It said the deal violated the GCC's common external
tariff agreement which set import duties at 5%. Other GCC members,
Oman and the UAE, have since started their own free trade talks with
the US. The principle has been accepted that the US — and only the
US — is given that exemption. A technical committee will look into
practical ways to accommodate individual deals reached with Washington
without undermining the GCC customs union, under which the six member
states plan to dismantle customs posts on their joint borders.
It may be recalled that Saudi Finance Minister
Ibrahim al-Assaf had warned in January the kingdom would consider
imposing customs duties on foreign goods imported duty-free through
its neighbors. Reports said one GCC proposal was for the government of
any country which agrees a free trade deal with Washington to pay the
5% duty on any US imports — instead of the importers themselves —
and put the money in a regional fund.
Abu Dhabi may set up a dedicated special economic
zone to attract Indian investment, even as the emirate initiates talks
with major industries like Essar Group for possible collaboration.
Hussain J al-Nowais, member of the board of
directors of the Higher Corp for Specialized Economic Zones was quoted
as saying "We are looking at various options to enhance
collaboration with Indian companies, including setting up a dedicated
special economic zone."
Al-Nowais is part of a 10-member delegation, which
includes prominent non-resident Indian businessmen, accompanying
Sheikh Hamed bin Zayed al-Nahyan, chairman of the Department of
Economy and Planning of Abu Dhabi, on his first visit to the capital
to woo Indian investment.
Sheikh Hamed also met leading Indian industry
representatives at a luncheon hosted by the Confederation of Indian
Industry (CII) and Finance Minister P. Chidambaram.
Prior to arriving here, Sheikh Hamed and his team
held talks in Mumbai with several industry representatives and also
visited the steel and power complex of Essar Group at Hazira.
"We are looking at Essar for possible
partnership in setting up a steel facility in Abu Dhabi. We are in the
early stages of discussions and are looking at a joint partnership
with them," Al Nowais said.
Plans for setting up a major steel complex with a 6
million tonne capacity were under active consideration in Abu Dhabi
provided gas supplies at competitive rates was assured.
From a peak of almost $58 a barrel, oil prices have
lost some ground over the past few weeks. For a change this is
welcome. Not only will the consumers welcome it, but also the
producers — including the major player Saudi Arabia, who will also
be happy with the trend. For they all realize prices that are too high
are not in their long or medium term interests.
For many months though oil was in even higher
territory, the real returns to the oil producer was somewhat
compromised on account of the weakening dollar. And as soon as dollar
started to regain some of its lost ground in comparison to major
global currencies, black gold, as other factors are definitely playing
their role in stabilizing the crude markets. Indeed the resolve of the
oil producers, especially Saudi Arabia to supply to the markets as
much oil as was required also has helped in soothing the nervy
markets. Even the Saudi government at the highest level, during this
week's cabinet meeting, reaffirmed its determination to keep the
global economy well oiled.
Then oil inventories in the United States — the
major oil consumer — has been reported to be rising lately quite
significantly. The Energy Information (EIA) last week reported that
crude oil inventories (in the US) rose by 4.3 million barrels to 334
million in the week ending May 13. This level is 25.1 million barrels
— 8.1 percent above the five-year US average for the week. This was
the biggest stockpile of crude in the US since June 1999. With the
summer driving season, just round the corner, the issue of gasoline
inventory was also under tremendous scrutiny. Despite the concern
about higher oil prices, as per the largest US travel organization
AAA, a record 37.2 million Americans were expected to hit highways
during the US Memorial day weekend end this month. According to the
EIA, gasoline inventories in the meantime, also climbed by 1.1 million
barrels. In fact gasoline stocks were just below the upper end of the
average range, the EIA said. This allayed fears in the market that
stockpiles won't be able to match summer driving demand in the US.
In the meantime, OPEC has brought down its
projection of global oil demand growth for the year by 80,000 barrels
a day to a total of 83.94 million bpd. It now expects the global
demand to grow by 1.82 million bpd. "Slower demand growth of the
United States or China coupled with large increases in OPEC output
since mid-2004 and the substantial efforts by member countries to
increase production capacity should remove a large part of the
speculative premium in the oil price,' the OPEC monthly report
OPEC's downward revision followed the International
Energy Agency's cut in expected demand growth. The IEA forecasts that
the global demand growth would slow down to 2.2 percent. This is in
sharp contrast to the 3.5 percent demand growth registered by the IEA
Higher than average oil prices have somewhat dented
the market's capacity to absorb additional supplies, analysts in
Dhahran, the virtual global energy capital concede.
Things however, may change in the crude markets
later this year. A US weather forecast last week predicted that up to
15 tropical storms and hurricanes would form in the Atlantic and
Caribbean this year, possibly heralding another difficult season for
the oil and gas producing Gulf of Mexico, especially in view of last
year's experience, when similar storms knocked out oil platforms for
Some concerns on Nigerian crude supplies have also
emerged, as gang violence ahead of Nigeria's 2007 presidential
election may disrupt exports from Africa's biggest crude oil producer,
US CIA's analysts were quoted as saying last week. Unrest in Nigeria,
instability in Iraq and elsewhere in the region and the unprecedented
Chinese thirst for oil has been some of the many factors that have
kept global crude markets on edge. Despite some apparent easing of the
pressure, the markets are still not entirely off the hook!
Qatar's vision is based on building a vibrant and
prosperous economy to the benefit of the people and the international
partners, Minister of Economy and Commerce Sheikh Mohamed bin Ahmed
bin Jassim al-Thani said.
Addressing the Third Annual Conference on Finance
and Investment in Qatar on the second and final day, Sheikh Mohamed
said Qatar's Economic Development Strategy is to promote a free and
modern economy with a business friendly environment to accelerate
growth in non-oil sectors as well as developing the oil and gas
reserves and to enhance and encourage the role of the private sector.
Sheikh Mohamed told the conference that Qatar wants
to attract foreign investment by expanding the bilateral trading
agreements, improving Qatar's external competitiveness and heavily
investing in the infrastructure, education and health.
He said Qatar's GDP jumped from $8.1 billion in
1995 to $23.6 billion in 2003 and to $28.4 billion in 2004. Qatar's
per capita income ranks among the highest in the world ($32,070 in
2003 and $38,130 in 2004).
MORE INSURANCE FIRMS
More insurance companies are likely to be licensed
to operate in the Kingdom as the Saudi Arabian Monetary Agency (SAMA)
urged 26 insurance firms that were previously operating in the country
to re-apply after fulfilling the conditions set by authorities.
SAMA has announced that these 26 firms can present
their intent to continue their activities in the Kingdom and complete
licensing procedures after fulfilling necessary conditions. SAMA
backed down from its previous decision to close down the 26 firms
after the Council of Ministers gave them a three-year grace period to
correct their situation. The agency also brought down the number of
companies that have withdrawn from the market from four to two: Abu
Dhabi National Insurance Co. and Aman Saudi Insurance Co.
The National Company for Cooperative Insurance (NCCI)
is the only licensed insurance firm in the Kingdom at present. Saudi
Arabian General Investment Authority (SAGIA) licensed 13 new insurance
companies in March this year with a total capital of SR2.5 billion to
operate in the Kingdom.
Kingdom's insurance regulator, the 13 companies as
well as nine others are currently completing licensing procedures. The
addition of 26 more would bring the total number of insurance
companies in the market to 49. SAMA has listed 14 companies on its
website, saying they have reached advanced stages in their licensing
procedures. They are: Assurance Saudi Fransi, Saudi United Cooperative
Insurance (AMITY), Saudi Indian Insurance Co., United Cooperative
Assurance Co. (UCA), BUPA Arabia, Al-Ahli Takaful Co., Saudi National
Insurance Co. SABB Takaful, Arabian Shield Insurance Co., Al-Rajhi
Company for Cooperative Insurance, Al-Alamiya Insurance Co., the
Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf),
AXA Cooperative Insurance and Tokio Marine & Nichido.
SAMA included Arabian American Insurance Company (AAICO)
and American Life Insurance Company (ALICO) among companies that had
expressed their desire to withdraw from the market. But the new list
does not comprise the two firms, indicating they would continue their
operations in the Kingdom.
The 26 companies, which were allowed to re-apply,
include Saudi-European Cooperative Insurance Co., SACIR, Arab-German
Insurance Co., Islamic Assurance Company, Islamic Insurance Company,
Delta and UCI.
The new move comes as part of SAMA's efforts to
regularize the market, which is set to exceed SR15 billion by 2009 as
a result of growing demand for medical and car insurance. The market
is currently estimated at SR4 billion with car insurance having the
largest share of 32 percent, medical insurance 22 percent, property
insurance 17 percent and others 29 percent.
It is estimated that car insurance will grow to SR5
billion and medical insurance to SR6.3 billion within the next four
years. He also predicted that per capita insurance spending could
increase to SR750 per year, thus increasing the sector's contribution
to the GDP from less than one percent to five percent.
Meanwhile, the Cooperative Health Insurance Council
recently approved five companies to provide health insurance service
in the Kingdom. The council also authorized 117 health institutions
across the country — 40 in Riyadh, 11 in Jeddah, nine in Dammam, 14
in Madinah, and three each in Makkah and Jubail — to implement the
scheme from June 1.
SAUDI TV SIGNS DEALERSHIP ACCORD
Saudi Television Manufacturing Company (Saudi SAT)
has signed an exclusive dealership agreement with Egypt SAT Company
under which 15,000 televisions manufactured by Saudi SAT will be
exported to Egypt in 2005 for SR60 million.
The agreement was signed in Cairo and it is the
first agreement to be implemented after the recent Arab free trade
zone agreement that calls for customs exemption between Arab
countries. These will be the first Saudi appliances in the Egyptian
market and the first batch will be shipped next week.
Saudi SAT was established seven years ago. It has a
manufacturing site in Jeddah which cost some SR600 million.
The company has already exported its products to
Sudan and Syria. The Egyptian SAT ordered different a product line
including many of the latest LCD television sets with flat screens
which hang on walls.
Saudi Arabia is the third country to manufacture
these LCD sets after Japan and Korea. Our products are of very high
quality and our prices are 20 percent less than others in the Saudi
market and much less than the cost of other brands in Egypt, company
officials said. There will be an addendum to the agreement with Egypt
SAT to export 300,000 units of its mobile brand called Jadailo for
SR750 million. Jadailo is on the production line now and will be
available in the Saudi market within two months. Our mobiles are also
of the latest and best quality including the LCD screen and G3. We
will be shipping the mobiles to Egypt in three months, company
According to reports, Laila Alfar, chairperson of
Egypt SAT board of directors, said that this agreement would bolster
trade relations between the two countries and open more investment
opportunities. She also said that Saudi products have gained the
confidence of the Egyptian people and that they look forward to future
agreements between the two.
(Inputs from PAGE sources)