Business

TRIPOLI — Small businesses are prospering in Libya’s major cities even as the economy at large is being throttled because of security problems and industrial action which has shrunk lifeline oil revenues.

Its financial woes combined with lawlessness has so far discouraged the return of multinationals, three years after the outbreak of an armed revolt which toppled long-time dictator Muammar Qadhafi.

Post-war reconstruction has been slow, with major infrastructure projects on the back-burner even as Libyans endure more and more frequent power cuts, especially in the west of the country.

Small businesses have been leading the way in post-Qadhafi Libya, with shops and boutiques in Tripoli and other cities boasting the latest in luxury brands.

“These investments are thanks to partnerships with foreign investors,” said chamber of commerce chief Idriss Abdul Hadi.

Such joint ventures have “promoted investment in the private sector at a time when the oil crisis has slashed the state budget, not allowing spending on planned development projects,” he added.

Economic experts, however, stress that trade and services play a secondary role in the overall Libyan economy, with only little value added.

The oil crisis dates back to last July when striking workers and pro-autonomy demonstrators in eastern Libya began blockading the country’s main terminals.

The action sent production shooting down to as low as 250,000 barrels per day (bpd), compared with 1.5 million bpd before the strike.

In early January, launch of production at Al Sharara field in the south after protesters in the area lifted their blockade allowed the country’s total output to recover to 570,000 bpd.

The oil sector accounts for 70 per cent of the gross domestic product (GDP), 95 per cent of state revenues and as much as 98 per cent of Libyan exports.

Only last week, protesters shut down oil and gas pipelines to the Millitah plant from Al Wafa field in southwest Libya.

Their action brought output back down to 460,000 bpd, National Oil Company spokesman Mohammed al Hrari told AFP.

Diversification and private sector

The World Bank, in a report issued last month, stressed “the urgent need for economic diversification in order to ensure long-term financial and economic stability”.

It called for reforms “to generate a vibrant private sector”, warning that “lack of access to financing, uncertainty in the legal environment and a fragile security situation” were key obstacles.

Ahmed Belras Ali, director of Libya’s stock market, warned of “a climate of fear among businessmen”.

“The stock market has lost an estimated 30 per cent of its value because of falling share prices,” he indicated.

Ali said hopes were pinned on the private sector, “which can serve as an engine of the economy, with the current weakness of state structures”.

Libya has lost more than $10 billion in revenues because of the crisis, according to estimates from the oil ministry and the World Bank.

Prime Minister Ali Zeidan has even warned that “the government could have difficulties paying salaries”.

AMMAN –– The government may take a decision soon restricting investments in the housing sector to Jordanian developers only.

Kamal Awamleh, president of Jordan Housing Developers Association (JHDA), told The Jordan Times on Sunday that the association has urged the government to ban foreign and Arab investors from developing residential projects in the Kingdom due to issues related to post-sale maintenance contracts.

“For example, several Iraqi investors built housing projects and left to settle in other countries,” Awamleh said, explaining that several buyers have complained to JHDA from construction faults after developers left the country.

He added that the association has called on the government to restrict investments in the property market to Jordanian companies only, or to allow foreigners and Arabs to enter into partnerships with Jordanian investors who should own at least 51 per cent equity in such joint firms.

“This would be a fair decision to protect homebuyers,” Awamleh continued, noting that there are 2,700 companies registered at JHDA.

According to Awamleh, the real estate market is still on uptrend.

He referred to official data which showed that trading in the property market reached JD6.3 billion in 2013.

Indicating that although prices of residential apartments went up by around 10 per cent in 2013 compared to the previous year, Awamleh said that more apartments were sold last year.

According to Department of Land and Survey data, a total of 30,380 residential apartments were sold in 2013, a 19 per cent increase over the 25,434 units sold in 2012.

The JHDA president called on the government to open the door for investors to import cement from neighbouring countries such as Saudi Arabia and Egypt as prices of domestic prices have increased sharply over the past year.

Another factor that could contribute to lowering the prices of residential units, Awamleh mentioned shortening the 10 months period for the Greater Amman Municipality (GAM) to grant approval for licences, describing the period as “too long”.

“If the government allows us to import cement from cheaper markets and GAM slashes the period for granting licences, housing prices could go down by at least 15 per cent,” he claimed. 

DUBAI, United Arab Emirates — Dubai and luxury are nearly synonymous. The city is home to the world’s tallest tower, massive man-made islands in the shape of palm trees and a fleet of police cars that includes a Ferrari, a Lamborghini and a $2.5 million Bugatti Veyron.

Now, to boost its glamour factor and economy, the city has its eyes set on the multibillion dollar a-year global fashion industry, which is currently dominated by the US, Europe and Japan.

But in the Middle East, Dubai is the powerhouse, raking in almost half of the region’s market share of retail spending.

As people in other parts of the Arab world grapple with protests, violence and turmoil, Dubai’s modern skyscrapers, over-the-top glitz and flair for opulence provide the well-heeled a seemingly endless supply of indulgence and distraction.

Real estate services firm CBRE ranks Dubai as the second most important destination for international retailers, after London. A little more than half of all major international retailers have outlets in Dubai, and a third of all luxury spending in the Middle East happens here, according to consulting firm Bain and Company.

But the city’s officials want more. They want Dubai to evolve into a hub of creativity that attracts the region’s best designers.

Construction has already begun on a massive project called the Dubai Design District, or D3. The site is dedicated to the fashion industry and will house design studios, boutique hotels, high-end apartments and, of course, a promenade for shopping.

The first phase of construction on the 1.7 million-square-metre site will cost around $1 billion and be ready by 2015, said Amina Al Rustamani, chief executive officer of Tecom Investments, which is developing D3.

She says the idea is to bring creative minds together under one umbrella.

“So the idea was like, OK, why can’t we create a SOHO destination for these designers to be in, one place where you have specific events and activities and promotion for tourists to come and see really what is special that Dubai could offer to them?” she added.

With foreigners making up roughly 90 per cent of its population, Dubai’s designers say the city is great for new brands and entrepreneurs who want the world to take notice. The port city’s location links trade routes from east to west.

“Dubai is a melting pot. There are over 200 nationalities here, so there’s always a different target audience to cater to without even leaving the country,” said Shaimaa Gargash, one of three Emirati sisters behind the three-year-old fashion label House of Fatam.

Of $7.6 billion spent in the Middle East on fashion in 2012, just under a third was spent in Dubai alone, according to Bain and Co.

Local designers say there is a misconception that Arab women in the Gulf — who traditionally wear long black robes over their clothes and matching black scarves over their hair and even faces — are not daring when it comes to what they wear underneath and in front of other women.

“They are actually more adventurous than people think,” said Lamia Gargash, one of the founders of House of Fatam.

Lebanese designer Zayan Ghandour says fashion is not merely a luxury, but a necessity in this part of the world.

One of three women who own Sauce, a highly sought-after brand of boutique stores with six branches in the United Arab Emirates, Ghandour says the majority of her customers are Gulf Arab women who are not afraid to experiment with bright colours, bling and the latest trends.

“The lady in this part of the world takes her fashion very seriously,” she said.

Saudi designer Lama Taher says her brand, Lumi, is selling out across the region because Arab women have learned to value locally made products, rather than only wearing international luxury brands.

“They love to flaunt their beauty, but there are different ways to do it and different platforms. It can be in public, or in [private] gatherings and parties and events,” the 27-year-old said.

Capitalising on the growing interest in local brands, D3 will be built up over the next decade to act as a gateway for emerging designers from South Asia to North Africa.

“We believe Dubai Design District will be different than what you hear about in Milan or Paris. ... We want to create our own identity,” Al Rustamani said.

If Dubai wants to offer something unique and authentic, it will have to attract designers from outside the UAE, says Egyptian jeweller Azza Fahmy.

Fahmy, who has been approached by D3 as an adviser, is an icon among young Arab artisans for successfully infusing Egyptian and Islamic art into wearable, modern pieces. She created a line of jewellery for the British Museum inspired by the Muslim Hajj pilgrimage, and her jewellery will be on the runway Sunday during London’s Fashion Week, for designer Matthew Williamson’s show.

Fahmy says D3 needs more than just buildings to come alive. Ancient metropolises like Cairo and Damascus — where thousands of years of history and civilisation are on display in the bazaars, architecture, poetry and cuisine — inspire artists, she said.

“You need to collaborate with the countries around you that already have culture and civilisation, each helping one another,” she said.

For Dubai, fashion means business.

The retail industry makes up a third of Dubai’s economy, according to the Oxford Business Group. Shopping is tax free and the United Arab Emirates (UAE) is home to around 40 malls.

The Dubai Mall received more than 75 million visitors last year, nearly half of them tourists, said the mall’s developer, Emaar Properties.

To back the growing retail market, Emaar is planning to add 304,000 square metres of retail space to Dubai Mall.

Another big outlet, The Mall of the Emirates, wants to double its sales and is investing $1 billion over the next five years to add new stores and restaurants.

The expansions are in line with Dubai’s plans to increase tourism. The city will host the world Expo in 2020, and officials forecast the six-monthlong event will attract 17.5 million visitors from outside the Emirates.

Fashion market analyst Cyrille Fabre of Bain and Co. says tourism and fashion drive one another in the UAE. Shopping is the third-largest reason people come to Dubai, he said last year at an event called Fashion Forward that brings together local designers, buyers and industry insiders.

“Fashion is a big tourist attraction and as the fashion industry grows, tourism grows and vice versa,” he added.

AMMAN — Transport Minister Lina Shbeeb and her Iraqi counterpart Hadi Al Amiri on Saturday weathered the liquidation of the Iraqi Jordanian Land Transport Company with a determination to boost economic and commercial integration in various fields.

Land transport activity is continuing at 80,000 trucks per year, Shbeeb indicated at a press conference. The company’s general assembly meetings were set to discuss difficulties facing the liquidation committee in selling remaining assets of land, used trucks and different spare parts.

The Iraqi official noted that Iraq’s council of ministers has recently approved extending an oil pipeline to Aqaba, stressing that Iraq is looking into all means that can boost joint cooperation with Jordan.

Shbeeb said coordination is continuing on a railway project, noting that a Chinese company expressed interest in getting acquainted with the studies on the project feasibility in order to finance it.

On Saturday, Prime Minister Abdullah Ensour received Al Amiri and stressed the importance of following up on the agreements reached during the meetings of the Joint Jordanian-Iraqi Higher Committee, which convened in Baghdad recently. The minister officially informed Ensour of the Iraqi Cabinet’s approval of extending an oil pipeline between Iraq and Jordan. 

TURAIF, Saudi Arabia — Billboards on the highway outside Turaif, a remote desert town in the far north of Saudi Arabia, foretell a glittering future of glass offices and palm-shaded residential streets. A future that won’t rely on Saudi oil.

Early this month, an array of government ministers gathered in a tent near this barren outpost, 1,100 kilometres from Riyadh, to sign contracts to develop an industrial complex around a phosphate mine, with a new railway link to a Gulf port and total investments estimated at more than $9 billion.

The Waad Al Shimal Project, or “Northern Promise”, is part of a wider strategy in the kingdom, the world’s largest oil exporter, of building downstream industries and boosting the private sector instead of simply exporting raw materials.

It follows in the footsteps of Jubail and Yanbu, massive industrial cities on the Gulf and Red Sea coasts that were built in the 1980s as Saudi petrochemical production grew.

Riyadh is also pushing the King Abdullah Economic City near Jeddah, run by Emaar Economic City, as a private sector scheme along the same lines.

“I think this approach is something that will help diversify the economic base,” said Paul Gamble, director, sovereign risk, at Fitch Ratings. “It will help diversify export revenues. It will have an impact on employment, though not a large one. The one thing it doesn’t address is diversifying budget revenues.”

Recent diversification efforts through industrialisation have had little impact on official figures showing the size of the oil industry relative to the wider economy as increased crude revenues have outpaced growth in non-oil sectors.

Oil and gas accounted for 49.7 per cent of the gross domestic product (GDP) in 2012, up from 37.7 per cent in 2002, the most recent central bank data shows, as the price of Brent crude quadrupled over the period.

But many analysts expect oil prices to fall in the next few years as the United States ramps up shale oil production, which will shine a light on the virtues of diversification.

“We started out exporting crude oil, then we moved into refining, then we moved into gathering gas and creating a petrochemical industry. Then we moved into large-scale mining. The benefit of it is that it has large downstream industries,” Economy Minister Mohammed Al Jasser told reporters at Turaif.

The desert stretches in all directions from the spot where he spoke to an unbroken horizon, but when complete, Waad Al Shimal will be a major producer of phosphate products including the industrial fertiliser ammonia, animal feedstock, plastics and detergents.

The project could make its biggest shareholder, half state-owned Saudi Arabian Mining Company (Maaden), a significant player in the global minerals industry, modelled perhaps on Saudi Basic Industries Corporation (SABIC), which was built from nothing in the 1980s and is now one of the world’s biggest industrial chemical companies.

SABIC is not only Saudi’s main source of non-oil exports, but provides the raw materials for a host of downstream factories in Jubail and Yanbu.

“There [will be] many industries that also have high employment value in the region,” Finance Minister Ibrahim Alassaf told Reuters.

A measure of the importance attached to job creation at Waad Al Shimal is that the kingdom’s technical training institute plans a new college nearby, to educate 300 graduates a year for white-collar jobs in industrial fields.

Saudis increasingly work in technical fields that were once the preserve of expatriates, something government labour reforms are aimed at encouraging.

However, many companies still say they prefer to hire foreigners, who cost less and often have more experience.

Mineral production has been largely neglected by the Saudi oil ministry and for decades has been restricted mostly to small-scale gold mining.

The government set up Maaden in 1997 and opened the sector to private and foreign investors in 2001.

“Saudi Arabia is hardly explored. We expect very high potential for additional mineral resources. Saudi Arabia is virgin. There is a lot of activity and interest in the development of minerals,” Oil Minister Ali Naimi told reporters.

Maaden was part privatised in 2008, floating half its shares on the Saudi bourse, and it moved towards large-scale minerals developments supported by extensive state-funded infrastructure.

The thinking behind Maaden and other former state-owned companies set up with an eye to privatisation was as a means of distributing wealth and bringing private-sector nous to development projects.

“They have so many foreign partners for these big projects, which gives more confidence in the due diligence process, and therefore their chances of success,” said Fitch’s Gamble.

A first project, Maaden Phosphate Company (MPC), started up in 2011 in partnership with SABIC, had capacity to produce 11.6 million tonnes a year (t/y) of ore at Al Jalamid in the Northern Borders region, supplying a 3-million-t/y diammonia phosphate (DAP) plant at Ras Al Khair on the Gulf coast.

Last year, Maaden inaugurated a second major development, a $10.8 billion aluminium joint venture with US-based Alcoa, with an alumina refinery, aluminium smelter and rolling mill at Ras Al Khair.

It currently imports raw material, but will eventually use bauxite from a mine at Al Ba’itha near Quiba in Qassim Province scheduled to start up this year with output of 4 million t/y.

The phosphate mine at Al Jalamid, the bauxite mine at Qassim and the processing facilities at Ras Al Khair are connected by a new rail network built by state-owned Saudi Arabian Railways that will be extended to Waad Al Shimal.

The government built the port and some other facilities at Ras Al Khair, but Maaden developed a power and water desalination plant for its aluminium and phosphate projects.

Waad Al Shimal, a joint venture with SABIC and US phosphate and potash producer Mosaic, builds on these earlier developments with a mine at Umm Wual near Turaif and nine large processing facilities.

In December, Maaden said it had secured $4.2 billion financing commitments from banks, while government bodies would supply $3 billion. First production is expected in 2016. Government agencies will also pay for rail and port expansions.

Engineering, procurement and construction contracts for the main facilities have already been awarded, with the largest jobs going to Daelim Industrial Co., Spain’s Intecsa Industrial, SNC Lavalin, Sinopec Engineering Group and Hanwha Engineering & Construction Co.

The engineering consultant is Fluor Corp., and the project manager is Bechtel.

Saudi Arabia is already a major exporter of urea and ammonia, two of the most common artificial fertilisers, via Saudi Arabia Fertilisers Co. (SAFCO), a unit of SABIC.

“It’s about using what they have and producing value-added goods instead of just exporting the raw material. Around that is an industrial cluster strategy that you hope will create jobs and industries you never had before,” said John Sfakianakis, chief investment strategist for Saudi investment company Masic.

WASHINGTON — The US Congress approved an increase in the country’s debt limit through March 2015, bowing to President Barack Obama’s demands to extend federal borrowing authority without conditions, but only after a dramatic Senate vote on Wednesday.

Final action in the Senate followed an hour-long nail-biting procedural tally forced by the objections of Republican Ted Cruz, a conservative Tea Party favourite. It appeared at first there would not be enough Republicans to join the Democratic majority and advance the bill.

A decision by Senate Republican leader Mitch McConnell and Senate Republican Whip John Cornyn, who are both up for re-election this year, to vote to advance the measure appeared to kick the procedural tally over the needed 60 votes.

After a few more tense minutes of huddling on the Senate floor, several other Republicans changed their votes to follow their leadership. In the end, 12 Republicans joined Democrats in advancing the bill, on a vote of 67-31.

The measure, which then passed the Senate on a final, party-line vote of 55-43, now goes to Obama to be signed into law.

The House of Representatives, where Republicans hold a majority, passed the measure in a close vote a day earlier, after Republicans dropped the confrontational tactics they had used in similar votes over the past three years.

The advance of the measure this week has brought relief to financial markets. Investors were becoming increasingly jittery ahead of February 27, the date by which the US Treasury had been warning its borrowing authority would be exhausted, putting federal payments at risk.

Without an increase in the statutory debt limit, the US government would soon default on some of its obligations and have to shut down some programmes, a historic event that would have likely caused severe market turmoil.

Reaction in most financial markets to the drama on the Senate floor was muted, with US stocks holding near the unchanged mark on the day and most US Treasury debt prices remaining modestly lower for the session.

But there was visible relief in the short-term interest rate market. The rate on the one-month Treasury Bill, which had jumped in the past week on concern over a protracted showdown over raising the debt ceiling, dropped to its lowest in three weeks, ending the day at just 0.01 per cent.

Obama welcomed the vote, but said Republican efforts to use the debt limit increase as leverage to achieve other policy goals had been damaging and should be abandoned.

Since 2011, Republicans have linked raising the borrowing cap to spending cuts or cutbacks to the president’s signature healthcare law, and the dispute at one point led to a downgrade of the pristine US credit rating.

“The full faith and credit of the United States is too important to use as leverage or a tool for extortion,” Obama said in a statement. “Hopefully, this puts an end to politics by brinksmanship, and allows us to move forward to do more to create good jobs and strengthen the economy.”

Treasury Secretary Jack Lew said in a statement that Congress’ action would boost economic growth by making businesses and investors more confident.

Cruz wanted conditions on debt ceiling

Obama and his fellow Democrats have demanded that the debt ceiling be raised without any conditions.

But Republican Cruz, whose influence helped push Congress into a government shutdown in October, objected to a simple-majority vote on the debt limit because he wanted to attach “meaningful conditions” that would help reduce US deficits.

Because of an approaching snowstorm, senators agreed to waive the required debate time and hold the procedural vote on Wednesday, with the final vote immediately following it.

After the results were in, some Republicans said their party was furious with Cruz for forcing a number of them to cast votes that could open them up to attacks from Tea Party conservatives opposed to any debt limit increase whatsoever.

“He accomplished nothing except forcing a number of Republicans to swallow hard and show some courage,” one aide remarked.

Both McConnell and Cornyn face conservative opposition in upcoming primary elections.

McConnell’s primary opponent, Matt Bevin, wasted no time in putting out a statement denouncing the senator’s move, saying: “Kentucky deserves a senator that will not keep voting to suffocate our children and grandchildren with trillions of dollars in debt.”

The Senate Conservatives Fund, a political action committee founded by ex-Senator Jim DeMint, also hit McConnell, tweeting that “Mitch McConnell just voted with the Democrats to advance yet another debt limit increase. Kentucky deserves better.”

Cruz, who is from Texas, made no apologies for his maneuver and said failure of the procedural vote would have presented an opportunity to address Washington’s spending problems.

“The next step would have been, I believe, that we would have come together to work on meaningful structural reforms to address the out-of-control spending,” Cruz told reporters.

Senator Bob Corker, a Tennessee Republican who cast a “yes” on the procedural vote, told reporters that after McConnell had voted for the measure, discussions took place on the Senate floor and then other Republicans stepped in to “help him out”.

Republicans who switched their votes from “no” to “yes” included Senator John McCain of Arizona, who joked later that his shoulder had been dislocated in arm-twisting on the Senate floor.

McCain said much of the discussion in the tense Republican huddles focused on getting past the debt limit to issues where Republicans could gain more political traction, such as healthcare.

“Nobody persuades me,” McCain said of his vote. “I just thought it was the right thing to do.”

TEL AVIV — Israeli conglomerates will offload billions of dollars worth of assets over the next few years to comply with a new law designed to promote competition and dilute the power of big business in a country where a few tycoons control much of the economy.

The move to redefine Israel’s corporate landscape comes after 400,000 people took to the streets in 2011, the largest protest in Israeli history, angered by the high cost of living.

The Business Concentration Law, which aims to break up some of the largest conglomerates and prevent the growth of new behemoths, could put about 40 firms worth 80-100 billion shekels ($23-28 billion) up for sale, according to Israeli corporate law firm Gross Kleinhendler Hodak Halevy Greenberg & Co. (GKH).

The reform, which was approved in December and is the latest in a swathe of new business regulations, should result in smaller holding companies with less debt, said Alon Glazer, head of research at Leader Capital Markets.

Some fear it could also push Israel’s biggest companies to look elsewhere for growth.

The expected surge in divestments looks set to cover a wide range of businesses, from insurers and banks to oil refiners and food companies. Some, including Israel’s second biggest insurer Clal Insurance and leading food company Tnuva, are already up for sale.

Potential buyers include foreign firms as well as private equity funds, possibly teaming up with local partners unable to buy on their own. Critics say the tighter regulatory environment in Israel could deter some investors, however, forcing sellers to lower their prices or float assets piecemeal on the stock market.

The law, which supporters say is an overdue strike against a select band of overmighty tycoons, grants conglomerates four to six years to sell the assets, but experts believe they will act early to avoid last-minute fire sales.

Pyramid power

Corporate power in Israel is more closely concentrated than almost anywhere else in the developed world, with the 10 largest groups controlling 41 per cent of the $200 billion-plus value of the 495 companies on the Israeli bourse.

Part of the problem has been that the biggest players have been able to build “pyramids” with tiers of holding companies, enabling wealthy individuals to control business empires while owning only a fraction of the equity in any given entity.

“A lot of assets are going to shake loose,” said one senior investment banker.

The lopsided influence of Israel’s financial elite dominated the political agenda in 2011 when the protesters took to the streets, demanding greater competition to lower costs for housing and basic goods.

In response to that pressure, Prime Minister Benjamin Netanyahu’s rightist government swiftly drew up a plan to open up markets and force service providers to cut consumer fees, along with a flood of regulations that affected almost every sector, from mobile phone operators to food makers.

A new generation of politicians promising to tackle vested interests were swept into parliament in 2013, including former TV personality Yair Lapid, who became finance minister in Netanyahu’s new government and has railed against “shameless tycoons”.

The new law will limit the pyramid conglomerates to two layers of listed companies and bar them from holding financial firms with assets of more than 40 billion shekels and non-financial businesses with more than 6 billion shekels of domestic revenue.

GKH Chairman David Hodak called the law a “big experiment” to curb private sector power in the economic and political field, saying: “A process of this kind happens in a country once in a very long while or as a result of a deep crisis.”

The case for breaking up the pyramids was helped by the insolvency of IDB Holding, the most layered of Israel’s conglomerates.

IDB Holding, with a market value of 26.8 million shekels, owns IDB Development, which in turn owns 74 per cent of holding company Discount Investment Corp., which holds 70 per cent of holding company Koor Industries. IDB Development also owns 55 per cent of Clal Insurance.

IDB has already agreed to sell a third of Clal to a group led by Chinese businessman Li Haifeng for 1.47 billion shekels and is also in the process of merging Koor and Discount as it moves towards becoming a two-layer pyramid.

Discount Investment in turn controls some of Israel’s most prized assets: 44 per cent of Israel’s biggest mobile phone operator, Cellcom, 48 per cent of leading supermarket chain Super-Sol, and 79 per cent of real estate developer Property and Building.

All are potential candidates in the big sell-off, though IDB said in a statement last month that the full impact of the new law was still unclear.

Another affected by the law is businessman Zadik Bino, who controls refiner Paz Oil and First International Bank, the country’s fifth-largest lender.

Grow elsewhere

According to Adir Waldman, of the Freshfields Bruckhaus Deringer law firm, many foreign clients, especially European private equity firms, had been sizing up the opportunities.

“They have a lot of money they need to put to work and have seen what firms like Apax did,” he said.

Britain’s Apax has invested more than $1 billion in Israel over the past eight years. However, Apex itself could be subject to the new restrictions and has held talks with China’s Bright Food over its 56 per cent stake in Tnuva, which could fetch an estimated $1.6 billion.

“There will be attractive opportunities, but there is high uncertainty for private equity in terms of regulation,” indicated one private equity source. “Unless we see a new mindset, I don’t think there will be a lot of new players.” Some say it could also have a chilling effect on homegrown growth.

“The regulator is basically saying, ‘We don’t want you to grow [in Israel]; we want people to come from abroad’,” said an investment source who declined to be named. 

SINGAPORE — Airbus claimed bragging rights as the Asia-Pacific’s dominant aircraft supplier this week, saying the region’s fast growing economies and rising passenger demand will continue to drive demand over the next 20 years.

The European plane-maker said that in 2013, it won 80 per cent of all new business in the Asia-Pacific with 379 firm orders.

It also delivered 331 new aircraft, or over half of all new planes that entered into service with the region’s airlines, it added.

Speaking at the Singapore Air Show, senior Airbus executives said they were optimistic about more orders from the region’s full-service carriers and budget airlines despite ongoing concerns about the health of emerging markets, many of which are located in the Asia-Pacific.

“The message from me is very clear. This [Asia-Pacific] is where the action will be for the industry in the coming years,” Fabrice Bregier, head of Airbus plane-making division, told a news conference.

There is demand for 11,000 aircraft worth $1.8 trillion in the 20 years to 2032, Airbus pointed out.

The total fleet size is expected to more than double to over 12,130 jets, based on average annual traffic growth of 5.8 per cent and replacement of nearly 3,770 aircraft in service today, it indicated.

According to the company, growing urbanisation means that 25 of the 89 mega-cities in 2032 will be in Asia-Pacific, where there will also be 90 cities with more than one million passengers.

China will also overtake the United States as the world’s largest domestic airline market by 2032, said Airbus sales chief John Leahy.

“There is no doubting the importance of the Asia-Pacific market both today and in the future,” he added.

Even though airlines from the emerging markets account for an increasingly large portion of its order book, Bregier said he is not too concerned about current worries regarding that market segment.

Airbus is also looking for more partnerships with companies in the region, Bregier remarked.

In China, where the company has a final assembly line in Tianjin for the current generation of the A320 family of aircraft, he noted that there remains the possiblity of assembling the upgraded re-engined A320neo variant.

Airbus has been promoting a “regional” variant of its A330 widebody aircraft, which it says will suit services between high-demand slot-restricted airports in countries like China.

Airbus received on Wednesday its first order of the year for its flagship A380 when leasing firm Amedeo signed an $8.3 billion deal for 20 of the superjumbos.

The purchase agreement, signed at the Singapore Air Show, put the European manufacturer on track to meet its target of 30 orders for the world’s largest passenger plane in 2014.

Airbus said more than 120 A380s are now in operation worldwide following its launch in 2007.

Leahy said the company wants about 30 orders for the A380 this year.

Airbus says it has received 814 orders so far from 30 countries for the A350-XWB, a wide-body plane due to begin service with Qatar Airways in the fourth quarter of 2014.

On Tuesday, fledgling carrier VietJetAir ordered 63 Airbus A320 jets with a list price of $6.4 billion in an expansion programme that underscores Asia’s central role in the future of world aviation.

The deal also covers rights to acquire or lease 38 more A320s, potentially boosting the budget carrier’s current fleet of 11 A320s tenfold.

Separately, the world’s biggest planemaker Boeing expects nearly half of the world’s air traffic growth will be driven by the Asia-Pacific region over the next 20 years, but is monitoring local currencies to assess airlines’ ability to meet orders.

Boeing forecast the fleet of aircraft in the region would triple in size over the next two decades, sparking demand for close to 13,000 more planes valued at $1.9 trillion.

Air travel has surged in the region, driven by a rise in disposable incomes and low air fares offered by budget carriers, notably in Southeast Asia.

But Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, sounded a note of caution, saying market conditions were being monitored closely for any signs of overcapacity.

“We are watching what’s happening here in terms of currencies and in terms of economic growth,” he told Reuters television.

After years of explosive growth, the region’s budget carriers now face the possibility of overcapacity as deliveries accelerate, airlines expand into each other’s markets and currency weakness threatens to dent economic growth.

By the end of the year, airlines in Southeast Asia will have 1,800 planes, while their order book is set to surpass the 2,000 mark.

Boeing estimated Asia-Pacific’s fleet size would blow out to 14,750 over the next 20 years, from 5,090 in 2012.

“Asia Pacific economies and passenger traffic continue to exhibit strong growth,” Tinseth told a media briefing. “Over the next 20 years, nearly half of the world’s air traffic growth will be driven by travel to, from or within the region.”

Both Airbus and Boeing have committed to record production rates for their most popular models, but executives are closely watching the financial turmoil in key aviation markets, such as Indonesia and Thailand.

Asia Pacific is home to some of the world’s biggest long-haul carriers and budget carriers AirAsia and Lion Air have placed aircraft orders valued at billions of dollars and are among the biggest customers of Boeing and Airbus.

“They (low-cost carriers) have been able to provide a service to a part of the population that couldn’t fly before. And so what they are able to do is, to reach into a country and help stimulate demand, very similar to what a Southwest or a Ryanair did over time,” Tinseth indicated.

“Their growth is being bolstered by both the growth in income we see, growth in the economy, but also the fact that they are able to push their product into a greater base,” he said.

Flag carriers weigh orders

Full service carriers are also getting in on the act.

Singapore Airlines is weighing a potential order for up to 40 of wide-body jets as it compares Boeing’s revamped 777X against Airbus A350, sources familiar with the matter said.

The airline is looking at a potential order for as many as 40 777X aircraft in a deal potentially worth $15 billion at list prices, the sources said, asking not to be identified.

Garuda Indonesia is looking to tie up a long sought deal with Airbus for around 10 A330 aircraft, a source familiar with the matter said, echoing a Bloomberg report.

Tinseth said the boom in low-cost carriers and demand for intra-Asia travel have fuelled a substantial increase in single-aisle airplanes.

Boeing’s data projects that passenger airlines in the region will rely primarily on single-aisle planes such as the Next-Generation 737 and the 737 Max, a new engine-variant of the 737, to connect passengers. Single-aisle airplanes will represent 69 per cent of the new airplanes in the region.

Carriers in Southeast Asia are due to take delivery of about 230 aircraft worth over $20 billion this year.

“As we would move forward, we are going to be watching that capacity growth very closely and asking ourselves, ‘Will it change the yield market and the revenue market?’,” said Tinseth.

“We see the capacity that’s coming into the market within the bounds of our forecast, which is good but it’s aggressive growth. And so you have to watch, especially as they open up new markets, where those markets will be and whether they will be successful,” he added.

Thai budget carrier Nok Air on Wednesday committed to buy 15 B737s from Boeing worth $1.45 billion.

LONDON — World oil demand will rise slightly more than expected in 2014, the Organisation of the Petroleum Exporting Countries (OPEC) said on Wednesday, becoming the second major forecaster this week to predict higher fuel use as economic growth picks up in Europe and the United States.

In a monthly report, OPEC indicated that global demand will rise by 1.09 million barrels per day (bpd) this year, up about 40,000 bpd from its previous forecast. The group, which pumps a third of the world’s oil, also sees potential for further rises.

“Given the improvement in oil demand from the countries of the Organisation for Economic Cooperation and Development, the likelihood for upward adjustments for world oil demand growth in 2014 is currently higher than existing projections,” said the report by economists at OPEC’s Vienna headquarters.

OPEC’s report comes a day after the US government’s Energy Information Administration raised its 2014 world oil demand growth forecast by a similar increment. Oil prices edged higher after it was released, with Brent crude trading near $109 a barrel.

While the bulk of the growth in global oil demand continues to come from China and the Middle East, OPEC was more upbeat about the prospects for further fuel use this year in established economies.

OPEC sees a contraction in European demand — in the doldrums for years due to recession — easing in 2014, and said preliminary figures for December 2013 and January 2014 indicated strong demand in top consumer, the United States.

“The potential of the oil demand forecast for countries of the Organisation for Economic Cooperation and Development leans to the upside as the improving economic conditions in the US and Europe may turn out better than expected,” OPEC said.

“For other countries, risks are skewed to the downside due to fiscal and monetary issues,” it added.

According to secondary sources cited by the report, OPEC raised its own output to 29.71 million bpd in January, as a partial recovery in Libyan shipments — disrupted for months by unrest — was offset by cutbacks in top exporter Saudi Arabia.

But the stronger global demand outlook is not translating yet into higher demand for OPEC oil, as rising supplies including of US shale oil are eroding its market share in 2014.

OPEC raised its estimate of the amount of crude non-member countries are expected to produce this year to 54.14 million bpd, up about 50,000 bpd from the previous estimate.

As a result, OPEC expects demand for the crude pumped by its 12 members to average 29.60 million billion barrels, virtually unchanged and suggesting inventories will build up should the group keep pumping at January’s rate.

Another closely watched oil demand forecast is due on Thursday from the International Energy Agency (IEA), adviser to industrialised countries.

Last month, the IEA’s chief economist told Reuters on the sidelines of the World Economic Forum in Davos that Europe’s high gas prices risk driving away a big share of its energy-intensive industries such as cement and steel unless countries boost shale gas output and trim green subsidies.

“These industries are critical for the European economy as they employ over 30 million people and it could have a major knock-on effect on the European Union economy,” the IEA’s Fatih Birol said.

Concern among European Union (EU) nations about the impact of energy costs on their already suffering industry is intensifying, with some member states debating a freeze on prices and stripping away renewable subsidies.

Gas prices in Europe are around three times higher than those in the United States thanks to a shale gas boom that has seen US output soar, while European consumers increasingly rely on imports from Russia and Norway as domestic fields age.

Tackling the continent’s rising energy bills requires a wide-ranging approach, Birol stressed.

Not only must European countries renegotiate gas contracts — two-thirds of which will expire in the next decade — to get more favourable terms, but they should also boost production of unconventional gas resources such as shale, he said.

EU regulators have already said they are preparing to charge Russian gas export monopoly Gazprom with abusing its dominant position in central and eastern Europe.

They have voiced concern that Gazprom imposed unfair prices by linking gas to oil prices, helping to keep tariffs high, especially to nations most reliant on Russian gas.

The EU should also consider trimming the $60 billion it spends annually on subsidising renewable sources of electricity generation, such as wind and solar.

“In some cases, it is excessive and puts an unnecessary burden on consumers,” Birol said.

The policy recommendations, which also include introducing energy-efficiency measures to cut consumption, follow pleas from industry, which argues energy policy has to focus on affordability.

But with the current gas price disparities between Europe and the United States, more European firms are considering relocating to take advantage of America’s cut-rate energy.

AMMAN — The industrial producers’ price index increased by 1.6 per cent in 2013 compared with 2012, according to Department of Statistics (DoS) figures.

The rise in the index resulted from the increase in the prices of manufacturing industries, while prices of mining industries and electricity production went down.