TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Knesset Approves 2011-2012 Budget
1.2 Governor Fischer Sees 3.8% Growth or Even More In 2011
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 BIRD to Invest $5.4 Million in Six New Israel - US Projects
2.2 Tefron Acquires Activities of Nouvelle Canada
2.3 Frutarom Acquires the Scandinavian Industrial Spices Savory Activity of Rieber & Son
2.4 Incredimail Signs New Two Year Agreement With Google
2.5 SodaStream International Achieves 40,000 Global Points of Sale
2.6 RiT's Patchview Named China's Best IIM Solution
2.7 NIS 600 Million Disney Park & Multiplex Planned for Haifa
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Mideast Set To Spend $2.1 Billion on Safety & Security
3.2 Elbit Systems Acquires Brazilian Companies
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 Israel's Clean Air Law Goes into Force
4.2 Leviathan Discovery Opens a New Era of Natural Gas Development Offshore Israel
4.3 Egypt to Tender 1,000 MW Wind Power Plants in 2011
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Lebanese Inflation Slows For The First Time In Five Months
5.2 Jordan & Iraq Agree In Principle to Extend Oil Pipeline
5.3 Iraq to Recognize Kurdish Foreign Oil Contracts
5.4 Bahrain Seen Meeting Economic Growth Target for 2010
5.5 Kuwait Annual Inflation Accelerates to a 22-Month High in November
5.6 Qatar's GDP Growth Reaches 21%
5.7 Qatar Annual CPI Remains Flat In November Though Accelerates on a Monthly Basis
5.8 UAE Budget Projects $800 Million Deficit
5.9 UAE Submits Plans for First Nuclear Plants
5.10 Oman to Spend $78 Billion in Five Year Plan to 2015
5.11 Egypt Awards Four Steel Licenses to Curb Shortage as Demand Expected to Rise
5.12 Study Finds 16.3 Million Egyptians Now Live Below Poverty Line
5.13 Maghreb States Agree On Agricultural Free Trade Union
5.14 Algeria Self-Sufficient in Gas & Oil From 2013
5.15 Algeria Trade Surplus Surges To $14.8 Billion
5.16 Algerian Unemployment Falls
5.17 EU-Morocco Free Trade Agreement Closer
5.18 IMF Approves Nine-Month Extension of Stand-By Arrangement for Pakistan
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkey's Inflation Rate Hits 41-Year Low Of 6.4% In 2010
6.2 Turkey's Exports Outpace Expectations & Approach $114 Billion In 2010
6.3 Turkey's Exports In 2010 Exceed $112 Billion
6.4 Turkey Has Low Domestic Savings Rate
6.5 Turkey Ranks 95th on the Black Economy List
6.6 Cyprus' Inflation Reached 2.4% In 2010
6.7 Cyprus Health Sector Worth €600 Million
6.8 Greek PPI Up 5.9% in November
6.9 Greek Liberalization Reforms to Begin in January
6.10 Greece's Apparel Sector the Hardest Hit
6.11 Bulgaria Faces Delay in Joining Schengen
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Over 19,000 New Immigrants Arrive in 2010
7.2 China Asks Israel to Help Fight Child Abuse
*REGIONAL:
7.3 Jordan's Government Wins Record Vote of Confidence
7.4 Findings Cite Deterioration of Women's Rights in Egypt in 2010
7.5 Protests Trigger Tunisia Cabinet Reshuffle
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Brazil Medical Association Publishes PillCam SB Reimbursement Code
8.2 NasVas Wins NIS 2.1 Million OCS funding
8.3 Oramed Pharmaceuticals Awarded NIS 2.9 Million Grant from Office of the Chief Scientist
8.4 Strawberry Genomes Forever at Weizmann Institute
8.5 Compugen Signs $5 Million R&D Funding Agreement in Support of its Pipeline Program
8.6 Virent & HCL CleanTech Receive Grant to for Biofuels & Bioproducts Development
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 GigOptix & CIVCOM Receive BIRD Grant to Develop Optical Telecommunication Transponder
9.2 LucidLogix GPU Virtualization to Reform Entertainment PC Power Consumption
9.3 Elbit Systems Supplies EHUD Air Combat Maneuvering Instrumentation (ACMI) Systems
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel Has the Best Economy in the West
10.2 State of the Economy Index Shows Slower Growth Continues
10.3 Export Institute Sees Slower Export Growth In 2011
10.4 2010 is a Record Year for Tourism to Israel
10.5 Israel's Unemployment Rises While High Tech Brings Down Industrial Output.
10.6 Adva Center Says Global Crisis Shrunk Israel's Middle Class
10.7 Gasoline Prices in Israel One of Highest in the World
10.8 Israel Sees Record 213,000 New Cars Sold in 2010
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11: IN DEPTH
11.1 CEEMEA: Another Year in the ‘New Normal' 2011 Preview
11.2 LEBANON: Moment of Truth
11.3 JORDAN: Healthy Growth
11.4 IRAQ: Politics - All-In
11.5 ARABIAN GULF: State of the Arabian Gulf's Aviation Industry
11.6 EGYPT: Formula for Growth
11.7 EGYPT: Auto Industry Moves Up a Gear
11.8 TUNISIA: Tourism Upgrades
11.9 ALGERIA: Pharmaceuticals and Healthcare Report Q1 2011
11.10 TURKEY: Food and Drink Report Q1 2011
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Knesset Approves 2011-2012 Budget
On 29 December, Prime Minister Netanyahu received a vote of confidence as the Knesset passed his 2011-2012 budget in a 63 to 33 vote. The total budget for 2011 will be NIS 247 billion and NIS 259 billion for 2012. Sources in the Prime Minister's Office pointed to Israel's relatively strong economy in the global economic crisis as proof that Netanyahu's policies to date have been successful. Finance Minister Steinitz praised the budget. "This is a budget of growth, education... This is a budget that will bring the ultra-Orthodox and Arab sectors into the national economy. It is good for the state of Israel, the citizens of Israel and the Israeli economy," he proclaimed. The new budget includes lower income tax and lower taxes on companies, something the Finance Ministry hopes will encourage development and create new jobs. However, the VAT will remain at 16% after being raised from 15.5% in 2009.
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1.2 Governor Fischer Sees 3.8% Growth or Even More In 2011
Governor of the Bank of Israel Prof. Fischer said that the main reason for the strengthening of the shekel is the soundness of the Israeli economy which is causing an influx of capital into the economy due to foreign investments. He said, "The Israeli economy is in a very good situation. Growth in 2011 could be 3.8% or even more. Sweden is the only OECD country that expects higher growth." This growth estimate is more optimistic than the Bank of Israel's official forecast. Fischer warned against an additional strengthening of the shekel and recommends that exporters hedge their risks. However, he stressed that it was difficult to predict in which direction the exchange rate would be heading. Fischer made it clear that the Bank of Israel will not stop buying dollars. He said that the Bank is not indifferent to the exchange rate and will continue to monitor it. The US economy is only half way to handling the credit crisis and there is still uncertainty there, although the situation could soon improve. (Globes 04.01)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 BIRD to Invest $5.4 Million in Six New Israel - US Projects
The Board of Governors of the Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation approved $5.4 million of funding for six new projects between Israeli and American companies. In addition to the grants from BIRD, the projects will access private sector funding, boosting the total value of all projects to $15.4 million. The approved projects are the following:
• Altair Semiconductor & US Company will develop a high-performance, dual-mode communication device.
• Civcom Devices & Systems and GigOptix will develop a low power module for next generation optical communications.
• First Life Research & Healthline Networks will develop a web environment to analyze and present patient's drug usage. This new web based application will empower patients and also provide an additional research tool to health professionals.
• HQL Pharmaceutical & Emerald BioStructures will co-develop novel anti-microbial drug compounds against Gram-negative infectious microbes for which there are critical unmet medical needs for new therapies.
• Nextar Chempharma & OsteoGenex will develop and formulate new molecules for localized bone building therapy.
• Vaica Medical & MTS Medication Technologies will develop an automated medicine pill dispensing system thus helping in improving compliance, while providing accurate reporting to caregivers.
The BIRD Foundation (http://www.birdf.com) promotes collaboration between Israeli and American companies in various technological fields for the purpose of joint product development. Specifically, the Foundation assists by locating strategic partners from each country, making the necessary introductions and providing conditional grants of up to $1 million for approved projects. During its 33 years, the BIRD Foundation has invested in more than 800 projects, which have yielded direct and indirect revenues of about $8 billion. (BIRD 04.01)
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2.2 Tefron Acquires Activities of Nouvelle Canada
Tefron announced the closing of the transaction with Canadian apparel manufacturer, Nouvelle, for Tefron to acquire the seamless activities of Nouvelle Inc., and the completion of two financial transactions raising $10.8 million of fund for the company. With the closing of the transaction, Tefron acquired the seamless assets of Intimes Nouvelle Seamless Inc. (Nouvelle), including of all of Nouvelle's current and future purchase orders and other assets of its seamless business. Nouvelle is a private Canadian manufacturer of mass market seamless apparel which has established a strong position in both private label and branded products with broad distribution through leading U.S. retailers. Tefron strengthened its financial position with two other completed transactions. In the shareholders' meeting, investors approved a capital increase of $5.8 million. Separately, Tefron succeeded in its negations to modify its banking agreement, as a result of which Tefron will receive an additional $5 million in bank loans
Misgav's Tefron (http://www.tefron.com) is a market leader in the field of apparel, serving customers in the U.S. and Europe. Tefron focuses on developing, producing, marketing and selling undergarments, athletic wear, beach and swimwear. Tefron activities are divided into two business sectors: "Seamless" design, development, production and sale of undergarments and athletic apparel; and "Cut & Sew" design, development, production and sale of undergarments, swimsuits and athletic apparel. The design and production are mainly performed in Israel, Jordan and the Far East, while the finished goods are sold mainly in the U.S. and Europe. (Tefron30.12)
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2.3 Frutarom Acquires the Scandinavian Industrial Spices Savory Activity of Rieber & Son
Frutarom Industries agreed to acquire Rieber Industrial Spices Savory activity and its fixed assets of Rieber & Son ASA from Norway, for approximately $4.2m. The acquisition will be self-financed. The acquisition is subject to the approval of the Norwegian Competition Authority. Frutarom estimates that the approval will be obtained within a number of weeks. Rieber is an activity of the international food manufacturer Rieber & Son ASA, and engages in the development, manufacture and marketing of savory taste solutions (the non-sweet taste spectrum). Its product line includes flavors, seasoning compounds and functional ingredients for the food industry, with a specialization in the processed meat, fish and convenience food sectors. Rieber's R&D, marketing, and manufacturing capabilities are located in its operational facility in Norway. Haifa's Frutarom (http://www.frutarom.com) is a global company operating in the global flavor and fine ingredients markets. Frutarom has significant production and development centers in three continents and it markets its products in five continents to over 10,000 customers in more than 120 countries. Frutarom's products are intended mainly for the food, beverage, flavor, fragrance, pharmaceutical, nutraceutical, health food, functional food, food additives and cosmetic industries. (Frutarom 29.12)
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2.4 Incredimail Signs New Two Year Agreement With Google
IncrediMail signed a new 2 year agreement with Google, effective 1 January 2011. The new agreement provides the basis for a more extended relationship between the two companies and will allow them to grow their existing business and find other areas of cooperation. The terms of the new contract are expected to produce results similar to those achieved under the previous contract. Tel Aviv's IncrediMail (http://www.incredimail-corp.com) is a digital media company that builds, acquires and enhances downloadable consumer applications. The company's award winning e-mail client product, IncrediMail Premium, is sold in over 100 countries in 10 different languages. Other products include, HiYo a graphic add-on to instant messaging software and Magentic, a wallpaper and screensaver software. (IncrediMail 27.12)
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2.5 SodaStream International Achieves 40,000 Global Points of Sale
SodaStream International announced that its products are now sold in more than 40,000 locations worldwide, up from 35,000 earlier this year. The company continues to expand its distribution to more stores as their products attract new retailers as well as consumers, in the US and around the world. In the UK, the Company launched a "SodaStream is Back" marketing campaign in July 2010, integrating various media such as TV, digital and print. Retailers such as Robert Dyas and Comet recently expanded to include the full SodaStream system of soda makers, flavored syrups, bottles and CO2 refills. Sainsbury's, a heritage UK shopping destination for over a century, now carries the full system in 100 superstores. SodaStream is also now available at all 700 Argos stores, the UK's largest general-goods retailer and a subsidiary of the Home Retail Group.
Airport City's SodaStream (http://www.sodastream.com) manufactures home beverage carbonation systems, which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water. Soda makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks and sparkling water. Their products are environmentally friendly, cost effective, promote health & wellness and are customizable and fun to use. In addition, the products offer convenience by eliminating the need to carry bottles home from the supermarket, to store bottles at home or to regularly dispose of empty bottles. (SodaStream 22.12)
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2.6 RiT's Patchview Named China's Best IIM Solution
RiT Technologies announced that its PatchView real-time intelligent infrastructure management (IIM) solution was named the best IIM solution in the cabling market at the China International Building Intelligent Summit 2010. This prestigious rating was awarded by Qianjia Brand Media, a professional services and consulting company formed in 2000 to promote Intelligent Building throughout China. In evaluating RiT's product offering, Qianjia considered product quality and innovation, customer satisfaction, leading industry experts' opinion, RiT's market education activities, partner satisfaction and brand awareness. Tel Aviv's RiT (http://www.rittech.com) is a leading provider of intelligent solutions for infrastructure management, asset management, environment and security, and network utilization. RiT Enterprise solutions address datacenters, communication rooms and workspace environments, ensuring maximum utilization, reliability, decreased downtime, physical security, automated deployment, asset tracking, and troubleshooting. RiT Carrier solutions provide carriers with the full array of network mapping, testing and bandwidth qualification capabilities needed for access network installation and service provisioning. RiT's field-tested solutions are delivering value in thousands of installations for top-tier enterprises and operators throughout the world. (RiT 23.12)
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2.7 NIS 600 Million Disney Park & Multiplex Planned for Haifa
New Lineo Cinemas (2006), owned by the Edery family and Walt Disney Company investment arm Shamrock Holdings, will build a NIS 600 million 25 screen multiplex and Disney amusement park at the Check Post exit from the Carmel Tunnel in Haifa. The entertainment complex will be built on a 20-acre site and will include 50,000 square meters of cinemas and shops and a 30,000-square meter Disney amusement park. The land is owned by a local family. The plan began with the municipality's assistance in the building of Cinemall and the upgrade of the mall, previously known as the Lev Hamifratz Mall, and the building of the transport hub for the cable car, which carries passengers up to the Technion and Haifa University. (Globes 03.01)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Mideast Set To Spend $2.1 Billion on Safety & Security
Middle East is set to spend around $2.1 billion on security-related equipment and services with the surge expected to increase by 50% until 2013, said the organizers of an upcoming trade fair on safety in Dubai. A recent study by the Homeland Security Research Corporation indicated that spending on homeland security in the UAE alone is expected to double from $5.5 billion to $10 billion over the next ten years. Industry leaders have estimated that over the next few years more than 60,000 buildings in Dubai will be fully equipped with direct alarm systems, to bring them in line with international safety best practices being actively promoted by the local authorities. Additionally, the market for fire detection and suppression systems in the Arabian Gulf, is expected to surge to $1.12 billion in 2013, up from $635 billion in 2008.
According to research, the cumulated Saudi market for homeland security, forecasted to become the largest in the world after the US, is expected to be worth around $97 billion in the 2010-2018 period. Saudi Arabia has 24 separate agencies and organizations, arranged in a three-tier structure, employing more than 250,000 personnel (a number that is expected to grow by an additional 35,000 over the forecast period). (TA 23.12)
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3.2 Elbit Systems Acquires Brazilian Companies
Elbit Systems acquired the Brazilian companies, Ares Aeroespecial e Defesa and Periscopio Equipamentos Optronicos. The acquisition was accomplished in a series of transactions totaling tens of millions Brazilian Reals. Ares and Periscopio are involved in the area of defense electronic systems and supply a range of products to the Brazilian military as well as to additional markets in South America. The selling shareholders are continuing to perform management functions in the companies following the acquisition. Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems (UAS), advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Company also focuses on the upgrading of existing military platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services. (Elbit 30.12)
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 Israel's Clean Air Law Goes into Force
Israel's Clean Air Law went into effect on 1 January. According to the Ministry of Environmental Protection, the main provisions of the law are as follows:
• Regulating the treatment of different air pollution factors within a single legal framework.
• Preparing a national program for the reduction of pollutant emissions to air which will enable compliance with environmental standards and will aspire to comply with target values as well.
• Setting air quality values (environmental standards) and updating them
• Requiring plants with a potential for high air pollution to obtain emission permits as a prerequisite for continued activity
• Establishing economic incentives for reducing emissions into the atmosphere
• Expanding the powers vested in the Ministry of Environmental Protection on air pollution emission from mobile sources
• Implementing stringent and deterrent means of enforcement against violators who endanger human health
• Expanding the supervision and enforcement powers of the Ministry of Environmental Protection
• Transparency and public participation
Environmental Protection Minister Erdan said the law marks "the beginning of a new era," and promised it will "protect human life and health and will improve the quality of life of the public in Israel." The law positions Israel "on par with developed countries worldwide," he stated. The Ministry enumerated some of the changes it now intends to effect through the law:
Emission permits: The Clean Air Law requires industrial plants with a high air pollution potential to obtain an emission permit from the Ministry of Environmental Protection and stipulates that such plants may not be established or operated without a permit. Specific requirements will be set for each industrial plant, on a plant by plant basis, rather than on a sectoral basis, in order to bring about maximum emissions reductions.
National program for air pollution reduction: By law, the ministry is required to prepare a national program for the prevention and reduction of air pollution and to submit it to the government by the end of 2011. For this purpose, an expert committee has been set up to check the existing situation in Israel. It is expected to submit its recommendations to the Minister of Environmental Protection by mid-January.
Environmental sampling: In order to characterize air quality in Israel and prepare a database which will allow the Ministry to check the feasibility of environmental air quality values and check trends for the purpose of policy setting, the Ministry prepared a multi-annual plan for measuring air pollutants which are not measured in monitoring stations. The plan establishes permanent sampling points throughout the country in which sampling will be undertaken at a frequency of once in two weeks. The cost of the plan is NIS 20 million annually.
Establishment of a monitoring network: The ministry currently operates 23 air monitoring stations and another 100 stations are operated by other organizations including local authorities and industrial plants. The ministry is preparing rules and guidelines on the operation of monitoring stations within a national network. The establishment of the network will allow for uniform operation of the monitoring stations and for the creation of a uniform database to assess air quality in Israel.
Enforcement measures against factories: The Clean Air Law establishes a number of enforcement measures against anyone breaching its provisions. These include orders to prevent and stop air pollution, administrative financial sanctions of hundreds of thousands of shekels and criminal investigation and indictments, where warranted. The ministry is preparing the infrastructure for the imposition of financial sanctions by means of regulations and work procedures.
Spot checks of emission sources: The ministry conducts spot checks in the stacks of industrial plants for purposes of inspection and enforcement. Priorities and frequencies of sampling are set in accordance with the air pollution potential of the emission sources. Plants requiring an emission permit will be checked more frequently.
Clean Air Regulations (Air Quality Values): Proposed regulations which define air quality values were submitted to the Knesset Internal Affairs and Environment Committee for approval. The regulations set maximum permissible limits of air pollutants in the environment.
Broadening of the ministry's authority on air pollution from mobile sources: Under the law, the Ministry of Environmental Protection has the authority to set standards for vehicles and fuels, including import standards for vehicles, annual registration tests, fuel quality, etc.
Air pollution from vehicles: A proposed amendment to the current law determines that the testing method for vehicular air pollution and emissions in the annual registration test will be adapted to the European method. According to this method, the binding emission values will be those set by the vehicle manufacturer for the specific vehicle model and the air pollution test will be specifically adapted to this vehicle model.
Roadside enforcement of air pollution from vehicles: At present, there are six mobile stations for vehicular air pollution testing on the country's roadsides. The ministry has published a tender for the joint operation of five additional mobile stations with interested local authorities.
Publication of data: The ministry has completed its preparations for publishing air pollution data as per the requirements of the law, including: industrial emissions, air pollution data and pollution forecasts, permits and licenses. (IsraelNationalNews 04.01)
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4.2 Leviathan Discovery Opens a New Era of Natural Gas Development Offshore Israel
Delphi Global Analysis Group responded to the confirmation of the Leviathan field offshore Israel as a major natural gas discovery with 16 Tcf of reserves. Delphi specializes in geopolitical risk analysis and mitigation, with a focus on energy development in Israel and throughout the Levant Basin. Delphi said the Leviathan discovery opened a new era of natural gas development offshore Israel. Production of so large a quantity of gas relative to Israel will trigger major political changes. A resource of this magnitude will allow Israel to implement an energy policy that advances security, economic growth and the environment. From power generation to desalination to transportation, the benefits of significant Israeli natural gas production promise to be profound. Israel is now positioned to become an exporter of natural gas. If encouraged by effective public policy, the fiscal, macroeconomic and geo-strategic implications of developing offshore natural gas promise to rank among the most important advances in the history of the modern State of Israel.
An assessment of the Levant Basin published by the U.S. Geological Survey earlier this year estimated a total mean volume of 122 trillion cubic feet (Tcf) of undiscovered, technically recoverable gas resources. The first noteworthy hydrocarbon discovery in the area was made in March 2000 offshore Israel west of the city of Ashkelon. This find, which ultimately was determined to contain about 1 Tcf of natural gas, encouraged additional exploration. In January 2009, a major natural gas discovery was confirmed at the Tamar field within 60 miles of the northern coast of Israel. Tamar holds a resource now estimated at 8.4 Tcf, which represents the world's largest natural gas discovery in 2009. The Tamar and Leviathan fields are within the equivalent of Israel's exclusive economic zone. Together, these fields represent a volume of gas capable of supplying Israel's domestic natural gas needs for approximately 60 years. (Delphi Group 29.12)
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4.3 Egypt to Tender 1,000 MW Wind Power Plants in 2011
Egypt plans to launch two tenders in 2011 to build 1,000 MW wind power plants in the Gulf of Suez area, according to Egypt's Minister of Electricity Younes. The plants will be constructed on a build-own-operate (BOO) basis and will be tendered over two phases; 500 MW will be tendered in January 2011 and another 500 MW in July 2011. The output from these power plants will be purchased by the Egyptian Electricity Holding Company through a 20 year agreement and will be sold to consumers at prices set by the cabinet, the Minister explained. (Beltone 23.12)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Lebanese Inflation Slows For The First Time In Five Months
Lebanon's year-on-year inflation slowed down in November 2010 to 4.3% after appreciating for five months in a row, ending the series at 4.8% in October 2010, according to data released by Beirut's Central Administration of Statistics. The month-on-month growth in the Consumer Price Index slowed down to 0.4% in November 2010, compared to 1.8% m-o-m growth registered in October 2010. The slowdown in November's m-o-m growth is attributed mainly to falls registered in the prices of food and non-alcoholic beverages, which declined m-o-m by 0.3%, and the prices of clothing and footwear, which depreciated m-o-m by 9.1%. (Beltone 23.12)
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5.2 Jordan & Iraq Agree In Principle to Extend Oil Pipeline
Jordan and Iraq have agreed in principle to extend a pipeline to convey crude Iraqi oil to Jordan. During a meeting between Jordanian Prime Minister Rifai and Iraqi PM Maliki on 3 January, the two officials also discussed the possibility of future expansion of the project to include Iraqi gas. Amman and Cairo signed an agreement in 2003 to build a 360-kilometre pipeline from Arish through the Sinai to Aqaba and northwards to the Syrian border for carrying Egyptian gas to Jordan and later to Syria, Lebanon and Turkey. During the Baghdad talks, the Jordanian side made a request to extend a contract under which the Kingdom receives Iraqi oil and to gradually increase the quantities of supply from 10,000bpd to 30,000. The Iraqi side promised to study the request. Iraq currently provides crude oil to Jordan by trucks.
Rifai and Maliki discussed means to exchange information in the fields of gas and oil exploration, including tasking joint committees to come up with an action plan in the field of energy. They agreed to continue talks through ministerial meetings to look into the steps needed to activate cooperation between the two countries. They also discussed Iraqi debts to the Jordanian private sector and the Central Bank of Jordan and the need to pay the private sector dues in return for services and goods exported to Iraq in the pre-war era. Talks also covered other issues of cooperation in the fields of land and air transport as well as trade, among others. The Jordanian and Iraqi side underlined the importance of railway linkage, which is considered a strategic option for both countries and agreed to follow up on the technical committees work to unify studies and mechanisms of implementation. The officials agreed to improve Jordan's role as a centre for training and technical cooperation to support reconstruction efforts in Iraq. They discussed the possibility of accrediting the Aqaba Port as one of the main ports for Iraqi imports, and agreed to arrange a visit by an Iraqi delegation to the Kingdom to acquaint the private sector with opportunities available for Jordanian construction contractors to be involved in building residential and infrastructure projects in Iraq. (JT 04.01)
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5.3 Iraq to Recognize Kurdish Foreign Oil Contracts
Iraq will recognize contracts the government of its Kurdish north has signed with foreign oil companies, the country's new oil minister Al Luaybi said on 25 December at a meeting in Cairo of the Organization of Arab Petroleum Exporting Countries. Luaybi, whose appointment to Prime Minister Al Maliki's new cabinet was approved by parliament, said Baghdad would also reimburse costs incurred by international companies investing in the region. Baghdad has long been in dispute with the autonomous northern region of Kurdistan over dozens of contracts the latter signed with foreign companies. The Iraqi government had said the deals are not binding as they have not been approved by the central government, while the Kurdistan government says they are in line with the constitution. Iraq aims to raise oil output to 3 million bpd by the end of 2011. Exports from the northern Kurdish region were halted a few months after they started in June 2009 amid a disagreement over payments between the central government in Baghdad and the Kurds. Iraqi Kurds have unilaterally signed more than two dozen oil deals with Western companies that were deemed illegal by Baghdad. (AFP 26.12)
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5.4 Bahrain Seen Meeting Economic Growth Target for 2010
Bahrain's economy is on target to meet expectations of 4% year on year growth for the full year, according to the Bahrain Economic Quarterly, Q4/10. The quarterly reports, have been developed by the Bahrain Economic Development Board (EDB) to provide regular assessments and key information on the Bahrain economy, in the context of the regional and global outlook. GDP growth in Bahrain was 4.3% through the first nine months of 2010. There was particularly strong growth in hotels and restaurants (up 15% year on year in Q3 2010), manufacturing (up 8%) and financial services (up 6%). Bahrain's economic progress has also been supported by two recent independent reports, following visits by the IMF and Standard & Poor's. The IMF noted that: "The near-term outlook is favorable. Buoyed by the rebound in oil prices, the continuing recovery in the global economy, and fiscal stimulus, growth is expected to accelerate from the 3% recorded in 2009 to 4% in 2010 and further to 5% in 2011." Standard & Poor's also recently reaffirmed its ‘A' rating for Bahrain's sovereign debt, with a stable outlook. In reaffirming its rating, it stated that: "The ratings on the Kingdom of Bahrain reflect the government's net financial asset position, renewed development of its hydrocarbon resources, and strong international alliances." (AB 30.12)
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5.5 Kuwait Annual Inflation Accelerates to a 22-Month High in November
Kuwait's annual inflation accelerated to a 22-month high of 5.9% in November 2010, according to data released by the Central Statistics Department (CSO). Kuwait's annual inflation rate has last been that high in February 2009. This significant rise in November's annual inflation, compared to a 5.1% annual inflation in October 2010, is mainly due to a rise in food prices, which have recorded an annual increase of 12.3% in its index in November 2010, compared to an annual increase of 10.6% in October 2010. Prices of clothing and footwear increased significantly by 6.5% y-o-y in November, compared to an increase of 5.1% in October 2010. Housing services sub-index recorded an increase of 5.9% y-o-y in November compared to 5.8% in October 2010. On a monthly basis, inflation reached 0.6% in November 2010, compared to a drop in the monthly inflation by 0.1% in October 2010. (KUNA 30.12)
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5.6 Qatar's GDP Growth Reaches 21%
Qatar's estimated Q3/10 GDP rose by 21.1% to QAR 111.25 billion, compared to QAR 91.85 billion in the same period last year. The third quarter 2010 GDP also jumped 13.1% when compared to the QAR98.38 billion figure in the second quarter. Mining and quarrying, which includes the oil and gas industry, was the biggest sector accounting for over 51% of Qatar's GDP in the third 2010. This sector grew by 36,2 % compare to the same period in 2009, as production of liquefied natural gas and LNG, maintains a high growth. This sector's production reached QAR 76.58 billion compare to QAR 43.13 billion in Q3/09.It grew by 19.9% in the third quarter compare to 8.9% in Q1/10. The significant expansion of the natural gas production was a key element to achieve Qatar's GDP growth for the third quarter. Principal hydrocarbon products as well witnessed major increases in the production. The production of liquefied natural gas (LNG) has progressed by 28% of major industries'' total production followed by natural gas liquids production by 22%. While manufacturing activity kept steady growth, the statement said, noting that it rose by 3.4% from QAR 8.576 billion in Q3/10 compared to QAR 8.292 for the same period in 2009. (QNA 02.01)
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5.7 Qatar Annual CPI Remains Flat In November Though Accelerates on a Monthly Basis
Qatar's annual inflation saw flat growth in November 2010 as a rise in annual transport and communication costs and food prices were diluted by the continued decline in housing costs, media reported, citing data from the Qatar Statistics Authority (QSA). The flat annual growth in November 2010 follows a deflation of -0.8% in October 2010, which was led by the continued decline in housing and energy costs. The rate of annual decline in the housing component has slowed down in November 2010 to record -7% compared to the -9% seen in October and the average -14% since the beginning of 2010. Meanwhile, the decline in housing costs was diluted by a 3.89% annual increase in transport and communication costs in November 2010 (from 2.5% in October 2010), and a 3.65% increase in food prices in November 2010 (from 5.1% in October 2010). On a monthly basis, inflation accelerated to its highest level in almost 17 months, rising 0.4% in November 2010 from 0.13% in October 2010. This was, again, led by a 1.44% monthly increase in transport and communications costs (from a -1% monthly decline in October). Food prices saw a marginal monthly change in November of 0.15% from 1.1% in October, while the monthly change in housing costs remained almost stable in November 2010, for the third consecutive month. (QSA 30.12)
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5.8 UAE Budget Projects $800 Million Deficit
The United Arab Emirates' Federal National Council approved a 2011 budget with a projected deficit of $817 million while passing a new law on public debt. The Emirati government had decided in November to cut its projected 2011 public spending by 6% compared with this fiscal year's AED43.63 billion. During the Council session, it also passed a public debt law, stating it should not exceed $54.49 billion or 25% of GDP. The new legislation will only apply to the debts of the federal government in the UAE, a federation of seven emirates including financially troubled Dubai. The government would draw on its reserves to finance the budget deficit but it could also issue bonds to finance the shortfall. In addition to the federal budget, each of the seven emirates adopts its own budget and the total spending in those budgets is much higher than that of the federal government. With crude reserves estimated at 97.8 billion barrels, the UAE is oil cartel OPEC's fourth largest producer. It has a population of about six million people, more than 80% of them expatriates, mostly Asians. The Gulf country pumps about 2.32 million bpd, of Abu Dhabi, which is also the federation's capital, contributes more than 90%. (AB 29.12)
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5.9 UAE Submits Plans for First Nuclear Plants
One year after the award of a $20b contract to build the first nuclear power plants in the Arabian Gulf, the UAE has filed construction license applications for two reactors with the new nuclear regulator. The 9,000-page applications for Braka Units 1 and 2 have been handed into the Federal Authority for Nuclear Regulation (FANR) and document the safety case for both the plants and the proposed site in Abu Dhabi's Western Region. Based largely on the safety analysis done for two units in South Korea – on which the Braka reactors are modeled – the applications represent the latest move in the UAE's aim of achieving nuclear power by 2017. By replicating as far as possible the design of the Korean reactors, this ensures the technology used in the Braka plants will have already undergone a licensing process before being inspected by FANR. There will be slight changes to the plant design to reflect the UAE's climatic conditions and the specific requirements of FANR. The ‘reference plant' plan has allowed KEPCO, the head of the South Korean consortium that won the contract last December, and the Emirates Nuclear Energy Corporation (ENEC) to finish the construction license application relatively quickly. Construction work on the first reactor is scheduled to start in 2011. KEPCO official said construction of the Braka site's harbors, breakwaters and waterways would be completed in 2011, along with labor accommodation for 10,000 workers. ENEC is planning to have all four Braka reactors up and running by 2020. (AB 27.12)
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5.10 Oman to Spend $78 Billion in Five Year Plan to 2015
Oman plans to spend $78 billion in its five-year development plan to 2015 and is forecasting economic growth of 5% a year. The program is based on an average oil price of $59 a barrel, according to National Economy Minister Macki. Oil production is projected at 897,000 bpd during the five-year period. Oman wants to invest in oil and gas production to increase government revenue and attract investment. Hydrocarbons account for 70% of government revenue and 45% of foreign direct investment. The government forecast average inflation at 4% and average economic growth at constant prices at 5% during the five-year period. (BI-ME 02.01)
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5.11 Egypt Awards Four Steel Licenses to Curb Shortage as Demand Expected to Rise
Cairo handed out four new steel licenses in an attempt to reduce the shortage of the local steel supply. Through the new licenses, a further 2 million tons of finished steel and 1 million tons of billets will be made available to the local market. Beltone Financial stated that it is "not concerned about the effect of the increase in supply on the Egyptian steel market, as there is still a gap of around 1.5 – 2 million tons, annually, that are currently filled by imports. Such an investment would require 4–5 years to bear fruit. Port Said National Company for Steel, IIC for Steel Plants Management, Al-Marakbi and Al-Wataniya all came out on top of the bidding process for the new licenses. The capacity that each firm will be allowed to put onto the market has yet to be decided. The government's decision was motivated by a need to free up capacity that was being left unused as a result of the inability of Arcelor Mittal, an international steel firm with operations in the Egyptian market, to exploit the license it had obtained, thereby forcing the government to revoke it from the firm. It is felt that a burgeoning middle-class in Egypt is driving the construction sector and the government's spending on infrastructure, which should result in a 36% increase in reinforced steel production by 2017. Demand for steel is divided largely amongst three main categories: private housing, large real estate developments and infrastructure projects led by the government. Private housing represents 60% of steel demand, while large real estate developments and government-led infrastructure projects each account for 20%. (DNE 30.12)
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5.12 Study Finds 16.3 Million Egyptians Now Live Below Poverty Line
The Egyptian Cabinet's Information and Decision Support Center announced on 30 December that the number of Egyptians living below the poverty line in 2008 and 2009 amounted to 16.3 million. The World Bank puts the poverty line at $2 per day per person. The study also revealed that the poverty rate in Egypt had risen to 21.6% compared to 16.7% in 2000. The highest poverty rates were recorded in Upper Egypt, with 79% of the poorest income segment living in rural areas. The lowest rates of poverty, meanwhile, were recorded in Egypt's urban governorates. The Egyptian government's strategy for the 2010/11 fiscal year aims to reduce the national poverty rate to around 18%, compared to 22.5% in 2005. (Almasry30.12)
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5.13 Maghreb States Agree On Agricultural Free Trade Union
After nearly two decades of negotiations, the five states of the Arab Maghreb Union finally agreed to create an agricultural free trade zone. The members of the Arab Maghreb Union (AMU) reached an agreement on the establishment of a Maghreb free trade zone for agricultural products that will take effect in 2011. The announcement was made at the 16th session of the Maghreb Ministerial Committee for Food Security in Algiers on 30 November. Negotiations, which began in 1991, were difficult but they took into account the interests of each country. The pact will be presented to the trade ministers of the AMU at their next meeting in Tripoli prior to its submission to the Council of Foreign Ministers. The Maghreb countries are seeking to create an economic bloc to counter effects of the global market and to ensure food security. (libyaninvestment.com 14.12)
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5.14 Algeria Self-Sufficient in Gas & Oil From 2013
OPEC member Algeria will become self-sufficient in gas oil from 2013, having imported about 6% of its needs in 2009, the state's official APS news agency reported 1 December. Quoting the head of state-owned Sonatrach, APS said upgrades of refineries in Algiers, Skikda and Arzew are expected to add 5 million tonnes to Algeria's refining capacity and cover 120% of its domestic needs as of 2013. Skikda's refinery, Algeria's biggest, will have its crude oil refining capacity raised by 10% to an annual 16.5 million tonnes. The refining capacities of Algiers' refinery will be raised 33% to 3.6 million tonnes and that of Arzew will be increased by 50% to 3.75 million tonnes. Algeria also plans to upgrade a refinery in Tiaret and has yet to decide whether it would upgrade another one in Hassi Messaoud. (APC 01.12)
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5.15 Algeria Trade Surplus Surges To $14.8 Billion
Higher world oil prices pushed Algeria's trade surplus up to $14.8 billion in the first 11 months of 2010 from $4.7 billion in the same period last year, official figures showed on 25 December. Exports were up 26.8% to $51.27 billion from $40.44 billion in January-November 2009, while imports were up 1.9% to $36.43 billion versus $35.76 billion in the first 11 months of last year. The value of oil and gas sales abroad, which accounted for 97.16% of total exports, rose 26.24% to $49.80 billion, it said.-(APS 25.12)
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5.16 Algerian Unemployment Falls
According to a National Statistics Office survey published 19 December, Algeria's unemployment rate fell to roughly 10%, with 1,076,000 out of work. Unemployment was at 30% in 1999. By 2007, the rate had dropped to 11.8% in 2007. The trend continued: 11.3% in 2008 and 10.2% in 2009. Unemployment affects different social groups in different ways, the survey also showed. The proportion of jobless women (19.1%) is higher than that of men (8.1%). Young people are affected the worst. Among those aged 16-24, just over one in five (21.5%) is unemployed, whereas the rate is just 7% for those aged 25 and over. While unemployment in Algeria affects young people the most, which has certain far-reaching effects, the survey also highlighted another troubling trend. The findings appear to show that unemployment among university graduates – currently 21.4% - is much higher than the 7.3% of those without degrees. Women with university education fare the worst, with a jobless rate of 33.6%. The survey showed that 9,735,000 Algerians are employed (up from 6 million in 1999). Of these, 1,474,000 are women. Two out of every three workers are employed by companies. The commerce and service sectors account for more than half of jobs (55.2%), followed by construction (19.4%), manufacturing (13.7%) and finally agriculture (11.7%). The private sector, which numbers 6.39 million workers, employs two-thirds of the workforce. (Magharebia.com 27.12)
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5.17 EU-Morocco Free Trade Agreement Closer
The Council of EU Agriculture Ministers and Morocco agreed on 13 December on the new convention regulating their reciprocal liberalization measures on agricultural products. The agreement, in the form of an exchange of letters of intent, was reached on the sidelines of the 9th session of the EU-Morocco Association Council. Now the European Parliament's approval is needed to allow the deal enter into force. It would however not take effect before the 2011 season at the earliest. The agreement should strengthen the position of European exporters on the Moroccan market, particularly in the sector of processed agricultural products. As for Morocco, it opens way to larger Moroccan exports to the EU - which makes European exporters, particularly Spanish ones, highly worried. (GreenMed 19.12)
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5.18 IMF Approves Nine-Month Extension of Stand-By Arrangement for Pakistan
On 27 December, the Executive Board of the International Monetary Fund (IMF) approved a nine-month extension of Pakistan's Stand-By Arrangement (SBA), to September 2011. The extension will provide time to the Pakistani authorities to complete the reform of the General Sales Tax, implement measures to correct the course of fiscal policy, and amend the legislative framework for the financial sector. The IMF staff is continuing its dialogue with the Pakistani authorities on the program's fifth review. A 23-month SBA in an amount equivalent to about $7.61 billion was originally approved on November 24, 2008. On 7 August 2009 the SBA was augmented to about $10.66 billion and extended through 30 December 2010. Following the completion of the fourth review in May 2010, disbursements under the arrangement reached SDR 4.936 billion. (IMF 27.12)
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkey's Inflation Rate Hits 41-Year Low Of 6.4% In 2010
TurkStat announced on 3 January that Turkey's inflation rate reached a 41-year low of 6.4% in 2010. According to the data, the Consumer Price Index (CPI) was 6.4% in December 2010, while the Producer Price Index (PPI) was recorded at 8.87%. With these latest figures, inflation in Turkey has continued its downward trend over the past decade. This better-than-expected CPI figures have exceeded market expectations, which were around 7%, while the central bank had predicted 7.23% and the government's Mid-Term Economic Program (MTEP) had expected a figure of 7.5%. The greatest annual increase in the CPI was experienced in the categories of alcoholic beverages and tobacco (24.66%), miscellaneous goods and services (9.76%), food and non-alcoholic beverages (7.02%) and transportation (6.78%). When excluding energy, which is usually a target for governments looking to raise revenues, the CPI decreased by 0.8%, lower than the aggregate rate of 6.4%, signaling that the energy prices faced by consumers have increased tremendously in the past year. When items that put the biggest pressure on inflation, such as unprocessed food products, energy, alcoholic beverages, tobacco products and gold (which hit record levels in December) are excluded, the adjusted CPI increased by only 0.15%.
The largest annual increase in prices was experienced by the agriculture sector, with a 14.52% annual rise in producers' prices. Prices increased by 12.14% in fishing, a subsector of agriculture. The subsector that saw the largest increases was the logging subsector with a 25.5% annual increase. Out of 779 items that are used to determine the PPI figures, 186 of them witnessed no price increase, prices of 404 items increased, while prices of 189 items dropped. (Zaman 04.01)
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6.2 Turkey's Exports Outpace Expectations & Approach $114 Billion In 2010
Turkey's exports increased by 11.3% in 2010 and exceeded expectations, reaching more than $113 billion, Foreign Trade Minister Caglayan has announced. The December figures of the Turkish Exporters' Assembly (TIM) show Turkish exports climbed 11.3% last year to $113.6 billion, surpassing the government's target of $111.7 billion. He added that the country is expected to make more than $130 billion from exports in 2011, at least $2.5 billion higher than a 2011 target set in the Medium-term Economic Program (OVP). According to the TIM figures, December exports were also up by 21.28% over the same month a year earlier, to stand at $11.6 billion. Caglayan reiterated that Turkey eyed getting $500 billion from exports by 2023, the centennial of the modern republic's foundation.
TIM's figures have shown that the automotive sector in Turkey, often considered the driving force of the country's economy, ranked first in the exportation of industrial products with a surge of 14.83%, followed by agricultural products with a 13.41% share, the ready-wear clothing and textiles industry with 12.66% iron and steel products with 11.02% and the mining sector had a 3.22% share in Turkey's overall exports in 2010. Germany was first on a top-ten list of the major importers of Turkish goods. They were followed by Iraq, Great Britain, Italy, France, Russia, Spain, the US, the UAE and Iran. (Zaman 04.01)
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6.3 Turkey's Exports In 2010 Exceed $112 Billion
On 30 December, the Turkish Statistics Institute (TurkStat) announced 11 month export and import figures. The data showed that Turkey's foreign trade deficit expanded by 106.8% in the first 11 months of this year over the same period in 2009. The country's total export volume for the January-November period of 2009 was recorded at $102.1 billion with a 10.9% increase over a year ago; however, its imports for the same period are at the level of $164.9 billion with a 31% year-on-year increase. The resulting foreign trade deficit is $62.8 billion, showing rapid growth from the $33.8 billion recorded last year. For November specifically, exports saw 6% growth of $9.4 billion, whereas imports experienced a much higher rate of growth at 35.7%, or $17.1 billion. During this one-month period, Germany took the lead among the countries to which Turkey. Turkey exported slightly more than $1 billion in goods in November. After Germany, the list of top countries that import from Turkey was the UK, Iraq, Italy and France, listed in descending order. In terms of imports from other countries, on the other hand, Russia ranked first in November with $1.9 billion in exports to Turkey. Following Russia in descending order were Germany, China and the US. (Zaman 31.12)
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6.4 Turkey Has Low Domestic Savings Rate
The ratio of Turkey's savings to GDP is indicative of the economy's key problems, as the country ranked sixth from the bottom among 32 countries. The data by the Turkey's Finance Ministry said among the selected 32 countries, proportions of domestic savings to GDP ranged from 8.9% to 53.7% this year. Turkey's proportion of domestic saving to GDP, however, was 12.6% this year. The saving rate in Turkey, which was 15.5% in 2007, increased to 16.8% in 2008 in Turkey. This figure was 13.1% in 2009 and dropped to 12.6% this year. The figure was expected to boost again to 13.4% in 2011. Ireland is the country that had the lowest savings representing 8.9%, followed by the United States and Greece with 9.2%. Portugal and the Netherlands ranked third and fourth with 10.6 and 11.1%, respectively. The proportion of savings to GDP in Ireland, which experienced a heavy economic crisis, was 21.9% in 2007 and dropped to 8.9% this year. Among the 32 countries, China had the highest rate of savings with 53.7%, followed by Slovenia with 34.9%. According to the data, between 2007 and 2010 six countries, Estonia, Greece, South Korea, the Netherlands, China and Indonesia, increased their rate of savings per GDP. (Hurriyet 27.12)
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6.5 Turkey Ranks 95th on the Black Economy List
Unregistered economic activity is causing serious problems across the world, according to recent research supported by the World Bank. Turkey ranks as the 95th country in terms of the black economy among 162 countries in the list of "New Estimations for Unregistered Economies." The survey is part of a research project that has been investigating the black economy for the last nine years. Georgia topped the list with 62.1% of unregistered economic activity compared with the registered economy. Still, the research noted a slight downward development in the country. Bolivia and Panama followed Georgia with 66.1% 63.5% respectively. The unregistered economy stands at some 30% in 48 countries including Turkey.
Turkey's 10-year record draws a billowing graphic, according to the report. In 1999, the first year of the World Bank's survey, the ratio was 32.7%. The highest rate of the black economy was in 2001 with 32.8%. 2001 was a crisis year for Turkey after the government's decision to ease the tight fiscal policy after 14 months. The lowest unregistered economy rate for Turkey was marked in 2007 with 29.1%. Morocco, Pakistan, Libya, Croatia, Estonia, Malaysia and Namibia were the other countries that were placed in the 30-40% range. Switzerland and the United States were the countries that suffered from the least amount of black economic activities. The rate in both of these countries was 8.7%, according to the report. (ANA 27.12)
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6.6 Cyprus' Inflation Reached 2.4% In 2010
Cystat announced on 4 January that Cyprus' consumer price inflation rate rose to 2.4% in 2010, compared with 0.3% in 2009. The main reason for the increase was a sharp rise in prices of housing, water, electricity and gas, which rose by 7.6%, having dropped by 2.5% in 2009. This category is heavily influenced by the price of oil, which has risen from around $75 per barrel at the beginning of 2010 to around $92 per barrel by the end. By contrast, a fall of 0.7% was recorded in the price of clothing and footwear, reflecting weak demand in this sector. The latest available data show that sales of textiles, clothing and footwear fell in volume terms by 1.9% over the year earlier in January-September. Weak demand was also reflected in the prices of furnishing, household equipment and supplies, which prices rising by only 0.2% in 2009. Retail sales of electrical goods and furniture were down 2.9% in the first nine months of 2009. One interesting trend was the smaller than usual increase in the prices of restaurants and hotels. Since Cyprus adopted the euro in January 2008, it feels like restaurant and coffee shop prices have soared. However, in 2010, prices in restaurants and hotels rose by only 2% - much lower than the increases of 7.7% in 2008 and 5.6% recorded in 2009. (FM 04.01)
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6.7 Cyprus Health Sector Worth €600 Million
The Cyprus health sector was worth €600m in 2008 according to the latest annual report entitled "Economic Statistics on Health" for 2008. The report provides data on the number of enterprises, employment, labor costs, gross output, value added and gross fixed capital formation. During 2008 value added at current market prices for the health sector increased by 12.7% to €558.5m compared with €495.4m in 2007. Its contribution to gross value-added (GVA) was 3.7% in 2008 compared with 3.5% in 2007. Gross output increased by 13.0% to €846.9m from €749.3m in 2007. In the private and public health sectors the most important contribution to the total value added was generated through human health activities, at 84.7% and 87.9% respectively. Employment in the health sector increased by 9.3% in 2008 compared with the previous year and reached 16,246 persons, accounting for 4.0% of the total economically active population (labor force) and 4.3% of the total gainfully employed population. Gross fixed capital formation in 2008 increased by 13.3% to €33.9m from €25.4m in 2007. Investment in new buildings accounted for €18.7m, in machinery and equipment €10.9m, in furniture & fixtures €3.3m and in transport equipment €1m. (FM 04.01)
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6.8 Greek PPI Up 5.9% in November
Greece's Producers' Price Index in the industrial sector (measuring both the domestic and external markets) grew 5.9% in November this year, compared with the same month in 2009, after an increase of 1% recorded in November 2009, the Hellenic Statistical Authority announced on 29 December. This increase could cause further inflationary pressures if rolled over to consumption and attributed the 5.9% rise of the index to a 5.4% increase in the domestic market index and a 7.8% rise in the external market index. The producers' price index was up 1.3% in November from October after an increase of 0.4% recorded in the corresponding period last year. (HAS 29.12)
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6.9 Greek Liberalization Reforms to Begin in January
A law to open up dozens of closed professions will be passed through the Greek Parliament by the end of January, according to plans agreed on by Prime Minister Papandreou and his Cabinet. The government had delayed the unveiling of the liberalization bill from before Christmas as it wanted to have a break from the pressure it was being put under by unions and the media following a series of unpopular and badly handled reforms. However, Papandreou made it clear on 3 January to a small clutch of ministers who are working on the details of the draft law that the legislation has to be ready by about 15 January so Parliament can have ample time to debate it before it is voted through. The premier appears acutely conscious of the criticism PASOK received for virtually ignoring the House last month when passing legislation on labor rights and wages at public enterprises.
The only section of the liberalization bill that still seems to be in question is that relating to pharmacies. Health Minister Loverdos is still in negotiations with pharmacists about opening up their trade. The EU and the IMF have asked that supermarkets be allowed to sell some medicines, which is just one of the sticking points that Loverdos has encountered in his talks with pharmacists. The minister, however, insists that he will strike a deal with them soon. Papandreou emphasized to his ministers that in the current climate, when pensions are being cut and jobs are being lost, some professions cannot justify maintaining unrealistic privileges and barriers to entry that have the end result of pushing up prices for consumers. Greece, as well as the EU and the IMF, hope that the opening up of more than 100 closed professions will bring prices down, make the economy more competitive and stimulate growth. (eKathimerini 04.01)
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6.10 Greece's Apparel Sector the Hardest Hit
Thousands of enterprises were forced to shut down and tens of thousands of jobs lost in 2010 as Greek commerce saw its turnover shrink considerably last year, according to figures released on 3 January by the National Confederation of Greek Commerce (ESEE). Preliminary estimates by ESEE's Commerce and Services Institute suggest that the overall sales volume of retail enterprises, with the exception of fuel and lubricants, came to €51.6 billion in 2010, down from €52.8 billion in 2009, a 2.2% annual decline. The yearly drop in 2009 had come to 7.1%, but the containment of the drop is attributed to the system of tax incentives for collecting receipts rather than more sales. In previous years tax evasion was seen to have been much more extensive. The biggest problems are in sectors such as apparel, where the decline in turnover last year amounted to no less than 52% compared with 2009, while the yearly fall in the volume of fuel sold reached 28%. Pharmaceuticals and cosmetics dropped by 27%, furniture and electrical goods fell 15%, alcohol and tobacco products declined 14%, while even food saw a double-digit slump, with the sales volume contracting by 11% year-on-year. The decline in consumption – a result of the additional taxation and cuts in the income of most Greeks – forced more than 40,000 enterprises to close down within 2010, ESEE estimates, resulting in thousands of layoffs. The first three months of 2010 saw a decline in employment in commerce that came to 6.2%, or 52,000 people, from the same quarter a year earlier. All this brought about a 10.9% reduction in the number of employers in commerce in Q3/10 compared with the same period in 2009, while the number of self-employed also declined by 3.8% year-on-year, according to the same data. (eKathimerini 04.01)
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6.11 Bulgaria Faces Delay in Joining Schengen
Germany and France have urged the European Union to delay bringing Bulgaria into the bloc's borderless travel zone, due to concerns about their ability to combat corruption and crime. Bulgaria hopes to join the Schengen zone, which includes most of the EU, in March but Berlin and Paris are likely to block this. Preliminary discussions among member states on their accession are expected in January. Since joining the EU in 2007, Bulgaria has made only limited progress in fighting corruption and organized crime, and have faced repeated criticism from the bloc's executive Commission which monitors their efforts. This has raised concerns about the countries' ability to curb trafficking in people and drugs from eastern Europe to the west. Bulgarian Interior Minister Tsvetanov told reporters that the letter did not change Sofia's plans to push ahead with technical preparations for joining Schengen. Illegal migrants and asylum seekers, crossing into EU member Greece from Turkey, can also use Bulgaria as a route to western Europe at a time when many governments in the bloc are trying to curb immigration. France and Germany urged the EU to postpone any discussion of Schengen entry for the state until it strengthens the ability of the judiciary and public administration to combat abuses. (FM 22.12)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Over 19,000 New Immigrants Arrive in 2010
The Jewish Agency announced that there was a 16% rise in number of new immigrants to Israel, mostly from the former Soviet republics. The Jewish Agency said that the number of immigrants (known as olim) from around the world reached 19,130 by the end of 2010. In 2009 alone, 16,465 moved to Israel (made aliyah), compared with 2008 when only 15,452 of those eligible chose to. Despite an improvement in the economic state in their countries and a rise in the quality of living, 40% of the new olim that immigrated to Israel in 2010 are from former Soviet republics. Jewish Agency and Absorption Ministry data state that 7,300 olim came from the former Soviet republics in the past year. This is a 7% rise as 6,820 made aliyah from those countries last year. Many new immigrants came from eastern European states as well as from Germany. A total of 3,980 olim arrived from the US, Canada and 1,470 from Latin America. Moreover, there has also been in a rise in the number of immigrants from Australia, New Zealand, India, Belgium, Switzerland and Italy. New immigrants also came this year from: China (10), Monaco (4), Japan (3), Hong Kong (3), Honduras (93), Malawi (2) and Guadeloupe (2), as well as Malta, Singapore, South Korea, Kenya and Rwanda. (Ynet 29.12)
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7.2 China Asks Israel to Help Fight Child Abuse
Recently, a team from the Jerusalem-based Haruv Institute, which provides innovative training in identifying and fighting child abuse and neglect, is holding a five-day seminar for a group of 40 pediatricians from across China. The seminar seeks to provide the pediatricians, who often serve as the front line in identifying child abuse, with new tools and clinical skills with a focus on early detection. The training, which is taking place in Xi'an, a city of ten million in central China, will also include methods for documenting and treating cases of child abuse. Shaanxi Hospital in Xi'an invited Haruv's physicians after hearing about their expertise. The seminar includes lectures, workshops, an examination of case studies, in-depth discussion and clinical, hands-on training. Some of the Chinese physicians will travel to Jerusalem for further training at the Haruv Institute. Haruv said that this is the first time an Israeli delegation has been invited to another country to train others on the subject of preventing and treating child abuse and is "among the first times, if not the first time, that a Chinese institute has asked for such outside expertise on the matter." The seminar's long-term goal is to train a core group of pediatricians in China to become experts in detecting and treating child abuse. They will then be able to transmit their knowledge and new tools to colleagues throughout the country, which is home to one of the largest populations of children in the world. The Haruv Institute, established by the Schusterman Foundation – Israel, sees as its mission to establish, apply and disseminate new standards of excellence in the field of child abuse and neglect for all professionals and allied care-givers. (IsraelNN 23.12)
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*REGIONAL:
7.3 Jordan's Government Wins Record Vote of Confidence
On 23 December, the government of Jordanian Prime Minister Rifai won Lower House's confidence after garnering a record 111 yes votes. Out of the House's 119 lawmakers, eight deputies voted "nay". One deputy, passed away the day before. With this unprecedented vote of confidence, reaching 93.2% of the total number of deputies present, Rifai's government registered a record in the vote of confidence in the Kingdom's history, surpassing Nader Dahabi's government that gained 88.2% of the House's vote of confidence in 2007.
Addressing the House ahead of the vote, which capped five days of speeches by more than 85 deputies, Rifai reiterated his government's commitment to carrying out the political, economic and administrative reform programs outlined in the King's Letter of Designation, considered as an action plan, with a set timetable for implementation. The premier also reiterated that his government will move ahead with "total" coordination and cooperation with Parliament and in "transparent, well-defined and measurable programs, coupled with fixed time frames". He also underlined that the government does not have a "magic wand" and does not promise what it cannot deliver, pointing out that the government will be "objective" and "realistic" in handling the challenges facing the country in partnership with the legislative authority.
The premier also said that the government will refer to the House its 2011-2013 development program, which contains well-defined and fully detailed plans to achieve the envisioned reforms. On political reform, Rifai indicated that the Elections Law is now "in the hands of deputies" that are entitled to do all the necessary amendments that ensure active public and political parties participation in the decision-making process "in line with the Constitution and national constants". On the government's support of education, Rifai said that it allocated JD900 million in the 2011 state budget to build new schools and improve educational programs. Responding to some lawmakers' remarks on the number of ministers in the current Cabinet, Rifai said that the 31 ministers add no "burdens" on the state budget, but will "enrich" the work, renewing the government's abidance by the code of conduct that ministers signed when they were appointed to their posts. (JT 24.12)
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7.4 Findings Cite Deterioration of Women's Rights in Egypt in 2010
The issue of women's rights was used as a political tool by the government and other entities in 2010, according to an annual report by the Egyptian Center for Women's Rights (ECWR). The report, which is based on the findings of international human rights organizations, stated that Egypt was ranked 125th out of 134 countries regarding women's rights, and was ranked 13th among countries in the Middle East/North Africa region. The state council's refusal to appoint female judges in February was considered by the ECWR as a major setback to women's rights in 2010. The ECWR also stated that the women's quota system, which reserved 64 parliamentary seats for female candidates, is a temporary solution that is not sufficient to integrate women into the political sphere.
Due to the disappearance of two women for allegedly converting to Islam, the ECWR report stated that women were also used to fuel sectarian tension in 2010. The report deemed the representation of women in political parties to be weak, as was demonstrated by the nomination of women on the final candidate lists of only three parties out of the 24 that participated in the Shura Council elections. However, the report added that some women successfully emerged as leaders in a few political parties - the most notable of which was Asmahan Shoukry, who was named the Labor Party's first female president. According to the report, the %age of women in ministries, the Shura Council and local councils is still under 3%. Regarding economic equality, the report stated that women's unemployment rates have decreased since 2004; however, Egypt is still below the average in international rankings regarding an equal access to resources.
According to the Committee on the Elimination of Discrimination against Women, the school curriculums in Egypt reaffirm the stereotypical view that women are consuming beings that are only suitable for domestic roles. Women still suffer from inequality in the workplace according to the ECWR report, which stated that women still receive lower wages than men, are deprived of promotion opportunities and are treated as temporary labor because of their domestic responsibilities. The report also stated that there's been a rise in violence against women. A study by the ECWR shows that 71.4 % of violent crimes in 2010 were against women. (DNE 28.12)
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7.5 Protests Trigger Tunisia Cabinet Reshuffle
After twelve days of violent protests in Sidi Bouzid, Tunisian President Ben Ali announced a partial cabinet reshuffle on 29 December, marked mainly by the replacement of Communications Minister Romdhani with former Youth and Sports Minister Laabidi. Tunisian police clashed on 18 December with citizens of the southern province. The protestors, whose demonstration began peacefully, tried to enter the governorate headquarters, and police used tear gas to stop them. The protestors responded by throwing stones at the building and police cars, wounding several officers. An 18-year-old was killed. The incidents followed the attempted suicide of a young merchant, who set himself on fire in front of the prefecture after the authorities seized his goods. The cabinet changes came after Ben Ali's 28 December speech, in which he said that he "understands" the social conditions behind the protests in Sidi Bouzid, but accused "a minority of extremists and paid instigators" of causing the acts of violence, vowing to punish them firmly.
Youth unemployment remains one of the most prominent challenges facing the Tunisian government. According to official statistics, the number of jobless people in the country is about 500,000. The figures also show that a breakthrough in the situation is not likely to take place soon as the number of university graduates rose from 40,000 to about 80,000 during the last five years. To tackle the problem, the state must create 425,000 jobs in the next five years and reduce the unemployment rate by 1.5% to ensure at least one source of income for each household. Last year, Ben Ali pledged to create 415,000 jobs by 2014 and to reduce the rate of unemployment, which is currently estimated at 14%. Unlike previous protests, the Sidi Bouzid demonstrations were widely covered on social networking websites, especially Facebook, where activists published the developments on an hourly basis. (Magharebia 30.12)
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Brazil Medical Association Publishes PillCam SB Reimbursement Code
Given Imaging announced that the Brazilian Medical Association (Associacao Medica Brasileira) issued a reimbursement code for PillCam SB capsule endoscopy. Published in the revised Classificacao Brasileira Hierarquizada de Procedimentos Medicos, the national publication of reimbursable procedures, code 4.02.01.34-1 provides for the reimbursement of capsule endoscopy and does not require any other prior endoscopic procedures. This is the first step in a process that is expected to eventually enable all of Brazil's 190 million citizens to have access to PillCam SB capsule endoscopy for visualization of the small bowel. Approximately 9.1 million of Brazil's 44.3 million privately insured citizens are covered immediately for the PillCam SB procedure with the issuance of this code. The company believes coverage for the additional 35.2 million privately insured individuals will be fully implemented by the latter part of 2011. Upon implementation of private reimbursement, the public healthcare system is expected to begin the process of bringing coverage to the remaining 145 million Brazilians in the months that follow. Under Brazil's healthcare system, once reimbursement is available, capsule endoscopy procedures prescribed by a physician for the approved indication will be reimbursed and are not subject to institutionally-determined funding allocations.
Since 2001, Yokneam's Given Imaging (http://www.givenimaging.com) has advanced gastrointestinal visualization by developing state-of-the art, patient-friendly tools based on its PillCam Platform. PillCam capsule endoscopy uses wireless technology and advanced software to provide physicians with clear images of the small intestine via PillCam SB and the esophagus through PillCam ESO. The PillCam COLON, which is an investigational device in the U.S., is designed to visualize the colon. The PillCam capsules are miniature video cameras that patients ingest. (Given Imaging 21.12)
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8.2 NasVas Wins NIS 2.1 Million OCS funding
NasVax has reached an agreement in principle with the Office of the Chief Scientist for a grant to fund development of its orally administered its proprietary immunotherapy treatment of inflammatory and autoimmune diseases. The NIS 2.1 million grant will finance half of the NIS 4.2 million budget to develop the drug candidate. The project include a Phase IIa clinical trial of orally administered anti-CD3 MAb monoclonal antibody for diabetics with NASH or "fatty liver", as well as other Phase II clinical trials to test the drug's tolerance and the response of the immune system in other diseases. NasVax must complete the trial protocol within two months from approval of the grant, otherwise the approval will expire and the Chief Scientist will have the right to use the grant for other purposes. Ness Ziona's NasVax (http://www.nasvax.com) engages in the development and commercialization of proprietary polycationic lipid-based molecules, designed to improve vaccines either by formulating an intranasal carrier platform for painless administration of vaccines or by serving as an adjuvant platform for superior response of the body's immune system. (NasVax 22.12)
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8.3 Oramed Pharmaceuticals Awarded NIS 2.9 Million Grant from Office of the Chief Scientist
Oramed Pharmaceuticals reported that its wholly owned Israeli subsidiary, Oramed, Ltd., was awarded a government grant amounting to a total net amount of $807,000, from the Office of the Chief Scientist (OCS) at the Ministry of Industry, Trade and Labor of Israel. The OCS awards grants to industry in Israel in order to foster technological innovations. The funds will be designated and used by Oramed Ltd. to support further R&D and clinical study of its Oral Insulin capsule and Oral GLP1-Analog. The OCS selects its recipients on various criteria including the financial strength of a company, the exceptionality of a company's innovative technology, and the potential of a company's technology to significantly improve an existing product or process. Jerusalem's Oramed Pharmaceuticals (http://www.oramed.com) is a technology pioneer in the field of oral delivery solutions for drugs and vaccines presently delivered via injection. Oramed is seeking to revolutionize the treatment of diabetes through its patented flagship product, an orally ingestible insulin capsule currently in phase 2 clinical trials. Established in 2006, Oramed's technology is based on over 25 years of research by top research scientists at Jerusalem's Hadassah Medical Center. (Oramed 23.12)
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8.4 Strawberry Genomes Forever at Weizmann Institute
An international team including Weizmann Institute researchers has produced the full genome of a wild strawberry plant, paving the way for tastier berries. A genome is the entirety of an organism's hereditary information. Two Weizmann scientists were part of team of 74 researchers from 38 research institutes who published their findings this week in Nature Genetics. The Israeli scientists helped map the genes and gene families responsible for the strawberry's flavor and aroma, characteristics that that have been lost over years of breeding in the cultivated cousin of the wild strawberry and now may be improved following the research. The woodland strawberry has now joined the elite list of plants, including rice, grapes and soya, which have had their genomes sequenced, according to Weizmann scientists. The woodland strawberry genome is relatively short, simple and easy to manipulate, and the plant grows quickly and easily, making it an ideal model plant that might provide insight into other related agricultural crops, such as the rose family and apple, peach, cherry and almond trees. The researchers' findings also may help breeders create plants that can be grown with less environmental impact, better nutritional profiles and larger yields. (Israelnationalnews.com 27.12)
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8.5 Compugen Signs $5 Million R&D Funding Agreement in Support of its Pipeline Program
Compugen entered into an agreement with Baize Investments (Israel) Ltd., a private corporation, under which it will receive $5,000,000 in R&D funding. Under the terms of the funding agreement, which is in support of Compugen's recently announced Pipeline Program, Baize Investments has obtained a financial interest in five designated Compugen-discovered molecules and has been issued a warrant to purchase 500,000 Compugen shares at an exercise price of $6.00 per share, expiring June 30, 2013. Baize Investments' financial interest in the five designated molecules consists of the right to receive from Compugen up to 10% of certain future payments received by Compugen from third parties in the event of the successful licensing out for development and/or commercialization of such designated Compugen molecules. Currently, all five molecules are in active research in the Company's Pipeline Program, with their current status ranging from in silico selection to post animal model validation. Compugen utilizes its systematic and broadly applicable predictive discovery capabilities to provide product candidates to the drug and diagnostic industries under licensing and other commercialization arrangements.
Tel Aviv's Compugen (http://www.cgen.com) is a leading drug and diagnostic product candidate discovery company. Unlike traditional high throughput trial and error experimental based discovery, Compugen's discovery efforts are based on in silico (by computer) product candidate prediction and selection utilizing a broad and continuously growing infrastructure of proprietary scientific understandings and predictive platforms, algorithms, machine learning systems and other computational biology tools to address important unmet therapeutic and diagnostic needs – both for Compugen and its partners. Compugen's growing number of collaborations covering the further development and commercialization of Compugen-discovered product candidates provides Compugen with potential milestone payments and royalties on product sales or other forms of revenue sharing. (Compugen 30.12)
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8.6 Virent & HCL CleanTech Receive Grant to for Biofuels & Bioproducts Development
Madison, Wisconsin's Virent Energy Systems and HCL CleanTech have been awarded a $900,000 grant from BIRD Energy, a program for U.S. - Israel joint renewable energy development funded by the U.S. Department of Energy, the Israeli Ministry of National Infrastructures and the BIRD Foundation. The grant supports almost half of the $2.1 million total project cost. The project's objective is to address the key hurdles limiting the market acceptance of biofuels and bioproducts made from cellulosic feedstocks: price, performance, and infrastructure compatibility.
The project combines HCL CleanTech's proprietary lignocellulosic conversion technologies that produce cost-effective non-food sugars with Virent's innovative BioForming technology that converts plant sugars into hydrocarbon molecules like those now refined from petroleum. HCL CleanTech's pioneering technology builds on a proven industrial process, significantly improving the economics of converting lignocellulosic biomass into refined sugars, de-acidified lignin and tall oils. The process chemistry works at low temperature and atmospheric pressure, resulting in very few degradation products and significantly lower energy and water consumption. These sugars can be utilized by Virent's process to make fungible hydrocarbons that can be used as chemicals or seamlessly blended to make premium 'drop in' fuels for car, truck, train, and air transportation. Virent's fuel products can readily enter the market using existing pipelines to power today's vehicles at high blend rates.
HCL CleanTech (http://www.hclcleantech.com) is commercializing innovative biomass hydrolysis and extraction technologies that dramatically improve the economics of accessing lignocellulosic sugars for conversion into biofuels and bioproducts. The technology generates sugar yields of up to 98% of the theoretical sugars from any lignocellulosic material. High sugar concentrations are refined and have been successfully converted into a number of biofuels and bio-products. HCL CleanTech has developed a process to de-acidify the lignin using a proprietary washing system which uses no water, recovers the hydrochloric acid at high concentrations and produces unadulterated lignin as dry flakes with low chloride content.
The mission of the BIRD (Binational Industrial Research and Development) Foundation (http://www.birdf.com) is to stimulate, promote and support industrial R&D of mutual benefit to the U.S. and Israel. The BIRD Foundation approves funding for approximately 20 projects each year. During its 33 years, the BIRD Foundation has invested in more than 800 projects, which have yielded revenues of about $8 billion. (VES 04.01)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 GigOptix & CIVCOM Receive BIRD Grant to Develop Optical Telecommunication Transponder
Palo Alto's GigOptix, a leading supplier of high performance electronic and electro-optic components that enable next generation 40G and 100G optical networks, and CIVCOM announced today that they were awarded a US-Israel Bi-national Industrial Research & Development (BIRD) Foundation grant to develop low power, highly integrated components and modules for next generation 40Gb/s and 100Gb/s communication systems. The grant will initially help fund the development of a Small Form Factor (SFF) 40Gb/s RZ-DQPSK transponder. GigOptix will develop an integrated 40Gb/s RZ-DQPSK optical modulator and the corresponding broadband amplifiers to drive the modulator while CIVCOM will develop and manufacture the 40Gb/s RZ-DQPSK SFF transponder.
Under the grant, GigOptix will leverage its Thin Film Polymer on Silicon (TFPS) technology to implement an integrated 40Gb/s RZ-DQPSK optical modulator in a single package. Currently 40Gb/s RZ-DQPSK optical modulation is implemented using two separate Lithium Niobate modulators, the first implements RZ modulation and the second DQPSK modulation. The integrated GigOptix solution will be significantly smaller to the discrete approach with the integrated GigOptix solution being smaller than one of the competing Lithium Niobate modulators. Furthermore, GigOptix broadband RF driver and optical modulator teams will optimize the interoperability between the modulator and the driver to enable further reduction in power consumption and overall footprint of the electro-optic transmission system. This size and power reduction will enable CIVCOM to shrink the size of its 40G RZ-DQPSK transponder to the size of current 10G transponders.
Petah Tikva's CIVCOM (http://www.civcom.com) is a pioneer in the development and manufacturing of cost-saving dynamic opto-electronic components and modules, specializing in the field of 10Gbps and 40Gbps Telecom applications. Civcom leads the way in the field of dispersion tolerance transmission providing solutions for some of the most progressive tunable transponders. The BIRD Foundation (http://www.birdf.com) works to encourage cooperation between Israeli and American companies in the various areas of technology, and provides free assistance in locating strategic partners from both countries for developing joint projects. The BIRD Foundation works in full cooperation with the Chief Scientist's Office at the Ministry of Trade, Industry and Labor in Israel, and with the U.S. Commerce Department's National Institute of Standards and Technology (NIST). (GigOptix 23.12)
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9.2 LucidLogix GPU Virtualization to Reform Entertainment PC Power Consumption
LucidLogix announced ground-breaking GPU virtualization software designed for Intel Sandy Bridge platforms. With this technology, next generation PCs will dynamically balance the advanced power-efficient, built-in media features of Sandy Bridge processor graphics with the high-end, DirectX 11 3D performance features of discrete GPUs, while significantly reducing the power drain of traditional entertainment desktops. Called Virtu, the Lucid GPU virtualization software is able to assign tasks in real time to the best available graphics resource based on power, performance and features considerations, with no need for additional hardware. If high end graphics power is needed for applications like DirectX 11, high-resolution 3D gaming, the system will assign the job to the discrete GPU. If not, the discrete GPU automatically goes into idle mode, while heat drops, fan speed slows down and GPU utilization goes down to zero, resulting in a green, power-efficient, long-lasting system. Designed for entry-level through mainstream PCs equipped with second generation Intel's Core i3/i5/i7 and NVIDIA or AMD 3D GPUs, Virtu software automatically adjusts the performance, thermal and feature allocation based on the requirements of individual applications. The only system requirement is to always connect the display screen directly to the motherboard's Sandy Bridge display output (DVI, HDMI, etc).
Kfar Netter's Lucid Technologies (http://www.lucidlogix.com) has reinvented multi-core graphics with its HYDRALOGIX real-time distributed processing engine that improves visual computing for both business and gaming applications. A fabless SoC provider, Lucid's innovations are protected by more than 60 patents pending. (Lucid Technologies 29.12)
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9.3 Elbit Systems Supplies EHUD Air Combat Maneuvering Instrumentation (ACMI) Systems
Elbit Systems was awarded an approximately $18 million contract, for the supply of an EHUD Air Combat Maneuvering Instrumentation (ACMI) system for an Asian air force. The contract is a follow-on order that calls for the supply of two additional complete systems (static and mobile) to be used for real-time, autonomous air-to-air and air-to-ground combat training and debriefing. The new systems will feature interoperability with an existing Elbit Systems' training system that the customer is already operating. The contract will be performed over the next two years. Eighteen leading air forces, on four continents, including numerous NATO countries, have chosen the EHUD ACMI training systems.
Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems (UAS), advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Company also focuses on the upgrading of existing military platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services. (Elbit 29.12)
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel Has the Best Economy in the West
The Central Bureau of Statistics (CBS) announced that Israel's Gross National Product grew by 4.5% in 2010, 0.5% more than had been expected. This compares with only 2.7% in the other 33 countries of the Organization for Economic Co-Operation and Development (OECD). Israel became an OECD member state this past September. In 2009, despite the great worldwide economic crash, Israel's economy grew by 0.8%, after by 4.2% in 2008. The GNP per capita grew by 2.7% this year, compared with a drop of 1.1% the year before. In the OECD as a whole, this year's per capita GNP grew by 2.3%. Israel is also doing better in the employment arena than the rest of the OECD, with a 6.7% unemployment rate, compared with 8.3% in the other countries. The CBS notes three notable developments in Israel's economy during 2010: Exports slowed during the third quarter, following the growth spurt in the second half of 2009; rapid growth of private consumption began to slow down; and investments in residential buildings and the like continued to grow. (CBS 29.12)
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10.2 State of the Economy Index Shows Slower Growth Continues
The composite state of the economy index compiled by the Bank of Israel rose 0.1% in November. The Bank noted that since July, the index has pointed to a rise in activity at a slower pace than was recorded in the first half of the year. The rise for the month reflected a rise in industrial output, and exports of goods. These were offset by falls in imports of consumer goods and imports of raw materials. (BoI 23.12)
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10.3 Export Institute Sees Slower Export Growth In 2011
The Israel Export and International Cooperation Institute predicts slower export growth in 2011, based on estimates of exports in the fourth quarter of 2010. The Export Institute says that the estimates point to a continuation of a trend of treading water. Israel's exports totaled about $80 billion in 2010. Export Institute forecasts show that activity will decline in 2011 due the effect of markets, so that the growth in exports will continue, but will slow compared with previous years, and that exports will total $85 billion next year. (Globes 27.12)
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10.4 2010 is a Record Year for Tourism to Israel
The year 2010 set a record in tourism to Israel, according to the Ministry of Tourism, with 3.45 million arrivals registered. Statistics released Monday showed 26% more visitors than Israel had seen a year earlier, and 14% more than in 2008, Israel's previous record-setting year. According to the ministry figures, 2.8 million visitors were tourists who stayed more than one night – 21% more than in 2009 and 10% more than in 2008, another record. Of the 3.45 million incoming tourists, 2.3 million arrived by air (68%), an increase of 18% over the previous year and 10% over 2008, representing a boon to the airline industry. Luxury cruise ships did not suffer, however: some 160,000 came on cruise ships by sea – double the number that arrived in 2009 and three times those who came in 2008. Some 490,000 entered through the land crossings (14%) – 38% more than in 2009, and 8% more than in 2008. Another 470,000 were day visitors who arrived by land and air – 34% more than in 2009 and 11% more than in 2008. These were arrivals mainly from Russia, Poland, the Czech Republic and Ukraine, all located within close geographic flying range.
As in previous years, the United States continued to lead with 625,000 visitors arriving this year, representing 19% of all incoming tourism. This was an increase of 14% over last year, and a slight increase over the tourism figures for 2008. Tourism from Russia followed in second place with 560,000 visitors, comprising 15% of all incoming tourism – 40% more than last year. About 240,000 of these – 40% – were day visitors. French tourists comprised the third largest category, totaling about 285,000 visitors, 9% more than in 2009 and 7% more than in 2008. The United Kingdom and Germany followed, each with some 180,000, as well as Italian tourists (160,000), Polish visitors (130,000 – 60,000 of whom were day tourists), and those from Ukraine (90,000, half of whom were day visitors), Canada (73,000) and Spain (65,000).
The majority of incoming tourists this year (69%) were Christian, more than half of whom were Catholic). Of the remainder, 23% were Jewish; the others were of various faiths and/or unaffiliated. Although 38% said they were coming to Israel on a pilgrimage, 69% said the purpose of their visit was "tourism." In addition, 17% said they came to visit friends and relatives, 15% came on business, 41% arrived as part of an organized tour, 25% came as part of a packaged tour and 34% were traveling independently.
Jerusalem is the city most visited by incoming tourists in Israel (76%), according to the Tourism Ministry statistics, with Tel Aviv- Jaffa in second place and the Dead Sea area in third. The Western Wall is the most visited site in the State of Israel (77%), closely followed by the Jewish Quarter in Jerusalem (73%), the Church of the Holy Sepulcher (61%), the Via Dolorosa (60%) and the Mount of Olives (55%). (CBS 27.12)
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10.5 Israel's Unemployment Rises While High Tech Brings Down Industrial Output.
The unemployment rate rose to 6.6% of the civilian workforce in October 2010, returning to its level of March, the Central Bureau of Statistics announced in 23 December. The unemployment rate was 6.5% in July-September and 6.4% in May-June. The Central Bureau of Statistics also reported that industrial output fell 8.5% in August-October, mainly due to a 17.4% drop in high-tech output. Excluding high tech, industrial output fell 1.1% in August-October. (CBS 23.12)
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10.6 Adva Center Says Global Crisis Shrunk Israel's Middle Class
On 26 December, the Adva Center announced that a recent study found that the global economic crisis of 2009 deepened the social gaps in Israel. The report said that some 80,000 households previously defined as middle class are now considered lower class. The percentage of middle class households in Israel declined from 27.1% in 2008 to 26.6% in 2009, while the share of Israel's middle class in the total income declined from 20.7% to 20.5%. Since 1988, the middle class has shrunk from 33.0% of all households to 26.6%, while the upper and lower classes expanded during this time.
In 2009 the poverty rate increased to 20.5%, compared with 17.6% at the beginning of the decade. According to the report, 15.2% of Jewish families and 53.5% of Arab families are defined as poor. Among Israel's Jewish population, the highest poverty rates were recorded in the Haredi community. In 2000 about 29% of Israeli workers earned minimum wage or less, as opposed to 33% by the decade's end. In 2009, the gross average monthly income of eight of the 10 income deciles declined, while the income of the bottom four deciles experienced a sharper decrease than the top 2 declines. During the years 2000-2009, the share of the bottom four income deciles in the total income declined, from 17.0% to 16.3%, while the share of the top decile grew, from 28.0% to 28.5%, the report said. (Ynet 28.12)
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10.7 Gasoline Prices in Israel One of Highest in the World
Gasoline prices in Israel rose in the last week of December, where the price for a liter of 95 octane fuel reaches about $1.98. Gasoline prices in Israel are among the highest in the world and one of the reasons is the high taxes on fuel. Out of every New Israeli Shekel paid for fuel at a gas station, some 56 agorot go directly to the state as a result of VAT payments and excise tax, which is the fixed tax imposed on fuel products. The increase of excise tax on gasoline and petrol by 20 agorot per liter is expected to yield some $310 million in taxes annually and double next year when taxes are raised once again.
On 27 December, by a vote of 9-4, the Knesset Finance Committee approved an increase in the excise tax on fuel. The tax on gasoline and diesel fuel will rise 20 agorot per liter in 2011 and another 20 agorot per liter in 2012 in an effort to get people to use their cars less in favor of mass transit. Other fuels, such as coal, kerosene and biodiesel, will be taxed at the higher rate in December 2012. In the case of coal, a treasury official said it was taxed at a low level compared to elsewhere in the world and the idea is to encourage less polluting fuels, such as natural gas and biodiesel. Critics of the increases said they would strike an economic blow to many sectors of the population.
The tax on petroleum varies from country to country. In 2008 the average petrol tax in OECD countries was approximately 55% of the price of gasoline, similarly to Israel. Countries such as Germany, Finland, France, Britain and Holland pay petrol taxes of up to 68% of the price. In comparison, the excise tax in the United States is set on only 15% of the price. (Various 30.12)
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10.8 Israel Sees Record 213,000 New Cars Sold in 2010
A new Israeli record was made when vehicle industry data indicated some 213,000 new cars were purchased during 2010, an increase of some 17,000 (or 9%) from the previous record set in 2008. The increase is even more apparent in comparison to car sales during the financial crisis of 2009, with only 172,000 new cars purchased that year. For the 15th consecutive year, Mazda is ranked as the best-selling car in Israel. Some 32,000 Mazda vehicles were purchased during 2010 – a 2% increase from last year. Hyundai took second place with 30,500 new car sales and a whopping increase of 51% compared to 2009. Mazda3 was the best-selling model in Israel during 2010, with some 20,000 purchases, while Toyota Corolla was ranked second with 13,700 purchases. (Various 04.01)
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11: IN DEPTH
11.1 CEEMEA: Another Year in the ‘New Normal' 2011 Preview
Morgan Stanley's (http://www.morganstanley.com) CEEMEA (Central Eastern Europe Middle East & Africa) Economics Team reported on 17 December that the ‘New Normal' for CEEMEA is a world of slower trend growth, less abundant credit creation and lower external imbalances: 2011 should be another year in which the region follows the script of the ‘New Normal'. Within such a vast and diverse region, there are of course exceptions. This piece lays out our major themes for 2011, looking at risks, key events and the likely policy response.
Growth - most countries to grow faster, with a few exceptions: We expect the CEEMEA region to post an overall growth rate of 3.9% in 2011, not materially different from the expected outturn for 2010. While the aggregate growth trajectory should not change much, within such a diverse region there are significant differences. Specifically, we expect growth rates to pick up in Saudi Arabia and the UAE; conversely, we expect slower growth in Turkey.
Turkey: Robust Growth with Inflation and Current Account Challenges
The fastest-growing economy in the region: Following the recession of 2009 when real GDP shrank by 4.7%Y, the economy recovered rapidly and is not only likely to post the fastest growth rate in the CEEMEA region in 2010 (at 7.4%Y), but also one of the fastest in the world. This performance took place on the back of some statistical carry-over but more importantly on broad-based growth in domestic demand. The latter was based on three main pillars: First, a strong banking sector, which had the ability to mobilize funds for credit growth; second, the low household debt (and therefore lack of deleveraging during the recession); and finally, very low interest rates that spurred credit growth and investments. Looking into 2011, we think that all these drivers will remain broadly in place and project a growth rate of 4.7%Y. The main drivers of growth will again be domestic demand, with net exports having a negative contribution as imports are likely to continue their ascent. Fiscal policy implementation has been broadly encouraging thanks to strong revenue growth and controlled non-interest spending. The budget deficit to GDP target is likely to be undershot at 3.8% in 2010, which we project to stay unchanged in 2011. In line with this, we expect debt/GDP to decline further to around 43% in 2011. Clearly, a falling debt/GDP ratio is a positive and rare event in the current global environment.
Four topics to dominate the agenda in 2011: One of the key macro topics is likely to be whether inflation will ease in 2011 or the CBT will fall behind the curve. With an off-consensus and optimistic forecast of 6%Y inflation for 2011, we expect the CBT to get close to the target. Our impression is that the CBT will keep the policy rate unchanged until 4Q11 (we pencil in 150bp tightening in 4Q) but use alternative measures such as RRR hikes to slow down credit expansion. Another issue will be the widening in the current account and the nature of its financing. We project a current account deficit/GDP of 6.1%, which is sizeable, but we do not expect the financing to be a significant issue to place any pressure on the currency in 2011.
There will be two idiosyncratic events: The appointment of the new central bank governor in April and general elections to take place in June 2011. While the former is important to maintain the perception of independent monetary policy, we expect the latter to be more or less a non-event based on recent polls implying the continuation of the status quo.
Sovereign rating upgrade - not if, but when: In our view, Turkey's fundamentals and encouraging policy implementation so far deserve recognition with a rating upgrade. With the base case assumption of a mild increase in spending in H1/11 and some policy improvement post elections, we expect at least one of the main rating agencies to move Turkey to investment grade.
Israel: Good Fundamentals with Surmountable Policy Issues
Solid fundamentals and robust growth: According to our projections, real GDP growth will reach 4%Y in 2010 and 3.8%Y in 2011 following the brief recession the country experienced in 2009 that still yielded 0.9%Y growth. In comparison to the past experiences, the recent recession's overall impact was limited thanks to swift policy action by the monetary and fiscal authorities. With overall solid fundamentals, the risks to growth are unlikely to be stemming from the domestic side, but rather external. As exports have a 45% share in GDP, growth could decelerate in case of a sudden downturn in global growth or even extended weakness mainly in the euro-zone and in the US. That said, the main reasons why the economy showed resilience to the external shocks still seem to be in place. These include the strength in the external accounts, a strong banking sector with no toxic assets, no housing-related bubble (relatively low household leverage) and the composition of exports that includes a significant portion of high-tech goods.
Inflation to occupy the agenda with housing prices in the spotlight: According to our projections, inflation will ease slightly at end-2010 owing to base effects and a marginal decline in food prices. However, the base effects are likely to work adversely in H1/11, when inflation is likely to breach the 3% outer limit of the target range. While the inflation issue is not a broad-based problem and is mostly specific to the housing market, an extended period of a breach of the target range might place added pressure on the BoI. This is why we expect the policy rate to be raised every quarter in 2011, with the bulk of the hikes taking place in Q4/11, such that the terminal policy rate reaches 3.5% by end-2011. Currently, the policy rate is still low, with a real interest rate of around -1%. While the BoI has been intending to normalize rates for some time, it has been a very gradual process due to the concerns surrounding currency appreciation.
Two main glitches make the policy implementation a serious challenge: We expect two topics to dominate the agenda in 2011. The first challenge will be the ongoing rise in house prices and how to stem their rise. We expect mostly macro-prudential measures to be utilized rather than aggressive rate hikes due to the second challenge, which is currency appreciation. It seems like the BoI will continue to intervene in the currency (at the expense of bearing sterilization costs); this is a losing battle, in our view, given the strong macro fundamentals: the expected rise in rates, the presence of a current account surplus and exceptionally high FX reserves.
Saudi Arabia: Light Headwinds and Steady Growth
The 2011 economic outlook for Saudi Arabia is fairly benign: We expect economic growth to maintain its moderate pace, with overall output growing by about 3.7% next year. Real growth in the oil sector will likely remain subdued, largely due to projected marginal growth in oil production of about 1.1%. Conversely, we expect the non-oil sector to grow by about 4.6%, as private spending gradually picks up, and consumer and business confidence strengthen in the near term. However, we expect fiscal spending to continue to be the main driver of growth in non-oil sector. This is in line with the government's five-year $400 billion investment plan announced in 2009, and its recently released 2010-14 development plan, which guided towards a potential 67% increase in government spending, compared to the previous five-year plan. We expect headline inflation to stabilize at around 5% next year, as pressures in the housing market gradually ease over the near term. However, further increases in international food prices could spell higher inflation going forward, as food has a weight of 26% in the CPI index.
The impact of higher oil revenues on budget and external balances will likely be mitigated by an increase in domestic spending: Saudi Arabia's 2011 fiscal and external balances are expected to register surpluses of about 3% and 11% of GDP, respectively. Oil export receipts are projected to increase thanks to an expected rise of about 8% in average oil prices, according to the current futures curve. But fiscal expenditures and imports are also expected to increase on the back of higher domestic spending. As a result, external and fiscal balances will likely remain in line with those of 2010. We estimate Saudi Arabia's average breakeven oil prices per barrel over 2011-12 to be around $80 for the budget balance and $72 for the external balance.
Barring an exogenous oil shock, the main economic risk facing Saudi Arabia is that of continued weakness in domestic credit markets: Bank lending has yet to gain momentum, with credit to the private sector growing by only 3%Y in October 2010, down from 33% two years earlier. Money supply growth may have slowed down during 2010, but banks remain flush with liquidity, as reflected by their excess reserves, which currently stand at about 6.5 times their June 2008 levels.
As such, we believe that the main impediment to credit growth in Saudi Arabia is not the lack of domestic liquidity. It is rather due to the banks' excessive risk-aversion and to domestic investors' apparent low appetite for borrowing. Both of these conditions are likely to ease over the near term, in our view.
UAE: Weighed Down by Debt, but Not Stalling
The UAE will likely experience modest growth in 2011, supported by high oil prices and stronger regional demand: After a relatively flat performance in 2010, we believe that the UAE economy will grow by about 2% in 2011 on the back of continued government spending (Abu Dhabi) and stronger external demand (Dubai). Despite continued downward pressures on rents, we expect consumer prices to start stabilizing next year. Moreover, the projected increase in average oil prices in 2011 will likely contribute to a current account surplus of about 6% of GDP and a fiscal surplus of close to 3% of GDP. This assumes no additional, large fiscal outlays in support of Dubai's debt restructuring.
The UAE's near-term economic prospects depend on a number of factors, including: i) continued strength in global oil prices - noting that the UAE's fiscal and current account breakeven oil prices currently stand at around $77 and $72, respectively; ii) further strengthening of regional demand, on which the UAE's non-oil sector depends; iii) the resumption of domestic lending and the strengthening of bank balance sheets; and iv) an expeditious and transparent resolution of Dubai's public sector debt challenges.
Dubai government's direct debt remains manageable, within limits: The Dubai government's direct debt liabilities currently stand at about $25 billion, or close to 33% of the emirate's GDP, which seems to be moderate in comparison to an average debt to GDP of about 64% among the region's oil-importing countries. But relative to the emirate's modest fiscal footprint, the burden of servicing this debt may be significant. We estimate that interest payments will account for about 12% of fiscal expenditures in 2011 and 15% of revenues. As such, raising additional debt at the sovereign level, in excess of budgetary needs, may be difficult.
However, the public sector debt overhang is substantial: We estimate that the current value of Dubai's disclosed public debt stands at around $93 billion, or about 125% of the emirate's GDP. Further, Dubai's upcoming debt obligations are non-trivial. About $20 billion of disclosed debt will come due in 2011 and another $13 billion will mature in 2012. These figures do not include bilateral loans and trade liabilities, which could be sizeable. We believe that addressing Dubai's debt challenges requires additional transparency on a number of issues, including: i) the scale and the scope of the debt overhang; ii) the government's intended course of action to address this challenge; and iii) the extent of external support available to Dubai, including from the oil-rich emirate of Abu Dhabi.
Conclusion
In 2011, the CEEMEA region should grow by approximately 3.9%, well above G10 growth (2.2%), slightly lower than LatAm (4.1%) but far less than AXJ (7.9%). In that respect, therefore, the CEEMEA region as a whole is the most ‘DM-like' of the emerging markets, mostly owing to the close proximity to Europe and reliance on credit growth. Within the region, most countries will accelerate into 2011, with a few notable exceptions (Turkey). From a policy standpoint, we expect central banks to start normalizing policy rates, or continue gradual tightening where that process is already underway. We see more rate hikes in Israel and the start of the tightening cycle in early 2011 with Turkey following later in the year. (MS 17.12)
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11.2 LEBANON: Moment of Truth
While Lebanon's economy has performed soundly over the past year, there are lingering concerns that political instability could weaken investor confidence in the capital markets, unwinding economic progress made in the last year. As observed by the Oxford Business Group, the political climate has become increasingly heated in the past few months due to a standoff between Shiite movement Hezbollah and the ruling March 14 coalition over the UN-backed inquiry into the killing of former premier Rafik Hariri – father of the current Prime Minister Saad Hariri – on 14 February 2005. The Special Tribunal for Lebanon (STL) is preparing to announce initial indictments into the assassination, with expectations running high that members of Hezbollah will be formally accused of involvement in the plot.
Hezbollah officials, including the group's leader Sayyed Hassan Nasrallah, have called for the inquiry to be halted, warning that any move to implicate their members will result in a breakdown of national reconciliation. With two members in a cabinet grouping that has veto power, the movement potentially has the political clout to bring down Hariri's government.
The political stability seen since the national unity government was formed in November 2009 has helped maintain economic performance, with GDP growth of 7% forecast for 2010 and the nation's dramatically high debt levels dipping below 150% of GDP in the year.
There has, however, been less certainty in capital markets. Market capitalization of the Beirut Stock Exchange decreased by 1.6% to $12.4b over the first 11 months, of which 71% was in banking stocks and 24.8% in real estate stocks. However, the market has been more active, with total trading volume for same period hitting 161m shares, an increase of 62.2% on the same period last year. The combination of lower values and higher trading activity likely reflects a jittery atmosphere, say analysts.
Nassib Ghobril, the chief economist at Byblos Bank, cites concerns over the political outlook as cooling consumer and business confidence, with negative perceptions affecting the stock exchange. "We know there are some companies that had expansion plans but are now taking a wait-and-see approach," Ghobril said in an interview with Medialine on November 30. "There's been a decline in the stock market since the summer, which has reflected political sentiment more than underlying performance," he said.
Riad Salameh, the governor of the central bank, is confident that the country's capital markets can ride out any storm. "From experience, we know what our country can encounter," he told the Financial Times in an interview on November 19. "We have shown resilience because of measures put in place. Even in the worst days, Lebanon never defaulted."
Though Salameh acknowledged that a deterioration of the political situation could cause concerns, he said Lebanon's financial stability was based on the strong balance sheets of the banking sector, minimizing the risk and forming a "powerful argument to the markets." Markets have taken note, at least recently, with $725m worth of Eurobonds offered by the state in mid-November snapped up rapidly by both local and overseas investors. This despite the issue having the lowest market yields on any paper issued by Lebanon for fixed-rate bonds, with the weighted coupon average being just 5.44%.
The low rates, and the fact that the issue was oversubscribed more than three times, represented a vote of confidence in Lebanon, said Finance Minister Raya Haffar Hassan. "The interest rates on the new issue were the lowest in Lebanon's history and the international bond markets with limited ceilings and foreign investors grabbed 26% of the entire Eurobond issue," she said on November 11. Indeed, the figures were a far cry from bonds issued in the early 1990s, when coupon rates at times were more than 30%.
The lead-up to the STL issuing indictments could see the fragile faith in capital market's further shaken, since the tribunal seems likely to reignite political and factional tensions. However, having seen similar crises come and go, fundamental economic confidence in Lebanon will most likely be maintained in the long term. (OBG 23.12)
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11.3 JORDAN: Healthy Growth
Jordan is fast turning medical tourism into a mainstay of the kingdom's economy, according to a report by the Oxford Business Group, with the sector likely to soon turn a healthy profit thanks to the high levels of public and private investment in hospitals, medical facilities and staff training.
Jordan is well established in the medical tourism sector, having welcomed foreign patients to its health facilities for more than two decades. According to figures issued by the Jordan Enterprise Development Corporation, the country earned $1.4bn from the medical tourism sector in 2009 from 220,000 foreign visitors seeking treatment – a 10% rise in medical tourists from last year.
A breakdown of 2009 figures compiled by Jordan's Private Hospitals Association show that Iraqis were by far the largest patient group treated in the country's hospitals, accounting for 19% of the total. This was followed by Saudi Arabians with 15%; Yemeni patients next with 14% and Sudanese and Libyan patients at 13% and 9%, respectively. The remaining 14% included patients from a further 36 countries, demonstrating the fact that Jordan's medical tourism sector is currently heavily reliant on a few neighboring states for the vast majority of its activity.
According to a World Bank study, Jordan is ranked first in the region and fifth globally as a medical tourism destination, though it will be facing increasing competition in the coming years, with other Middle Eastern nations looking to cash in on the potential health windfall.
Dubai is actively investing to promote medical tourism and in early October signed a memorandum of understanding with the Medical Tourism Association committing the two parties to co-operate in developing the sector in the emirate, while Saudi Arabia is also stepping up efforts to raise its medical tourism profile.
The revenue generated by the Jordanian health services may also come under pressure as other countries in the region, notably states such as Iraq, improve the standards of their domestic medical facilities and those of professional service providers.
In recognition of the potential for the patient pool in the region to be partly drained, Jordan has begun looking further afield for clients, promoting its medical services in the US and Europe. In early October, Jordan and Romania agreed to bolster cooperation in the health sector, with Bucharest offering to help train doctors in specialized emergency services, while there are also plans to export Jordanian-made pharmaceuticals to Romania. According to Romanian Health Minister Attila Cseke, there was the potential for medical tourists from his country to come to Jordan as long as the fees charged were lower than those in other countries.
Jordan's efforts to enter the Romanian market are just the latest step in a far longer campaign to broaden the scope of its medical tourism sector. In 2009, Jordan began actively promoting its medical services in the US, aiming to capture a share of the growing market for overseas health provision there. While it may be early days, Jordan has made some impact in the American market, with the US now ranked in the top 10 countries sending patients for treatment in the kingdom, though this still represents a fraction of the total.
Though some other countries in the region are trying to generate interest in their own medical tourism services, seeking to attract foreign patients while also encouraging their own nationals to utilize local care facilities, Jordan does enjoy a number of advantages.
One of the strongest selling points that Jordan's health tourism industry has is its cost factor, with the fees for many procedures being less than 25% those charged in the US. This, combined with the acknowledged quality of the country's medical facilities and staff, with most of Jordan's hospitals having gained internationally accepted accreditation, mean that overseas patients can be treated to the highest standards but at a fraction of the cost. Jordan also enjoys the advantage over many of its regional rivals of not requiring visas for citizens of many countries, or being able to offer visas on arrival, appealing to weary travelers not in the best of health.
As long as Jordan can continue to increase the numbers of US medical tourists, who represent the largest and most lucrative segment of the market, the kingdom's health sector should be able to shrug off any losses of clients to regional rivals, further building its reputation as a service provider of the highest quality while at the same time improving the health of the economy. (OBG 29.12)
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11.4 IRAQ: Politics - All-In
The Economist Intelligence Unit (http://www.eiu.com) notes on 22 December that nine months after an inconclusive parliamentary election, a new Iraqi cabinet has been announced, bringing to an end an often bitter impasse. The new national unity government, headed by Nouri al-Maliki, brings together all of Iraq's main factions, and will need to work hard to make sure that security gains made over the last three years are consolidated, while also shifting focus towards improving basic services. Its all-inclusiveness is its principal strength, but could also prove to be a drag on policy implementation.
One of the most important issues raised by the election was the level of participation by each of Iraq's ethnic and religious groups, with particular attention focused on Sunni representation. From this perspective, the Iraqi cabinet is more equitable than the previous one. There were fears that the Iraqi National Movement (INM), a Sunni-backed block led by a former prime minister, Ayad Allawi, that got the most votes in the election, would be marginalized by an alliance that brought together Mr. Maliki's State of Law coalition and a conservative Shia group, the Iraqi National Alliance. The cabinet line-up suggests otherwise; a deputy prime minister, the speaker of parliament (perhaps the most important office in Iraq after the prime minister's own), and the finance minister all come from the INM. Furthermore, the deeply divisive issue of de-Baathification, which was dragged back into the political narrative just before the election, seems to have been solved, with the reinstatement of Saleh al-Mutlaq, a Sunni Arab politician (and Iraq's new deputy prime minister).
Oil Continuity
The all-important oil ministry, responsible for bringing in over 90% of Iraq's state revenue, will be run by Abdul-Karim al-Luaibi, a former deputy minister and long-time employee of the ministry who is thought to have a broadly similar outlook to that of his predecessor, Hussain al-Shahristani. This, and that fact that Mr. Shahristani himself has been given a newly-minted role, deputy prime minister for oil and electricity affairs, will be encouraging news for the international oil companies that are involved in developing Iraq's largest oilfields. Mr. Shahristani's office will likely be given substantial executive powers, allowing him and Mr. Maliki to maintain a strong influence in strategic energy matters and ensuring that the path they set in their first term is adhered to. This will help provide a measure of continuity and stability for the oil companies, which they will need if they are to successfully carry out the gargantuan task of increasing Iraq's oil production. Mr. Luaibi also appears to be better placed than Mr. Shahristani to solve the ongoing disagreement with the Kurdistan Regional Government over the oil contracts signed by the semi-autonomous region - which have been a bone of contention between the KRG and the oil ministry in the past.
Allawi Man Takes The Finance Portfolio
There was no change at the foreign ministry, with Hoshyar Zebari (a Kurd) once again at the helm. However, a notable appointment was made in the finance ministry, which will be run by the former deputy prime minister, Rafi' al-Issawi. Mr. Issawi, a Sunni Arab politician who is close to Ayad Allawi, is highly regarded across the political spectrum in Iraq as being a capable, consensus-seeking politician, and his appointment in one of Iraq's key ministries will go some way towards allaying fears that the country's Sunni Arab community will be marginalized.
Sadrists' Prize
The Sadrists, who gained 40 seats in parliament after a powerful showing in the election, have been rewarded with eight ministries, and will control the housing, public works, labor and, perhaps most importantly, the planning ministry- signaling a definite move by the controversial group to control important service ministries.
Missing Links
The announcement of the new government has generated some rare optimism in Iraq, but there are still important decisions to be made to ensure a complete cabinet. Two of the most important ministries remain vacant; the ministries of interior and defense will be run by Mr. Maliki in the interim period, until candidates that are acceptable to all are found. Furthermore, the powers of the Council of Strategic Policies, a new office that will be headed by Mr. Allawi, are yet to be approved by parliament, and could prove a point of contention in the near future. Granting the office enough executive power to act as a counterbalance to the prime minister will help placate Mr. Allawi and will likely secure the full buy-in from his INM bloc. If however, the office's powers are confined to playing an advisory role rather than carrying any executive weight, as suggested by some of Mr. Maliki's supporters, the government could face rebellion sooner than it expected.
The new government faces considerable challenges; it will seek to try to consolidate the security gains made over the last few years, while also investing in projects aimed at improving vital services and infrastructure. It will be helped by increased revenues thanks to high oil prices and increased production coming on line, which in turn, will lead to higher capital and current spending throughout its four-year term. The Economist Intelligence Unit has based its economic forecast on the assumption that the new government will be reasonably effective, although its performance will continue to be held back by internal feuding and persistent security problems. We are forecasting real GDP growth of 6.5% in 2011, rising to 7.4% the following year as oil production starts to ramp up. (EIU 22.12)
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11.5 ARABIAN GULF: State of the Arabian Gulf's Aviation Industry
The Middle East Aviation Business Newsletter reported that with the expansion of the Middle East's national carriers, regional governments are also investing in upgrading and building new airports. In particular, the airports of the major airlines are becoming best-in-class emerging global hubs: They make use of advanced technologies (such as electronic immigration, navigation and docking systems) to improve passenger flow and air fleet operations, and their terminals are designed to facilitate access to retail areas, maximizing passenger spending.
Dubai, in particular, has become the largest hub in the GCC region, on course to becoming the fastest-growing airport worldwide, with 9.2% growth and a record 40.9 million passengers in 2009. In comparison, Heathrow and JFK had 66 million and 46 million passengers respectively. Regional expansion is planned to continue, with proposed projects to grow capacity for Abu Dhabi (from 7 million to 33 million), Doha (from 12 million to 38 million) and Dubai (from 70 million to a remarkable 120 million with the new Al Maktoum Airport).
In parallel to growth in passenger traffic, airports in the Middle East are facing other emerging trends. Greater airline focus on costs is leading to aggressive negotiations. Passengers expect greater convenience and services, such as limousine service, luxurious lounges and a wide range of duty-free shopping. The difficulty of finding qualified personnel to support growth and services is leading to operational constraints. The regulatory and political environment has generated enhanced security requirements, compromising service and convenience. Finally, increasing competition between neighboring airports is leading to significant oversupply.
The trends are spurring four major challenges: a need for improved airport processes, such as upgraded security facilities; aeronautical revenues that are not growing at the expected rate; the need to streamline passenger interfaces and services; and the need to optimize costs through improved asset utilization and partnering models. Consequently, airports will need to rethink their strategies to achieve long-term sustainability, moving away from traditional aviation business models and better incorporating private partnerships, promoting privatization and driving non-aviation revenues.
Civil Aviation
The year 2010 has been a challenging one for the Middle East's aviation regulators, particularly in four areas: flight safety, aviation security, environment and market liberalization. The region's record in aviation safety has reached worrisome levels: The number of catastrophic accidents per million flights is 3.32, four times the worldwide industry average.
The strong growth in traffic and fleet size requires more capable industry oversight that makes more efficient use of regulators' time and efforts. CAAs should consider switching to smarter risk-based methodologies, which are the foundation of ICAO's State Safety Plan (SSP) program. Regional regulators should focus on full implementation of the SSP, which most states have launched in some fashion but none have yet taken to full operational implementation.
Concurrently, global aviation security was shaken in October 2010 by several unlawful actions targeting cargo aviation, which could have led to a large-scale, multiple-attack catastrophe. They had a particular impact on regional security, since the packages containing explosives originated in Yemen and one was routed through Doha and Dubai. System inadequacies in identifying and tagging the weak links in the security chain make it regulators' top priority to implement risk-based intelligence and threat assessment methodologies, which will enable co-ordination with the relevant national security intelligence systems.
In terms of environment and emissions levels, IATA committed in 2010 to carbon-neutral growth starting in 2020, with the goal of halving 2005 industry emissions by 2050. Meanwhile, despite the Middle East's young fleet, fuel efficiency in the region continues to be poor, mainly because airspace requirements force airlines to take longer routes than necessary, with more frequent ‘go-arounds' prior to landing.
As such, environmental sustainability is a key challenge for regional CAAs. They need clear national policies empowering them to regulate ground and flight emissions, move towards a technologically and operationally harmonized airspace, and influence the international ETS debate by expressing their respective governments' positions.
Finally, market liberalization remains a long-standing priority due to restrictions on air traffic rights, the lack of a uniform air traffic service, constraints on free travel, and travel taxation. Regulators should focus on implementation of the 2004 Damascus Convention to enable the region's market to develop to its full potential.
Air Freight
The Middle East air freight market accounts for approximately 8% of the 40-45 million tonne global market, and primarily serves volumes originating from Europe and Asia Pacific. It was the only region to show some growth in 2009. Dubai, for example, witnessed the year's highest growth in air cargo movement, showing an increase of 5.6%. As global air cargo traffic is recovering in 2010, we expect steady growth in the region to resume at an average rate of 5 to 6% per year. The air cargo market will continue to develop in the Middle East, driven by the region's strategic position at the crossroads of global trade routes. Dubai was the first mover in taking advantage of this strategic position and has already become one of the world's major re-export hubs; it now serves over 60% of regional air cargo volumes.
The region, and Dubai in particular, serves large volumes of cargo that originate from South East Asia by sea and is then transported to Europe by air. Demand is also on the rise from within the region, as nations continue to diversify into non-oil sectors such as manufacturing, logistics and construction, which have a need for air freight services. New infrastructure, especially Al Maktoum International Airport with 16 cargo terminals and its integrated logistics capabilities, will further boost the region's position as a trans-shipment and cargo hub.
Also, Abu Dhabi, Qatar, Saudi Arabia, Oman, Bahrain and Kuwait have continued to expand their air freight capabilities and infrastructures to meet the growing demand. Although the overall outlook is positive, the sector is likely to continue facing a number of challenges.
Aggressive airport and fleet expansion plans may lead to overcapacity: In addition to the expansion under way at Jebel Ali, there are substantial airport expansions moving forward in Abu Dhabi, Doha and Dubai, with other, smaller expansions happening around the region. The regional cargo fleet currently consists of more than 40 aircraft and is expected to expand in the near future: Emirates SkyCargo alone currently has 15 cargo planes on order. The sector will also need to work with governments to address complicated customs regulations and procedures, which remain a major impediment to cargo movements.
Airlines
Although air travel all over the world has started to recover from the global downturn, the growth of the Middle East's aviation industry has been notable. Passenger traffic was up 19% in the first nine months of 2010, compared with 8% worldwide; freight traffic is up 31%, compared with 25% worldwide. This growth is mainly driven by three factors.
The first is the growth of the network carriers, such as Emirates Airlines, Etihad and Qatar Airways, which have capitalized on their strong network and the region's geo-centricity: Four billion people living within an eight-hour flying zone.
The second is the growth of the budget carriers, such as Air Arabia, Jazeera Airways and Fly Dubai, which have drawn on the unprecedented boom in point-to-point budget travel within the region. The third factor is the massive influx of investments into the region's aviation system, including state-of-the-art and passenger-friendly airports; the latest generation of aircraft, which can connect, non-stop, any two points on the globe with lower operating costs than older aircraft; and award-winning products and services that offer passengers an unparalleled travel experience.
Yet looks can be deceiving. The region's rapid growth in aviation masks some significant challenges. Middle East carriers have more than 500 aircraft on order, posing the risk of overcapacity - particularly since the region's airlines have similar value propositions and considerable network overlap, leading to a potential price war. Another critical challenge is the risk of securing additional traffic rights in some markets to support their rapid growth, as illustrated by the recent dispute between the UAE and Canada.
In light of new competitive circumstances and industry changes, Middle Eastern carriers need to rethink their growth strategies. They should consider global partnerships to further strengthen their network and access untapped and bilaterally constrained markets. Local consolidation could increase market share while maintaining healthy price levels. Finally, diversified business models could generate new income streams.
Airspace Management
Airspace is one of the factors that most restricts the full development of the Middle East civil aviation industry. Passenger and cargo traffic growth in the first nine months of 2010 have been strong, at 19% and 31% respectively; by 2011, growth should be back to pre-crisis levels. Additionally, there is likely to be more traffic through the Mediterranean routes as the Single European Sky (SES) doubles capacity, beginning around 2012. All of this traffic is fighting for space within fragmented airspace that is heavily restricted by the military, as well as burdened by varying air navigation technologies and traffic management procedures.
These issues limit the industry's capacity for traffic growth, causing increased complexity and higher costs to air carriers. In this context, three key areas should be of primary concern to Middle East governments and their Air Navigation Service Providers (ANSPs).
Strategic Co-ordination: Despite IATA's efforts, the region still lacks a defined airspace master plan to guide its evolution in the next five to 10 years. Decision-making by the region's ANSPs and regulators is still too individualistic; more active and collaborative participation among the existing working groups is needed to build a common vision of the region's airspace future and structure.
Military Restrictions: The region's airspace is extensively restricted by military no-fly zones. As a result, airlines have to fly longer routes and burn more fuel, while airspace capacity is reduced and congestion-induced flight safety risks are increased. Middle Eastern governments should wait no longer to introduce flexible use of airspace, whereby airspace is dynamically allocated to the military on an as-required basis.
Operational Harmonization and Consolidation: Due to the high density of ANSPs in the region, airspace is fragmented and bottlenecked by the technology-limited providers. Governments should therefore focus on harmonizing technology and, more important, look at consolidating ANSPs at national and international levels following the European model.
Technology-limited providers should seek public and private financing for their ANSPs; since these ANSPs have an impact not only on their own airspace but on their neighbors', wealthy neighboring countries may also want to consider investing in this infrastructure. Assigning peace-time military traffic control to civil ANSPs is another highly recommended lever, as demonstrated by the successful stories of several European countries. (AB 03.01)
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11.6 EGYPT: Formula for Growth
The Oxford Business Group observed that legal wrangling over a new pricing plan for Egypt's pharmaceuticals has not dampened confidence in the sector, with rising domestic demand expected to ensure robust profits over the next decade. The Ministry of Health (MoH) last year introduced a new drug-pricing regime under which brand-named drugs were priced 10% lower than the cheapest rates in other countries, while generic drugs were priced between 40-70% of the rates for corresponding brand-named pharmaceuticals.
While the MoH insisted that the reform would lower costs for Egyptian consumers, a non-governmental organization called the Egyptian Initiative for Personal Rights said that the changes were unconstitutional as would they would raise prices and deprive Egyptians of their right to healthcare.
In April 2010, Cairo's administrative court issued an injunction suspending the decree's implementation until the question of its constitutionality was resolved. The ministry sought to have that injunction overturned, but the courts upheld it in a ruling this past September. The Supreme Administrative Court is deliberating on the case in December.
Industry observers say that, aside from pricing, the reforms promise easier registration procedures. "Nobody was happy with the old system because it lacked transparency. If you wanted a good price you needed a good lawyer," Ahmed Al Hakim, market access director for Bristol Meyers Squibb, told the local media. Hakim said that under the new regulations there are clearer procedures and criteria so that firms can anticipate the prices of registered drugs. With the new rules in place, pharmaceutical firms hope to bring drugs to the market faster – and in greater numbers.
The reform also promises to improve the quality and competitiveness of Egyptian-made pharmaceuticals by encouraging adherence to international standards. Generic drug manufacturers that have certification from internationally recognized regulatory agencies will be allowed to charge 70% of the brand-name price, rather than a lower rate, and manufacturers who do not obtain certification by 2020 will be forced to cease production. By getting its factories up to international standards, the ministry expects to increase exports. The industry exported $604m in 2009 and hopes to raise that figure to $983m by 2015.
Meanwhile, the government is to confront the counterfeit drug trade, which is estimated to be worth some $172.4m annually. Up to 10% of the medicines on pharmacy shelves are fake, according to the MoH, and the problem is not purely domestic – Egypt is a hub for the transit of counterfeit pharmaceuticals. Ihab Youssef, a pharmaceutical industry consultant, told the local daily Business Today Egypt in April that 7% of the world's counterfeit drugs are either made in or pass through Egypt en route to their destination.
To combat this problem the government has partnered with multinational pharmaceutical companies Pfizer, GlaxoSmithKline and Sanovi-Aventis to educate the public about counterfeit drugs' dangers and to train pharmaceutical inspectors in the latest and most efficient techniques for identifying them. Egypt has also partnered with the United States Pharmcopeial Convention as well as the governments of Abu Dhabi, Jordan, Morocco, Saudi Arabia and Tunisia, to establish the MENA Regional Laboratory Network, which will coordinate efforts at eliminating the regional counterfeit drug trade. Meanwhile, the MoH is thinking about amending the country's pharmaceuticals laws – which date to 1955 – toughening penalties for counterfeiters, most of whom are currently tried under laws governing fraud.
While the dispute over the new pricing plan is significant, it should not obscure the sector's sound fundamentals and bright prospects. The Egyptian International Pharmaceuticals Industries Company reported a 14% rise in profits over the first three quarters of 2010. Meanwhile, BMI released a report in November which predicted that the industry would be worth $4.47b by 2014, an 8.39% compound annual growth rate.
"Domestic demand will form the driver for sales growth … Although the rate will slow to 7.96% in the 2009-2019 period under pressure from higher generics usage, pricing reforms, lower inflation and patent expirations, Egypt will continue to be viewed as a promising pharmaceutical market as well as a foreign direct investment (FDI) destination" said BMI. (OBG 23.12)
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11.7 EGYPT: Auto Industry Moves Up a Gear
The Oxford Business Group says that reforms in Egypt's car industry designed to ensure the quality and standardization of car components, along with measures to encourage exports and a scheme to modernize the country's ageing taxi fleet, bode well for automobile sector's growth in coming years.
In January 2010, the Ministry of Trade and Industry announced that new, higher standards would be applied to 127 imported car components, with the new regulations being implemented in three phases. The first phase, which came into effect in August, covers 10 items related to health and safety and the environment, including brakes, lights and tires.
The start date followed a six-month grace period during which the General Organization for Standardization and Quality (EOS) provided local factories with foreign assistance in meeting the new standards. According to Hani Barakat, chairman of the EOS, 90% of local manufacturers were able to produce all 10 items in accordance with the new regulations by July, one month ahead of schedule. The second phase will cover 50 more items and the third will extend to the remaining 67. Regulations governing all 127 components will be fully applied by 2013, according to EOS.
The primary goal of the new regulations is to protect Egyptian consumers. In the past cars and components could enter the country without restriction, regardless of their quality. As a result, the market featured many sub-standard parts, which posed safety risks. According to official figures, up to 40% of automobile accidents in the country are attributable to technical problems. "The government's priority is to protect consumers," according to Barakat.
Effects of the new regulations are already being felt. In late September, the Egyptian Consumer Protection Agency (CPA) ordered a halt to the production and sale of Chinese-brand Komodo automobiles for failure to adhere to EOS guidelines. The ban will remain in place until Komodo, which is locally produced by the Automotive Egypt Company, makes the changes necessary to meet the improved quality standards.
General Motors Chairman and Managing Director Rajeev Chaba told OBG that, "There were previously low-entry barriers for new car products, which meant HSE standards were low. New regulatory frameworks on local components and imported products were certainly needed, particular given that the customer has become more demanding."
Other companies have also welcomed the changes. Abdel-Kader Talaat, sales and marketing manager at Ford, told local media that the new regulations will not adversely affect the company's operations since, "our imports of cars as well as components have certifications from the factory that they are original and manufactured according to specifications." Indeed, he predicted that most dealers will not have problems. "Only those who import cars and components from unknown sources will be affected," he said.
Barakat insists that the new regulations will not significantly affect car prices, "since the price of the 10 items represents between 4-5% of a car's total price. Assuming that their price increased by 20% it will only increase a car's total price by 1%," he said. That negligible markup should be more than offset by the fact that cars made or assembled in Egypt will now be able to compete with imported ones on quality. Such parity will be crucial going forward because Egypt has agreed to reduce Customs on European-made cars by 10% a year, starting in 2010, until they are eliminated by 2019.
Mercedes CEO Mike Nolte told OBG that, "With new customs tariffs loosening restrictions on European imports coming into effect over the few years we will expect to see a significant increase of European-imported vehicles in the Egyptian marketplace." Barakat, who came to office last March, said the absence of such regulations has led to low-quality cars being offered to local consumers. "The same make of a certain car is different in Europe than what we import here," he told local media.
Standardization and improved quality should also help attract more foreign investment to the sector and further integrate it into the international market. Indeed, Barakat believes the new standards will prepare Egypt will to become a net exporter rather than a net importer of automobiles – which is one of the government's goals for the coming years. Towards that end, it has passed a number of measures aimed at increasing exports.
On August 14, the Ministry of Finance approved the refund of fees on car and bus exports paid since the start of the year. Egypt is also in the process of joining the United Nations Economic Commission for Europe (UNECE), which would allow it to exchange cars and components within the group without inspection. This, in turn, would facilitate the entrance of Egyptian exports to European markets. If all goes according to plan, Egypt will join UNECE by early 2011.
Even before the new regulations and customs refunds had come into effect, the sector was enjoying a rebound from a decline in 2009. Salah El-Hadary, secretary general of the Egyptian Automobile Manufacturers Association, has forecast that auto sales will increase by 27% in 2010 to about 260,000 vehicles, a new record for the country.
Hadary gives much of the credit for the recovery to the government's LE560m ($96m) taxi replacement program, which aims to help 50,000 cab drivers scrap and replace their old cars by the end of this year. Thus far the program only applies to Cairo but once it is expanded to other cities it should spur even more growth. Meanwhile, the government is looking into a similar program to replace old minibuses, which could begin as early as next year. "If the microbus replacement program comes into effect, it will [further] bolster sales, increase domestic output and expand the country's auto market," Hadary said. (OBG 21.12)
11.8 TUNISIA: Tourism Upgrades
While Tunisia remains a popular tourist destination, occupying 29th spot on the World Tourism Organization's (UNWTO) list of the top 40 destinations worldwide, the country is launching development strategies to help the sector adapt to a rapidly changing global market.
The Oxford Business Group observed that Tunisia has successfully attracted tourists for years by taking advantage of its image as an affordable beach getaway. The tourism sector employs more than 400,000, contributes 6.5% of GDP and supplies a significant amount of foreign currency earnings. However, facing fierce competition, the country must defend its competitive advantage in order to ensure the sector's sustainability.
Over a million French citizens visited the country over the first eight months of 2010, followed by 330,312 Germans and 295,701 Italians. The highest increase though was among tourists from Great Britain, Scandinavia and Russia, with 28.9%, 30.5% and 46.3% more respectively compared to last year. The rate of summertime visits from neighboring countries has remained relatively high, despite the holy month of Ramadan falling in August.
However, local media recently noted that while overnight stays in Tunisia increased from 27.28 million in 2009 to 28.07 million in 2010, tourism receipts fell by 18.5% over the first eight months of this year compared to the last, from €1.3b in 2009 to €1.1b in 2010.
Recognizing the need to improve its position and image as a tourist destination, the government recently commissioned a strategic study on prospects for growth in the tourism sector by 2016 from Roland Berger International, a German audit company. The study, released in October, said the Tunisian tourism sector is being challenged by recent trends, which include the changing profile of consumers (who are becoming on average older), advances in technology such as online booking and the emergence of new types of accommodation such as boutique hotels.
Diversity and innovation, advertising, promotion and marketing, legislative framework and a re-financing of the industry all need particular attention, said Roland Berger. The consultancy firm also said Tunisia should improve the range and quality of tourism services, stimulate demand and step-up competitiveness as well as adopt a better advertising strategy. Tunisia last year spent €27m on advertising while Morocco spent €49m and Turkey €82m.
In keeping with recommendations that Tunisia place a premium on quality, the government has started to upgrade infrastructure and improve vocational training centers. New standards have been adopted for grading hotels. In 2010, after 6,439 controls were carried out, 156 hotels were downgraded and 16 obtained an additional star. Hotel training centers have been renovated. In addition, the teaching program at such schools will anticipate changes in the sector; their management, meanwhile, will be left increasingly to tourism professionals.
According to Minister Tlatli, Tunisia plans to become "a destination that can provide an upscale product," catering to "international visitors who wish to enjoy a cultural offer that cannot easily be found at the same level at competing destinations".
The strategic study also focuses on the need for better marketing. To that effect, Mr. Tlatli highlights the need for "regional promotion" and "a better understanding of markets, so as to develop a suitable product for each market." The government has worked on developing cultural, environmental, wellness and sports tourism, as these can cope with the strong seasonality of Tunisian tourism, concentrated between May and October. Efforts have also been undertaken by the government to boost tourism to the Saharan region with the opening of two direct flights from Tozeur, in the south-west of the country, to Milan and Madrid.
Meanwhile, the Tunisian National Tourism Office (Office National du Tourisme Tunisien, ONTT) will undergo a major restructuring. One part of the ONTT will deal with promotion and tourism marketing while the other will specialize in vocational training in tourism.
The tourism ministry has predicted that these and other reforms will help the country welcome 10m tourists per year by 2015, last year there were over 7m arrivals. Though the target is ambitious if Tunisia can accentuate its mix of North African charm and European sophistication, it stands a good chance of meeting it. (OBG 22.12)
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11.9 ALGERIA: Pharmaceuticals and Healthcare Report Q1 2011
Research and Markets (http://www.researchandmarkets.com) "Algeria Pharmaceuticals and Healthcare Report Q1 2011" says that in Q1/11, Algeria moved down one place in BMI's Business Environment Ratings (BERs) to occupy eighth position of the 19 regional markets surveyed in the Middle East and Africa region. This adjustment now sees Algeria placed below Lebanon and above Egypt. Algeria's pharmaceutical rating is 47.7 out of 100, which is above the average of 45.8 for the region. When taken in a global context, Algeria has also fallen one place to now occupy 48th position in BMI's 83 market-strong pharmaceutical universe. The main draws of Algeria's pharmaceutical market are its considerable size (with a population of over 35m) and the substantial potential for healthcare investment, given the fact that the country is a major hydrocarbons exporter. However, the government remains accused of giving preferential treatment to generics products and the domestic industry, while the country's wider intellectual property rights (IPRs) environment is also a cause for concern to multinationals operating there.
The incidence of diabetes (especially type II) is on the rise in Algeria as both affluence and urbanization increase. Official figures estimate that around 8% of Algerians suffer from the condition. In addition, around 40,000 new cases of cancer are registered each year, although the country only has four specialist oncology centers. In response to mounting criticism about the lack of adequate treatment facilities, plans have been announced to increase the number of cancer treatment centers in Algeria from four to 17, as well as to build a National Cancer Care Institute in Oran. Minister of Health Abbas has also pledged to purchase more equipment.
In October 2010, the Algerian government signed a letter of intent with a number of US firms aimed at bringing much needed investment to the country's pharmaceutical and healthcare sector in areas such as technology transfer, R&D and direct investments. Investments are also expected to be made in a number of specialized healthcare services such as oncology centers. Domestic pharmaceutical group Saidal announced that it is to start work on a modernization program worth €1.4m ($1.9m) aimed at increasing production capacity at eight of its manufacturing facilities based in Algiers, Cherchell and Medea. The improvements will increase Saidal's drug production capabilities from 135m to 298m sales units, as well as raise the firms' standards of quality to that of European levels. The improvements are being financed by a National Investment Fund loan, which allocated €180m ($251m) to the Saidal Groups five-year development plan in 2009. Elsewhere, Pfizer-Saidal Manufacturing (PSM), a collaboration between US pharmaceutical major Pfizer's local subsidiary, Pfizer Pharm Algerie and domestic pharmaceutical firm Saidal, announced that it is to begin the production of an unspecified major anti-inflammatory treatment by the end of 2010. The anti-inflammatory medication is currently one of about 20 products imported by PSM, which also manufactures about 18 products at its Algiers plant. (R&M 04.01)
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11.10 TURKEY: Food and Drink Report Q1 2011
Research and Markets (http://www.researchandmarkets.com) "Turkey Food and Drink Report Q1 2011" says Turkey's short-term consumer spending outlook emphatically distinguishes it from the rest of emerging Europe, with trends far detached from a region that for the most part has been systemically negatively affected by the economic turbulence of the past 18 months.
Turkey is expected to be one of Europe's strongest performing economies over the next decade. Able to call on a dynamic long-term economic outlook (by 2019 its per capita GDP is expected to resemble that of Portugal's), a business friendly regulatory environment and a growing population already in excess of 70 million, Turkey is likely to emerge as one of the world's highest potential consumer markets over the next decade.
Headline Industry Data
2010 per capita food consumption: +6.27% (forecast to 2015: +53.14%)
2010 beer volume sales: -2.76% (forecast to 2015: +16.35%)
2010 mass grocery retail sales: +18.30% (forecast to 2015: +88.0%)
Key Company Trends
Discount Retail Outperforming: Discount retail sales continue to perform strongly with the leading players laying down significant expansion plans. In May 2010, the rapidly growing Turkish discount retailer Diasa put forward plans to launch 300 new stores by year-end 2010. One of the much vaunted E7 emerging markets (along with Brazil, China, India, Indonesia, Mexico and Russia), the authors believe a strong case can be made for Turkey's mass grocery retail industry to be considered emerging Europe's most promising.
In April 2010, Turkey's leading discount retailer BIM Birlesik Magazalar announced its aim to grow annual sales by 25% in FY10 (12 months to December 31 2010), with growth largely being driven by aggressive organic store expansion. Sometimes called the Turkish Aldi due to the similarity of its business model to that of the German discounter, BIM reported above consensus FY09 headline year-on-year (y-o-y) earnings growth of 86% to $101.94m, with annual sales increasing by 25%.
Domestic Companies Holding Up Well: In July 2010, underlining the authors very positive view on the Turkish consumer (and their macro preference for domestic demand stories over export oriented economies), Turkey-based Coca-Cola Iecek (CCI) recorded H1/10 sales volume growth of 9.9% y-o-y. Despite coming off a much higher base, Turkey sales increased 10.3% y-o-y to 225.2mn unit cases. Proportionally, it contributed close to 75% of headline sales in H1. Sequentially, group volumes grew 9.91% over the Q1/10 - Q2/10 period.
In April 2010, it was announced that Anadolu Efes came through FY09 resiliently with net income up 36% on the year to $278.2m. Strong earnings and 3.9% y-o-y consolidated sales revenue growth to TRY3.1bn came despite particularly tough trading conditions for Efes' emerging Europe beer arm EBI, subsequently emphasizing the resilience of the Turkish consumer market in 2009 relative to nearly all of emerging Europe. After a particularly challenging first quarter (fiscal year), positive momentum established in Q2 continued to play out sequentially over the H2 period with firmer beer prices in Turkey supporting growth.
Risks To Outlook: The main risks to the authors Turkish consumer outlook are largely external. While the diversified structure of the Turkish economy has to a large extent allowed it to rebound more emphatically than most of emerging Europe in 2010, a further deceleration in Europe (including the prospect of another liquidity crunch), could affect their long-term consumer outlook. (R&M 23.12)
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