Business

RIYADH — Saudi Arabia plans to issue tenders to consolidate consultancy services for government infrastructure projects in the coming months in a bid to improve efficiency and bring fresh momentum to stalled developments, government sources said.

The kingdom plans to hire a consultancy at each ministry or state entity to supervise its pipeline of projects worth billions of dollars, according to one draft request for proposal (RFP) seen by Reuters.

Currently, some entities and ministries like housing, health, power and municipalities use multiple consultants per project. Local and international consultants do project design and execution, while government entities and ministries monitor.

The new plan aims to outsource these services for five years during which the winning bidders will train Saudis so government bodies ultimately have the capability to manage such work themselves.

It also aims to trim waste in state spending, combat corruption and help revive a slump in the construction industry at a critical time for the economy as Saudi Arabia embarks on an ambitious economic transformation plan that includes development of major projects such as the $500 billion NEOM business zone in the northwest of the country.

Recognised regional and foreign consultants with expertise in applying international project management standards are expected to win the contracts. 

Saudi Arabia's construction sector has slumped in recent years as the government delayed payments to contractors and lower oil prices squeezed the state budget for new projects.

The RFPs are being finalised and tendering, worth millions of dollars, is expected to start in coming months, with five-year contracts to be awarded by the end of 2018, government sources told Reuters.

The sources spoke on condition of anonymity because the matter is not yet public.

The total value of the contracts has not been finalised, but one source said the contract his ministry is planning to tender could reach 5 billion riyals ($1.3 billion).

Countering the slump 

The kingdom has spent billions of dollars on mega-projects over the past decades, but the absence of a standard mechanism for planning, follow up, and accountability has resulted in many projects being stalled or delayed.

Work on King Abdullah Financial District for example, a $10 billion mega project in the capital Riyadh, began in 2006 but has been plagued by construction delays, cost overruns and doubts about the initial economic feasibility study.

Saudi Arabia’s government is now moving to standardise infrastructure project delivery across the kingdom. The project management office at each ministry and state entity will be overseen by the National Project Management Organisation (NMPO) — which was set up in 2016 as part of a broad government effort to overhaul the economy and close a gaping budget deficit.

The government hired US-based Bechtel Corporation,  of the world's largest industrial contractors, to run the NPMO — Mashroat in Arabic.

Consultancy Faithful+Gould has said the roll out of project management offices across government sectors would speed up delivery of priority projects and was a positive development for the industry following two years of contraction and uncertainty.

In a January 2018 report, Faithful+Gould forecast Saudi Arabia to award infrastructure contracts in 2018 worth $35 billion across government sectors. 

BEIJING — Growth in China's manufacturing sector picked up more than expected in March as authorities lifted winter industrial pollution restrictions and steel mills cranked up production as construction activity swings back into high gear.

The official Purchasing Managers' Index (PMI) released on Saturday rose to 51.5 in March, from 50.3 in February, and was well above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts surveyed by Reuters had forecast the reading would pick up slightly to 50.5. February's print had been the lowest in one-and-a-half years, but many analysts suspected it was due to disruptions related to the long Lunar New Year holidays.

The March survey showed manufacturers shifted into higher gear as seasonal demand picked up. The sub-index for output jumped to 53.1 from 50.3 in February, while total new orders rose to 53.3 from 51 and export orders climbed to 51.3 from 49.

Driving the positive sentiment are better-than-expected exports in the first two months of the year, particularly in tech shipments, the fastest-growing segment of China's industrial sector. 

A sub PMI for the hi-tech manufacturing sector stood at 53.2 in March, down from 54.0 in February.

However, a sharp escalation in trade tensions with the United States is clouding the outlook for both China's "old economy" heavy industries and "new economy" tech firms.

The Trump administration slapped hefty tariffs on steel and aluminium imports last week and then targeted China specifically by announcing plans for additional tariffs of up to $60 billion of Chinese goods, which are expected to focus largely on its tech and telecommunications products.

A resurgent yuan has also weighed on exporters' confidence. The Chinese currency has gained more than 3 per cent against the US dollar this year, on top of a 6.7 per cent rise in 2017.

This spring could see a major test of Chinese manufacturers' surprising one-and-a-half year run.

In the first quarter, China's steel companies defied expectations for a winter lull and continued to ramp up output in response to strong sales, while boosting borrowing, capital expenditure and hiring, a survey from the China Beige Book showed on Wednesday.

Production increased further after winter smog controls expired on March 15 in many areas.

A separate PMI on the steel sector rose to 50.6 in March from 49.5 in February, the China Logistics Information Centre said.

But the burst in output has pushed steel inventories to multi-year highs, sending prices sharply lower and reducing mills' profit margins.

At the same time, growth in property sales and new construction starts appears to be slowing, and Beijing has hit the brakes on some local governments' infrastructure spending due to concerns over high debt levels.

Overall, China's economic data so far this year suggest the economy has carried more growth momentum into the first quarter from last year than expected, with a government think tank forecasting the economy will grow 6.9 per cent in the first half.

That would keep synchronised global growth on track for a while longer. But economists are sticking to forecasts that China's pace will slow to around 6.5 per cent by the end of the year, weighed down by the cooling property market and rising borrowing costs, even if there are no global trade shocks.

Boosted by government infrastructure spending, a resilient housing market and unexpected strength in exports, China's manufacturing and industrial firms helped the economy produce better-than-expected growth of 6.9 per cent in 2017.

A sister survey showed activity in China's service sector rose in March. 

The services sector accounts for over half of China's economy, with rising wages giving Chinese consumers more spending clout.

ZURICH — Switzerland has become a global hub for cryptocurrencies and the blockchain technology they are built on, with investors flocking to the wealthy Alpine nation to get in on the virtual action.

The country's largest city, Zurich, set up its first bitcoin ATM four years ago, while the Swiss national rail company has since 2016 provided the possibility of purchasing the virtual currency at over 1,000 distributors across the country.

Just a half-hour drive from Zurich is the small town of Zug, which thanks to a business-friendly taxation scheme has long been a global economic hub and is home to tens of thousands of companies, including large investment firms, pharmaceutical companies and commodity trading groups.

But for the past few years, a new category of company has descended on the town, which in high-tech circles has been dubbed "Crypto Valley".

That is the name of an association set up in Zug in 2013 with the explicit aim of drawing startups dabbling in virtual currency technologies, creation and trading to the town.

The push worked. Out of the world's six biggest Initial Coin Offerings (ICOs) — an unregulated means to raise funds for new cryptocurrency ventures — last year, four took place in Switzerland, according to Swiss financial watchdog Finma.

Blockchain technology allows for the development of peer-to-peer payment systems. It runs by recording transactions as "blocks" that are updated in real time on a digitised ledger that can be read from anywhere and does not have a central record keeper.

Zug is currently home to some 200 blockchain companies including the foundation behind ethereum, the second largest cryptocurrency after bitcoin.

The town has also since 2016 accepted bitcoin payments for council services.

The southern Italian-speaking Swiss town of Chiasso, which is attempting to compete with Zug as a "CryptoPolis", has meanwhile decided to accept bitcoin payments for some taxes.

 Money laundering fears 

Faced with a "sharp increase" in the number of ICOs, Finma last month published guidelines detailing the regulatory requirements for such fundraising schemes.

"Creating transparency at this time is important given the dynamic market and the high level of demand," the regulator said.

It warned that it was in particular important to protect against money laundering, since the risk was high "in a decentralised blockchain-based system, in which assets can be transferred anonymously and without any regulated intermediaries".

Switzerland's famous banking sector has been divided in the face of the flood of new virtual currencies on the markets.

Some Swiss banks were among the first to dive into the cryptocurrency pool.

Vontobel for instance created the first structured bitcoin product, a tracker which allows for investment in shifting values of the virtual currency without purchasing the coins directly.

Falcon Private Bank has, meanwhile, offered asset management services for a range of cryptocurrencies, including bitcoin and ethereum, while financial and trading services group Swissquote offers trading in five virtual currencies.

Switzerland's two largest banks UBS and Credit Suisse have, however, so far kept their distance from the crypto boom.

In an interview with the NZZ am Sonntag weekly late last year, UBS chairman Axel Weber, a former head of the German central bank, warned of significant "design flaws" in cryptocurrencies like bitcoin.

UBS has decided to warn clients against investing in the virtual currency, he said, because the bank does "not consider it valuable and not sustainable".

WASHINGTON — The world's largest economy grew significantly faster at the end of 2017 than previously reported, with revised data showing stronger consumer spending and business investment, the government reported on Wednesday.

GDP grew 2.9 per cent in the fourth quarter, 0.4 points higher than the prior estimate, the Commerce Department said. That rate was significantly faster growth than analysts were expecting.

The rosier result for the October-December period did not take into account December's sweeping $1.5 trillion tax cuts, which economists say should boost growth in the near term.

The third and final estimate of economic growth, based on a fuller set of data, was just shy of President Donald Trump's target of 3 per cent annual growth.

But for the full year the growth rate was unchanged at 2.3 per cent, faster than the 1.5 per cent seen in 2016, but still well below Trump's goal and the 2.9 per cent expansion seen in 2015.

The Trump administration is counting on an acceleration of growth to pay for the December tax cuts, which are expected to swell the budget deficit and add to the mounting US sovereign debt.

However, economists say this may be unrealistic and current forecasts point to growth of below 2 per cent in the first quarter of 2018, although first quarters typically are slower than annual growth.

The upward bump to the fourth-quarter growth estimate came from higher consumer spending on transportation, higher wholesale business inventories and updated statistical adjustments to account for seasonal factors, according to the Commerce Department.

The higher consumer spending on transportation saw US services grow by 2.3 per cent in the quarter, up two-tenths from the prior estimate and the fastest expansion in seven years.

Consumer spending on goods also saw its biggest quarterly bounce in more than 11 years after an upward revision of three tenths to 7.8 per cent growth.

Despite the accelerating economic growth, corporate profits stagnated in the quarter, falling 0.1 per cent after the prior quarter's $90.2 billion increase.

The financial sector saw a $14.6 per cent decrease but the non-financial sector experienced a $19.4 billion increase for the quarter.

Profits for 2017 were up $91.2 billion after the $44 billion decline in the prior year. 

The December tax cuts imposed a one-time repatriation tax on foreign earnings, recorded as a $250 billion quarterly capital transfer from businesses to the federal government, according to the Commerce Department.

LONDON — A growing number of internet companies are banning crypto-currency advertising, fearing reputational damage if their users are duped or left penniless, even as regulators struggle to get to grips with the fast-emerging industry.

Twitter on Tuesday began blocking crypto- ads, becoming the latest internet giant to crack down after moves by Alphabet's Google and Facebook earlier this year. 

Once restricted to small online chatrooms for early bitcoin backers, Crypto-currencies have since exploded in popularity and the industry has grown rapidly.

Huge billboards promoting the latest coin hang over Tokyo's streets, ads touting crypto-trading dot the London underground network and social media platforms are full of start-ups looking to raise capital through "initial coin offerings" (ICOs), as the selling of new virtual tokens is known.

While regulators have stepped up their warnings about the risks to consumers of investing in Crypto-currencies and the potential for scams, in most jurisdictions they are only beginning to discuss publicly how they might regulate the industry, let alone frame advertising rules.

Last week, the G-20 group of nations failed to agree on specific regulatory action.

So companies are taking matters into their own hands.

"If internet companies were not already under pressure from regulators for their loose control of data privacy, they probably would not ban advertising from cryptos, which are still a grey area for many regulators," said Arnaud Masset, a crypto-currency analyst at Swissquote Bank.

Snapchat in February started removing adverts for ICOs — which regulators say lack transparency and are susceptible to fraud — a spokesperson told Reuters. 

The company declined to comment on whether it would widen the ban to include individual crypto-currencies, crypto-wallets and unregistered exchanges, as other technology giants have done.

LinkedIn is blocking crypto-related ads, a spokesman said, although owner Microsoft does allow adverts on its other platforms.

Around the world 

Across Asia, where the crypto frenzy is at its most feverish, firms are also restricting advertising. 

China outlawed crypto-currency exchanges and ICOs last year. Chinese Internet titans Baidu, Tencent, and Weibo followed suit by curbing ads shortly after.

While Japan's government and regulators have embraced Crypto-currencies as a phenomenon that is here to stay, sentiment was hit by a $530 million cyber heist of an exchange in January. Prime time TV advertising subsequently fell, billboards on Tokyo's transport network were cut back and online companies are responding with changes to their advertising policies.

Line, Japan's most popular social media site and messaging app, does not allow crypto-related advertising. The policy is designed to protect customers and avoid legal risks, it says. 

The country's financial watchdog, meanwhile, has asked the crypto-industry's new self-regulatory body to draw up advertising rules. It has not stipulated what it wants to see but it is likely that Japanese exchanges will not be allowed to mention specific currencies when advertising, while TV promotions for ICOs could be banned altogether, a source familiar with the matter told Reuters.

A spokesman for Yahoo Japan said the search engine was reviewing its policy in light of the changing environment. 

Russian search site Yandex said it had not carried crypto ads for "a long time".

While online companies are prohibiting ads, there is less evidence that traditional advertising routes are under threat. 

London's metro system is plastered with advertising promoting crypto-trading. Transport for London did not respond to requests for comment about its policy on advertising.

The slump in virtual currency prices this year has not rattled British punters lured in by adverts, however: A spokesman for Britain's Advertising Standards Authority said it had to date received fewer than 10 complaints about crypto ads.

Crypto-currencies, unlike most securities, do not confer ownership in the underlying business, which is partly why advertising is not currently governed in conjunction with financial authorities.

Also, regulators are reluctant to rush to impose rules on Crypto-currencies as they examine the possible benefits of the Blockchain technology underpinning them.

Many analysts expect the likes of Google and Facebook to loosen blanket bans once authorities provide guidance on how virtual currencies and the infrastructure around them will be treated.

Christie Dennehy-Neil at the Internet Advertising Bureau, a British trade body, said large online platforms often introduce policies that take "a judgment more broadly than advertising" to protect their reputation. 

She said that the ideal case "would be for a product to be regulated and for there to be sector-specific rules for advertising". But without regulation in place, companies were sensible to act on their own accord, she added.

Crypto-supporters argue the bans will have little impact.

CAIRO — Egyptian President Abdel Fattah Al Sisi has revived economic growth and tackled pressing problems in power and gas supply. But as he heads for a second term, he must juggle austerity under an International Monetary Fund (IMF) programme with the need to tame inflation.

Sisi inherited an economy in tatters when he took over the presidency in 2014, requiring aggressive reforms that have largely stopped the rot while hurting most Egyptians through a currency devaluation and withdrawal of some price subsidies.

"He's now at the crossroads that every Egyptian president has found himself in," said Reham Eldesoki, an independent economist long focused on Egypt. 

"He needs to push forward on intensive reforms, to move forward in building services and non-oil industry and to make Egypt really investment-friendly." 

Sisi's performance in consolidating the gains over the next four years — he is set to cruise to victory in a presidential election which began on Monday — will be watched well beyond Egypt's borders.

European nations particularly worry that any faltering of reforms could worsen unemployment and encourage young Egyptians to cross the Mediterranean illegally, aggravating already sizeable flows of migrants from north Africa.

Also, successive governments' reluctance to devalue the overpriced currency had led to an acute foreign exchange shortage, dampening imports and pricing Egyptian exports out of foreign markets.

Sisi's signature economic achievement so far has been concluding a three-year deal with the IMF in 2016. Under this, the government has raised the price of subsidised fuel to ease the huge burden on the budget, increased value-added tax to 14 per cent and devalued the Egyptian pound against the dollar by more than half. 

Many say the reforms were needed to stablise Egypt as it recovers from the chaos and tackles Islamist insurgency. However, the currency reform hit the middle classes particularly hard, while inflation remains high, poverty has increased and unemployment is not going down as quickly as people had hoped.

Economists see some grounds for hope. GDP growth increased to 5.3 per cent year-on-year in the three months to December from a low of 2.1 per cent in 2012/13, according to the central bank.

"I think we should see growth continuing to escalate," said Mohamed Abu Basha, an economist with Egyptian investment bank EFG Hermes. "Tourism has space to recover, and consumption and investment should continue to recover over the next few years."

Energy fix 

Egypt, once a net energy exporter, had struggled to get enough fuel to run its antiquated power stations, with the country of 97 million people suffering regular blackouts. 

Under Sisi, the government signed construction contracts for new plants and arranged for floating gas terminals to allow more imports. The power shortages were soon brought to a near halt. 

Sisi has also acted to break a logjam in gas exploration and development. Likewise, he moved to reduce vast arrears in payments to international energy companies for oil and gas.

This has encouraged them to revive their activities in Egypt, leading to several gas discoveries, including the Zohr field, the largest in the Mediterranean region. 

Zohr, operated by Italy's ENI, shipped its first gas at the end of 2017. Other fields that were brought on stream included BP's Atoll and West Nile Delta. The government says the country will be self-sufficient in gas by the end of this year. 

Infrastructure expansion 

Sisi launched a series of large infrastructure projects designed partly to put Egyptians back to work. Many won praise, such as new roads and expanded electricity capacity. 

More controversially, Sisi has begun work on several megaprojects, some of which economists say will produce little immediate return. These include dredging a new branch of the Suez Canal.

Sisi insisted the project be completed within a year, adding to the cost, but because of a worldwide trade slowdown canal revenue was little changed. 

He has begun building several new desert cities, including a $45 billion new administrative capital east of Cairo. Egypt has also been negotiating with Russia for a new $20 billion nuclear power plant. 

Many investors and economists worry that the army is becoming too involved in these projects and in other ventures, threatening to crowd out private investors. 

Austerity measures imposed under the IMF deal pushed annual inflation to 33 per cent in August. By last month, the rate had dropped back to 14.4 per cent.

But more planned measures will make it difficult to bring it down further. The government is widely expected to raise fuel prices again at the start of the new fiscal year on July 1. 

"The challenge now will be to get inflation down to single digits," Abu Basha said. "We know that they will eliminate most of the fuel subsidies by the end of the IMF programme in 2019."

SAN FRANCISCO/LONDON — Opinion polls published on Sunday in the United States and Germany indicated that a majority of the public were losing trust in Facebook over privacy, as the firm ran advertisements in British and US newspapers apologising to users.

Fewer than half of Americans trust Facebook to obey US privacy laws, according to a Reuters/Ipsos poll released on Sunday, while a survey published by Bild am Sonntag, Germany's largest-selling Sunday paper, found 60 per cent of Germans fear that Facebook and other social networks are having a negative impact on democracy.

Facebook founder and Chief Executive Mark Zuckerberg apologised for "a breach of trust" in advertisements placed in papers including the Observer in Britain and The New York Times, Washington Post and Wall Street Journal. 

"We have a responsibility to protect your information. If we can't, we don't deserve it," said the advertisement, which appeared in plain text on a white background with a tiny Facebook logo.

The world's largest social media network is coming under growing government scrutiny in Europe and the United States, and is trying to repair its reputation among users, advertisers, lawmakers and investors.

This follows allegations that the British consultancy Cambridge Analytica improperly gained access to users' information to build profiles of American voters that were later used to help elect Us President Donald Trump in 2016.

US Senator Mark Warner, the top Democrat on the Senate Intelligence Committee, said in an interview on NBC's “Meet the Press" on Sunday that Facebook had not been "fully forthcoming" over how Cambridge Analytica had used Facebook data.

Warner repeated calls for Zuckerberg to testify in person before US lawmakers, saying Facebook and other internet companies had been reluctant to confront "the dark underbelly of social media" and how it can be manipulated.

‘ Breach of trust’

Zuckerberg acknowledged that an app built by a university researcher had "leaked Facebook data of millions of people in 2014". 

"This was a breach of trust, and I'm sorry we didn't do more at the time," Zuckerberg said, reiterating an apology first made last week in US television interviews.

Facebook shares tumbled 14 per cent last week, while the hashtag #DeleteFacebook gained traction online.

The Reuters/Ipsos online poll found that 41 per cent of Americans trust Facebook to obey laws that protect their personal information, compared with 66 per cent who said they trust Amazon.com Inc., 62 per cent who trust Alphabet Inc.'s Google, 60 per cent for Microsoft Corp.

The poll was conducted from Wednesday through Friday and had 2,237 responses. (https://reut.rs/2G9hvrv)

The German poll published by Bild was conducted by Kantar EMNID, a unit of global advertising holding company WPP, using representative polling methods, the firm said. Overall, only 33 per cent found social media had a positive effect on democracy, against 60 per cent who believed the opposite.

It is too early to say if distrust will cause people to step back from Facebook, e-Marketer analyst Debra Williamson said in an interview. Customers of banks or other industries do not necessarily quit after losing faith, she said. 

"It's psychologically harder to let go of a platform like Facebook that's become pretty well ingrained into people's lives," she said. 

Data supplied to Reuters by SimilarWeb, an Israeli firm, which measures global online audiences, indicated that Facebook usage in major markets and worldwide remained steady over the past week.

"Desktop, mobile and app usage has remained steady and well within the expected range," said Gitit Greenberg, SimilarWeb's director of market insights. "It is important to separate frustration from actual tangible impacts to Facebook usage."