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Mar 27 - Apr 02, 2000

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

'New economy' comes to the Gulf

The New Economy that has been so much talked about in the United States and Europe is now the subject of discussion at "Family Company Management", a conference on Gulf family businesses, according to a press release from Press Release Network.

The event will be held at the Metropolitan Palace Hotel in Dubai from March 26 to 28.

John Sandwick, head of the portfolio management firm Encore Management S.A. in Geneva, says "There is a lot of talk now about New Economy companies taking off, and leaving the Old Economy companies behind.

This means that many family companies in the GCC will lose in the race for shareholder funds and new business. Those that don't understand this very rapid change will fail. Those that re-engineer will succeed."

The New Economy is represented by those companies at the forefront of changing business practices. That means leaner management, more flexible ownership structures, and a far greater reliance on outside capital.

It also means a much greater emphasis on technology, especially the Internet and E-commerce.

Predictably, says Mr. Sandwick, Old Economy companies in the GCC have focused much of their past efforts on traditional trading and real estate.

The number of world-class manufacturing and service firms is limited. The universe of top-level Information Technology companies is even smaller, and must grow to meet the demands of international business.

Saddam orders boost to Iraq's currency, output

Iraqi President Saddam Hussein has ordered his cabinet to sell hard currency to public and mixed sector companies at a concessionary price to increase production and boost Iraq's volatile dinar currency.

Energy firms, banks form internet exchange

Seven leading banks and energy concerns announced on Tuesday they had joined forces to launch an online electronic market for trading over-the-counter (OTC) energy, metals and other commodities. In the biggest foray yet on to the internet in those markets, the venture said it planned to begin trading various petroleum and precious-metals based OTC products later this year. It also intends to develop additional markets for global natural gas, electrical power and a variety of base metals in due course.

The companies are BP Amoco, Royal/Dutch Shell, Totalfina, Goldman Sachs, Societe Generale, Morgan Stanley Dean Witter and Deutsche Bank.

The seven founders, already among the largest players on energy and commodity markets, said they had made a commitment to provide initial market liquidity for the new exchange — called IntercontinentalExchange.

Neal Shear, global head of commodities at Morgan Stanley, said that in markets now valued at $1.8 trillion annually, electronic trading could significantly reduce trading costs.

Economic reality looms over new PLO land

A handshake and gunshots fired into the sky symbolised Palestinian hopes that an independent state was closer on Tuesday when Israel ceded more West Bank land to the Palestinian Authority (PA).

More mouths to feed, Palestenians want quality as well as quantity But as the population and land under its control swell, the PA will face new pressures to implement regulations, improve land registration and provide jobs, economists say.

"Every inch of land added to the PA domain is an economic plus," said Mohammad Ishtayyeh, head of the semi-official Palestinian Economic Council for Development and Reconstruction.

PMs hold working meeting

Tunisian Prime Minister Mohamed Ghannouchi and his Egyptian counterpart Atef Ebeid co-chaired a meeting of the Egyptian-Tunisian joint higher committee, the state-run MENA news agency said.

Ebeid said in a speech at the first of a series of meetings that he hoped trade would be boosted to 300 million dollars a year from its current level of around 80 million dollars, MENA reported.

Egypt and Tunisia have begun implementing a bilateral free trade zone which will come into full effect in 2007, the same year that a free trade zone between all Arab states is due to be completed.

More than 50 million dollars of their bilateral trade is accounted for by Egyptian exports.

Morocco 99 clothing exports

Morocco's clothing exports grew only slightly in 1999 due to increasing competition and higher costs, an industry official said on Tuesday. Mohamed Tazi, secretary-general of the Textile and Clothing Association (AMITH), said exports inched up 0.3 percent to 25.6 billion dirhams ($2.49 billion) in 1999.

"Rising energy costs, heavy tax system and contraband trade in the country prevented growth in the clothing industry, which employs over 190,000," Tazi told Reuters.

Kuwait probes huge losses in national carrier

Finance Minister Sheikh Ahmad Abdullah Al-Sabah has ordered a probe into the finances of Kuwait's national carrier after it incurred a loss estimated at 80 million dinars (265 million dollars) last year.

In a letter to parliament, Sheikh Ahmad, who is also communications minister and chairman of state-owned Kuwait Airways Corp. (KAC), said "huge" losses were also recorded in previous years, Al-Rai Al-Aam newspaper reported Saturday.

Although the minister gave no figures, a member of parliament`s finance and economics committee, Ahmad Al-Duaij, has said KAC losses for the 1998-1999 fiscal year which ended in June amounted to 80 million dinars.

US agrees Iraq oil industry must get more funds

The United States agrees that allocation of funds to Iraq`s ailing oil industry from its UN-controlled sales of crude must be increased, a senior US official said on Wednesday.

United Nations Secretary General Kofi Annan warned last week of the "massive decline in the condition, effectiveness and efficiency" of Iraq's oil industry.

In a report to the UN Security Council, he renewed a recommendation for doubling the half-yearly allocation for the industry to 600 million dollars. The council is due to discuss the situation in Iraq on Friday.

Oil price falls

The price of oil fell Monday, following a series of comments raising expectations that OPEC ministers will increase production at a Vienna meeting next week.

In London, the price of Brent North Sea crude for May delivery fell 53 cents to 26.03 dollars a barrel.

In New York, light sweet crude for April closed at 30.91 dollars a barrel on Friday.

GNI Research said weekend comments "underscore consumer demands for higher production and producer acknowledgements of these needs." Oil ministers are continuing talks to attempt to forge agreement ahead of the Vienna meeting on March 27 of ministers from the Organisation of the Petroleum Exporting Countries.

US Energy Secretary Bill Richardson is visiting Nigeria, Indonesia and Algeria, while Venezuela's Energy Minister Ali Rodriguez is on a tour of Iraq, Iran, Kuwait, Algeria and Libya.

Egyptian foreign reserves continue to slide

Egypt's foreign reserves slipped further over the month of December to reach 15.63 billion dollars, their lowest level since 1993, according to the Egyptian central bank`s latest monthly report.

The central bank's net international reserves registered their 16th consecutive monthly drop, down from 16.18 billion dollars in November 1999 and 20.00 billion dollars in November 1998, according to the bank's March report published Tuesday by the state-run MENA news agency.

The bank has been forced to spend its reserves to meet the demand for dollars which have been in short supply for over a year. The Egyptian pound is pegged to the dollar.

The dollar crisis has roused fears of a devaluation of the pound, but Prime Minister Atef Ebeid's government has repeatedly denied any such plans.

Morocco signs debt conversion accord with France

Morocco and France signed an accord on Tuesday to convert 700 million francs ($103.5 million) worth of outstanding Moroccan debt into investment credits.

Negotiated in February, the accord was signed by finance ministers Fathallah Oulalou and Christian Sautter during a lunch with Prime Minister Lionel Jospin and Morocco's King Mohammed.

It brings the total amount of Moroccan debt converted by France into private investment credits to 2.7 billion francs following similar agreements in 1996, 1997 and 1998 and in the wake of an agreement by the Paris Club of creditors last September raising a ceiling on debt conversion.

Arab Insurance dips into the red

Arab Insurance Group (ARIG), the Arab world`s biggest insurance firm, reported on Sunday a net loss for 1999 of $98 million, saying it was the first time it had dipped into the red since 1991.

It attributed the loss -- which compared to 1998's net profit of $1.6 million — mainly to a spate of disasters, tough competition and expenses involved in ceasing underwriting at its subsidiary ARIG UK, which cost the group $24.4 million.

"Arab Insurance Group reported a net loss of $98.0 million for 1999, the first since 1991, as a result of the adverse operating conditions faced by its core reinsurance business," an ARIG statement said.

Japan considering lifting sanctions on Libya

Japan said on Tuesday Libya no longer poses a terrorist threat and that it would consider lifting eight-year-old sanctions on the state.

"We are considering the lifting of sanctions imposed on Libya," a Japanese Foreign Ministry official told Reuters.

Japan's punitive steps, taken in 1992 after a 1988 bombing of a Pan Am airliner over Lockerbie, Scotland, included a ban on flights between the two countries, exports of parts for aircraft and petrochemical facilities, and cash remittance to Libya.

The official did not say when Tokyo would lift the sanctions, but local television broadcaster NHK reported that the move could come by the end of March.

Drinking water resources

As much as 50 percent of the Egyptian capitals drinking water, which originates from the Nile River, is being lost through underground leaks and illegal tapping, specialists warn.

According to reports by the World Water Forum, which wound up a six-day meeting in The Hague on Wednesday, around half of the water distributed in Cairo and Mexico City leaks back into the ground before reaching the taps.

Western water experts in Cairo, not all of whom agree with the estimate, say such a figure is difficult to confirm in the absence of recent studies on water wastage and add that the reasons for water loss are numerous.

US House approves OPEC 'arm twisting' bill

Angry at OPEC for steering oil prices higher, the US House of Representatives approved legislation on Wednesday pressuring the cartel to raise production and reaffirming President Clinton`s authority to cut US aid and arms sales to OPEC and nations that fix world oil prices.

The 382-to-38 vote in favour of the bill comes just five days before the Organisation of Petroleum Exporting Countries meets in Vienna to decide whether to ramp up production.

"We're putting pressure on the OPEC nations," said Representative Benjamin Gilman, the New York Republican who sponsored the legislation and chairs the House International Relations Committee.

The legislation would not give the president any new authority to punish OPEC, but encourage him to use his existing power to confront the cartel over its oil production policies by reducing or terminating US aid and armed sales.

The bill would require President Clinton to report to Congress within 30 days on which OPEC nations have fixed oil prices, and then begin negotiations to stop those price fixing activities.

The House bill is a sharp rebuke of the Clinton administration's energy policy, which many Republican lawmakers believe allowed OPEC to gouge US consumers with high gasoline, home heating oil and diesel fuel prices.

With US gasoline prices poised to rise as high as $1.80 per gallon ahead of the nation`s general elections, lawmakers from both political parties want the White House to apply more pressure to OPEC to ease world oil markets.

Hundreds of US truckers gathered on Capitol Hill to ask Congress for relief from high fuel prices and for action against the OPEC countries they blame for the crisis.

Microsoft says fixing 'anti-arab' bug

The head of Microsoft's European and Middle East operations said the firm was fixing a bug in its Windows 2000 French-language spell-checker which suggested replacing "anti-stress" with the word "anti-arab".

Michel Lacombe, President of Microsoft EMEA, said the problem should be fixed in "a few weeks" and that customers would be offered a new version free of charge.