Business

AMMAN — Data from the Amman Chamber of Industry (ACI) showed on Saturday that exports increased by 3 per cent during the first eight months of 2015, despite the decline of sales to traditional markets, particularly Iraq and Syria.

According to ACI statistics,  exports during January-August 2015 reached JD2.75 billion, JD83 million higher than the JD2.67 billion registered during the same period of last year. Exports to the Iraqi market declined by 26 per cent to JD427 million, from JD575 million in the same period of 2014, a drop ACI attributed to border closure.

Despite this regression, Iraq still tops the list of importers on ACI list, followed by Saudi Arabia, the US and India. Sales to Saudi Arabia totalled JD474 million, whereas those to the US and India amounted to JD265 million and JD261 million respectively.

Exports to Egypt went down from JD53 million to JD49 million, and to Libya from JD16 million to JD14 million. Chemical industries and cosmetics topped the list of exports with JD656 million, followed by mining at JD526 million, while exports of the engineering, electric and ICT sector were valued JD337 million during the first eight months of 2015.

AMMAN — The consumer price index, a measurement of inflation, decreased by 0.6 per cent in the first eight months of 2015 compared with  the same period in 2014, according to the Department of Statistics (DoS). 

The decline was attributed mainly to lower transportation costs, which went down by 14 per cent, fuel and electricity, which fell by 12 per cent, and vegetables and beans, which dropped by 1 per cent. Other factors included a 1.5 per cent drop in prices of drinks and refreshments, and personal luggage, the prices of which decreased by 3.6 per cent. 

Higher costs covered rents which rose by 5.3 per cent, education by 3.7 per cent, fruits and nuts by 6.9 per cent, and tobacco by 3.9 per cent.

AMMAN — Marking  the visit to China of His Majesty King Abdullah, a memorandum of understanding (MoU) was signed on Thursday  in Yinchuan China by Shenzhen Chamber of Investment, Aqaba Development Corporation and PBI Aqaba Industrial Estate LLP. (PBIA).

According to a PBIA press statement, the MoU provides for development and operation of an industrial and logistics estate in the southern area of Aqaba Special Economic  Zone, near the new Aqaba port development project. “The estate will occupy an area of about 1 million square metres,” the statement said. 

The Shenzhen Aqaba Estate will be managed as an expansion of the Aqaba International Industrial Estate (AIIE) which is located on a site of 1.7 million square metres, near Aqaba Airport.

“AIIE has been operating for ten years with over 1,000 employees and it already has 80 signed contracts with $300 million invested,” the statement added. When completed, AIIE will have over $600 Million invested and more than 2,000 employees.

“The new Shenzhen Aqaba Estate is planned for an additional $700 million investment and should create an additional 2,500 jobs,” it concluded.

AMMAN — Vice Chairman of the Joint Chiefs-of-Staff Maj. Gen. Ziad Majali and his Ugandan counterpart Lt. Gen.

Angina Charles on Wednesday signed a memorandum of understanding governing bilateral military cooperation.

The memo stipulates cooperation in training, defence industries, medical services and fighting terrorism.

DUBAI — Dubai property developers are still turning out some larger-than-life projects even though prices are heading south again after clawing back a good chunk of their losses in the 2008 crash.

The Gulf emirate's annual Cityscape property fair opened Tuesday with developers foreseeing price declines of about 15 per cent this year, yet confident there would be no return to the days when huge projects were abandoned half finished.

Scale models of new skyscrapers, sprawling villa compounds and leisure centres, including a new indoor ski slope, were rolled out by several companies.

Analysts have signalled a slide in property values, which had recovered significantly in the past two years after shedding half of their value in the 2008 global financial crisis.

Dubai had shaken world markets when it signalled that it might default on huge debts incurred after borrowing extensively to build those ambitious projects.

Thanks to the robust trade, tourism and transport sectors, the economy has since steadied.

"Residential prices have fallen maybe nine or 10 per cent this year," indicated Craig Plumb, Middle East and North Africa research director for Chicago-based investment management company Jones Lang LaSalle.

"We expect prices to go down further over the rest of the year," he said, indicating that the decline has "more to do with what is going on globally. Things like [falling] oil prices and the global nervousness with the Chinese economy slowing."

"The Dubai residential market is very much affected by what's going on in the rest of the world because a large number of people buying here are investors coming from overseas," Plumb explained..

"There is a negative sentiment largely driven by oil prices... It pushed stock prices down and pushed sentiment against the residential market as well," he added.

The city-state, one of seven that make up the United Arab Emirates (UAE), is the largest and one of very few markets in the region that has opened up to foreign free-hold ownership.

According to Plumb, prices are likely to fall for 12 more months, while forecasting the drop for this year at 15 per cent.

London-based property consultancy Knight Frank has reportedly put the annual drop to June at over 12 per cent.

Cluttons, another London consultancy, expects villa prices to lose up to 7 per cent in the second half of the year after dropping 5 per cent in the first six months.

Signs of price softening had begun to show as a result of strict regulations introduced by UAE financial authorities to avoid a new bubble, including mortgage caps.

In particular, they put a cap on mortgage financing at 75 per cent for a first purchase and 60 per cent for a second one. This priced out of the market those who could not make down payments of 25 per cent or more.

As a result, Plumb remarked, prices are not expected to nosedive as they did in the crisis.

"We are seeing a much more stable market and that is a sign of better regulation," he said.

Developers undeterred 

Against that background, Cluttons indicated that more than 40,000 units have been announced this year, with an excess of 20,000 to be delivered by 2017.

Ziad Chaar, managing director of Dubai developer DAMAC Properties, said "with 53 billion dirham ($14 billion) recorded transactions in the first six months... we are sure that this market is a good market."

Chaar cited a growing population and healthy economic expansion, including a rising number of tourists and modern infrastructure, in addition to a stable exchange rate and political stability compared with a wider region in turmoil.

"If we did not know that this market is strong, and that there is a very strong demand, we would not have launched these projects," he said, pointing to scale models of various luxurious projects.

One of the projects on display at Cityscape is Meydan One, which includes plans for the world's highest residential tower, at 711 metres high.

Dubai is already home to the world's tallest building, Burj Al Khalifa, with stands at 829.8 metres.

At foot of Meydan One, a 1.2-kilometre indoor ski slope is set to break Dubai's own world record, Ski Dubai, which boasts a 400-metre slope.

Dubai's Nakheel Properties, developer of Palm Jumeirah and the World Islands, announced that it aims to bring 10,000 units on to the market in the Jebel Ali area.

Savills, another British real estate consultancy, ranks the UAE as the world second-best country for residential investment, after only the United States.

It described Dubai's market as "matured" and that softening prices are expected to pick up again in mid-2016, as the country prepares to host the Expo 2020 trade fair.

PARIS — Bahrain's national carrier Gulf Air is planning to buy up to 50 Airbus aircraft. Information Minister Isa Abdul Rahman Al Hammadi said the massive new contract was discussed between Bahrain's King Hamad and French President Francois Hollande during a meeting in Paris.

"Gulf Air met with Airbus and discussed the airline's future narrow-and wide-body fleet requirements, up to 50 aircraft," the minister added in an interview.

"Discussion will be finalised by the end of the year and an announcement will be made during the Bahrain International Air Show", which takes place in January 2016.

The two leaders discussed several "mega-projects" the minister indicated, as the Gulf island state plans to build a new airport terminal and a second causeway linking it to Saudi Arabia.

DUBAI/RIYADH — A shake-up of Saudi Arabia's oil leadership by King Salman has introduced a new element of unpredictability to its energy policymaking at a moment when Riyadh is grappling with slumping crude prices and its war in neighbouring Yemen.

State oil giant Aramco has been without a permanent chief executive since April, when Khalid Al Falih was made health minister, and the old Supreme Petroleum Council, where energy policy was historically made, was abolished in January.

While the world's top crude exporter has always prized stability and consistency in crafting oil policy, the changes, alongside a shift in market strategy that contributed to the world price slump, have left analysts and traders guessing as to King Salman's long-term vision.

The main tenets of Saudi oil policy, maintaining the ability to stabilise markets via an expensive spare-capacity cushion and a reluctance to interfere in the market for political reasons, are still set in stone, say market insiders.

But the uncertainty has led to speculation over the fate of both veteran Oil Minister Ali Al Naimi and the wider composition of the kingdom's energy and minerals sectors, with rumours abounding that a sweeping restructure could be imminent.

"There will be changes [at the oil ministry], but no one knows when or what will happen next. It could be tomorrow, next week or a month from now," said a Saudi insider. "The decisions are being taken by a small circle of people and a few advisers."

The key person in that small circle is Prince Mohammed Bin Salman, the young deputy crown prince who without having any previous oil experience has emerged since his father's accession to power as the most powerful figure in Saudi economic and energy policy.

The prince heads both an economic development super committee and a new council overseeing Aramco, making him the first royal ever to directly supervise the state oil giant, the world's biggest energy company.

The sense of unpredictability has only been sharpened by the wider geopolitical and market climate.

"It's anybody's guess what will happen next," said a Western diplomat in Riyadh.

Market changes

While Riyadh's launch of air strikes in Yemen on March 26 stunned observers of a country more noted for its use of backroom cheque book diplomacy, its shift in oil market policy in November was equally surprising, and arguably more important.

The kingdom led other producers within the Organisation of Petroleum Exporting Countries (OPEC) in November against cutting output levels, a move that abandoned decades of work to protect oil prices in favour of a strategy geared towards maintaining market share against rival producers such as Russia and US shale drillers.

Brent prices have more than halved since then, partly due to that policy shift, to around $48 a barrel down from peaks of around $115 in June 2014. This has tested Saudi Arabia's ability to corral its fellow OPEC members and added fiscal pressure as Riyadh cements its leadership change and faces regional turmoil.

"With the advent of US shale, Saudi Arabia has entered unchartered territory where it is still learning about a new source of supply. This necessitates a new approach for managing their investment and output policies," said Bassam Fattouh, director of the Oxford Institute for Energy Studies.

In his other role, as defence minister, Prince Mohammed has been the public face of the war in Yemen, which may have cut into the time he has been able to devote to restructuring Saudi Arabia's energy sector.

One clue as to what may eventually happen was given by Al Arabiya, a news channel with close ties to Salman's branch of the ruling Al Saud family, which reported on April 30, that Aramco would be restructured and split from the oil ministry.

Some Saudi energy sources have speculated about merging the oil ministry with the electricity, water and renewable power entities, to create a new energy ministry. Some have even raised the possibility of a limited privatisation of Aramco.

New energy godfather?

Inevitably, given his role as godfather of Saudi Arabia's energy sector from his youth as an Aramco office boy in the 1940s to his leadership of the company in the 1980s and as minister since 1995, such speculation also takes in Naimi's own future.

It will be impossible to find a like-for-like replacement for Naimi, who turns 80 this month and has enjoyed unmatched scope to interpret and implement policy thanks to his experience and the respect in which he is held internationally.

However, some had seen Falih, the former Aramco chief executive, as being his most likely successor, following Naimi's route from Aramco into the ministry. 

Whether his move to the health ministry makes that more or less likely is unclear, as is the fact he has been left in place as Aramco chairman.

Senior Aramco Vice President Amin Al Nasser was named acting chief executive on May 1, but there has been no further word as to whether he will remain in the job.

Others still bet on the deputy oil minister, Prince Abdul Aziz, another of Salman's sons, being promoted thanks to his years of experience. But that would fly in the face of the Al Saud's preference for keeping the oil ministry in the hands of technocrats and steering it clear of princely politicking.

How far this unpredictability affects the market is unclear, said Samuel Ciszuk, senior adviser at the Swedish Energy Agency, pointing to the fact that the new oil strategy appeared to enjoy consensus at the top levels of the Al Saud.

However, "the uncertainty element... could grow if the changes are perceived to be detrimental to the market", he added.

DOHA — Super-rich Qatar will withstand plummeting global oil prices and its economy will expand by almost 7 per cent in both 2016 and 2017, a major bank reported Tuesday.

Despite its reliance on oil and gas, Qatar's economy will be powered by major infrastructure projects, including the building of a new city where the 2022 football World Cup final will be played, a rail network and a mega-reservoirs project.

A $226-billion (202-billion-euro) spending programme by the tournament host will see real gross domestic product, the figure adjusted after inflation, grow 4.7 per cent this year and 6.4 per cent in each of the two following years, predicted Qatar National Bank (QNB).

"We expect growth in Qatar to remain strong despite lower oil prices," said the bank in its "Qatar Economic Insight 2015" report.

"The government has repeatedly expressed its commitment to continue the investment spending programme and its efforts to diversify the economy," it added.

The QNB said Doha can shrug off the fall in world oil prices as its breakeven oil price is "low" at $60.7 per barrel. It has more than $315 billion in savings and public debt is low.

Earlier this week, Qatar's Finance Minister Ali Sherif Al Emadi, said Doha would not scale back on its major economic projects even though other countries in the Gulf have begun to curb spending.

Oil-flush neighbour and regional powerhouse Saudi Arabia on Sunday said it would cut spending and issue more bonds as it faces up to a record budget shortfall due to tumbling crude prices.

Riyadh's unprecedented deficit is hitting as the kingdom maintains a costly military intervention against Iran-backed Huthi rebels in neighbouring Yemen as part of a coalition that includes Qatar.

On the back of sustained economic growth, the QNB predicts that Qatar's population will top 2.5 million for the first time by the end of 2016.

It only reached one million in 2006.

The current population stands at around 2.3 million, with 75 per cent of those men, which the United Nations estimates as the highest male to female ratio in the world.

BRUSSELS — The European Commission announced a 500 million euro ($557 million) package of measures on Monday to provide relief for farmers stung by slumping prices, triggered partly by the loss of exports to Russia due to European Union (EU) sanctions against the country.

The crisis has triggered a wave of protests which culminated on Monday with nearly 5,000 farmers and more than 1,000 tractors arriving in Brussels, where an emergency meeting of the EU's Agriculture Council was being held.

"This package will allow for 500 million euros of EU funds to be used for the benefit of farmers immediately. This is a robust and decisive response," European Commission Vice-President Jyrki Katainen said.

The package was discussed by the EU's Agriculture Council, which consists of farm ministers from member states, on Monday. Some details have not yet been finalised.

"We are pleased with the initial reactions [from ministers]," commission spokesman Daniel Rosario said.

The European Commission, the EU executive, said it was seeking to help farmers with cash-flow difficulties, stabilise markets and improve the functioning of the supply chain.

The plan allows member states to advance some payments to farmers and the commission said it was working closely with the European Investment Bank to design financial instruments where repayments were linked to commodity prices.

Albert Jan Maat, president of farmers group Copa, said Russia was one of the EU's main markets and sanctions imposed as part of the dispute over Ukraine last year had led to the loss of about 5.5 billion euros of agri-food exports.

"This situation is not our fault yet it is our sector that is being hit the most. EU farmers are paying the price for international politics," he added.

Farmers have been facing a worsening cash flow crisis.

"We are now in early September, bills have not been paid for the summer and a lot of milk producers will not be able to see their way through the winter unless cash is put on the table immediately," Mansel Raymond, dairy chairman at Copa said.

Milk prices paid to EU farmers are down 20 per cent from last year at 30 euro cents a litre on average. In the Baltic States, which has been worst hit by Russian sanctions, prices are even lower at around 20 euro cents.

The commission said it had not yet finalised the national distribution of the support funds but there would be "particular regard to those member states which have been most affected by market developments”.

The EU executive refused to raise the intervention price for dairy products, a move sought by farming groups and supported by France, Italy, Spain and Portugal.

Much of the funds come from larger-than-expected receipts from a dairy super-levy imposed on those who exceed their quotas under a system which was abolished earlier this year.

The super-levy raised more than 800 million euros while only 440 million euros was included in the EU budget, creating additional funds to distribute.

The commission also said it would be proposing a new private storage scheme for pigmeat, an increased budget for promoting products in 2016 and added it was also working hard on bi-lateral trade agreements, most recently with Canada and Vietnam.

SHANGHAI/BEIJING — China's foreign exchange reserves posted their biggest monthly fall on record in August, reflecting Beijing's attempts to halt a slide in the yuan and stabilise financial markets following its surprise move to devalue the currency last month.

China's reserves, the world's largest, fell by $93.9 billion last month to $3.557 trillion, central bank data showed on Monday.

The drop left market watchers questioning how sustainable China's efforts to support the yuan are, as capital flows out of the country due to fears of an economic slowdown and prospects of rising US interest rates.

"Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity," said Zhou Hao, senior economist at Commerzbank in Singapore.

The offshore yuan weakened following the data release to trade at a record discount to the onshore rate, suggesting investors believe the official rate is being kept too high.

There was relief, though, that the dip in reserves had not been larger, with some commentators predicting in the run-up to the announcement that the drop could be as much as $200 billion.

The decline in reserves has quickened following China's near 2 per cent devaluation of the yuan on August 11, which stoked fresh concerns about the economy and heavy selling of the currency.

China was so surprised by the reaction to the devaluation that it is likely to keep the yuan on a tight leash in the near-term to head off fears of a global currency war, policy insiders have told Reuters.

Markets still nervous

Chinese policymakers are now determined to show their financial markets are back to normal, after the devaluation of the yuan, or renminbi, coupled with wild swings in its stock markets caused jitters in markets around the world.

China's Central Bank Governor Zhou Xiaochuan told financial leaders from the world's 20 biggest economies over the weekend that Chinese financial markets had almost completed their correction after a steep run up in stock prices in the first half of the year.

Zhou's comments, coupled with pledges from regulators to deepen financial market reforms, had limited impact in stabilising China's stock markets on Monday, which closed before the release of the reserves data.

The CSI300 index of the biggest stocks in Shanghai and Shenzhen closed down 3.4 per cent, while the Shanghai Composite Index was 2.5 per cent lower, in the first day of trading following a four-day long weekend.

Chinese equity markets have fallen 40 per cent since mid-June, despite the authorities unleashing a volley of policy responses to try and stem the falls.

On Monday, China unveiled changes to taxes on share dividends aimed at encouraging longer term investment as opposed to short-term speculation. The measures are due to come into effect on Tuesday.

Hours earlier, the Shanghai Stock Exchange said the Shanghai and Shenzhen Stock Exchanges and the China Financial Futures Exchange planned to introduce a "circuit breaker" on the CSI300 index to stabilise the market.

The exchanges are seeking comment from market participants before September 21 on proposals to suspend trade in the country's equity indexes, if it moves sharply either way.

There is no guarantee that Beijing will adopt the proposals.

However, while seeking to reduce volatility in equities, if enacted, they could prove a disincentive to short-term investors by restricting the market's potential to rise as well as fall.

Initial reaction among economists was sceptical.

"What's the point? It merely delays the pace of the market fall," said Liu Ligang, China economist at ANZ in Hong Kong.

Economic worries

Last week, the China-based investment community was put on edge following media reports that the China chairwoman of Man Group Plc., Li Yifei, had been taken into custody to help with a police probe into stock market volatility.

However, Li told Reuters on Monday that the reports were incorrect, saying she spent last week in industry meetings and then took a 5-6 day trip to meditate.

China's government is also pushing on with attempts to ease concerns about the country's slowing economic growth.

Finance Minister Lou Jiwei was quoted in a central bank statement as saying that central government spending would rise by 10 per cent this year, up from the 7 per cent growth budgeted at the start of 2015.

A string of soft economic data has made it harder for Chinese regulators to bring stability back to their markets, as fears grow of a hard landing for the world's second-biggest economy.

Earlier on Monday, China revised down its reading for growth in 2014, saying the economy expanded by 7.3 per cent, a notch below the previous estimate of 7.4 per cent.

This year, the economy is headed for its slowest expansion in 25 years, and concerns have been building that it may miss the official growth forecast of around 7 per cent.

However, analysts say increased government spending, combined with five interest rate cuts since last November, mean that risk has diminished.

"We remain of the view that the considerable monetary, fiscal and macro prudential policy stimulus already in place and expected will put full-year growth in the 'about 7 per cent' range," said Tim Condon, head of research for Asia at ING Bank in Singapore.

China's top economic planning agency tried to back up that view, saying on Monday that the country's power usage, rail freight and property market have all shown improvements since August, indicating the economy is stabilising.

"The economy is expected to maintain steady growth and we are able to achieve annual economic growth target," the National Development and Reform Commission said.