CGI Gulf Insights of the Week

  • ByCGI Gulf Insights of the Week
  • Monday, 13 May 2019
  • Published inMay 2019
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Country Risk Update - Saudi Arabia

Risk Indicator  -  DB3c
Risk Level       -  Slight
Ratings Trend -  Deteriorating

The latest economic data highlights the vulnerability of the Saudi economy to oil price changes, auguring badly for the medium term as prices fall. Falling oil prices over the next five years will see the government forced to liberalize the economy, opening opportunities for cross-border investment and trade.
Market Overview
UAE holds talks on setting up retirement funds for expats
A plan to set up investment funds for the retirement benefits of UAE expats has been set in motion, as the Federal Authority for Government Human Resources (FAHR) recently held a meeting with major firms regarding the system. The planned new system will include an enhanced gratuity scheme and a private sector savings programme that will help retain talent in the country, according to authorities. The FAHR said the meeting, held with leading local and international expert firms, looked into the best practices in the management of retirement funds and analysed which strategies would work best for the expatriate population of the country. The meeting followed the Workers Incentives and End-of-Service Benefits Conference that took place in Dubai in February this year, in which officials had proposed that a savings scheme be created for expats. "With accelerated technological advancements and the increased retirement age and years of service, there is an urgent need in the region to establish investment funds to manage retirement and end-of-service benefits, which will provide a saving opportunity to all employees in the UAE and the regional labour markets," Dr Abdul Rahman Abdul Manan Al Awar, director-general of the FAHR, said at the Dubai conference.
UAE bank postpones loan installments during Ramadan
Abu Dhabi Islamic Bank (ADIB) has postponed monthly installment for its personal finance customers at 'no extra charge' during the holy month of Ramadan. Customers eligible will be contacted by SMS with the postponement made automatically, the bank said in an announcement. The offer is valid for installments due between Mat 1-31, 2019. Customers are free to opt out, should they wish to continue making installment payments. Philip King, Global Head of Retail at ADIB, said, "Addressing our customers' needs and exceeding their expectations has always been at the core of what we do at ADIB. This holy month, we will offer our personal finance customers flexible payments as we are mindful of the high spending needs. We continue striving to provide our customers with high-end products and customized services that aid them in managing their financials efficiently and through a seamless experience." The unit works with customers to develop tailored debt management plans and offers them guidance on reducing debt and managing their financial obligations. In order to qualify for postponement, customers must be up-to-date with their payments, having paid more than three previous instalments and must have a salary-transfer arrangement in place with the bank. There is no fee associated with the offer.
RAK-based Utico to infuse Dh1b in Singapore firm
Utico, a Ras Al Khaimah-based Water Management Solutions company, said on 12 May 2019, it has entered into a binding agreement to give $400 million Singapore dollars (Dh1.08 billion) to Hyflux for a quick turnaround of the company. The agreement includes interim funding possibility as well as engagement with Public Utilities Board (PUB) and retail investors to strike out a win-win deal, Utico said in an emailed statement. “Both Utico and Hyflux being in the water industry there is tremendous synergy we could jointly leverage in turn positively impacting onward business operations,” Richard Menezes, managing director of Utico, told Gulf News. He stated that the deal should satisfy the stakeholders of Hyflux and of Utico and for that, a full and final interaction with full force is needed failing which a May 28 deadline for the deal signature and May 29 hearing for getting extended moratorium looks highly unlikely. The statement said that “this deal has come to this stage after the last white knight investors, SIM of Indonesia, walked off the transaction without a deal after having spent over six months trying to close out an agreement.” It is also highly likely that Utico could in fact strike this deal as the only water player to have made an offer for Hyflux. Utico also brings with it strategic and valuable Middle East success stories. Utico stated that other prospective suitors are funds and not major water players, meaning their focus is mainly financial and they are eyeing the assets of Hyflux as a possible position which may not suit other stakeholders like retail investors and including clients and off-takers.
DFZ Council submits e-commerce initiative to Executive Council
Members of the Dubai Free Zones Council (DFZ Council) have submitted the proposal for an e-commerce initiative to The Executive Council of Dubai for implementation. The completion of the proposal was discussed at the DFZ Council's 12th meeting, along with the latest developments across initiatives and industries. Following the recent announcement about developing a comprehensive geo-economic map of Dubai aligned with the Fifty-Year Charter, issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the council members also appointed the team that will work on the initiative as a second order of business. The team is tasked with assigning economic objectives to each geographical area to advance the overall economic diversification of the emirate with the support of the Department of Economic Development in Dubai, Dubai Chamber of Commerce and Industry, Dubai Development Authority, Jebel Ali Free Zone, the Dubai International Financial Centre, Dubai Customs, Dubai Municipality, the World Free Zones Organization, and the Ministry of Economy. "The DFZ Council aspires to position Dubai as a regional driver of sustainable economic growth, as well as a reference point for forecasting the future in various fields, including education and innovation while reflecting the outcomes of the Fourth Industrial Revolution. Following the directives of the UAE's visionary leaders, we have completed a study on our e-commerce initiative and look forward to constructive feedback from The Executive Council of Dubai," said Sheikh Ahmed bin Saeed Al Maktoum, chairman of the DFZ Council, who is also chairman of the Dubai Civil Aviation Authority and chairman and chief executive of Emirates Airline and Group. 
Dubai's Nimai Capital's Dh550.5m fund to invest in Asia, Africa
Investment banking advisory firm Nimai Capital has launched $150 million (Dh550.5 million) fund in partnership with Kenya's Victoria Commercial bank to invest into financial services sector across emerging and frontier markets particularly Africa and South Asia. The Nimai Emerging Financial Services Fund (NESF) will initially target Bangladesh, Sri Lanka, Nepal, India, Kenya, Tanzania, and Ghana, the Dubai-based company said in a statement. The fund will invest in technology/mobility enabled emerging financial services opportunities which include - but not limited to - banking, insurance, retail, and housing finance, and microfinance, etc. Pankaj Mundra, co-founder and managing partner of Nimai Capital, said there is a strong need to develop financial services across all countries of Africa/Asia. "These markets have been specifically chosen based on the existing presence and experience in these markets. The Fund will invest in and actively manage a well-diversified portfolio of financial services opportunities and aim to improve the lives of at least 1.7 million underserved customers," said Mundra. The Fund will be regulated by the Cayman Islands Monetary Authority.  "We have a firm belief that the fund will make a significant and positive impact in the lives of millions of families in addition to generating appropriate financial returns for investors," Mundra added. "We will benefit from Victoria Commercial Bank's business experience and deep understanding of the Kenyan market. After intensive preparation, we are now commencing the launch of the Fund. We look forward to working with the Bank to sourcing and developing investment opportunities for the Fund across East Africa," he added. He said Nimai is well poised to capitalize on the growing demand for financial sector targeted capital investment in these markets.
Commodity Tracker
Business Events this Week In UAE
Ramadan 2019
Date: 06 May To 05 June 2019
Business Updates

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