, and
Skoda distribution.
The Hotel and Tourism Division owns the four-star Continental Hotel in Kuwait. It is a
partner in the five-star InterContinental Resort Hotel in
Hurghada, Egypt, which is one of
the largest hotels on the Red Sea.
Besides portfolio investments,
the Investment Division is
active in venture capital and
owns a number of companies
in Australia, Germany, the
United States, and Austria.
The Oil Division – which
operates as Energy International
– is a 50/50 partnership with other groups. It is one of very few
companies that has exploration
and oil trading rights in Kuwait.
The International Trading
and Contracting Division produces aluminum profiles and
glass tempering. It operates
in Kuwait and the
wider Gulf region.
The Shipping
Division is one of
the largest in
Kuwait. It represents major international shipping lines,
customs clearance, packing,
and local haulage.
The Aviation and Airlines Division was the first to be established by a non-government
company. It started in the mid1990s with aircraft leasing. Today, the company manages 45
planes through an Austrian subsidiary, Jetta Lines, which is number three in Europe. “We believe
that we’ll be number two by the
end of 2004,” says Mr. Alghanim. He also has an aviation company with the British government,
called United Iraqi Airways. It
has established a firm with the
British government to fly to
Arbil in northern Iraq.
Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content
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Página 3
Our World
Wednesday, June 30, 2004
Distributed by USA TODAY
INVESTMENT HOUSE continues to offer high returns for investors
Dynamic investment firm
faces bright future
The Securities House
K.S.C.C.
“Our mission is to be one of the
most successful Kuwaiti investment
Success has been achieved by earning client trust and working together as partners
■ THIS investment company
has become one of Kuwait’s
most successful investment
houses having doubled profits in 2003 to $34.8 million.
Formed 20 years ago to stimulate investment activity in
the country, today the Securities House Company has a
clear strategic vision, in line
with a constantly changing
world.
The company’s own fortunes
did not always run so smoothly. Following the stock market crash in 1982, Securities
House was saved by the government who moved to assume control of the investment
firm.
As the market eventually stabilized the government once
again signalled its intent to privatize the company. It was the
management and clients of the
company who came together
and approached the government with a view to buying
out its share of the business.
Today, the company has enjoyed great success and has
never looked back. Diversification and integration are
blended in order to reduce risk
and increase profit and more
importantly trust. Declares Ayman A. Boodai, Managing Director and Chairman of
Securities House, “The clients’
interest comes first. When we
introduce a product to our
clients we believe in it and are
not just marketing or selling
something.”
The investment house has also turned its attention to be-
yond its own borders. A subsidiary, Global Securities
House, has been established
as a foreign investment arm
and has already tasted success
in the U.S. and European real
estate markets.The company
is also eager to find new opportunities in other sectors.
Securities House rarely invests
on the stock market. As Mr.
Boodai boasts, “We create not
just speculate.” Education
AYMAN A. BOODAI
Chairman & Managing
Director of
Securities House
companies, for example, have
been established and presented as attractive packages for
sale onto the market. Other
companies are integrated so
that together they can work as
a self-sufficient unit.
The Securities House Company also prides itself on being
a market builder. When prices
rose too high in the industrial
sector a couple of years ago the
company bought a small ce-
ment factory. Today, the plant
has been modernized and has
gained a significant market
share. As the company continues with its own investments
these new subsidiaries come
together and reduce the overall cost of the project.
Most of the incorporated industrial subsidiaries are today
grouped together under Equipment Holding, which will be
floated on the Kuwait Stock
Exchange this year. “One of
our main contributions to the
financial markets in Kuwait is
to introduce new companies
to the stock market,” says
Ibrahim Al-Ghanim, Deputy
Chairman and Deputy Managing Director of the Commercial Companies Sector of
Securities House.
By acquiring companies across
a wide range of sectors, outside of heavy industry, Securities House is fulfilling its role
as a market builder. The various companies, many of which
will eventually be floated on
the Kuwait Stock Exchange,
not only diversify investor risk,
but they also generate business for each other, and in turn
develop the market.
The company is a big investor
in education and healthcare,
as they are seen by Securities
House as representing the future of Kuwait. “We want to
be a major player in health services,” says Mr. Al-Ghanim.
With investments in two large
private hospitals, the company is now planning, through a
subsidiary, YIACO Medicals,
to purchase small medical centers. Securities House believes
that Kuwait has no shortage
of skilled personnel to develop and run the health service
to the highest possible international standards.
One of Securities House’s other success stories is New Technology Bottling Company,
which has grown rapidly thanks
to a contract to supply the U.S.
army with bottled water. Says
Managing Director, Ahmed
Yousif Al-Ghanim, “The future for water bottling is very
bright as there are only two
companies in the business.”
And, always thinking of their
customers, the company has
designed cartons that fit in
schoolchildrens’ lunchboxes.
In a further show of the company’s diversity, Securities
House has recently ventured
into the telecommunications
sector by establishing a company by the name of Streamlink
Communications,
specializing in satellite communications.
Securities House sees this market becoming increasingly
competitive in the future and
is confident of providing low
cost services to the consumer.
Through a strong, trusting relationship with its clients, a
desire to develop and build
new and existing markets, and
its eagerness to reduce costs
wherever possible, the Securities House Company has
proven itself to be one of
Kuwait’s most dynamic and
successful companies.
companies at maximizing shareholders’
value. We will always do what we do
best, and seize opportunities for
strategic acquisitions. We will prudently
expand into new areas where we are
able to utilize our skill to add value
through new products and services. We
are committed to maintaining the
highest standard acquired from our
religion and our culture.”
“ We see Success as a journey,
not a Destination ”
INTERVIEW WITH MR. AYMAN A. BOODAI
Playing a major role in the Middle East
United World: What is your
view on the Kuwaiti economy at the moment?
Kuwait has experienced
very significant events since
the 1990s after the liberation
of our country and the recent
fall of the political regime of
Saddam Hussein. We have
also witnessed, during the last
decade, an extensive privatization program by the government which encouraged the
private sector to take the leading role in the promotion of
the economy. Today, Kuwait’s
geographic position makes it
the gateway to the reconstruction of Iraq. Through joint
ventures, alliances and strategic partnerships with other
nations, Kuwait will have a
major role to play in the
Middle East.
UW: People in the U.S. are
increasingly interested in
Kuwait and it is now seen as
a developed country with
plenty of business opportunities. Why, in your opinion,
would it be convenient to
invest in the country now?
Since the early days of
Kuwait, the founding fathers
had a desire to become business traders, transporting
goods from China and India
to Europe and Africa. As
businessmen they have been
building trust for decades
and for generations they have
carried great credibility. Our
oil exporting, healthy balance of trade, and business
experience
have
come
together to make Kuwait a
more vibrant economy.
We also have political stability and Kuwait is most democratic within the region. The
laws are easier for local and
foreign investments. There is
no shortage of flexibility and
ease in creating, trading or in
selling a business in Kuwait.
UW: What are the reasons
behind the success of
Securities
House
in
Kuwait?
Our company played an
important role in the stabilization of the market after
the stock market crash of
1982. From there we won our
clients’ trust and decided to
acquire the company during
the privatization program.
Our success is built on the
trust of our clients in the
management and the effort to
hire the most talented people,
and on providing the best
possible services.
UW: What services do you
provide
that
make
Securities House different?
Here, the interest of the
client comes first. Any
investment that we offer to
our clients goes through a
rigorous selection process
and we will not recommend
it unless we believe in it and
are part of it. We provide
support for our clients, and
we also receive support from
them.
UW: As a successful company operating under the
guidelines of Islamic Sharia
principles, what involvement have you in the U.S.
market?
Global Securities House is
the international investment
arm of the Securities House.
Its aim is to seek international investment opportunities.
For example, in the U.S. we
have invested in and partnered major institutions to
find opportunities in both the
real estate and private equity
markets. We have invested in
a number of sectors such as
industrial
warehousing,
offices, healthcare and technology. Our latest acquisition, completed earlier this
year, is a property in
Washington D.C., and is currently leased to the U.S.
Coast Guard. We will be continuing to look for opportunities in the U.S. and European
markets.
UW: What does the future
hold for Securities House?
We think that the Kuwaiti
economy is very healthy. We
seek to create and develop new
opportunities for our clients.
When we find the right opportunities for our clients, we are
determined to take on board
the challenge and to successfully complete it.
Tel: (965) 2458550 Fax: (965) 2459287
www.sh.com.kw
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Página 4
Our World
Distributed by USA TODAY
Wednesday, June 30, 2004
12
PRIVATE SECTOR/ Kuwaiti experience is the first choice for international companies seeking partners
Construction boom builds hopes for
new alliances
■ A BOOM in the Kuwaiti construction sector has enabled the
Kuwait Company for Process
Plant Construction and Contracting (KCPC) to grow dramatically over the past three
years. It now has an annual
turnover in excess of $100 million and employs more than
1,000 people.
KCPC, which was recently
listed on the Kuwait Stock Exchange, has become one of the
leading enterprises in the field
MARWAN A. SALAMAH
Chairman of the Kuwait
Company for Process Plant
Construction and Contracting
of engineering and construction services for the public and
private sectors. It has also become increasingly self-sufficient in the technology and
equipment it uses.
The company is now hoping
to expand its business further
through the business opportunities arising out of the liberation of Iraq. “The main
prospects will remain in investment which may produce
interesting opportunities in the
longer term. There is scope for
some logistical support out of
Kuwait but it will be short term.
The greatest prospect is for
Kuwait to invest abroad,” says
Marwan A. Salamah, Chairman
of KCPC.
Kuwaiti companies with the
correct know-how and capabilities stand to benefit. “What
we see now is a flow of businessmen going into Iraq,” says
Mr. Salamah.
“Iraq presents itself as a very
attractive opportunity for people like us to form joint-venture
contracting companies with
Iraqi firms. We can develop
housing projects, fund them,
and complete them. It is not an
KCPC
With experience of business in Iraq, KCPC
is well-placed to assist Iraqi companies
KCPC is one of the leading enterprises in the field of engineering and construction services for the public and private sectors
opportunity to go and try to sell partners to build an office block,
our business but to help in any housing project, hotel, and stacultural development we can, dium, or even to replant all those
working alongside Iraqis. This millions and millions of palm
makes good politics. It gives trees that were destroyed,” exMr. Salamah.
long-term returns and
Reconstruction plains
During the 1980s,
it is something we
know how to do,” he in Iraq presents before the Iraqi invaan attractive sion of Kuwait,
says.
“Many companies opportunity for KCPC had a $200
are now maneuverjoint-venture million contract for
ing and looking for
development building highways in
Iraq. “We built the
partners. But Iraqi
projects
Baghdad-Nasseryia
federal government
projects are being offered sub- highway and a good part of
ject to supply by Iraqi compa- Nasseryia city as well,” he says.
“We have done it all and we
nies. They know that the Iraqi
companies may not be able to have seen it all locally. So it
supply everything, so they en- will save you a lot of time and
courage partnerships and direct effort to work with us. We built
investment. The Iraqis will need the U.S. Embassy in Kuwait in
Cooperation cements contracts
CGC is working
alongside U.S. firms
on projects in Iraq
in the construction business in
Kuwait including roads, bridges,
infrastructure, expressways,
buildings, housing, and oil sector projects,” says Abdul Rahman
Ma’aroof, General Manager of
CGC. In the past five years the
company has completed projects
worth approximately $399
million. CGC’s total assets for
2003 amounted to $51 million.
CGC has a proven record of
completing contracts on time. It
has developed good and friendly relations with owners and en-
Combined Group
■BUSINESShas never been better for Kuwait’s Combined Group
Company for Trading and Contracting (CGC). Although it is one
of the biggest contracting firms in
the country, it has been expanding
as quickly as it can to keep up with
the construction boom that has taken hold in Iraq and Kuwait since
the end of the Hussein regime.
CGC has had to rapidly increase the size if its plant, its
equipment, and its fleet of trucks
to deal with the increasing workload. The firm has also been hiring extra staff. It has developed
a large team of engineers and
specialists in all aspects of construction, and has the ability to
increase its resources as necessary in accordance with the requirement of the projects under
construction.
“There is a continual increase
CGC has ISO 9001 certification and follows international quality procedures in all its activities
gineers throughout the local construction market.
It has ISO 9001 certification
and follows international quality standard procedures in all
its activities. The company uses the latest technology and software available and provides a
high standard of control and follow-up services including material testing, managing
construction operations, maintenance and operation of sewerage treatment, petrochemicals
and industrial plants, and construction of road bridges.
The experience, equipment,
human resources, and information available to the company
puts in a highly advantageous
position. CGC’s know-how is a
valuable asset to any foreign
company planning to execute
construction contracts in the
Kuwait market as partners, joint
ventures, or in consortiums. “We
are aiming to become one of the
best companies performing specialized contracting services in
the Gulf within the next ten
years,” says Mr. Ma’aroof.
CGC is currently participating
in the reconstruction of Iraq. It has
established branches both in
Baghdad and Basra. It is competing for tenders published
a joint venture with Johnson
and Johnson. We did finishing
work worth $100 million on
the Seif Palace with a French
company. Now we are doing a
similar project to finish the Gulf
Cooperation Council’s conference palace in Abu Dhabi.”
KCPC is involved in a vast
array of businesses from the
sale and installation of
Schindler elevators to waterproofing, garage services, and
equipment hire. It is also one
of the major suppliers of water treatment equipment and
services. It has installed over
1,000 swimming pools in
Kuwait and filters the drinking water in most of the country’s hospitals, hotels, and soft
drink manufacturers who need
special water.
KCPC’s Sewage Pipeline
Maintenance department is virtually unique in Kuwait. It installs and maintains much of
Kuwait’s pipework and conduits, constantly monitoring
them with the use of a variety
of computerized underground
surveillance systems controlled
by monitors at ground level.
Roads and drainage construction are also an important
part of a large range of services
provided by KCPC to the
vast Kuwait City district. This
work is facilitated by the
company’s wholly-owned asphalt-mixing and concretemixing operations.
alongside U.S. firms. “No one can
deny the leadership of the United States in the entire world with
its scientific and technological
achievements,” says Mr. Ma’aroof.
The company is not only involved in Iraq. It is also carrying
out international projects in
Indonesia, Uzbekistan, Georgia,
Kazakhstan, Oman, and Lebanon.
The total value of projects undertaken internationally over the
past five years is $96 million.
ABDUL RAHMAN
Through close cooperation
MA’AROOF
with its international partners,
General Manager of the
the company is able to provide
Combined Group Company for
any type of construction service.
Trading and Contracting
It can form consortiums of qualified contractors, design firms,
through governmental bodies and and financial institutions to unfor those announced through the dertake large projects in the MidCoalition Provisional Authority. dle East and the Balkans.
“Our medium-term perspecIt has plans to diversify into BuildOperate-Transfer projects with tive is that there will be a rapid
increase in all busicompanies and other
CGC aims to ness sectors – indusauthorities. “It is our
commerce,
intention to build an as- become one of try,
phalt plant and a con- the Gulf’s best contracting, and railroad transportation,”
crete batch plant in
specialized
says Mr. Ma’aroof.
Iraq,” he says.
contracting
In mid-April the firms within the “Due to the changes
in the region, there has
company joined the
Global Coalition Con- next ten years been a big increase in
sortium, a marketing entity cre- the price of raw materials and
ated by Global Market Link Inc. transportation. We hope that the
Texas, to compete for contracts situation in the Gulf will soon be
in the Iraq reconstruction pro- more stable. We believe that there
gram with a group of American will be an increase in the overall standard of living within the
and Iraqi companies.
CGC is pleased to be working next five years.”
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Wednesday, June 30, 2004
Our World
Distributed by USA TODAY
PRIVATE SECTOR/Al-Sayer Group has interests spanning from automobiles to insurance
Ambitious company aims to
expand its business empire
Starting back in the 1950s, the Al-Sayer Group
has developed wide-ranging business interests
throughout Kuwait and the Middle East
■ KUWAIT has come a long one of the country’s best examway since the days when many ples of a successful and diversitradesmen made a living from fied trading group flourishing on
pearl fishing. New gadgets, smart the back of its highly tuned busicars, and wireless telephony are ness acumen.
now visible everywhere, highWith interests spanning autolighting the country’s transition mobiles, insurance, food, and
into the modern world.
telecommunications, it is now
Yet not all has changed in widely regarded throughout the
Kuwait. Although the last two country and the rest of the Middecades have brought with them dle East region. “Wherever there
great upheaval, extensive social is a business opportunity then we
and political reform, and other would like to go and conquer,”
transformations, the essential says the group’s respected Chaircharacter traits of the
The Al-Sayer man, Naser Mohamed
Kuwaiti people reAl-Sayer.
Group has
main largely the same.
group started
strengthened outThe
In the years before oil
way back in the
relationships 1950s with a small
was discovered, locals
with
U.S. firms trucking operation but
made their living as
to gain new with big ambitions.
traders and merchants,
from an entrepreneurEvery year since, it has
market
ial gift that still sur- opportunities grown in stature. “Now
vives today.
if you look at our webThe development of the pri- site we have many things,” he
vate sector in Kuwait illustrates says. “We have almost 80 franthe appetite among ordinary peo- chises of vehicles, we have heavy
ple to do business and launch equipment, we have earthmovers,
ventures. The Al-Sayer Group is we have food, electronics,
NASER MOHAMED
AL-SAYER
Chairman of the
Al-Sayer Group
telecommunications, office
equipment, and insurance.”
As a family, the Al-Sayers –
who have been in Kuwait for
more than 130 years – come
from the large Muteiri tribe in
the Arabian peninsula. The family has clearly made its mark
since its arrival. Mr. Al-Sayer
describes the group’s reputation in the home market as that
of a ‘sparkling diamond’, a view
that others, including officials
from the U.S. embassy, share.
As a founder of the American-
Before the discovery of oil, locals and merchants made their living from trades like pearl fishing
Kuwait Friendship Group, the
company has built up excellent
relations with U.S. businesses
through the years. Mr. AlSayer believes a key factor in
the success of his business is
trust. “If there is no trust there
is nothing. You have to be honest with all the people you deal
with.” It is this attitude that has
helped the Al-Sayer Group get
where it is today. At the same
time, there is the motivation of
competition and the belief in the
survival of the fittest. “You have
to be a fighter,” he adds.
The company has prospered
on the back of the country’s oil
sector and newfound wealth
over the last half century. Since
its formation it has strengthened its relationships with U.S.,
British, and Japanese firms to
capture new market opportunities. “Before the oil boom, this
region was a very humble one,”
says Mr. Al-Sayer. “After the oil
boom the region was thirsty for
many things.”
Outside Kuwait, the group
has built a network of businesses across the Middle East
and the North African region.
It has established import and
export facilities in places like
Egypt and Syria and built
strong relationships in other
markets such as India and Iran.
The company is eager to further links with American companies both in the Kuwaiti
market and elsewhere. “Regarding the future, I am still an
ambitious person,” says Mr. AlSayer. The aim is to continue to
build the business empire and to
put together a structure that will
enable future generations to benefit and take up the challenge in
years to come.”
Another key part of the group’s
strategy is to train its younger
personnel, including grooming
new faces for management duties. “Whatever is profitable for
us, whatever is required for the
benefit of our people, our country, our region, we will do,” he
says. “The sky is the limit.”
Like others at the moment, Mr.
Al-Sayer sees big potential in Iraq
once the country settles down.
“Iraq has all the resources – oil,
water, people, and plantations. It
is the richest country among the
Arabian countries. We would love
to see it stable, because this would
mean stability for the region.”
DEVELOPMENT
Fund puts its capital into developing
human resources
■ FOR MANY years Kuwait
has been leading moves toward
democracy and human development in the Middle East. It has
been a democratic country since
the 1960s. Now, many other
countries are treading the same
path according to Bader M. AlHumaidhi, Director General of
the Kuwait Fund for Economic Development (KFED).
“Countries in the region are
looking more and more toward
democratization. This is not because of 9/11, or because of
what happened in Iraq, or simply because of U.S. influence.
I think the region has just moved
in that direction,” he says.
One of the key elements in
Kuwait’s success and its future
potential is its strategic regional position. Most important is
perhaps its location between
three major powers: Iraq, Iran,
and Saudi Arabia.
“We have all the infrastructure, we have a very open economy, and we are open politically.
We have advanced laws. The
most important thing is what is
happening in the region and
what is happening in Iraq.
Kuwait is going to be one of the
main beneficiaries of the development in Iraq and the stability there,” says Mr.
Al-Humaidhi.
BADER AL-HUMAIDHI
Director of the Kuwait Fund
for Economic Development
Much of this infrastructure
has been developed thanks to
the work of KFED over the past
40 years. It is a task that the
fund is now passing on to others as it shifts its focus more toward human development. “We
built bridges and other infrastructure mainly to improve the
standard of living. In the past
three or four years we have given more emphasis to people
themselves by involving the
fund in two main social sectors:
health and education,” he explains.
This shift has enabled the fund
to greatly broaden the base of
its work. Human development
projects are much less capital intensive than infrastructure projects. The finance necessary for
a large power station can be
used to build hundreds of
schools. This has become
KFED’s new objective.
The other issue that the fund
is addressing as a priority is
unemployment. It is setting up
projects to help people graduating from schools, universities, and training institutions
who cannot find jobs. This is the
focus of its work in Kuwait and
in developing countries. “We
have established a mechanism
through which we extend soft
loans to people who are trying
to start a project,” says Mr. AlHumaidhi.
When the government set up
KFED in the 1960s, it looked on
it as one of the tools of
foreign policy for the state.
“Kuwait is a small country. We
don’t have a very strong and effective military. Our political
strength can be through the
economy and the fund is one of
those tools,” he adds.
The fund has a major role in
the development of many
areas. It has operations in
100 countries, including the
Caribbean islands, Latin America, Cuba, Argentina, most of
central Asia, China, eastern Eu-
rope, Bulgaria, Estonia, Moldova, and the Middle East. For
many of them the fund is their
only link with Kuwait.
“We think we have a role to
play and a duty to other countries and we are happy to do it.
We are not saying all that we
have done was correct or right.
We have made mistakes but we
are trying to learn from them,
says Mr. Al-Humaidhi. “But this
organization has achieved a lot.
It is highly respected and recognized for its achievements.”
International Finance Co. has established a new company in
Lebanon that will begin operations toward the end of this year
INTERNATIONAL FINANCE CO. aims to
establish itself as a strong regional player
Future holds for
a strong Kuwait
in a thriving
Gulf community
A new wave of investment optimism has
followed the opening of the Iraqi market
■ INFLUENTIAL businessmen in Kuwait are looking
ahead to the future with great
confidence. The fall of Saddam across the border has removed a major threat to
regional security, opening up
new possibilities for cross border trade and investment.
Khalifa Y. Al-Roumi, Chairman and Managing Director
of the International Finance
Company of Kuwait believes
his country will go on to reach
new heights in the next few
KHALIFA Y. AL-ROUMI
years. “Times have changed,”
Chairman and Managing
he says. “Things are much betDirector of the
ter than before.”
International Finance
In the coming decade, he exCompany of Kuwait
pects to see a stronger Kuwait
thriving within a growing and Real Estate Company and The
more prosperous Gulf eco- International Investor. Mr. Alnomic community. As for the Roumi says the company is
company itself, he wants to thriving in the new climate.
move up a gear. “Now we are “We are growing and I want
working between $136 mil- everybody to perceive that the
lion and $204 milStrong legal International Finance
Company is a strong
lion,” he says. “In
protection
company.”
the future we want
and political
Despite the unsetto see this figure rise
to $340 million.” As backing make tled picture, the openthe nation grows, so it a good time ing of the Iraqi
market has facilitattoo will the busito invest in
ed a wave of optiness, he says. “We
Kuwait
mism, enticing more
are a finance company and since the population individuals and organizations
is growing, people will need to invest in the region. “After
our services and that is what Iraq, the GCC region and eswill make us grow. People need pecially Kuwait have grown
very fast, because now people
financing so we provide it.”
There are plans to spread feel safer to invest and put their
across the region with an eye money in the economy. Even
on the Lebanese market and though the Iraqi situation is still
those of the Gulf Cooperation there, people feel safer than beCouncil (GCC) later on. “We fore and more ready to invest
have already established a new in the region.”
It is a good time to invest in
firm in Lebanon which will start
operations near the end of the Kuwait, according to Mr. Alyear, and not this coming year Roumi. He highlights the
but the year after that we plan strong legal protection on ofto expand in the GCC market.” fer for businesses and the poThe aim is to establish the In- litical backing from above in
ternational Finance Company attracting new investment.
as one of the region’s premier “Every businessman, whether
financial organizations. It has Kuwaiti or non-Kuwaiti, feels
already built up a network of comfortable here because we
partnerships with strong local have a constitution and laws
players including the Kuwait that protect them,” he says.
Making it Happen
International Finance Co.
K.S.C ( Closed )
Tel: 00965 820200
www.ifc-kw.com
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Kuwait 10/20 ok lumimar.qxd
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Our World
Distributed by USA TODAY
Wednesday, June 30, 2004
14
PRIVATE SECTOR/International Financial Advisors has changed its fortunes, from a loss in 2003 to a $81 million profit in 2004
Management
strategy turns
profitable
concern into
a big player
Pursuing a broad investment profile, the
firm’s success is based on a responsibility
to its shareholders and to its employees
■ LOCAL finance group International Financial Advisors
(IFA) is doing more than its
fair share in promoting the development of Kuwait and the
wider region. With millions of
dollars tied up in a whole range
of investment projects it is a
key player in making the economy tick. Making things happen comes easy for Chairman
and Managing Director Jassim
M. Al-Bahar. After taking the
company over from the government in May 2002 it has
transformed its fortunes from
a modestly profitable concern
into a major player. During the
first full year of operation it
turned the company around.
From making a loss during the
first half of 2003 it went on to
make a profit of $81 million in
the first quarter of 2004. “That
did not happen by accident,” he
says. “We have a strategy. We
know where we are going and
our responsibility is to add
shareholder value.” That is exactly what the company did.
“In 2003 we gave 40% cash
dividend, 40% share dividend,
and an increase of 20% in the
capital of the company.” It
means the company has expe-
rienced rapid growth since it
was privatized. “The company
started with about $50 million
– with the capital increase we
have taken this to $100 million. Hopefully we will go on
doing this.”
IFA has been very active on
the local Kuwait Stock Exchange, following mergers and
acquisitions, and pursuing high
growth sectors like tourism. It
holds a range of tourism assets
including a stake in the flagship Palm Jumeirah develop-
JASSIM M. AL-BAHAR
Chairman and Managing
Director of International
Financial Advisor
IFA holds tourism assets in Europe, South Africa, and the Middle East and has plans for the Maldives, Mauritius, and Zanzibar
ment off Dubai. It also boasts
extensive interests abroad. Its
first overseas foray was in 1985
with the establishment of the
Sheraton Algarve in Portugal.
“From a strategic point of view
our aim is to be present in Europe, in the Middle East, and in
South Africa, all of which we
are in already.” There are further plans for the Maldives,
Mauritius, and Zanzibar.
Mr. Al-Bahar has confidence
in the local economy but believes the development of
Kuwaiti tourism is still embryonic. The situation in Iraq still
exerts an influence. “That does
not mean there are no future projects in Kuwait,” he says. “Nevertheless let us not deceive
ourselves – what tourists are going to come here when we have
the Iraq situation next door?
Once there is stability then we
can concentrate on Kuwait too.”
The future looks promising,
however. The government is re-
vising many of the country’s and will reoccupy its historical
tax laws in a bid to entice more position of leadership in the difinterest from foreign investors. ferent areas of investment.”
Although globalization has
“Kuwait today should be ready
to seize the opportunities that are become a modern day buzzopening up. But for true op- word, IFA is simply continuing
portunities to arise there has to the trend started by Kuwaiti
traders many years ago. “What
be stability in Iraq.”
Mr. Al-Bahar believes Kuwait we are doing is an extension.
has always been Kuwaitis were Kuwaitis were global
something of a traders before traders even before
We had
leader in terms of inthe revenue globalization.
nothing before oil –
vestment, and as a
from oil,
our ancestors were in
centre for innovation
and
IFA is
dhows going to India
and business. This is
and East Africa. We
a role that he wants
continuing
are the modern seafarto continue through
this trend
ers of our ancestors.”
his own organizaThe human factor remains an
tion, alongside the direction of
the government. He supports integral part of the company’s
efforts to attract new invest- strategy. At the heart of the comment into the country. “With pany’s development is its comthe present drive of the gov- mitment to teamwork and support
ernment to revise the commer- for its employees. “In a nutshell
cial and tax laws and thereby our responsibility is to our shareattract foreign investment, we holders and to our employees. If
are reasonably confident that you take care of them you take
Kuwait will take a leading role care of your company.”
IFA COMPANY PROFILE
●
Hungry for more success,
IFA has set out an
aggressive expansion
program covering the
tourism sector and other
fast moving areas. Already a
major player in parts of
Europe, South Africa, and
Dubai, there are big
ambitions ahead. “We look
at ourselves as a regional
company but we would like
to become a global
company,” says Jassim M.
Al-Bahar, Chairman and
Managing Director. “When?:
the sooner, the better.”
●
The ambitions are there for
all to see with the high
profile Palm Jumeirah
luxury resort now underway
in Dubai in which IFA holds
a substantial interest.
Elsewhere, its portfolio
includes the Sheraton
Algarve in Portugal – its
first tourism venture
abroad – while there are
plans to open up the Indian
Ocean market, including
Mauritius and the Maldives.
●
The emphasis is always on
a high quality tourism
product. As well as resort
development the company
is targeting a fairly new
concept in part time yacht
ownership. Already well
established in Dubai, there
are plans for other
international yachting
subsidiaries to be opened
including IFA Cannes this
summer and IFA Beirut
from September. Other
markets are being looked
at. “We will have three
yachts placed in strategic
locations,” says Mr. AlBahar. “We follow our
client – we follow the Arab
tourist.”
PALM DUBAI
Palm resorts will boost the region’s tourist credentials
■ INTERNATIONAL Financial Advisors is currently spearheading one of the most high
profile tourism developments in
the world, The Palm-Jumeirah
man-made island resort in
Dubai.
Arguably the Gulf’s most cosmopolitan city, Dubai is already
a magnet for foreign tourists.
The new venture is expected to
underline the destination’s international credentials as a global tourist and business hub.
IFA Hotels & Resorts, a subsidiary company, is developing various projects at the resort.
Its initiatives on the unique
man-made island site cover a
sizeable area of the ‘trunk’ and
will offer just over 1,200 rooms
on the beach, 450 apartments
and 60 boutique shops. This in-
cludes the twin-tower Palm
Residence, an exclusive beachfront enclave of 246 super luxury shoreline apartments, the
five-star 300 room Palm Hotel
and Resort, and the 460 allsuite Palm Vacation Club.
Jassim M. Al-Bahar, Chairman and Managing Director of
International Financial Advisors, is convinced about the project. The location could not be
better, while the scheme itself
is beyond the imaginations of
most project developers. “Dubai
is thriving,” he says. “It has investment opportunities and regulations that are encouraging.
This is one of the attractions
that made us invest there. We
now have close to a billion dollars in investments in Dubai.”
The Palm initiative – a kind
The Palm Jebel Ali will mark Kuwait’s high profile tourism landscape
of tribute to the date palm tree
– will see the creation of two
man-made islands in the shape
of palm trees roughly 15 miles
apart. As well as The Palm
Jumeirah there will also be
The Palm Jebel Ali. The project is immense in scale. If all
the materials used to build just
one of the islands were placed
end to end, a wall two meters
high could circle the world
three times.
The project underlines the
growing confidence from within the region. Mr. Al-Bahar says
he believes Kuwait and other
members of the Gulf Cooperation Council region, which includes the UAE, have a great
future. “I believe in the GCC
becoming a true economic area
which it is not today.” After all,
he argues, if Europe can do it,
a continent divided for thousands of years by conflict, why
can’t the Gulf?
Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content
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Wednesday, June 30, 2004
Distributed by USA TODAY
TELECOMMUNICATIONS / Sending out the right signals
MTC COMPANY PROFILE
● Mobile Telecommunications
Company (MTC) was founded
in 1983 and is the largest
mobile operator with almost
700,000 customers. MTC is
listed on the Kuwait Stock
Exchange and has achieved a
solid reputation for its high
level of business success.
World-class standards
underpin company’s
international ambitions
●
In September 2002, MTC
entered into partnership
with Vodafone, the world’s
leading mobile communication company. The
agreement was the first of
its kind in the Middle East
and has been followed
closely with an agreement to
work as a partnership on the
second GSM license in
Bahrain. MTC-Vodafone’s
Bahrain service commenced
on December 15 last year
and was formerly launched
on December 28, 2003.
●
As a partner network, MTC
offers Vodafone and its
partners’ customers
seamless access to
Vodafone’s international
services whilst traveling in
Kuwait. MTC customers now
enjoy the benefits of
Vodafone’s existing services
and its innovative service
pipeline, enabling easy
access and service delivery.
●
Aside from its partnerships
with Vodafone, MTC will
continue to seek new
partners in key strategic
locations and projects. MTC
has a strong history and
sound reputation for
bringing new opportunities
and services to the market
for the benefit of its
customers and shareholders.
●
MTC constantly seeks to
forge partnerships with key
global companies to bring
the best products and
services to Kuwait and the
Middle East.
As the Middle East telecom market grows, Kuwaiti firm MTC is
exploring opportunities to improve its standing at home and abroad
■ THE MIDDLE EAST is going to be the world’s fastestgrowing telecommunication
market over the next five years.
The company that stands to benefit most from this expansion is
Kuwait’s Mobile Telecommunications Company (MTC).
“We believe the market will
double over the next five years
and reach 20% penetration, becoming the fastest-growing mobile market in the world,” says
Dr. Saad H. Al-Barrak, Director General.
There are an estimated 25 million mobile phones in the Arab
of a GSM service provider than
a mobile operator. So we are
geared toward providing services
that will influence people’s everyday lives, their entertainment and
business. Our biggest problem is
the state-controlled telecom sector. We need to develop our
telecommunication laws, revamp
our investment laws to encourage
foreign investment, and gear up
the whole system to make the best
use of foreign capital.”
Progress in this regard over
the region is patchy. While countries such as Bahrain, Morocco,
Jordan, and Tunisia have opened
world, and approximately 270
million people. That amounts
to an 8% to 9% penetration of
the market.
Regionally, there has already
been considerable investment
in the sector. Seven years ago
the Arab world invested approximately $13 billion to bring
its telecom systems up to the
level of developed countries.
The teledensity (average number of lines per person) before
the introduction of the mobile
was less than 7%.
“We still have a long way to go,”
says Dr. Al-Barrak. “We are more
IN PROFILE: DR SAAD H. AL-BARRAK
Leading the Middle East telecom market
■ DR. SAAD Hamad Al-
Barrak started his career in 1978
as an electrical design engineer
for the Kuwait Pre-Fabricated
Buildings Company. Then, after a time at the Kuwait Institute for Applied Technology as
an Instructor within the Production Department, he joined
International Turnkey Systems
(ITS) as a Project Engineer in
1983. He dealt with pre and
post-sales support for integrated information systems.
Dr. Al-Barrak’s career with
ITS blossomed. In 1987, he took
over as General Manager with
overall responsibility for general and business management.
Under Dr. Al-Barrak's guidance,
ITS increased its revenue base
from $5 million in 1987 to well
over $40 million by the end of
1995. This base rapidly grew to
$100 million in 2000, making
entered into a ground-breaking
partnership with Vodafone Group
PLC, resulting in the launch of
the MTC-Vodafone brand.
By the end of 2002, MTC had
acquired Fastlink of Jordan from
ORASCOM. This acquisition
was widely considered to be the
largest single acquisition within
the Middle East telecom sector.
In April 2003, MTC-Vodafone
was awarded the second GSM
license in Bahrain against very
stiff competition. In September
2003, Atheer Telecommunications – a consortium 50% owned
by MTC and the remainder by
private Iraqi investors – won the
license to start a GSM network
in Southern Iraq.
These steps form part of Dr. AlBarrak’s long-term vision for the
company in its drive toward being recognized as a strong, and resilient regional telecom business.
SAAD H.
AL-BARRAK
Director General of MTC
ITS one of the leading integrated
information systems companies
in the Middle East.
In June 2002, Dr. Al-Barrak
joined Mobile Telecommunications Company (MTC) as Director General. Soon after, MTC
Changes bring
spectacular results
MTC
Bold management decisions have boosted MTC’s market
value and transformed its performance rates
MTC has 2.5 million customers in the region and is expanding
■ IN 2002, Kuwait’s Mobile
Telecommunications Company
(MTC) reached a turning point
in its history. The company was
established in 1983, making it
the oldest mobile telecommunication company in the Middle
East. It pioneered many of the
mobile telecommunication services and technologies in the region. It launched analog services
in 1986 and its first GSM network
in 1994. By 2002, MTC was a
totally privately-owned business
with $500 million in its reserves
and no debts.
“It was a unique position,”
says Dr. Saad H. Al-Barrak, the
company’s Director General. He
was recruited after transforming
the nearly bankrupt ITS into one
of the Middle East’s leading IT
companies. MTC had vast resources at its disposal but the future didn’t look bright. Dr.
Al-Barrak explains: “ It was going to lose up to two-thirds of
its market value in five years’
time if it continued at the same
performance rates.”
The solution he said was to be
bold. “We agreed to leverage
this unique financial situation
and expertise to evolve into an
international company. There is
a motto I believe in: “Be first,
be daring, and be different! To
me, this is the motto of success.
Never accept second place. In
every market we have to be the
leader. At that time, Wataniya
Telecom controlled most of the
pre-paid sector. So we decided
to invade their market,” he says.
“In 2003, we took two-thirds
of Wataniya’s pre-paid market
in Kuwait. This changed the
company and boosted morale.
Now we are on a par with
Wataniya on the pre-paid side.”
Next, Dr. Al-Barrak brought in
the U.K.’s Vodafone, which led
to the launch of the MTC-Vodafone brand. “This meant change
in the company. There is change
by preaching and theory, and there
is change by action. In order to
become a global company you
must aspire to world-class standards. We went to Vodafone and
said we wanted to have a strategic agreement with them,” says
Dr. Al-Barrak.
“To gain this agreement we
had to improve in every area.
They have exacting quality standards and technical systems and
every product must be approved
by them and pass stringent
testing and quality procedures,”
he explains.
“We signed the Partner Network Agreement with Vodafone
in September 2002, just three
months after I joined MTC. Now,
MTC in Kuwait and Bahrain carry the Vodafone brand.”
The results were spectacular.
In 2003, the group’s expansionary platform achieved a 92%
increase in revenues to $865
million. The group exceeded its
profitability objectives. Net income for 2003 increased by
36% to $346 million. It signed
up its one millionth customer
in Kuwait in early April.
The company is now looking at
possible future business opportunities with America. “If you are
not present in the U.S. in one way
or another, then you have no space
to breathe as a global company.
We want to be a force in these
global markets. From every direction,” explains Dr. Al-Barrak.
MTC wants to expand outside the Middle East region into areas
such as Asia and Africa
MTC had pulled out of an earup their markets, some advanced
countries such as Dubai have lier failed privatization process
yet to liberalize their telecom in- there, arguing that the governdustry and enable competition. ment had set terms which were
MTC is a major operator in impossible to meet.
The company is almany of these counThere is
so bidding for GSM
tries. It has 2.5 million
huge growth operations in Oman
customers in the repotential
in the and Saudi Arabia. “We
gion. This includes a
Arab world
million each in Kuwait
are facing extremely
and Jordan, two of the where less than tough competition,”
most advanced mar- 10% of people explains Dr. Al-Barrak.
kets, where it is the have a mobile “There are 12 compaunquestioned leader.
nies competing in SauIn Kuwait, the company of- di Arabia and ten companies
fers its customers one of the competing in Oman.”
lowest tariffs. This strategy has
MTC is even active in Iraq. At
secured it a market share of 61% the end the of December 2003, the
by revenue and 53% by num- Coalition Provisional Authority
ber of customers. In Jordan, it awarded a formal license agreecontrols three-fourths of the ment to Atheer Telecommunicamarket by both revenue and tions to develop and operate the
number of customers.
GSM network in the Southern reThe company is also on its way gion of Iraq. Atheer is operated
to a dominant position in Bahrain, and managed by MTC, which
where its subsidiary is introduc- owns a 50% stake. The remaining the most advanced 3G der is owned by Iraqi investors.
and EDGE technologies. Earlier
There are currently 150,000
this year, it successfully bid subscribers in Iraq. MTC has in$201 million for the license to op- vested $1.2 million and hopes to
erate state-owned LibanCell, one secure 300,000 subscribers.
of the Lebanese mobile operators. Atheer wants to operate in the
This is a project which could lead other two zones of northern and
to the eventual liberalization and central Iraq after it meets its obligations in the southern region.
privatization of LibanCell.
IT SOLUTIONS
Leading firms get an added-value service
■ONE OF Kuwait’s rising stars,
Zajil International Telecom Co.,
has carved out a reputation for
itself in the local market supplying IT solutions to some of
the country’s leading corporate
names. Its client list is impressive, grouping many of Kuwait’s
biggest financial institutions,
the likes of Burgan Bank, and
international oil and gas firms
such as ChevronTexaco.
The company was established
in 1991, a grouping of two previous entities, one in Kuwait itself and the other from Saudi
Arabia. After a decade stamping its authority on the local
market it has also broadened its
horizons across the seas, forging strategic partnerships with
multinationals like Sprint and
Cisco Systems in the U.S., Japan
Telecom, and BT in Europe.
Khalifa O.. Al-Soulah, Zajil’s
CEO, says the aim is to be able
to support its clients wherever
they wish to go. “We are focusing on the top 500 companies today – we focus on the banks, the
big financial institutions, oil companies – this is our customer base.
Our aim is to help these companies and provide added value services, always looking out for their
needs, and to do that we have to
understand their business.”
Zajil provides high quality
and flexible voice and data com-
munication services to its clients,
supported by guarantees on reliability. Typically, it helps banks
connect branches, remote office
sites, and employees through a
purpose-built network using
state-of-the-art digital technology. Internet and networking
solutions are an important and
growing area of the business.
KHALIFA O. AL-SOULAH
CEO of Zajil International
Telecom Co.
Already well known in Kuwait,
the company is looking to establish itself as a regional ITleader
and move ahead of the pack as
the next generation of wireless
communication evolves. The
small size of the Kuwaiti market
means that the firm must look
across the border to grow. “We
have to be a regional player oth-
erwise we will not grow enough
to justify the new investment in
technology and track the changes
which are happening.”
According to Mr. Al-Soulah,
Kuwaiti firms are at something of
an advantage because of the early liberalization of the telecoms
sector beginning in the late 1980s
and early 1990s. But it is crucial
to move with the times. Zajil is
currently talking to mobile phone
companies and other potential
partners about how best to spread
wireless coverage. “Kuwait is a
small country – if we invest in
wireless and provide it in malls
and coffee shops, restaurants and
hotels, this will not be a big investment compared to companies in the U.S.” It is also keen to
tap the evolving government outsourcing market, another potentially vast source of business.
The way forward is through
partnerships, says Mr. Al-Soulah.
He says a lot of international companies are approaching the firm
with a view to creating links or
to merge and create a bigger organization. Although Zajil is in a
strong position to choose, it remains alert to new opportunities.
“We are in a very fast moving
market – it changes constantly,”
he says. “Generally in the technology business if you don’t grow
you die so we have to grow and
we have to develop our people.”
Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content
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Wednesday, June 30, 2004
16
OIL SECTOR / The state-owned Kuwait Petroleum Company is one of the largest and most exciting integrated oil firms in the world
Massive oil investment
plan for the next decade
KPC controls reserves of 96.5
■ THE KUWAIT Petroleum
Corporation (KPC), one of the billion barrels of oil and 52.7
world’s largest integrated oil trillion cubic feet of natural gas.
concerns, is also one of the most Its oil production has recovered
exciting, with a massive pro- from the damage inflicted by
gram of planned investment over Iraqi forces during the 19901991 occupation, but its infrathe next decade.
The state-owned company structure is still in need of huge
was founded in 1980 to bring investment. In particular, it is
together all the elements of the investing in new technology to
Kuwait oil sector under one deal with the heavier crude,
corporate umbrella. Today it is which the company is beginresponsible for the country’s ning to extract from deep in the
hydrocarbon interests through- fields to the north of the country. These fields could
out the world with
The company in time double the
operations on six
remains
company’s output up
continents.
KPC faces a num- commited to and to five million barrels
ber of challenges over fully integrated in per day.
“There is a potenthe coming years, exthe local
tial
strategic role for
plains its Deputy
economy
U.S. oil companies in
Chairman and CEO
Nader H. Sultan. The company developing the resources we
is bringing in international ex- need in Kuwait,” says Mr. Sulpertise but also ensuring that it tan. “We have the funding but
remains fully integrated in the we have some technological
local economy. “Domestically, problems with much heavier oil,
our capital budget from now to with a lot of water content that
year 2020 is somewhere be- we have to dig deeper to get to.
tween $ 40 - 45 billion in all The oil is in the ground. The
sectors. We try to include clauses markets need it. It’s right there,
in our major construction and but the technology will be a
maintenance contracts saying challenge for us. So that’s why
that contractors must use a giv- we must have the international
en percentage of local goods, companies present in Kuwait to
local services and local plants. help us.”
This is called ‘local content’,”
The company is well aware of
he says.
its obligations for the safety of
the international companies that
it is bringing in to take part in
its investment program, says the
CEO. “Security is more than a
concern. It’s one of the givens
of our responsibility. It’s part of
our responsibility to make sure
that the people who are coming
to work for us have safe working environment.”
“ In the last two years we’ve
been working with Dupont, a
U.S. company that is number
one in the world in safety management systems,” he adds.
“While we already have a safety management system here,
they are now creating an integrated system incorporating the
latest policies, standards and audits,” he says.
KPC also takes its environmental responsibilities very seriously, particularly as so much
of its production is exported.
Out of a total oil production capacity of 2.4 million barrels per
day (b/d), the country itself consumes just 120,000 b/d. Its
fourth refinery, a $4-5 billion
project due to go into production in four years time, will
process 430,000 b/d. “So most
of our products have to meet
international specifications. In
Kuwait we have projects to
eliminate all emissions from
our refineries within two years.
Out of a total oil production capacity of 2.4 million b/d the country itself consumes just 120,000 b/d
I have to meet the markets of
the next 20 years, so I have to
think about what the trend will
be and design my refinery to
meet those specifications,” says
Mr. Sultan.
Future plans aim for
greater output and
a highly motivated
local laborforce
Deputy Chairman and CEO of the Kuwait
Petroleum Company talks about the
challenges facing the oil business
KPC aims to privatize many activities
Local employment is a major challenge
In Kuwait water is more expensive than oil
Denationalization
will draw foreign
oil expertise
Trying to redress
the employment
balance
Desalination is a
vital link in the
water supply chain
■KUWAIT could become the first country
in the Arabian Gulf to denationalize its oil
and gas industry when the government’s
long-awaited draft oil bill finally becomes law.
The bill will bring foreign companies
back to the upstream sector providing technical service and operating contracts. “We
are looking to privatize many activities:
the chemical side, the tankers, the local
petrol distribution, lubricants, and fertilizers. All of these are things which the private sector can do either fully or partially
in the future,” says Deputy Chairman and
CEO of KPC Nader H. Sultan.
The Kuwaiti constitution does not allow
foreign ownership of oil resources, so bringing in new companies and technology to provide non-core services is the only way that
privatization can go ahead. The first deals
are planned at the forthcoming $7 billion
‘Project Kuwait’, which will develop a new
oil field in the north of the country.
KPC is also trying to bring more private
business into the downstream petrochemicals sector. Every two years it holds
a seminar advising companies how to build
factories. It sees these firms as building
blocks not only for a diverse production
of petrochemical products but also as making finished goods from these products.
■ JOB creation is a major challenge in
Kuwait’s highly capital intensive oil industry, which contributes 50%of the country’s
GDP but less than 3% of its employment.
“This raises an issue for the country because oil, as the engine of growth, does
not create that many jobs,” says Deputy
Chairman and CEO of KPC Nader H. Sultan. “We have a lot of hardware, we have
huge machines and equipment that do the
work of many people. The paradox that
this creates for the company can be seen
in an upcoming project, which will cost
$1.5 billion but will give long term employment to just 400 people.” You could
employ the same number of people in a
service industry such as in a five-star hotel, after investing less than one tenth of
the same capital cost, he says.
The situation is made more complicated by the fact that at present many private sector jobs are taken by non-Kuwaitis.
As the leading company in the country,
KPC has headed toward solving this problem. It is trying to redress the balance,
obliging its contractors to hire a minimum of 25% of Kuwaitis on any project.
“We work hard with the contract forms
to make sure this obligation is fulfilled,”
says Mr. Sultan.
■ LIKE many other countries in the Gulf
region, Kuwait has to work hard for every
drop of water. “This is a huge challenge specially for the region. Water is more
expensive than oil,” says Nader H. Sultan,
Deputy Chairman and CEO of KPC, which
itself could become a supplier of water.
The company is pumping up water along
with its oil in some places. “If we are producing four to and a half million barrels
per day of oil, we will be producing around
10 million barrels per day of water,” he says.
Presently the water is unusable because
of its high saline content. This however can
be overcome by technology. Most of the
country’s water now come from desalinated seawater and groundwater reserves. Total storage capacity is a little under 300
million gallons. The sector suffered some
damage during the Iraqi occupation, but capacity, for now, continues to exceed demand.
It is an expensive and energy intensive
way of supplying the country. A preliminary plan to import water from Iran via
a pipeline could secure a cheaper water
source. But as the population of the whole
region grows, Kuwait can expect strong
competition from its neighbors for the acquisition of these limited sources of excess water.
RELATIONS WITH THE U.S.
Focusing on opportunity and how to work together
■ THE KUWAIT Petroleum
Corporation and the U.S. enjoy a relationship based on a
win-win situation, according
to Nader H. Sultan.
“If you look at the world, twothirds of the oil reserves are in
the Middle East. American oil
companies have the markets and
we have the reserves,” he says.
The nature of the relationship
has been best described by Vahan Zahoya the Washingtonbased President of Petroleum
Finance, who told the U.S. Senate during the Iraqi war that they
should distinguish between very
strong commercial suppliers and
very important strategic sup-
pliers, he explains. “The strate- been a key source of stability on
gic suppliers are Saudi Arabia, world markets by maintaining
the Iraq and Kuwait,” says Mr. spare capacity. Commercial
Sultan. “We had two million companies will not build up capacity and then leave
barrel production before the Iraq war, we There is huge it idle.”
potential in
Studies show that
produced that spare
capacity during the Kuwait for local the oil is available for
war. This was the firms to work the world’s needs unequivalent of all the with American til at least the year
2030. “But the realioil of the Caspian
companies
ty is that these oil rearea, Russia and Angola. When oil companies go to sources are not in the place
Russia or elsewhere, they have where the markets are,” says
to look at maximizing the eco- Mr. Sultan. “This means that
nomic recovery in the life time there will be an 80% increase
of the contract. The govern- in the trade of oil because the
ments of the Gulf have done resources are here in Kuwait,
something different. They have Saudi Arabia and Iraq but the
markets are there, in the States
and China and they are resource poor countries. We
have to address these issues.”
Mr. Sultan advocates avoiding confrontational commercial tension and instead asking
whether there are opportunities
to look at and how to work together. “KPC will create the opportunities for American
companies to have strategic
commercial relationships. There
is a huge potential in Kuwait to
work with American companies.
We also need to explain to the
U.S. public that KPC, State of
Kuwait, is a reliable and long
term strategic supplier,” he says.
United World: What role
do you see for Kuwait in
satisfying the increasing
demand for the energy in
the world?
A recent economic study predicts that world oil demand
will increase from this year’s
80 million b/d to 120 million
b/d by the year 2030, but current production is decreasing
because of natural decline
curve. This means that the
world will be more dependent
on the Middle East because the
reserves are here and because
in relative terms, exploration
production development costs
about two dollars a barrel and
transportation costs are much
less. In Russia you are talking about $8-10 per barrel and
$10-12 in America itself. So
Kuwait offers some of the
cheapest production and distribution.
UW: What are the challenges that KPC is facing
domestically and internationally?
Domestically we face the
challenge of investing $40
billion dollars over the next
15 years in a way which will
benefit the company and
country while creating jobs.
The other challenge we face
is to make sure we can manage the projects efficiently.
That is very important to us.
We are talking about a business which will eventually
be two to two and a half times
the size of KPC today in
terms of production. We are
now at 2.4 million b/d capacity and our target is four
to five million. This means
on the human resources and
management side, getting
the resources behind the
scenes so that we have the
right capabilities.
UW: What would you like
to achieve here at KPC?
I would like to take the company to a different level; to
build on what we have created and take it further. I want
to have more people employed at KPC and to improve the morale of all
employees. I think one challenge I would love to be able
to achieve also is to increase
the technical competence
of people. When I look at
Schlumberger, they have very
effective training capabilities. If we can reach this level of training and enhance
people’s capabilities, it would
be a great achievement.
NADER H. SULTAN
Deputy Chairman &
CEO of KPC
UW: What would you like
our American readership
to remember about Kuwait
and KPC?
At KPC, we always thought
of America as an important
market, and we want to be
a strategic supplier. That’s
very important for us. We
are making the right investments to work with international companies in
order to achieve this objective. So we really want to
invite American companies
here and to work with them
because we really appreciate being a commercial partner with the U.S.
On a personal level, I believe it is very important to
have a vision and clarity of
where you are going. To
me, a vision is setting yourself a two-year goal and
making improvements to
achieve it. When you have
made those improvements,
you can say you are making progress. One of my
personal challenges is how
can one improve the lives of
the younger people here?
But by improving their outlook, their training and their
development you can actually see that change happening.
Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content
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Our World
Wednesday, June 30, 2004
Distributed by USA TODAY
TOURISM / Culture, cuisine, and comfort promise an unforgettable stay for business people and vacationers
cultural roots are drawn from
the desert and sea. So it’s not
surprising that its people
spend a lot of time at the
place where these two environments collide: the beaches that line the warm azure
waters of the Arabian Gulf.
In recent years, the State
of Kuwait has used some
of its great wealth and
creativity to transform its
coastline into one of the
premier tourist destinations in the Gulf. This
transformation advanced
rapidly last year as work
began on the creation of
one the most luxurious and
well-appointed resorts
anywhere in the region.
The striking $3.3 billion
Resorts transform
the coastline
transformation of Failaka
Island into a extensive holiday resort will bring seaside paradise to within a
footstep of the capital.
The island is located at
the entrance to Kuwait bay
just to the east of city. It
has 24 miles of coastline
and is home to a complex
of 4,000-year-old Bronze
Age remains, which are
the country’s most significant archeological site.
It promises to be a perfect
place for lovers of water-
sports. The mild breezes that
wafted trading dhows along
the coast are a blessing for amateur sailors and professionals alike. There is also great
scope for power boating, water-skiing, jet-skiing, windsurfing, and scuba-diving.
There is no doubt about
Kuwait’s ability to create
beautiful resorts from sand
and rock. It has already
conjured a miraculous area
of greenery and shade
from the 12 miles of unfriendly shoreline next to
Kuwait City, bordering the
Arabian Gulf Highway.
The waterfront project has
already turned six miles
of this coast into one of the
world’s most imaginative
land reclamation projects.
Among the most attractive features of this new
waterfront is a man-made
island, known as Green
Island, because of the great
variety of plants now
growing there. There is also an exclusive membersonly yacht club and marina
Luxury hotelier nurtures
market potential
of the hotel market. The results
of a recent leading hospitality
survey revealed that Kuwait City
moved to the top spot in the
worldwide rankings for hotel
occupancy. It is in second place
for revenue per available room
and in third place for average
room rate.
“Hotel occupancy has nearly
doubled since 2000, despite the
expansion of hotel room stock.
The Deloitte Hotel Benchmark
Survey reported that the nation
rose from 143rd worldwide to
number one in 2003 with an
average occupancy of more than
85%,” says Hannes Yaghi, General Manager of Le Meridien
Hotels Kuwait.
Le Meridien, one of the word’s
finest hotel companies, is currently redefining the hospitality sector in Kuwait. It has five
hotel launches planned in the
next 12 months. The company
has already relaunched the
former Ritz Hotel as the 81room Le Meridien Kuwait. Le
Meridien Residence and the
Bellevue are both scheduled to
open in September 2004.
At the same time, the company is working on the development of the 70-room Le
Meridien Tower Kuwait, which
will be the first hi-tech boutique
property in the region. With this
hotel, Le Meridien is bringing
in its renown Art+Tech
design into the Middle East for
the first time.
“It is probably the most exciting hospitality development
project in Kuwait,” says Mr.
Le Meridien
■ KUWAIT is officially at the top
Le Meridien has five hotel launches planned in the next 12 months
Yaghi. Art+Tech has been
designed to be different from
the standard hotel room, while
focusing on the three main elements of bed, bathroom, and
technology. The concept is also extended into public areas
from restaurants to meeting
rooms to create a contemporary
and clutter-free environment.
“Where there was once very lit-
HANNES YAGHI
General Manager of
Le Meridien Hotels Kuwait
tle choice for the business traveler to Kuwait, now the market
is maturing and we are seeing
growth in all sectors of the hotel
industry. By 2006, we will have
with 265 fully-serviced
berths, and five man-made
beaches made with sand
brought in from Kuwait’s
own Jahra Desert.
A lagoon fed by the tidal
water has become a favorite
place for swimming and
water games, while a children’s water adventure castle with mazes of water
slides and indoor and outdoor waterfalls is one of
the most popular family destinations.
There are also
five beach
clubs, one
of them
exclusively for
women,
with swim-
a basket of Le Meridien properties throughout the city, and we
want to see a Le Meridien flag
around every street corner. These
may be small properties by some
standards but we see them as multiple luxury properties to attract
multiple segments of business,”
explains Mr. Yaghi.
This expansion has been driven by Kuwait’s own economic expansion and the massive
growth of business interest in
Iraq. “During last year’s conflict
in Iraq, the hotel industry had to
work hard to meet the growing
demand, alongside its related
businesses such as transportation and food,” says Mr. Yaghi.
“The hotel industry saw the
direct consequences of the conflict, as our hotel rooms were
filled with armed forces and reporters. Both in- and out-bound
business started to thrive. Now,
business is booming, with corporations embracing Kuwait as
a gateway to Iraq.”
The response of the govern-
ming pools, beaches, gyms,
spas, and bowling alleys.
Further afield, Khiran,
Kuwait’s first tourist village, must be one of the
most perfect destinations
anywhere for sailing adventures. Located in the
south of the country, the resort has 148 air-conditioned chalets and
another 48 onebedroomed
flats.
Nasir Al-Sayegh
■ KUWAIT’S history and
ACKNOWLEDGEMENTS
ment of Kuwait assisted this expansion. “While it is traditionally conservative, it recognized
the need to open up the country. It relaxed visa conditions,
and promoted inward investment to the country, as well as
opening it up to businesses from
outside its borders,” he adds.
Business-wise, success in the
hotels sector has been more a
question of smart operators recognizing the potential for the
Kuwaiti economy. “Think of average room rates that regularly
top the $200 mark and you get
a very good picture of the hotel
sector in Kuwait and one that is
revealing for those who doubted the state could support the
current growth in hotel room
numbers,” says Mr Yaghi.
A’amal Holding Company, the
owners of the Le Meridien Ho-
United World’s
representatives in
Kuwait, Ms. Reyes
Fernandez and Mr.
Leonardo Soifer, would
like to thank the following people for their collaboration in producing
this first part of our
Kuwait feature:
Mr. Peter Alois
Senior Commercial
Officer – U.S.
Commercial Service
Ms. Mary Fanous
Information
Specialist – Embassy
of the United States
Ms. Maha K.
Al-Ghunaim Vice
Chairman & MD –
Global Investment
House
Mr. Hussein Azmi
Marketing Manager
– Kharafi Group
Mr. Adnan Kakoun
Head of Local News
– Al Qabas Newspaper
Mr. Mijbil A.
Al-Ayoub Head of
Corporate PR – MTC
Group
Mr. Faisal Ali
Al-Mutawa
Chairman & MD –
Bayan Investment
Ms. Nirmala Jansen
Kuwait Times
Newspaper
Additional thanks to:
The Arab Times
Newspaper, KUNA
News Agency, Al-Watan
Newspaper, Al-Rai Al-Aam
Newspaper, Al-Qabas
Newspaper, Al-Anbaa
Newspaper and the JW
Marriott Family.
tels Kuwait, has worked
with the group to develop a product and pricing strategy that reflects the needs of the new
Kuwait, its residents, and travelers perfectly.
CROWNE PLAZA HOTEL
Setting high standards
■ THE NUMBER of foreign
visitors arriving in Kuwait City
is on the rise. Despite the tumultuous events north of the border over the past year or so, many
believe that at least there is now
virtually no-one on earth who
does not know about Kuwait.
Hani Kafafi, General Manager of
the Crowne Plaza Kuwait and
Director of Operations, Northern
Gulf InterContinental Hotels
Group, describes it as one of the
“biggest advertising campaigns”
ever. After all, there are always
two sides to everything.
The Crowne Plaza Kuwait, a
leading place to stay in the city, has
benefited from the upturn in arrivals. Mr. Kafafi says the emphasis is still mainly business. “In
reality Kuwait is a business city,”
he says. “At present the tourism
traffic that we receive is regional.
Most people come from Saudi
Arabia, Bahrain, UAE, and Qatar.”
Nonetheless, he believes there
is scope to market the destination to a wider audience.
Kuwait’s cultural background
offers a unique insight into the
Arab way of life. This might
include visits to ‘diwaniyas’,
an evening political forum that
can influence proceedings in
parliament the next day. “For a
non-Arab it is a unique experience,” says Mr. Kafafi. From an
American perspective, other areas of interest might include
Kuwait’s oil history and the development of the giant Burgan
field, the second largest in the
world and now producing for
over half a century. Then there
are great beaches, luxury shopping malls, and the hot but dry
climate. On top of this Kuwait
offers all other modern amenities such as clean water, good
hotels and restaurants, plus high
quality service – among the best
in the world. “I have no doubt
that once tourism becomes a
priority then it will develop and
people will come.”
The Crowne Plaza Kuwait is
setting the pace with seven quality restaurants of its own – offering everything from Iranian
and Lebanese cuisine to French,
Japanese, and American – plus
a 24-hour gym and high-speed
wireless interconnectivity
throughout the hotel.
HANI KAFAFI
General Manager of the
Crowne Plaza Hotel
The Crowne Plaza Kuwait has a choice of seven quality restaurants
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Our World
Distributed by USA TODAY
TRADITIONS FROM KUWAIT
Wednesday, June 30, 2004
18
Today’s modern Kuwaiti lifestyle still owes much
to the country’s rich culture and historical past
Decorative textiles are
a draw for the visitors
With the atmosphere of an old world setting, the Old Souk in Kuwait
City offers all kinds of intricate rugs and other traditional items
Ancient pastimes compete
with modern day sports
■ THE KUWAITI passion for
beautiful design, a celebration of
colour and traditional Arabic
styles, can be seen everywhere
throughout the country – inside
every home and, to some extent,
even in modern office blocks and
apartments. The decorative element, seen throughout local clothing and textiles, and in architecture,
is a very important thing to all
Arab communities with Kuwait
no exception.
This becomes evident in the
way traditional carpets are crafted, a process that has a long history throughout the Middle East.
Beautiful hand-made rugs and
fabrics are traded enthusiastically
throughout the region and no less
so in Kuwait.
The Old Souk in Kuwait City
offers all kinds of intricate rugs
and other traditional items in an
old world setting, ideal for visitors. In fact, carpet shops selling
products from across the Middle
East are found everywhere in
Kuwait. These vary from practical day-to-day carpets to elaborate and hugely expensive rugs,
imported from across Asia. Many
of these traditional Middle Eastern and Asian carpets depict extremely intricate stories,
highlighting the level of time and
Kuwait is home to one of the only three surviving fragments of a
rare Mughal Indian carpet dated between 1630 and 1650
care that has gone into the making of them. It is an art form that
has been practiced for many centuries. Unfortunately, the most
exquisite Persian rugs carry a
price tag that does not suit most
budgets. Fortunately, rare and
precious designs – collector’s
pieces just like other antiques can be seen on display in muse-
ums. Indeed, Kuwait is home to
one of only three surviving fragments of a rare Mughal Indian
carpet dated between 1630 and
1650. With one recently auctioned
at Bonhams in London, the remaining two belong to the local
Al-Sabah collection in Kuwait
and the Metropolitan Museum of
Art in New York.
An intricate part of desert life, falconry first developed to aid survival
■ LITTLE is known of Kuwait’s rich cultural heritage outside of the region, but there is plenty for
overseas visitors to learn and experience. It is an
ancient and proud heritage created within a framework of Muslim religion, Arabic tradition and local customs.
Many traditional sporting activities survive today. Horse racing, for example, is still widely pursued by modern Kuwaitis just as it is in the U.S.
and in other parts of the world. Falconry is another ancient local pastime, something that was originally widely pursued in the desert by the Bedouins.
Training birds to swoop down on their prey from
great height at tremendous speed and then return
to their master is quite a skill and takes practice,
but it is something that has been mastered by countless Kuwaitis through the years. An integral part
of desert life, falconry originally developed to supplement the meagre diet of dates, milk, and bread.
It later evolved into a sport enjoyed by both rich
and poor alike. Some things have changed however. Hunting parties originally pursued their prey
on horse back or on camels but now powerful four
wheeled drive vehicles are used.
Pearl diving is another activity traditionally associated with Kuwait. This activity was vital to
the Kuwaiti economy at the end of the nineteenth
century, although the industry declined after the
1930s as a result of the depression in Europe and
the U.S. and the arrival of Japanese cultured pearls.
Today, pearl fishing is still enjoyed by Kuwaitis
more on a social level – people connected to it
are referred to as ‘ghawawis’.
The ‘Diwaniya’ is another fundamental part of
Kuwaiti life. Aplace separate from the main house
that is usually used by men for socializing, it offers a unique insight into local life. Within a social atmosphere the ‘Diwaniya’provides a meeting
place for discussions on politics, business, and life
– a kind of forum that provides a barometer of
public opinion. All Kuwaiti men belong to or own
a ‘Diwaniya’– something that has existed throughout the history of the country.
While traditional influences are alive and well
in today’s Kuwait, modernity has also crept into
most parts of this ancient civilization, from housing to clothing. The shopping malls and restaurants in areas like Salmiya and Gulf Road are
evidence of the march of globalization. Coffee,
for example, is still made at home using traditional
utensils but it is equally likely to be consumed at
the local Starbucks.
Modern day sports have taken an important
place in Kuwaiti society too, especially soccer.
As well as more than 120 soccer pitches, the country has six world class stadiums and is also home
to the Asian Olympic Council. Obviously, in such
a hot desert country there is a natural affinity with
the sea and water sports, including swimming, water skiing, and scuba diving.
Many of the traditional Middle Eastern and Asian carpets depict extremely intricate stories
The legacy of the desert lies within Kuwaiti culture
Hamed Alamiri, KUNA
An expanse of wilderness for recreation or exploration, the desert is increasingly cited as one of the country’s potential tourist attractions
During the winter time the desert supports an unexpected array of flowers and vegetation
■ THINK of Arabia and one automatically con- and animal life have shown remarkable resilience
jures up images of desert, endless rolling sand in the extreme temperatures.
dunes, a few camels, and a hot, scorching sun.
During winter time there is an array of wild flowCertainly there are lots of dunes to be found, but ers and vegetation, not at all what one expects to
in the case of Kuwait, the stereotypical image see in a desert environment. Then there are the
is only partially true.
camels of course – uniquely adapted to the tough
Although most modern Kuwaitis now live in terrain of the desert. Large numbers of goats and
air conditioned apartments and drive air condi- sheep kept by the Bedouins are another familiar
tioned cars, the desert still has immense signif- sight. Reptiles are in abundance. Among the sights
icance for local people. The country may now most likely to entrance visitors are the spiny tailed
be synonymous with oil but its roots are to be lizard, or dhub, as it is known. There are plenty
of snakes to be found too, including a few
found in the harsh desert landThere are
scape, a terrain that people of days several distinct poisonous species such as the horned viper
gone by learned to live with, thrivand the black desert cobra.
regional
ing off the limited resources from
Since Kuwait lies on a several importhe land. Despite the recent move features such tant migratory routes, bird watching is anas Jal Az Zor other popular activity. The globally
into cities and the arrival of fast
cars and tarmac roads, the legacy
escarpment threatened Lesser Kestrel, whose numbers
of the desert is still to be found
have dwindled in recent years is one that
and ridge
within Kuwaiti culture. These days,
can be seen passing over Kuwait City
nomadic tribesmen can still be seen throughout around April time. Kuwait is also home to numerous
the Gulf region, herding camels across the desert. species of beautiful butterflies.
There are several distinct regional or localized
For most ordinary Kuwaitis the desert is still a
place of escape, an open expanse of wilderness features within the desert landscape such as Jal
for recreation and exploration. It is increasingly Az Zor escarpment and ridge. Seen from the
being cited as one of the country’s major potential across the shores of Kuwait Bay, it is a promitourist draws. Watching the magic of the sunset nent feature of the landscape acting like a magacross the desert is one of the best sights in the net for migratory falcons which perch along the
world.
ridge in the early morning. Other interesting
Kuwait’s desert has plenty of interesting fea- features include Jahra marshes, Umm Niqa, and
tures for visitors. Throughout the country plants the sand dunes of southern Kuwait.
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Distributed by USA TODAY
Our World
Wednesday, June 30, 2004
6
FINANCE/ A focus on principles not profits is proving to be good business sense
KUWAIT FINANCE HOUSE
Islamic bank’s unparalleled growth raises
financial community’s interest rates
Tailor-made services and a clear commitment to community projects and charitable
causes are raising the profile of Islamic banking with both Muslims and non-Muslims
by what Mr. Al-Jassar describes
witnessed a quiet revolution in as “amazing” and “unprecethe Middle East during the past dented” rates of growth, that
decade. Islamic banking, once cannot easily be matched by any
a marginal idea, has, against all other industry. In recent years
expectations, become one of the the sector has grown at between
fastest-growing and most prof- 10% and 15% per year.
The sector is now beginning to
itable areas of business.
Much of this is thanks to Kuwait look busy. The Central Bank reFinance House (KFH), the first cently awarded licenses to two
Islamic bank to be founded in other Islamic banks. There are
Kuwait. It was established by a 14 other Islamic investment comspecial decree issued by the Amir panies in Kuwait itself, not to
in 1977 and started operations a mention innumerable others
year later. Its main aim is to de- mushrooming all over the Gulf
velop and promote Islamic bank- Cooperation Council (GCC) region. Each year KFH is experiing worldwide.
“Islamic banks were some- encing an increase in customer
thing very odd in the Over the past deposits, asset base, and
profitability at a signifbanking sector in
those days. The con- decade, Islamic icantly higher rate than
banking has conventional banks.
cept of Islamic bankA study of Islamic
ing whereby interest become one of
customers compared
was prohibited and
the most
business was con- profitable areas to conventional clients
that there have
ducted under special
of business reveals
always been some diecontracts was not only new but also unappealing and hard investors who have never
very strange to the banking com- considered going to convenmunity. At that stage it was an tional banks and at the same
experience that everyone thought time some equally enthusiastic
might not last more than a few conventional clients, who nevyears and was doomed to failure,” er normally think of going to
says Jassar Al-Jassar, General Islamic banks. KFH has enjoyed
its greatest success in attracting
Manager of KFH.
However, what was once customers from what Mr. Allooked on as unfeasible is now Jassar describes as the “gray
attracting a lot of attention, and area” of those who have been sitnot only from the Muslim world. ting on the fence and waiting to
This interest has been inspired exercise their options. “For the
last 25 years this gray area has
been shrinking, while the number of Islamic clients has been
steadily growing,” he says.
Why is this growth happening?
“I would say it is a question of
principle,” says Mr. Al-Jassar.
“We are Muslims and this is our
religious requirement. Also the
new generation looks at it more
seriously from a religious point
of view than their forefathers,
who had no choice, and who
therefore were forced to patronize conventional banks.”
The bank has also found a large
JASSAR AL-JASSAR
number of new female clients
General Manager of Kuwait
since it became the only bank
Finance House
in Kuwait to have separate
SYMBOL OF KUWAIT AND
ITS COMMUNITY
KFH works to fulfil its mission as the
leading Islamic Bank in Kuwait,
providing financial products
and banking services using the most
contemporary techniques and systems.
KFH’s business approach has proven
extremely successful:
significant improvements in
information technology have led to the
creation of state-of-the-art decision
support systems, and with banking,
investment, and commercial
services online, KFH is developing
a commanding presence both locally
and worldwide.
www.kfh.com
Kuwait Finance House was the first Islamic bank in the country
branches for women, and exclusive tailor-made services to
suit their specific needs.
“KFH is more than a bank,”
says its General Manager. “Whatever your needs are, we can respond to them. In a conventional
bank you give a direct loan but
persecute your client with the interest charged to him. In Islamic banking we make him our
business partner to encourage
his entrepreneurial skills with
the various Shari’a compliant
modes of financing.”
KFH is also committed to
community projects – another
Islamic obligation. It supports
not only financial services but
also health care, education, infrastructure development, aviation, petrochemicals, IT, and
human resources training.
“We are involved in everything related to community
service and charitable causes.
We are not merely banking with
the intention of making money,” says Mr. Al-Jassar. In addition to supporting projects
commercially, the bank contributes approximately $5 million to the community each year.
It recently financed the construction of a hospital costing
more than $13 million.
KUWAIT FINANCE HOUSE
Corporate strategy highlights global vision
■ KUWAIT FINANCE House
(KFH) is going global and taking the ideas of Islamic banking with it. “Our vision is to
replicate the success we have
achieved in Kuwait throughout
the region,” says its General
Manager Jassar Al-Jassar.
The corporate strategy of the
bank that was named “Islamic
Bank of the Year” by Euromoney
Publications for two years in a
row is to fulfill its mission as a
global Islamic financial institution, providing financial products and banking services using
the most contemporary techniques and systems.
“After expanding within the
Gulf Cooperation Council
(GCC), we will start looking
elsewhere. Hopefully, KFH will
be partially global in three years
and truly global in five years,”
adds Mr. Al-Jassar.” The bank
already has subsidiaries in
Bahrain, Turkey, the UAE,
Oman, and Malaysia. It is planning moves into Saudi Arabia,
Egypt, and other countries in
Africa and Asia.
KFH has been able to extend
its reach by forging strategic alliances with market leaders
across the world. Its partners include Citibank, Deutsche Bank,
HSBC, JP Morgan Chase, BNP
Paribas, and UBS.
“We have made ground-breaking transactions with each of
them. We have jointly participated in big deals and colossal
funding operations in different
types of investment in the fields
of real estate, aviation, and sukuk
issues. We gained from their
experience and it’s undeniable
that they gained from ours,” says
Mr. Al-Jassar.
In 2003, Moody’s upgraded
KFH’s rating to A3 and P2. The
bank’s stability is underpinned
by the fact that it has been listed on the Kuwait Stock Exchange for 20 years. Recently,
it has been involved in a number of the largest deals in the
Islamic banking market. In 2003,
it launched three major funds.
The MALC Fund, which specializes in aircraft leasing, is expected to reach a total asset base
of $800 million. By the end of
last year, MALC had successfully concluded ten aircraft deals
Kuwait Finance House
A
Kuwait Finance House
■ THE WORLD of finance has
KFH wants to introduce Islamic banking throughout the region
valued at $396 million. Nine of
these aircraft were sub-leased
to European airlines, including
five to British Airways.
The Alliance Real Estate
Fund, with a total asset base of
$520 million, will invest in the
U.S. market to yield an annual
return of between 7% and 9%.
The Net Lease Fund, launched
in partnership with U.S.-based
First Industrial, has a total asset
base of $420 million and is involved in leasing industrial real
estate in America.
KFH participated alongside
the UK’s HSBC in a $30 million
deal to finance the purchase of
materials for Fisteel, one of
Turkey’s largest companies.
It has also taken a leading role
in creating the market for Islamic sukuk bonds, with a spate
of multi-million dollar issues. It
assumed a lead manager role in
a $250 million sukuk bond issue for the government of
Bahrain and took a $40 million
share. The issue was arranged
by Liquidity Management Center, a subsidiary formed by KFH
along with other Islamic financial institutions.
KFH also acted as a co-manager for a $750 million global
sukuk issue for the government
of Qatar and as co-underwriter for
a $400 million sukuk issue for the
Islamic Development Bank.
It has joined up with Global
Investment House to launch the
Direct Investment Fund with
capital of $100 million. This is
the first investment fund that
includes in its investment objectives the aim of buying existing Kuwaiti companies and
transforming them into Shari’a
compatible institutions.
Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content