Business

CAIRO — Egypt's current account deficit shrank to $2.4 billion in the 2013-14 fiscal year from $6.4 billion the previous year, boosted by billions of dollars in aid from Gulf Arab donors, the central bank said on Thursday.

The year in question began with former army chief Abdel Fattah Al Sisi's overthrow of president Mohamed Morsi and the worst violence in Egypt's modern history, followed by an influx of financial support from Arab Gulf states that backed Sisi's move.

Those states do not regularly issue details of the size and timing of their aid payments, however Saudi Arabia, Kuwait and the United Arab Emirates have pledged more than $12 billion aid to Egypt since July 2013 — roughly the same as the net official transfers figure released by the central bank on Thursday.

The bank also said that improvement in the current account was driven by a rise in remittances and other payments from abroad, including aid. Net official transfers increased by more than tenfold to $11.9 billion in the fiscal year that ended in June from $835.6 million the previous fiscal year.

However, Egypt still posted a current account deficit of $2.123 billion between April and the end of June — the fourth quarter of the fiscal year — according to Reuters calculations.

This came after it registered a surplus of $523.1 in the third quarter, between January and March. The marked difference appeared linked to the timing of official transfers — most likely the receipt of foreign aid from Egypt's Gulf allies.

In the third quarter, official transfers were $4.5 billion, compared to just $1.4 billion in the fourth quarter, according to Reuters calculations.

Sisi took office as president in June and pledged to combat terrorism, improve the economy and restore stability after three years of upheaval, which began when a popular uprising ended three decades of iron-fisted rule by Hosni Mubarak.

According to Mohammed Abu Basha, economist at investment bank EFG-Hermes, the figures show Egypt's finances are still precarious.

"From a macro standpoint, things were not really that solid, if you look at tourism and exports. It's the foreign flows that helped restore macro stability and support the currency," he said.

The central bank said the improvement might have been larger without a sharp decline in tourism revenues. They fell 48 per cent to $5.1 billion from $9.8 billion a year earlier.

The trade deficit grew by 9.8 per cent to $33.7 billion from $30.7 billion a year earlier, the central bank indicated, as merchandise imports rose 3.7 per cent and merchandise exports fell 3.2 per cent.

Foreign direct investment in Egypt rose to about $4.1 billion in the last fiscal year compared with $3.8 billion in the previous year, the central bank pointed out, attributing the increase to a net inflow for oil sector investments.

AMMAN — The Aqaba Special Economic Zone Authority (ASEZA) and the Aqaba Development Company (ADC), the central development company of ASEZA, participated in the Cityscape Global Exhibition. That was held in Dubai with the participation of 28 countries and 265 companies specialised in real estate development. The ASEZA’s participation aimed at marketing the developing real estate market in Aqaba, in addition to showing the most important investment opportunities in this vital sector, and shedding light on big projects currently available in the city. Bashar Abu Rumman, deputy chief executive officer of ADC, described the exhibition as an opportunity to make contacts with major international financial companies that seek to have a share in the MENA investment market. Separately, ASEZA on Wednesday signed an agreement to build marine trailers and boats to deal with the entry and exit of ships loaded with liquefied gas from Aqaba Port. The agreement was signed between Aqaba Port Company for Marine Services, ASEZA and Turkish Sanmar Company which will build the trailers and boats worth $53 million.

AMMAN — The Cabinet on Wednesday listened to a briefing by Royal Jordanian (RJ) Chairman Nasser Lozi on the challenges facing the national carrier as a result of the political and security unrest sweeping the region. During the session, headed by Prime Minister Abdullah Ensour, Lozi outlined strategic plans RJ is implementing to address the current challenges, saying that the government's recent decision to increase the national carrier's capital by 50 per cent over three years to reach JD234 million will greatly help in face its problems. Lozi  said RJ has decided to shrink its fleet to 29 instead of 32 and will deploy new aircraft that consume less fuel. Ensour stressed the government's support to enable RJ avert financial troubles.

AMMAN —  Gas plus renewables like solar and wind power could be a winning combination for Jordan and other countries in the region, according to a press statement received Wednesday from Shell EP International.

The press release highlighted the input of Mounir Bouaziz, Shell’s vice president of commercial and country chairman for Dubai and the Northern Emirates, during his participation in the Powering the Middle East Summit 2014, which was held in Amman last week.

Bouaziz spoke about the value natural gas can bring to the region’s energy mix as a means to help countries like Jordan, which are heavily dependent on imported fuel, diversify their energy mix and reduce CO2 emissions in the long term. 

"Despite ongoing progress on developing its oil shale resources that are currently being explored by the Jordan Oil Shale Company
(JOSCO), in the short and medium term, Jordan is expected to import liquefied natural gas as a bridge fuel to satisfy growing energy needs," the press release quoted him as saying.

JOSCO is a wholly owned subsidiary of Royal Dutch Shell that invests in exploring and evaluating the commercial potential of Jordanian oil shale using the latest advances in technology to produce the assets that would otherwise remain dormant.

According to the World Energy Council, Jordan currently imports over 90 per cent of its energy requirements while it is estimated to hold the 8th largest oil shale resources in the world.  

By 2020 the country expects to meet 33 per cent of its energy needs from natural gas, while reducing reliance on imports to 61 per cent according to Jordan’s 2007 national energy strategy.

“Natural gas is the fastest and most affordable route for many countries to meet their energy needs, including Jordan,” Bouaziz indicated. 

International Energy Agency (IEA) estimates that with a rapidly growing world population, increasing prosperity and improved access to reliable electricity, the global demand for energy is expected to increase by 80 per cent by 2050.

Jordan, faces similar challenges with growing energy demands on the one hand and rapidly increasing power demand on the other, driven primarily by increasing industrialisation and a growing population. 

Beyond the cost and speed at which natural gas plants can be set up; the Environmental Protection Agency states that natural gas is the cleanest burning fossil fuel. Meaning that when combusted, natural gas releases very small amounts of sulfur dioxide and nitrogen oxides, virtually no ash or particulate matter, and lower levels of carbon dioxide, carbon monoxide and other reactive hydrocarbons.

According to the US energy information administration, carbon-related emissions dropped by 3.8 per cent from 2011 to 2012 as the US increased its dependence on natural gas, displacing coal in power generation. 

“If paired with renewables like solar and wind power, gas also offers a reliable source of backup power when the sun isn’t shining or the wind isn’t blowing,” said Bouaziz. 

“Increasing natural gas within the energy mix could drastically slash greenhouse gas emissions — a very real consideration for all the nations of the world. Although there’s no ‘silver bullet’ solution, gas plus renewables could be a winning combination for Jordan and other nations in the region,” he added in the press statement.

Ultimately, considerable investments need to be made in the power sector globally including in the areas of energy efficiency, the development of renewable energies and power generation. The IEA estimates that over the next 20 years, a cumulative investment of $16.4 trillion is needed across the power sector with an annual average of $740 billion per year.

Bouaziz concluded: “Each country in the region faces different challenges that will dictate their individual approaches. Governments, policy makers and regulators will make energy choices based on a number of factors: ensuring security, reliability and flexibility of energy supply. Ultimately, countries like Jordan will be developing an energy system that allows their economies to be globally and regionally competitive, and create jobs while making responsible choices on climate change and greenhouse gas emissions.”

AMMAN — A Korean delegation, from Choonngbuk City, held business meetings with their  Jordanian counterparts on Tuesday.

The delegation, representing nine companies, aims at  promoting and developing trade cooperation.

AMMAN — Jordan has the highest rates of ICT services in the Middle East and North Africa (MENA), according to an Ericsson report on the Networked Society City index.

Tareq Saadi, the regional manager of northern Middle East in Ericsson, indicated Tuesday that the report showed that Jordan was among 11 countries in MENA in the highest rates of ICT services, constituting 4.6 per cent of the total gross domestic product compared with the regional rate of 3.5 per cent.

Around 7 per cent of the Kingdom’s population work in the ICT sector, whereas the regional rate does not exceed 4 per cent, Saadi said.

He added that the study showed a possibility of more investments in Jordan to attract the most modern technologies, such as 4G LTE networks.

AMMAN — A delegation representing five British companies visited Jordan this week on a two-day business development mission, according to a press statement from the British embassy.

Representatives from Aggreko, City & Guilds, Linguaphone, KBC and Avon-Barrier, all firms with multisector experience, visited Jordan to look at new opportunities and partnerships in the energy, education and security sectors, the press release said.

The mission’s members conducted meetings with potential clients and learnt more about doing business in this fast developing region, it added. 

British Ambassador to Jordan, Peter Millett said: “ This mission demonstrates that British companies are keen to develop contacts with Jordanian firms, especially in key sectors where new opportunities are being created, such as IT, energy and health.

I hope to see some positive results from the contacts we are arranging.” In addition to calls on potential clients, the mission’s members learnt more about doing business in this fast developing region and received a briefing on different projects in Jordan and received a market briefing on Iraq and Egypt. 

AMMAN — Up to 200 private sector representatives are expected to take part in a local conference that will look into means to increase investments.

Scheduled to be held on November 17, the first International Conference for Investor Protection will bring Jordanian and foreign investors together with government officials to look into challenges facing the private sector and means to increase investments, organisers said Tuesday.

Organised by the National Association for Investor Protection (NAIP), the conference will discuss investment issues in the fields of industry, transportation, logistics, health, education and renewable energy, said Mohammad Halaiqa, NAIP chairman of the board of trustees and former minister of industry and trade, at a meeting with the media.

Participants will include representatives of banks, industry and commerce chambers and media outlets, he added, noting that the conference aims to come up with "detailed" recommendations that investors and the government agree upon, in order to develop the investment environment in Jordan.

"The conference will also discuss the effect of the recently endorsed investment and public-private partnership laws," Halaiqa said.

He added that the two laws create "a new phase" for investments in Jordan,  and  have positive aspects but can be improved further after "intense dialogue" between investors and the government.

Mohammad Abu Hammour, NAIP vice president of the board of trustees and former finance minister, underlined the country's need for a boost in real economic growth, which can be achieved by adopting investment-appealing policies.

"Jordan's natural population growth stands at 2.2 per cent, but with other growth rates that came at around 5 per cent last year… this means that Jordan's real economic growth rates, which now stand at 2 per cent must reach 7 per cent in order to sustain the current living standards," he explained. 

Abu Hammour said Jordan must work on reviewing laws and facilitating procedures governing investments, highlighting the need for implementing mega-projects and boosting the partnership between the private and public sectors.

NAIP President Akram Karmoul said the Kingdom should benefit further from its geopolitical location as a safe country in the middle of a region of turmoil.

He added that the association, founded in 2002, aims to provide exceptional services to investors in Jordan and to protect them from commercial and non-commercial risks, in addition to its role in promoting investment opportunities in the Kingdom.

DUBAI — An economic rebound has catapulted house prices and rents in Dubai to Manhattan-like peaks, the Gulf emirate's top property website says, forcing increasing numbers of residents to move to its cheaper outskirts or even to consider returning home abroad.

Rents fell 1 per cent in the third quarter after 10 straight quarters of price rises, property consultants CBRE reported this week. But the sustained cost of living surge has driven hundreds of families to relocate to smaller homes on the fringes of the  opulent, high-rise urban canyon that soars out of empty desert.

Research by Dubai website Dubizzle showed rents and house prices in Dubai's prime locations now match those in Manhattan.

"We're talking about $2,000 to $3,000 [a month] for a rental in Manhattan," indicated Ann Boothello, property product marketing manager at Dubizzle, which attracted 2.4 million monthly visitors to its property pages in the third quarter.

"For a one-bedroom apartment in Manhattan it would be about 1.9 million UAE dirham [$517,388], which would be the same for a prime community here," she pointed out.

Dubai rents and house prices are estimated to have increased broadly by some 30 per cent year-on-year, the highest growth rate in the world during the first half of 2014, according to various studies, while in some areas price rises have been much steeper.

Middle- and low-income expatriate families have suffered most from rocketing rents, often including Indians and Pakistanis as well as expatriate Arabs and also some families from affluent Western states.

Construction workers usually live in company accommodations but their families remain in their home countries.

The property market in the city of 2.3 million people rebounded in the last two years after a more than 50 per cent plunge in home prices from their peak in the aftermath of the 2008-09 global economic slowdown.

Expensive safe haven

The oil-rich Gulf sheikhdom's reputation as a solid safe haven in a Middle East increasingly torn by political upheaval and civil war has lured tourists and foreign investors alike.

Costs have kept rising and the emirate jumped to 67th spot among the world's most expensive cities to live in the world compared to the 90th position last year, according to the 2014 Mercer cost of living survey.

The leap in living costs was attributed in part to a significant increase in expatriate rental accommodation costs.

Some rents in the Dubai marina, for example, jumped by more than 50 per cent between August 2013 and February 2014.

"I don't save a thing," said Abdul, a 33-year-old website programmer from Bangalore, India who declined to give his full name. He relocated with his wife last December to Remraam, a new development built by Dubai Properties 30 kilometres inland on the desert periphery of the city.

"We moved out here because it was the cheapest area, but it will probably go up [in price] next year and we will have to move out of here too," added Abdul. "We will probably move back to India next year."

At an annual property exhibition in Dubai this week, state-linked companies announced projects they estimated to be worth billions of dollars combined.  Among the units on display were mansions in central Dubai priced at 75 million dirham each.

"There's been an exceptional amount of interest for these mansions," said Ajay Rajendran, vice chairman of Sobha Group, which is developing the project.

The increase in activity is causing many — including the International Monetary Fund — to worry that the Dubai market is overheating.

A senior government official said on Sunday that rising inflation needs to be controlled to ensure Dubai remains affordable.

The government has introduced some measures like increased transfer rates and mortgage caps to control prices.

These figured in the slight cooling of the market in the third quarter with average residential rents falling by 1 per cent, their first decline since 2012, a CBRE report said.

Developers at the property show have rolled out scale models of latest projects, including Mall of the World, a larger-than-life venture announced in July complete with temperature-controlled high streets, a theme park, hotels and a theatre.

Also on display at the Cityscape show on Sunday were models of mansions for sale at a price of more than $25 million apiece.

Dubai property prices have been on a roller coaster over the past 10 years.

The market began expanding when it was opened to foreigners in 2002 and peaked at record highs in 2008, driven mainly by speculative investments.

Prices took a nosedive in 2009 as finances dried up in the global financial crisis, shedding half the value of the sector.

But a revival in demand propped up values and rents at breakneck speed, stirring fears of another bubble.  

Data shows that sale prices surged by 56 per cent and rents by 41 per cent since August 2012, according to Dana Salbak, senior research analyst at Jones Lang LaSalle (JLL).

"We realise that this was very unsustainable," she said on the sidelines of the annual property show, pointing out a "welcome levelling off" in sale prices and rents in the residential sector in the third quarter of 2014.  

"We see the residential market stabilising. This is a healthy and sustainable level. We welcome prices and rents as they are," she added.

A JLL report put growth in sale prices and rents in the third quarter at just 2 per cent and 1 per cent, respectively.

Knight Frank real estate consultancy also noted that prices and rents have cooled down.

"The growth rate has been weakening," after having entered positive territory in mid-2011, the agency said in an autumn report.

AMMAN — Traders, manufacturers and exporters of construction materials from several countries, including Jordan, are eyeing business growth through Interbuild Jordan Fair 2014 which was inaugurated on Monday by Prime Minister Abdullah Ensour.

Representatives of companies, who were exhibiting their products in Jordan for the first time, said they pinned great hopes on the fair whose visitors, according to some exhibitors, were not up to expectations on the first day.  

“We are planning to develop good commercial relations by exporting marble items to Jordan and importing lime stone and marble from the Kingdom if prices are competitive.” Sindy Huang, manager of Foshan Ever Rising Trading Company Limited, told The Jordan Times.  

Thirty six members of the Federation of Indian Export Organisations (FIEO)  are exhibiting products at the Indian pavilion which was inaugurated on Monday by India’s Ambassador to Jordan Anil Trigunayat and Industry and Trade Ministry Secretary General Maha Ali.

“In the past, Jordanians used to indirectly acquire Indian products, after they were exported by India to European markets. But today, businessmen are finding more competitive prices by buying directly from India,” FIEO Chairman S.C. Ralhan told The Jordan Times.

“The partnership between India and Jordan is growing due to improvement in quality," said Hani Ghanem, member of the fair organising committee. ”For example, Jordan is buying drilling equipment used in the phosphate industry from India.”

Several representatives from Chinese companies, besides Jordanian manufacturers and real estate specialists are also taking part in the fair. There were also fewer participants from Poland, Greece, the United Arab Emirates, Egypt and Palestine, according to Ghanem.

Rick Xiong, a representative of a Chinese company specialised in timber and wooden industries, expressed frustration with business prospects. 

“Some customers from Jordan said the market is bad at this time, because construction projects are little slow. As such, importers of construction equipment have overstock,” he said, hoping his business will see a turnaround.  

A salesperson working at a Jordanian energy company, underscored the importance of changing customers’ mentality. 

In the past, everyone wanted European products. But some European solar panel companies were forced to shut down recently because they were incapable of competing with the Chinese and Indian products, she said.   

Ahmad Saleh, a Jordanian acting director at a real estate company said he expects good growth this year. 

“Despite political and economic challenges, people have gotten used to such difficulties. These challenges are no longer keeping us behind,” he said, 

The Interbuild Jordan Fair will remain open until Thursday.