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TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Netanyahu Economic Plan Says Tax Cuts Will Attract Capital
1.2 Fischer Believes Israeli Economy Turning Around
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 El Al Receives New Plane in Restructured Deal
2.2 Apple Rush Co. Continues Momentum in Israel
2.3 Ness Technologies Signs Three Year Outsourcing Contract With Academic College of Tel Aviv-Jaffa
2.4 ETV Motors Raises $12 Million Series A Round from Quercus Trust & 21Ventures
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 P.F. Chang's Announces International Expansion in Middle East
3.2 Mideast Arab Carriers Receive 12 Planes in February & March
3.3 US Pizza Company Eyes Major UAE expansion
3.4 AT&T Opens Regional HQ in Dubai
3.5 Oman's Sohar Aluminium Smelter Inaugurated
3.6 McDonald's Happy About Growth In Turkey
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4: ISRAEL MACRO-DEVELOPMENTS
4.1 Israel Ports Privatization Slated For 2011
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Jordan's Trade Deficit Drops 41% in Two Months
5.2 Jordan To Remove Sales Tax On Computer Devices
5.3 Some 210,000 Arab Patients Receive Treatment in Jordan in 2008
5.4 Jordan & US Discuss Nuclear Energy Cooperation
5.5 Duke University Sets Up Dubai Campus
5.6 Saudi Arabia Food and Drink Report Q2 2009
5.7 State of Renewable Energy in Egypt 2008
5.8 Egyptian Communications Markets - 2009
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkish Unemployment Hits Record 15.5% in January
6.2 Cyprus's Communist-Led Government Blows Its Budget Surplus
6.3 Cyprus May Have Highest Growth Rate In Europe
6.4 Tourism Revenues in Cyprus Plunge 12.8%
6.5 Cyprus Hosts 150,000 Rounds of Golf A Year
6.6 Revision Takes Greece's 2008 Deficit To 5%
6.7 Greece Calls for Alternative Energy Routes
6.8 Greek Unemployment Rate Climbs To 9.4%
6.9 Bulgaria's March Unemployment Rate to 6.9% Vs 6.8% In 2007
6.10 Egypt to Become Bulgaria 's Natural Gas Supplier as of 2011 or 2012
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Lag B'Omer Observed
7.2 Memorial Day Remembered Those Who Fell in Defense of the State
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Tolarex to Commence Phase I/IIa Trial of a Treatment for GVHD
8.2 Hadasit and Immuron to Collaborate on Clinical Trials to Be Held at Hadassah
8.3 NanoVibronix Receives Wound Healing Indications in Europe for its PainShield Device
8.4 IOPtima Sees Long-Term Results Using its Novel Laser System for Glaucoma Treatment
8.5 FDA Grants HUD (Humanitarian Use Device) Designation to ITGI's Pericardium Covered Stents
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 TSMC Adopts Jordan Valley JVX 6200 for Copper Layer Metrology
9.2 BroadLight to Power CIG's Next Generation GPON ONT Product Line
9.3 US Government & Armed Forces Units Opt for New Optibase MGW Decoder
9.4 BOS Announces RFID Solution to Prevent Swine Flu
9.5 N-trig Catalyzes Multi-Touch Application Market with New DuoSenseTM Development System For ISVs
9.6 Storage Startup Axxana Announces the Availability of the Phoenix System
9.7 Celeno Enables Cable HD IPTV Wireless Distribution throughout the Home
9.8 MTI Wireless Edge Adds New Small Footprint, Wide Band RFID UHF Antenna to its Range
9.9 Silicom Chosen by Leading Manufacturer of Application Acceleration Appliances
9.10 VocalTec Announces Partnership and a New Joint Customer with AMT Group
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Unemployment Rate Climbs
10.2 Israel's Annual Exports to Fall For First Time in its Modern History
10.3 Israel's First Quarter Tourist Overnights Drop By 26%
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11: In Depth
11.1 ISRAEL: Summary of High-Tech Company Capital Raising - Q1 2009
11.2 JORDAN: Pharmaceuticals and Healthcare Industry
11.3 LEBANON: IMF Executive Board Concludes 2009 Article IV Consultation
11.4 LEBANON: Enlightening Strategies
11.5 KUWAIT: Learning Curve
11.6 BAHRAIN: Sustaining Energy
11.7 BAHRAIN: Food and Drink Report Q2 2009
11.8 QATAR: A Reliant Partner
11.9 UAE: RAK Transport on Track for a Boost
11.10 OMAN: Pharmaceuticals and Healthcare Report Q2 2009
11.11 OMAN: Setting the Stage
11.12 OMAN: Developing Supply
11.13 SAUDI ARABIA: Built to Last
11.14 EGYPT: In Good Shape
11.15 EGYPT: Per Capita Spending on Pharmaceuticals Will Continue to be Relatively Low
11.16 ALGERIA: A Fresh Look at Reform
11.17 MOROCCO: Maintaining Momentum
11.18 GREECE: EIU Feels Greece's GDP Will Contract by 3.6% in 2009 & by 1.1% in 2010
11.19 GREECE: Pharmaceuticals and Healthcare Report Q2 2009
11.20 BULGARIA: Statement by the IMF Staff Mission
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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Netanyahu Economic Plan Says Tax Cuts Will Attract Capital
On 23 April, Prime Minister Benjamin Netanyahu held a press conference to present his economic plan for 2009-10. He began by saying that "We're in a great crisis, but we must, and we can, save the economy, save jobs, and boost the economy. We've done it before. The economy is like a plane in a dive. We'll stop the fall, after which it will soar upward." Netanyahu went on, "The plan comprises brakes and accelerators. The fact that we know that there are growth engines in itself helps to stop the fall. The plan combines blocking and growth measures. In addition, the most important thing is renew growth."
Minister of Finance Yuval Steinitz outlined the plan's steps, while Netanyahu sat at the side. "The plan's objectives are to halt the effect of the crisis and to create good springboards for the future. The plan's five main points are as follows: one - expansion of credit and the encouragement of exports; two - halt the increase in unemployment and to promote jobs; three - structural reforms; four - tax policy; and five - investment in physical infrastructures and human capital," he said
Steinitz said, "A fifth of the country's workers are afraid for their jobs. We're embarking on a struggle against foreign workers. There are 400,000 foreign workers in Israel, 300,000 of whom are illegal. I call on all employers: give precedence to the unemployed." He warned that the battle will also include stiff penalties. Concerning the expansion of the negative income tax, Steinitz said, "This is a bonus to anyone who enters the workforce. In the coming weeks, we'll establish a fund for enterprises in outlying areas. We'll also promote a comprehensive job training program and a retraining program for the unemployed to prepare them for new jobs when growth comes."
Netanyahu said that structural reforms would focus on land, the ports, and the electricity market. He said, "Young couples cannot afford to buy a home here. It's important to change the allocation of land. It's impossible to talk about development of outlying areas without reforming the Israel Land Administration (ILA)."
Netanyahu and Steinitz also announced decisions on the structure of tax cuts between 2009 and 2016, which focuses on the middle class. Netanyahu said, "The middle class bears the heaviest burden, and as a complementary measure, we'll promote the abolishing of exemptions and improve collection. Excellent people are working there, but it's no secret that the institution has been traumatized." Netanyahu's tax plan calls for reducing the company tax rate to 18% by 2016 and reducing the maximum income tax rate for individuals to 39%. Netanyahu added, "The individual tax rate will fall in 2010. We must distinguish ourselves from the world, so that everyone sees that we're the most attractive. We'll attract entrepreneurs and capital because the company tax will fall." (Globes 23.04)
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1.2 Fischer Believes Israeli Economy Turning Around
Bank of Israel President Stanley Fischer presented the bank's 2008 summary report on 19 April at a news conference in Jerusalem. Israel National News said he noted that although the economy is slowly coming out of its downturn, he predicted that layoffs will continue until at least 2010. "We see now the financial markets beginning to recover … but there is always a delay between what happens in the financial markets and in the real market … We expect the downturn to continue, but hopefully for not too long,” Fischer told President Shimon Peres as he presented him with a copy of the report. The bank estimates that 2009 will still be a difficult year in which the economy will experience a 1.5% loss. In 2010 the economy will begin to recover, and experience an estimated growth of 1.0%.
On the other hand, Fischer warned that the employment rate will be last to recover. The bank expects the unemployment rate to rise to 7.7% in 2009 and 8.3% in 2010 before the economic turnaround begins to create more jobs. Fischer called 2008 "one of the most interesting years in modern economic history” and said that despite the depression, Israel had achieved much in the previous five years. Unemployment and poverty were down, and the economy grew at levels equivalent to those in other Western countries.
The report also presents the bank's estimate that despite the financial crisis, inflation will remain at a nominal level of 1.0%. On the other hand, it warned that the public deficit will grow as tax revenues shrink. Whereas the deficit currently stands at NIS 7 billion, it will jump by the end of 2009 to NIS 42 billion. Fischer warned that any tax cuts will have to be carefully thought through. Peres accepted the report on an upbeat note. "I believe that as compared with other countries, we are above average … From a perspective of bank regulation, we are on the right path … If other countries are beginning to see sparks of recovery, we will see flames, and that should encourage all of us,” he said. (IsraelNN19.04)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 El Al Receives New Plane in Restructured Deal
El Al Israel Airlines has taken delivery of the first of three Boeing 737-800 passenger jets purchased from a Spanish airline. El Al obtained a $36m loan from the Export Import Bank of the United States to finance the deal, and will receive $73m for the purchase of two planes. El Al also signed an agreement with the Spanish airline to cancel the direct sale of the first plane. Instead, the Spanish airline sold the plane to Boeing Company, which in turn sold it to El Al. The deal for the other two planes has apparently not been changed. El Al expects to receive delivery of the next two planes in the deal in May and June 2009. The Boeing 737-800 is a next-generation short to medium-haul jet that replaces earlier models. It carries between 162 and 189 passengers, depending on layout. (Globes 19.04)
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2.2 Apple Rush Co. Continues Momentum in Israel
Dolton, Illinois' Apple Rush Inc (APRU) has announced that it received another re-order from Foods & Stuff, its Israel importer. This third, truckload ordered by Foods & Stuff is for the sparkling Organic Apple Rush 100% Juice line. This order will continue to solidify the brand's growth and acceptance in Israel. The company has expanded its late April production in order to fill both the Israel and growing Canadian export orders, as well as build floor stock for the 2009 beverage season. The Organic Apple Rush re-orders to Israel will be shipped in early May. (Apple Rush 20.04)
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2.3 Ness Technologies Signs Three Year Outsourcing Contract With Academic College of Tel Aviv-Jaffa
Ness Technologies announced a three-year, multi-million dollar contract with the Academic College of Tel Aviv-Jaffa. Under terms of the contract, Ness Technologies will maintain the college's current infrastructure and develop future IT systems and applications. The service agreement with Ness Technologies saves significant IT maintenance costs while improving the college's support and service capabilities. During the next three years, Ness will manage a variety of IT projects including the implementation of new systems and consolidate disparate existing systems to improve efficiency and save long-term costs. The Academic College of Tel Aviv-Jaffa comprises four schools for Bachelor and Master's degrees: the School of Behavioral Sciences, the School of Management and Economy, the School of Computer Sciences, and the School of Government and Society. Tel Aviv's Ness Technologies (http://www.ness.com) is a global provider of commercial and defense IT services with specialized expertise in software product engineering; system integration, application development, software distribution, IT strategy consulting and long-term support. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams to minimize customer costs while delivering world-class domain expertise. (Ness23.04)
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2.4 ETV Motors Raises $12 Million Series A Round from Quercus Trust & 21Ventures
ETV Motors (http://www.etvmotors.com), a Herzliya based start-up developing innovative electric vehicle propulsion technology, has announced its Series A investment round. The round was led by Quercus Trust of Newport Beach, California, with New York-based 21Ventures co-investing. The $12 million milestone-driven investment will, according to the company, enable ETV Motors to move rapidly ahead with a multi-year research and development program in which it is partnering with universities and development organizations. ETV Motors also revealed details about its development of enabling technologies for hybrid range-extended electric vehicles (REEVs). The company's activity is focused on a novel, high-efficiency, dual-power micro-turbine and a proprietary high voltage lithium-ion battery. Integration of these optimized components will result in an innovative electric vehicle propulsion platform. 21Ventures' primary geographic focus is Israel, where over half of the funds investment capital has been deployed to date. 21Ventures currently manages more than $250 million worth of investments in 25 companies in Israel and the United States. More than half of 21Ventures' investments are in clean energy companies. (Various26.04)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 P.F. Chang's Announces International Expansion in Middle East
Scottsdale, Arizona's P.F. Chang's China Bistro announced a development and license agreement with M.H. Alshaya, the Middle East's leading retailer, to develop 34 restaurants throughout the Arab Middle East over the next 10 years. The first location is scheduled to open in Kuwait City by the end of 2009. The second location will open in Dubai during the first quarter of 2010. Future locations are also planned for the Kingdom of Saudi Arabia, the United Arab Emirates, the Kingdom of Bahrain, Qatar, Lebanon, Jordan and Oman. Alshaya develops and operates retail outlets for many of the world's leading retailers and restaurants, including Starbucks, H&M, Foot Locker and Dean & Deluca. M.H. Alshaya Co. is the retail business of the Alshaya Group, which was founded in Kuwait in 1890. P.F. Chang's China Bistro owns and operates two restaurant concepts in the Asian niche. P.F. Chang's China Bistro features a blend of high-quality, traditional Chinese cuisine and American hospitality in a sophisticated, contemporary bistro setting. (P.F. Chang's21.04)
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3.2 Mideast Arab Carriers Receive 12 Planes in February & March
Middle East Arabian airlines received a total of 12 aircraft from Boeing and Airbus during February and March, latest figures show. Globally, the two aircraft makers delivered a total of 237 aircraft in the first quarter of 2009, just one less than in the corresponding period last year. Boeing just leads Airbus 121 deliveries to 116. A total of 42 aircraft were delivered by Airbus in February followed by 40 in March. This included just 12 wide-body aircraft and no A380s. Etihad (1), Middle East Airlines (3), Royal Jordanian (2), Air Arabia (1) and Wataniya (1) were among the regional customers. A total of 36 aircraft were delivered by Boeing in February followed by 50 in March with Qatar Airways (3) and Emirates (1) making up the Middle East recipients. Emirates is still on track to take delivery of 17 new aircraft this year and has a forward order of 150 new planes to be delivered over the next few years until 2016. (AB17.04)
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3.3 US Pizza Company Eyes Major UAE expansion
A US-based pizza retailers is planning to more than double its number of stores in the UAE under a new deal signed with local partner Ghassan Wehbe. Round Table Pizza, an American pizza restaurant icon, has inked a long-term development agreement to expand its UAE offering. Wehbe, who currently operates seven Round Table Pizza restaurants in Dubai and Abu Dhabi, has acquired rights to expand to 17 locations within the UAE. Additionally, Wehbe and Round Table Pizza are laying the groundwork for further development in other Gulf countries based on their success. Founded in California's San Francisco Bay Area, Round Table Pizza has prospered as the market share leader in one of the most competitive markets in the US. Of the company's 500 restaurants, 75% are owned and operated by franchisees. (AB17.04)
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3.4 AT&T Opens Regional HQ in Dubai
AT&T has opened its new regional headquarters in Dubai Internet City (DIC). The occasion was marked by a visit from Ronald E Spears, president and CEO of AT&T Business Solutions, who was visiting Dubai as part of a multi-country trip in the region. AT&T recently announced plans to invest approximately $1b in 2009 to continue building its global network, while driving new services and network-based applications to businesses. Over the past three years, AT&T has made significant investments in the Middle East, he added. Through its cooperative arrangements with leading local telecommunications companies, such as QTel, Saudi Telecommunications Company and Etisalat, as well as NavLink (a company in which AT&T maintains a minority shareholding), AT&T is able to connect customers to their other facilities around the world with seamless, consistent services. AT&T's latest network node in the region to become operational is in Saudi Arabia, serving the networking requirements for customers in the largest economy in the Middle East. AT&T opened its first office in Dubai in 2006. (TradeArabia 15.04)
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3.5 Oman's Sohar Aluminium Smelter Inaugurated
The $2.4 billion Sohar Aluminium smelter, a joint venture between Rio Tinto Alcan (20%), Oman Oil Company (40%) and Abu Dhabi Water and Electricity Authority (40%) was inaugurated on 29 April. This new generation AP36 smelter, the first greenfield smelter in the Middle East in over thirty years, was completed on time, on budget and reached full production capacity in February this year. The Sohar Aluminium smelter implements decades of industry insight in its design, layout and construction, resulting in the most efficient and environmentally conscious smelter currently in operation in the region. Sohar Aluminium also debuts the world's longest single potline at 360 cells and the industries highest known capacity ingot castor at 27 tonnes per hour. Moreover, the smelter is the only one in the world to operate exclusively using Rio Tinto Alcan's benchmark AP36 reduction technology. This smelter is already producing metal at a capacity of 360,000 tonnes per annum. Furthermore, Sohar Aluminium is one of the few smelters worldwide that is operating profitably at full capacity in the current economic climate. During the construction of the smelter, Sohar Aluminium achieved a period of 12 million man-hours without LTI - putting it among the safest greenfield aluminum projects in the world. Sohar Aluminium's ongoing commitment to safety has been continued into production with a commitment to EHS (Environment, Health and Safety) at the very core of the company. Domestically the smelter has excelled with an ambitious nationalization strategy, with the workforce currently comprising 68% Omani nationals which is an exceptional achievement for the region. (Sohar Aluminium29.04)
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3.6 McDonald's Happy About Growth In Turkey
McDonald's Turkey maintained a good run of expansion in 2008 and is planning to grow further in 2009, despite the gloom the global economic crisis has added to the domestic economy. Revenue from McDonald's sales in Turkey increased 30% last year to TL 250m, and the company aims to earn TL 290m by the end of this year. McDonald's Turkey just opened its latest restaurant in Gaziantep. McDonald's Turkey General Manager Hakan Serim said the company currently has 120 restaurants in Turkey and plans to increase this number by nearly 15% this year. Serim further underlined that McDonald's Turkey contributes greatly to both employment and local producers. The franchise receives 98% of its supplies from local producers. The income local producers earned from their production for McDonald's Turkey in 2008 was $56m. Also, the company currently employs 3,500 people in their 120 restaurants across Turkey. This number will reach 4,000 this year with the new restaurants. (Hurriyet20.04)
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4: ISRAEL MACRO-DEVELOPMENTS
4.1 Israel Ports Privatization Slated For 2011
Globes has reported that less than a week after Prime Minister Netanyahu announced his intention to pursue reform of Israel's ports, the Ministry of Finance has included the plan in the 2009 economic arrangements bill. The draft of the bill reportedly states that the government plans to offer 49% of the shares in Ashdod Port Company and Haifa Port Company on the Tel Aviv Stock Exchange (TASE) in 2011. Some 60 days after the 2009 economic arrangements bill is passed, the Ministry of Finance will submit to the ministerial committee for privatization a proposal for the sale of the government's holdings in the Ashdod Port Company, Haifa Port Company and Eilat Port Company. The ports privatization included in economic arrangements bill is in line with the 2005 ports reform agreement signed with the Histadrut (General Federation of Labor in Israel) and ports' workers committees. The reform, which began in February 2005, stipulates that 15% of the shares in the ports companies will be offered to the public in 2010 and full privatization - the sale of at least 51% the shares of each port company - will be completed in 2020. The agreement also stipulates that up to 49% of the ports companies' shares will be gradually offered to the public in 2011-20. The government now wants to speed up this timetable, and sell 49% of the ports companies' as soon as possible. The draft economic arrangements bill also states that institutional investors may participate in the offerings as financial investors. As for the Eilat Port, the economic arrangements bill states the government intends to privatize the port on the basis of a proposal that will be submitted to the ministerial committee for privatization. The government has an option to sell at least 15% of the Eilat Port Company beginning in 2010. Last year, the government began preparing for the privatization of the Eilat Port, and the Ministry of Finance has already appointed a team to promote the sale. (Globes 27.04)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Jordan's Trade Deficit Drops 41% in Two Months
Jordan's trade deficit dropped by 40.9% in the first two months of this year as exports jumped and imports fell, according to official statistics. The figures, which were released by the Department of Statistics, showed that deficit had dropped to JD629.4m from JD1.06b in the same period last year. National exports, excluding re-exported goods, rose by 6.9% to JD608.3m compared to JD568.9m in the previous year. The latest figures also showed that re-exported goods declined by 0.7% to JD188.2m, and imports dropped by 21.8% to JD1.42b. Phosphates, potash, fertilizers and vegetables topped the export list, while machinery, vehicles and metals were the biggest imports. National exports to Asian nations and member countries of the Greater Arab Free Trade Zone have risen, while exports to the United States and Europe declined significantly. (Petra18.04)
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5.2 Jordan To Remove Sales Tax On Computer Devices
The Jordanian government is planning to remove sales tax imposed on computers and laptops in 2009 to help accelerate the implementation of the Kingdom's ICT strategy. The Cabinet is currently looking into the issue of cancelling the sales tax which stands at 16% on computers. The exemption decision will be announced soon as part of a series of tax exemption to be announced by the government. According to a study conducted by the Department of Statistics in 2008, about two-fifths of Jordanian families had PCs in 2008, compared with about one-third in 2007. The survey also indicated that more than half of Jordanian households cannot afford to buy computers. At a meeting with representatives of ICT sector, Minister of Information & Communications Technology Roussan said the decision to exempt computers from sales tax seeks to increase the spread of computer in the Jordanian community and increase internet penetration, which currently stands at about 26%, noting that the Kingdom's ICT strategy seeks to increase it to 50% by 2012. Rousan stressed the importance of the ICT sector, whose contribution to the gross domestic product (GDP) stands at 12%, pointing out to UN reports which indicate that the sector's contribution to the GDP is even higher. He also reviewed the sector's achievements and the ministry's efforts to increase the sector's revenues to $3 billion as stipulated by the strategy launched in July 2007. The four-year strategy, which aims at increasing employment in the sector up to 35,000 jobs, is the outcome of joint efforts by the Information Technology Association of Jordan, the Ministry of Information and Communications Technology and the Telecommunications Regulatory Commission, was launched last year to help revive the sector and enhance its competitiveness. (JT30.04)
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5.3 Some 210,000 Arab Patients Receive Treatment in Jordan in 2008
About 210,000 Arab patients received medical treatment in Jordan in 2008 compared to 190,000 in 2007, according to President of the Private Hospitals Association Hammouri. Hammouri added in a press conference that revenues from medical tourism reached JD 1billion last year. He said Iraqis topped the list of patients seeking medical treatment in the Kingdom followed by Palestinians and these Sudanese. Although the number of Iraqis who sought treatment in Jordan dropped from 45,000 in 2007 to 39,000 in 2008, they still rank first with 20%. Palestinians ranked second with 14%, Sudanese 12.6%, Yemenis 11.5%, Saudis 10%, Libyans 7% and Egyptians 6.5%. (Petra25.04)
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5.4 Jordan & US Discuss Nuclear Energy Cooperation
On 18 April, Jordan and the United States discussed bilateral cooperation in regulating nuclear energy uses. Jordan Nuclear Regulatory Commission (JNRC) Director General, Jamal Sharaf, and head of the Council on Foreign Relations in the U.S Nuclear Regulatory Commission, Charles Ferguson, tackled Jordan's quest to obtain nuclear technology for civilian uses, including electricity generation and water desalination. Sharaf said the kingdom had sought to meet energy demand, about 96% of which is imported, for water desalination to face up to growing demand on potable water in view of limited domestic resources. He gave an update on JNRC's push to build national capacity in its task to regulate radiation and nuclear uses as it sought to ensure nuclear safety and protection of the environment, health and property from the dangers of pollution and radiation. Ferguson pledged cooperation with JNRC in infrastructure and rehabilitation of the Jordanian nuclear staff. JNRC signed an agreement with the U.S Department of Energy last December under which the United States would help install radiation equipment and associated infrastructure at border crossings in Jordan to detect, deter and interdict illicit smuggling of nuclear and other radioactive material. In addition, the U.S would train Jordanian officials on the use of such equipment and provide maintenance services for a specified period. (Petra18.04)
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5.5 Duke University Sets Up Dubai Campus
Duke University has signed an agreement with DIFC Centre of Excellence to open its Dubai Campus and deliver business and policy education programs in the emirate. The partnership was announced at an event on 28 April at the DIFC Conference Centre to mark the launch of the University's Dubai Campus in the presence of Sheikh Mansour Bin Mohammed bin Rashid Al Maktoum. Under the agreement, Duke University will establish a campus at the DIFC Centre of Excellence, which provides a platform for global educational institutions to provide executive and professional education programs to students in the region. Duke and the DIFC Centre of Excellence will also establish joint research centers, which will allow Duke's faculty and graduate students to pursue research topics related to the UAE and the Middle East while contributing to scholarship within the UAE. The global programs of Duke University's Fuqua School of Business, including the Duke MBA - Cross Continent, the Duke MBA - Global Executive MBA, the Advanced Management Program and the Global Leadership Program will run at the DIFC Centre of Excellence. Duke also intends to offer a one-year Masters Degree in Management Studies in Government at the Mohammed Bin Rashid Program for Leadership Development (MBRPLD). The program will be tailored to the educational needs of government officials throughout the Middle East, and will draw on the expertise of Duke's Fuqua School of Business and Terry Sanford Institute for Public Policy. The DIFC Centre of Excellence and MBRPLD partnerships will create a significant embedded presence in Dubai for The Fuqua School of Business, which in September 2008 announced plans to expand its operations to Dubai, London, New Delhi, St. Petersburg and Shanghai. Duke first became engaged with the Dubai Executive Office through the MBRPLD, which was designed and delivered by Duke Corporate Education. (TradeArabia 29.04)
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5.6 Saudi Arabia Food and Drink Report Q2 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Saudi Arabia Food and Drink Report Q2 2009" report to their offering. The current global economic crisis is having a significant impact on Saudi Arabia's food and drink sector, as discussed in our recently published Saudi Arabia Food & Drink Report for Q209. The economy is on a downturn, with a rise in unemployment and a decline in living standards, along with falling oil prices. However, the country will remain relatively stable, as its demographics will work in its favor relative to some of its neighbors: a large and growing domestic population means solid demand for goods, welcome news for the food and drink industry. Nevertheless, firms will feel the impact of the current difficulties. For example, the Saudi-based Savola Group recently announced that its annual profits fell drastically due to provisions made on investments, and what it termed a 'collapse' in commodity prices. Net profit for 2008 was $53.9m. A sharp fall in commodity prices led the company to make major provisions against its inventory position and investment portfolio, which was also hard hit by the global economic downturn. While the food division did manage to post an annual profit of $270,000, the drop in raw material prices resulted in fourth quarter losses of $67.2m. (R&M15.04)
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5.7 State of Renewable Energy in Egypt 2008
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Renewable Energy in Egypt 2008" report to their offering. As Egypt's supply of fossil fuels is being depleted slowly, renewable energy whether from the sun, wind, water and biomass are attracting much attention now rather than ever before. In 1982 the Egyptian government set a target of achieving a 5% share of TPES (Total Primary Energy Supply, i.e. Energy Mix) for Renewable Energy (RE) by 2005, excluding large hydropower plants and existing biomass use in industry & agriculture. In 2000, this target was downgraded to 3% by 2010. Although, RE in Egypt is still well below 0.5% of TPES, in April 2007, the Supreme Council of Energy in Egypt adopted a resolution on an ambitious plan to cover 20% of the generated electricity by renewable energy by 2020, including a 12% contribution from wind energy, translating about 7200 MW grid-connected wind farms. In view of that, private investments are expected to play the major role in realizing this goal. All that is extensively analyzed within Renewable Energy in Egypt Report, as it discusses different renewable energy sources available to Egypt, its applications, current implementations and potential opportunities for each of solar, wind, biomass and hydropower energy. In addition, it refers to the National Strategy for Renewable energy in Egypt until 2020. (R&M24.04)
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5.8 Egyptian Communications Markets - 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Communications Markets in Egypt - 2009 Edition" report to their offering. Mobile penetration in Egypt will reach 97% by year-end 2014 from 54% in 2008, driven by significant changes in its competitive landscape. Communications Markets in Egypt offers a precise, incisive profile of the country's converged telecommunications, media, and technology sectors based on proprietary data from our research in the Egyptian market. Although the total size of Egypt's telecom market is estimated to have reached $5.7 billion in revenue as of year-end 2008, it is still comparatively small despite the country's large population. However, it is among the fastest growing markets in the Middle East and Africa, with total revenue expected to grow at a CAGR of 7.4% for the 2009 to 2014 period. Mobile penetration in Egypt rose significantly from 40% in 2007 to 54% in 2008, with 65% expected in 2009. This has been largely driven by the entry of a third mobile operator, Etisalat Egypt, which has ignited the market with lower prices and innovative services; it was also the first to launch 3G and is investing into upgrading to HSPA. Other operators compete to attract the untapped, lower-income segments, developing very successful low-ARPS business models. This has led to a boom in the number of mobile subscriptions, which grew by 37% in 2008. We expect the current rapid growth to persist through the forecast period, with mobile penetration reaching 97% by year-end 2014." Egypt became the second Arab country to introduce a third mobile operator. Etisalat Egypt, which is a subsidiary of the UAE's government-owned operator Etisalat, gained a respectable 8.6% of the market in 2008, and we expect it to attract a 15.2% market share by 2014. (R&M24.04)
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkish Unemployment Hits Record 15.5% in January
Turkey's unemployment rate jumped to a record high of 15.5% in the three months through February when compared with the same period last year, official data showed on 15 April, as the country increasingly feels the severe impact of the global economic crisis. Turkey, where the jobless rate was 13.6% in December, now has about 3.65 million unemployed, the latest figures revealed. The jobless rate was 11.6% in January 2008. The labor force participation rate from December 2008 to February was calculated as 45.8%, the Turkish Statistic Institute, or TURKSTAT, said. The unemployment rate is 17.2% in urban and 11.8% in rural regions, it added. On 13 April the Turkish government announced revised figures for 2009, with an expectation for a 3.6% economic contraction; a sharp turnaround from its earlier prediction of 4% growth. (Hurriyet15.04)
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6.2 Cyprus's Communist-Led Government Blows Its Budget Surplus
The nominally communist AKEL government of Cyprus managed to spend all of the huge surplus it inherited in less 12 months, according to the latest figures for the general government accounts. The outgoing government, which started out with a ballooning deficit, left office five years and three finance ministers later with a fat surplus of 3.5% of GDP (€537.4m) in February 2008. However, the new government had turned this into a deficit of €326.3m by the fourth quarter of the same year. Although the government still managed to scrape a surplus for the full year, it was much smaller, at €157.2m (0.9% of GDP) than in 2007. The government's excuse is that in keeping with its socialist principles it has been raising expenditure on those with low incomes. However, there is evidence that it also took its eye off the ball. National accounts figures show that it racked up public expenditure to double digit growth rates in the third and fourth quarters of 2008. At the same time it has been very slow to realize that the economy would grow much more slowly in 2009 than in 2008. (FM20.04)
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6.3 Cyprus May Have Highest Growth Rate In Europe
Cypriot Minister of Finance Stavrakis said on 24 April that Cyprus is expected to have the highest and only positive growth rate in Europe in the year 2009. Commenting the latest projections of the International Monetary Fund (IMF) that Cyprus' growth rate is expected to be 0.3% in the year 2009, Stavrakis said that according to calculations of the Ministry during the first quarter of 2009 Cyprus' growth rate will be ''quite satisfactory and close to 2%.'' He furthermore said that ''2010 will be a difficult year'' and assured that the government would be making sure to deal with current financial conditions in order to minimize the cost on the taxpayers and the economy in the years to come. Speaking after a meeting at the Ministry to brief the private sector on the initialing of an agreement between Cyprus and Russia for the avoidance of double taxation and to discuss the action plan for 2009 for attracting foreign investments, Stavrakis said it was positive that, according to IMF figures, ''Cyprus is expected to have the best performance in the whole of Europe.'' Stavrakis said ''2010 will be a difficult year and thus we need to maintain several fiscal ammunition in order to support the real economy,'' adding that ''any expenditure that is not a dire necessity at this moment to support the economy is expenditure that the taxpayer and the citizens will bear in the coming years.'' (FM24.04)
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6.4 Tourism Revenues in Cyprus Plunge 12.8%
Revenues in Cyprus's vital tourism sector plunged 12.8% in the first quarter from a year earlier, signaling a tough year ahead amid the global recession, official figures showed on 24 April. Income from tourism, which forms 12% of GDP in the government-controlled southern two-thirds of the island, plunged to an estimated €124.8m in the three months to March from €143.2m a year ago. In March alone the drop accelerated to 14.8% as revenue from holidaymakers sank to €57.4m from €67.3m in the same month of 2008. Tourism income for last year as a whole fell 3.5% to €1.79b from €1.85b in 2007. Average daily spending by tourists in March was €65.80 and the average stay was 9.6 days. (Ekathimerini 25.04)
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6.5 Cyprus Hosts 150,000 Rounds of Golf A Year
Cyprus hosts between 90,000 to 150,000 rounds of golf a year in its three main golf courses, according to Trade & Tourism Minister Paschalides, who added that about 60,000 of those games played are tourists. The minister said that the golf courses attract high-income tourists who stay in 4- and 5-star hotels and spend much more than the average holidaymaker on the island. Paschalides said that golf tourism is also a boost to winter tourism and hotel occupancy rates, specially during the low season of October to April, as golfers, due to the harsh conditions in their home countries, prefer the weather in Cyprus for their game. Most of them come from the U.K., with smaller numbers from German-speaking countries (Germany, Austria and Switzerland), the Scandinavian countries and some from France and Holland. However, he admitted that the data compiled by the Statistics Department of the Ministry of Finance has not defined the category of "golf” among the purpose of visit to the island. The three main golf courses of Minthis Hills (formerly Tsada), Secreta Valley and Aphrodite Hills, were established in 1994, 1996 and 2002, respectively. There are three other non-commercial golf courses operated by local clubs, all of which are members of the Cyprus Golf Federation. The three are in the UNPA area within the UN-controlled Nicosia airport boundary. (FM16.04)
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6.6 Revision Takes Greece's 2008 Deficit To 5%
Greece's budget deficit for 2009 will close at just below 5% of gross domestic product, estimates the European Commission, posting just a small decline from the 2008 deficit, the latest revision of which shows it at 5% of GDP. According to sources, after negotiations with and strong pressure by Eurostat, the National Statistics Service was forced to revise its data on last year's deficit. Although on March 31 it had stated that the deficit amounted to 4.8% of GDP, yesterday it submitted new data that raised the figure to 5%, against an original target of 1.6%, or €3.8b. In November, the figure was revised to 2.5% (or €5.9b), while the revised Stability and Growth Pact submitted to the European Commission in January 2009 estimated the deficit to close at 3.7% of GDP (€8.7b). Still, even after the latest revision, it is highly likely that Eurostat will again express its doubts about the accuracy of the data, especially regarding the surplus of social security funds and local authorities, as well as the national accounting adjustments that have been used to reduce the deficit. With the 2008 Greek deficit soaring, the European Commission will have to revise its estimates for this year as well, to be announced on May 4. Sources suggest that Brussels will calculate the deficit this year to drop to just below 5% of GDP. That estimate will be based not just on the fact that the Commission considers that the measures taken by Athens are not enough to sufficiently reduce the deficit, but also on a more pessimistic macroeconomic scenario that Greek GDP will contract this year by about 0.5%. Apart from the Commission, the Organization for Economic Cooperation and Development also expects GDP to contract in Greece, by as much as 1%, according to a related report. (Reporter20.04)
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6.7 Greece Calls for Alternative Energy Routes
Greek Prime Minister Karamanlis, speaking on the first day of the energy conference in Sofia, stressed the importance of alternative energy supplies and of a common European energy strategy. Leaders from the EU, the Balkans and gas supplier countries sought to secure Europe's gas deliveries by diversifying sources and supply routes, although the summit was marked by political wrangling. Karamanlis placed special emphasis on the operation of alternative energy networks in the European Union and on a joint policy that will also rely on environmentally friendly sources. He noted the importance of natural gas interconnections between EU member states so as to create a solidarity system for the effective management of crises. In this context Karamanlis also referred to the new gas pipeline that will link Komotini in northern Greece with Haskovo in Bulgaria. The issue of energy security has topped the European political agenda since January when supplies of Russian natural gas to Europe were totally cut off by a payment dispute between Russia and Ukraine. But while the forum sought to inject fresh momentum into plans to build the Nabucco and South Stream gas pipelines, a last-minute decision by Russian Premier Vladimir Putin to skip the summit effectively stalled fruitful discussion on the Moscow-backed South Stream project to channel Russian gas to Europe via the Black Sea. (ANA25.04)
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6.8 Greek Unemployment Rate Climbs To 9.4%
As Greece's unemployment rate continues to climb higher, on 14 April Athens announced a €2.5b package to subsidize jobs in an effort to stem rising jobless numbers. The conservative government said it will subsidize existing jobs and public sector hirings in a bid to support young people and those working in tourism, construction and small businesses. A total of 500,000 people will benefit from the measures, said Employment & Social Security Minister Palli-Petralia. About 70% of the package will be financed by European Union funds while the rest will come from national resources. Economists expect the measures to have only a limited impact on the labor market, as jobless numbers are expected to keep rising this year due to the downturn. Meanwhile, new data showed that Greece's unemployment rate rose to 9.4% in January from 8.9% in December as the economy slows under the weight of the global crisis. The average unemployment rate in the 16-member eurozone was 8.3% in January, according to Eurostat. The Economy and Finance Ministry has said it expects the jobless rate to average 8% in 2009, versus a 9% estimate by the European Commission. The European Commission sees the Greek economy growing by just 0.2% this year, compared to the government's more optimistic 1.1% forecast. Greece's central bank recently revised downward its 0.5% growth forecast to zero. (Various15.04)
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6.9 Bulgaria's March Unemployment Rate to 6.9% Vs 6.8% In 2007
Bulgaria's unemployment rate stood at 6.9% in March versus 6.8% in the respective period last year, said the country's employment agency. In February, the country's unemployment rate stood at 6.7%. A total of 254,899 unemployed were registered in the period, said the employment agency. Bulgaria's 2009 average unemployment rate is seen higher than the current 5.4% due to the global economic turmoil, has said Labor Minister Maslarova, adding that the average unemployment rate is also unlikely to surpass 7%. (Reporter20.04)
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6.10 Egypt to Become Bulgaria 's Natural Gas Supplier as of 2011 or 2012
Sofia announced that Egypt will become Bulgaria's natural gas supplier as of 2011 or 2012 exporting 1 billion cubic meters (BCM) of gas per year. Bulgaria will import Egyptian gas either through the Arab Gas Pipeline to Turkey or through the liquefied natural gas (LNG) terminals in Southeastern Europe. The two countries signed a bilateral draft memorandum during the ‘Natural Gas for Europe' Summit in Sofia on 25 April. Moreover, the two sides will seek opportunities for transporting Egyptian natural gas to the European Union (EU), using Bulgaria's gas transit network. Bulgaria aims to diversify its natural gas supplies in a bid to ease its Russian dependence. (Reporter21.04)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Lag B'Omer Observed
Lag B'Omer, the 33rd day of the counting in the Omer, falls this year on 12 May 2009. It is a festive day on the Jewish calendar, celebrated with outings (on which the children traditionally play with bow and arrows), bonfires, and other joyous events. Many visit the resting place (in Meron in Northern Israel) of the great sage and mystic Rabbi Shimon bar Yochai, whose yahrtzeit (anniversary of his passing) is marked on this day. Rabbi Shimon bar Yochai, who lived in the 2nd century of the Common Era, was the first to publicly teach the mystical dimension of the Torah known as the Kabbalah and is the author of the basic work of Kabbalah, the Zohar. On the day of his passing, Rabbi Shimon instructed his disciples to mark the date as "the day of my joy." Lag B'Omer also commemorates another joyous event. The Talmud relates that in the weeks between Passover and Shavuot a plague raged amongst the disciples of the great sage Rabbi Akiva "because they did not act respectfully towards each other"; these weeks are therefore observed as a period of mourning, with various joyous activities proscribed by law and custom. On Lag B'Omer the dying ceased. Thus Lag B'Omer also carries the theme of the imperative to love and respect one's fellow.
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7.2 Memorial Day Remembered Those Who Fell in Defense of the State
On 27/28 April, Israel observed Memorial for those who fell in the defense of the state. According to the Defense Ministry, 133 soldiers and civilians died during the past year either in the course of military service or as civilian casualties of hostile or terrorist activity. These deaths include the 10 soldiers who were killed during Operation Cast Lead in the Gaza Strip, two members of a helicopter crew who crashed in the Jezreel Valley and a Bedouin tracker who was killed two months ago by a Palestinian explosive charge along the Gaza border fence. Most of the 133 whose names are being added to the memorial rolls this year died in traffic or work accidents, while some of the others were disabled veterans whose disabilities contributed to their deaths.
The total number of those who have been remembered by this Memorial Day is 22,570. The dead who are counted date from 1860, when Jews first settled outside the walls of the Old City of Jerusalem. Aside from members of the Israel Defense Forces, the memorial rolls include members of the Shin Bet security service, the Mossad intelligence service, the Israel Police and the Israel Prisons Service, the pre-state Jewish underground and the Jewish Brigade, which served alongside British forces in World War II. According to the National Insurance Institute, 17 civilians were killed in the past year in terrorist attacks, bringing to 1,723 the number of civilians killed in hostile acts since the founding of the state. Three civilians lost their lives in rocket attacks in the course of Operation Cast Lead. Three people were killed when a terrorist went on a rampage in a bulldozer in Jerusalem in July of last year, and Shimon Shiran this month succumbed to injuries he suffered in the suicide bombing at the Matza restaurant in Haifa seven years ago. (Various27.04)
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Tolarex to Commence Phase I/IIa Trial of a Treatment for GVHD
Tolarex has received approval by the Ministry of Health of Israel to begin a phase I/IIa clinical trial of its treatment for graft-versus-host disease (GVHD). The first in man trial, anticipated to begin shortly, will evaluate the safety and preliminary possible efficacy of Tolarex's therapy. Twelve patients will be enrolled at two medical centers in Israel, Hadassah University Hospital in Ein Kerem included. The therapies that exist today to treat GVHD are based on immunological suppression or the weakening of a patient's immune system, have low efficiency, can cause severe side effects and expose the patient to various risks of infection. Tolarex's technology, conversely, is based rather on inducing immune tolerance, whereby the implanted immune system is not weakened but instead encouraged to refrain from attacking the patient's body, which in turn can more readily accept the new immune system. Tolarex has begun initial discussions with potential strategic partners in this area. Assuming positive results of the trial, Tolarex has plans to explore other potential applications of its treatment within the billion dollar autoimmune and inflammatory disease market, including solid organ transplant and stent implantations.
Ein Kerem, Jerusalem's Tolarex is developing an innovative medicinal treatment for autoimmune diseases, conditions in which a patient's own immune system attacks his/her own organs. Tolarex is currently developing a medicinal treatment based on inducing immune tolerance by injecting the patient with self-cells at the early stages of programmed death. In parallel, the Company is developing additional medications based on proteins, and the concept of inducing immunological tolerability instead of immunological suppression. Hadasit Bio Holdings (http://www.hadasit.co.il) is the publicly traded holding company of Hadasit, the technology transfer company of Hadassah Medical Organization. HBL was founded in 2005 for the purpose of advancing the knowledge and experience accumulated in the Hadassah University Hospital Research Laboratories. HBL has a portfolio of nine biotechnology companies, all of which have proven success at the feasibility stage; all have demonstrated efficacy of a medication/s in animal models and are before clinical trials. (Hadasit20.04)
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8.2 Hadasit and Immuron to Collaborate on Clinical Trials to Be Held at Hadassah
Hadasit and Melbourne, Australia's Immuron, a biopharmaceutical company, announced an agreement whereby Immuron will assign from Hadasit a novel oral immune modulation technology that was developed by Hadassah physicians and scientists. This marks Hadasit's latest successful licensing of early stage intellectual property to a partner. The combination of Hadasit's oral immune modulation with Immuron's existing oral protein and antibody technology could yield a convenient, all-natural, side-effect-free approach to address serious diseases which have multi-billion dollars markets, including metabolic syndrome, hepatitis C and type II diabetes. Hadassah Medical Center scientists have demonstrated that their oral immune modulation approach, used in combination with Immuron's own dairy derived antibodies and other proteins, can directly affect the activity level of regulatory T cells, a type of immune cell known to have profound effects in controlling the inflammation caused by many diseases. This novel approach has shown positive effects in several validated animal models of human disease, including type II diabetes and metabolic syndrome.
Under the terms of the agreement, Hadasit will also provide clinical and laboratory services to Immuron, providing Immuron with efficiencies in its cost structure for human clinical trials. In return, Hadasit shall be issued 19.99% of Immuron's equity at the time of the approval of the transaction by Immuron's shareholders, as well as royalties on Immuron products. Jerusalem's Hadasit (http://www.hadasit.co.il), the technology transfer company of Hadassah Medical Organization (HMO), promotes and commercializes HMO's continuously generated intellectual property (IP) and R&D capabilities. (Hadasit21.04)
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8.3 NanoVibronix Receives Wound Healing Indications in Europe for its PainShield Device
NanoVibronix announced that its novel device has received CE approval in Europe for additional claims of wound healing. PainShield is the first hands-free, patch-based device that uses surface ultrasound waves for therapeutic treatment of wounds. The beneficial properties of low frequency, low intensity ultrasound in a compact, convenient patch allows for a whole new dimension in wound therapy. The ability to place the PainShield patch on healthy skin adjacent to the wound allows the ongoing wound care to continue uninterrupted, while therapeutic ultrasound is provided simultaneously to the wound site. In addition to the wound healing benefits of the PainShield, we have seen a dramatic diminishing of wound pain when pain was present. Nesher's NanoVibronix (http://nanovibronix.com) develops medical devices that implement its proprietary therapeutic ultrasound technology. The innovative portable PainShield device for treatment of pain gained FDA clearance in October 2008. The Company is planning to launch the product in the USA during H2/09. The company has also developed a unique line of catheter-based disposable ultrasound devices designed to treat catheter associated injury including pain, discomfort and biofilm formation. The first two products in this family are the UroShield for indwelling urinary catheters and the NG-Shield for indwelling Nasogastric tubes. (NanoVibronix21.04)
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8.4 IOPtima Sees Long-Term Results Using its Novel Laser System for Glaucoma Treatment
IOPtima successfully completed and analyzed the results of its first 12-month follow-up period of human clinical trials conducted in Mexico and India. IOPtima's novel, laser-based technology enables eye surgeons to perform a simple and safe surgery and reduce IOP without penetrating the eye membrane. Elevated internal eye pressure, (IOP), is a key cause / risk factor of glaucoma, which in many cases causes the deterioration in the visual field and ultimately can lead to blindness. The procedure, utilizing IOPtima technology, after 12 months follow-up, demonstrated to be both safe and efficacious as a means to reduce IOP. The combined results of the study in Mexico and India demonstrated an average reduction of 43% in IOP from 25.5 mmHg' pre procedure to 14.6 mmHg' after 12 months follow-up. In addition, the Company's procedure reduced the number of medications taken by the treated patients from 2.6 medications to 0.6, on average. These results reflect a Qualified success, (i.e. IOP of less than 18 mmHg', regardless of medication) of 95% of those treated in the study, and Complete success, (i.e. IOP of less then 18 mmHg' with no additional medications), of 67%.
IOPtima's technology utilizing a CO2 laser-based system to ablate the scleral membrane to a thinness which will enable the percolation of the intra ocular fluid, without penetrating the inner eye. The use of the CO2 laser is self-terminating once the desired scleral thickness has been achieved. This elegant self-regulation is possible because the CO2 laser essentially stops ablating as soon as it comes in contact with the intra-ocular percolated liquid, which is what occurs as soon as the laser reaches the optimal residual intact layer thickness.
Ramat Gan's IOPtima (http://www.bio-light.co.il/portfolio/?page=4) focuses on the development and commercialization of innovative and proprietary technologies for the treatment of glaucoma - a common eye disease that leads to loss of sight. The company has developed an innovative non-penetrating, easy-to-use system, based on CO2 laser technology, for the treatment of glaucoma. IOPtima believes that its innovative new system will offer significant advantages over traditional therapies for glaucoma, such as simplicity, higher efficacy, lower risks to the patient, fewer side effects and lower costs. The availability of a safe surgical procedure is expected to increase the number of surgical interventions. IOPtima is a subsidiary of Bio-Light Life Science Investments, a management and holding company specializing in biomedical technologies. (IOPtima27.04)
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8.5 FDA Grants HUD (Humanitarian Use Device) Designation to ITGI's Pericardium Covered Stents
ITGI Medical announced that the US Food and Drug Administration (FDA) has granted HUD (Humanitarian Use Device) designation to Over & Under and Aneugraft Pericardium Covered Stents for treatment of perforations and dissections of native coronary arteries and Saphenous Vein Grafts. This is the first step towards obtaining marketing approval. Over and Under and AneuGraft are stents 100% covered with a heterologous tissue, designed to set a barrier between the coronary blood vessel wall and its lumen. Stents are commercially available in Europe, Israel and Latin America for treatment of Saphenous Vein Graft stenosis, aneurysms and for emergency situations such as perforations. Pericardium Covered Stents are unique stents covered with heterologous tissue designed to set a barrier between the blood vessel wall and its lumen. Pericardium Covered Stents are indicated for treatment of bypass stenosis, aneurysms and for emergency situations such as perforations. Or Akiva's ITGI Medical (http://www.itgimedical.com) is engaged in research and development, manufacturing and marketing of heterologous tissue covered stents. ITGI's stents are already commercially available in Europe, Israel and Latin America. (ITGI Medical 27.04)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 TSMC Adopts Jordan Valley JVX 6200 for Copper Layer Metrology
Jordan Valley Semiconductors announced that Taiwan's TSMC, the world's largest dedicated semiconductor foundry, has selected JVX 6200 X-ray metrology tool for measuring the thickness of thin film copper layers in TSMC. TSMC's decision is recognition of XRR as the technology-of-choice for copper layer thickness metrology in Jordan Valley's products. X-ray reflectometry is a no-contact, non-distractive, surface-sensitive technique that delivers precise and accurate characterization and metrology of thin films and multi-layer stacks. The technique delivers thickness, density and roughness data by analyzing the reflection vs. angle, and interference patterns of X-rays that reflect off the interfaces. XRR is capable of analyzing single and multiple thin films layers from 1 to 500 nm thick. Jordan Valley's advanced XRR technology allows measurements on production wafers and offers superior throughput of over 30 WPH (17 points on 300mm wafer).
Migdal Ha'Emek's Jordan Valley Semiconductors (http://www.jvsemi.com) is the leader of X-ray metrology for advanced semiconductors fabs. They provide semiconductor metrology solutions for thin films front end of line (FEOL) and back end of line (BEOL) based on novel, rapid and non-destructive x-ray technology. They offer a comprehensive family of solutions based on advanced X-Ray Reflectivity (XRR), X-Ray Fluorescence (XRF), X-Ray Fluorescence (XRF), Small-angle X-ray scattering (SAXS) and High Resolution X-Ray Diffractometry (HR XRD). These tools are fully automated, production ready, and ideal for both blanket and patterned wafers. (JVSemi15.04)
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9.2 BroadLight to Power CIG's Next Generation GPON ONT Product Line
BroadLight announced that China's Cambridge Industries Group (CIG) has selected BroadLight's second generation of GPON System on Chips, the BL2345 and BL2348, for its wide portfolio of GPON Customer Premises Equipment (CPE). Representing a major win for BroadLight, CIG's shipment to its many clients will include BroadLight's integrated GPON SFU/Gateway ONT SoC. Ramat Gan's BroadLight (http://www.broadlight.com) is a fabless semiconductor company supplying semiconductor devices and solutions to equipment vendors for FTTH applications around the globe. Its technology spans from optical access to home networking which enables the delivery of highly integrated, low-cost, end-to-end (E2E) solutions from the central office to the customer premise. As a result, BroadLight is the leader in GPON semiconductor devices and software and is currently powering some of the world's largest PON deployments. (BroadLight20.04)
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9.3 US Government & Armed Forces Units Opt for New Optibase MGW Decoder
Optibase announced that US armed forces units and other branches of the US government have purchased its newly released MGW Decoder platform to decode H.264 and MPEG-1/2 video streams received from the GBS network. With the GBS network and TV content providers increasingly moving to highly efficient H.264 compression in order to reduce bandwidth costs and serve more content in existing bandwidth, organizations with legacy video networks need a fast, cost effective solution for decoding the new format to baseband video. MGW Decoder is a dense solution that decodes up to 12 streams of H.264 and MPEG-1/2 streams in a compact 2 RU rack-mountable platform and does not require any changes to the network infrastructure. The hardware-based decoding appliance offers remote management as well as an auto-start mode for fast service start during tactical deployments. MGW Decoder supports a range of video resolutions from QCIF to FD-1, frame rate of 1 to 30 frames per second and ancillary data. It is designed to decode H.264 streams for monitor walls, re-encode DVB over IP content to different formats and bit rates, and feed local legacy RF cable systems.
Herzliya's Optibase (http://www.optibase.com) provides video over IP solutions, specializing in video encoding, decoding and streaming for federal and state government agencies, Telco operators, enterprise organizations and the world's leading broadcast service providers. With a collection of open, standards-based products, Optibase enables its customers to take full advantage of video distribution over their IP network, ensuring superb video quality in a scale of bit-rates for simple and effective video streaming to desktops, STBs and VOD applications. (Optibase20.04)
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9.4 BOS Announces RFID Solution to Prevent Swine Flu
B.O.S. Better Online Solutions announced the availability of BOSwine 1.0, an advanced RFID platform for monitoring the lifecycle of pigs, enabling preventative treatment for disease management. Empowered by RFID tags, BOSwine 1.0 provides a computerized solution to track, monitor and control pigs' lifecycle, including breeding, insemination, pregnant, vaccine, transportation, weight and whelping. BOSwine 1.0 was developed in cooperation with the largest swine farm in Israel, enabling the farmer to track and monitor the mother during her pregnancy and ensuring that she receives the required vaccines. The solution offers real-time visibility and full traceability of the mother and the piglet, enabling automated track and control of health genealogy. BOS provides turnkey RFID solutions for the livestock industry, through which it supplies best-of-breed RFID tags for each animal, along with mobile and handheld readers, static wide-range readers, a BOS RFID process server, and software applications that manage the information and can be integrated with any ERP system. BOS also offers each of these elements – the RFID hardware components, the RFID BOServer, and the software – as stand-alone products.
Rishon LeZion's B.O.S. Better Online Solutions (http://www.boscorporate.com) is a leading provider of RFID and Supply Chain solutions to global enterprises. BOS' proprietary BOSaNova middleware and RFID and supply chain offerings are helping over 2,000 customers worldwide improve the efficiency of enterprise logistics and organizational monitoring and control. With BOSolutions, companies are enhancing the automation of various aspects of their supply chain, improving asset tracking and managing real-time business data, all crucial to improving margins in today's competitive marketplace. (BOS27.04)
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9.5 N-trig Catalyzes Multi-Touch Application Market with New DuoSenseTM Development System For ISVs
N-trig are further advancing the multi-touch adoption process with the new DuoSense Development System. This device enables software developers to create touch-enabled applications on their own computer. The DuoSense Development System is an extension touch-enabled display that provides a powerful and simple development environment for programmers, shortening the development life-cycle and reducing costs. The system connects to any PC via a USB and enables ISVs to develop multi-touch applications while simultaneously viewing the results of their work on their computer screen. As more OEMs are looking to incorporate multi-touch into their R&D roadmaps and the availability of Windows 7 becomes a reality, the evolution must start with the software developers. N-trig has designed this unique system to bridge the gaps that currently exist between ISVs and multi-touch enabled programs. Going forward, no longer does multi-touch development require a pen and multi-touch enabled computer. The DuoSense development system boasts a 12.1 inch screen and can be connected to any computer. Kfar Saba's N-trig (http://www.n-trig.com) is revolutionizing the way people interact with computers by providing the industry's first dual-mode pen and touch input device. N-trig's DuoSense technology is the only combined pen, touch, and multi-touch interface for today's advanced computing world. N-trig's DuoSense dual-mode digitizer uses both pen and zero-pressure capacitive touch to provide a true Hands-on computing experience for mobile computers and other digital input products over a single device. (N-trig29.04)
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9.6 Storage Startup Axxana Announces the Availability of the Phoenix System
Axxana announced the Phoenix System, an Enterprise Data Recording (EDR) system enabling 100% disaster recovery with no data loss, over any geographical distance, all with significant cost savings over traditional solutions. The Phoenix System is currently being tested at several leading organizations including Bynet Data Communications, Israel's leading systems integrator, and is planned for deployment and pilot at Banco Caixa Geral- Spain. Caixa Geral is the largest financial institution in Portugal. The Phoenix System is also scheduled for deployment at additional major enterprises including one of the world's financial services leaders. Axxana is working together with EMC to explore the value of the Axxana Phoenix system in EMC environments. Innovation around enterprise data protection has historically focused on removing data from the source location as quickly and as completely as possible for remote safekeeping. With the Phoenix System, Axxana offers a new approach to data removal by protecting the data "through the disaster,” ensuring the full survivability of all source data within the enterprise site itself. Tel Aviv's Axxana (http://www.axxana.com) was co-founded based on unique innovation by veterans of the storage industry in order to address the number one challenge in data protection; recovering data at any distance with zero data loss. Axxana provides a compelling solution that is set to change the face of Disaster Recovery. Axxana has introduced a new domain in the Data Protection arena, namely Enterprise Data Recording (EDR). Serving enterprises around the world and developed in close conjunction with some of the most prestigious names in the data storage industry, Axxana has risen to the challenge by developing its first EDR System. (Axxana29.04)
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9.7 Celeno Enables Cable HD IPTV Wireless Distribution throughout the Home
Celeno Communications is working with Texas Instruments to enable next-generation cable modem gateways with wireless HD technology for Cable HD IPTV applications. Celeno's high-performance CL1300 Wi-Fi chip is now interoperable with Texas Instruments' (TI) Puma 5 family of DOCSIS 3.0 products. The joint technology enables MSOs (Multiple Service Operators) to address next generation Cable IPTV whole-home distribution requirements and multi-room DVR use cases with robust, wireless HD home networking. Cable MSOs can benefit from the advantages of HD Wi-Fi such as: flexibility to address STB's in coax-less rooms, video distribution to devices beyond STB's (e.g., portable devices and personal computers), and reduction of installation expenditures. A DOCSIS 3.0 transport gateway manages the conversion of legacy MPEG2 streams to IP, in addition to handling next-generation IPTV streams. When deployed with a hard drive, it can support multi-room DVR service and share stored content throughout the home network. This delivery architecture leverages Celeno's wireless HD technology to reliably and efficiently stream video content throughout the home to multiple tuner-less thin IP STB's, laptops and portable media devices for place-, time- and device-shifting use cases.
Ra'anana's Celeno (http://www.celeno.com) is a leading provider of high performance Wi-Fi chips for HD multimedia and entertainment home networking applications. Powered by Celeno's system-on-chip (SoC) and its OptimizAIR technology, home gateways, multi-room DVRs and media servers can distribute multiple and simultaneous HD video streams to standard set-top boxes, PCs, television sets and other Wi-Fi enabled consumer devices. (Celeno28.04)
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9.8 MTI Wireless Edge Adds New Small Footprint, Wide Band RFID UHF Antenna to its Range
MTI Wireless Edge announced the addition of their new small footprint, wide band UHF RFID antenna - MT-242048/NRH&NLH. This new antenna, the smallest of its kind, designed to address applications requiring a small foot print antenna, fully complies with the ETSI standards. The new antenna has both Right and Left hand versions; it has a 7.5 dBic gain and is only 260x260 mm. The antenna is light weight (only 1Kg), and has both indoor and outdoor versions that can be deployed in the three RFID regions. Tel Aviv's MTI Wireless Edge (http://www.mtiwe.com), a leader in the development, production and marketing of high quality, low cost, flat panel antennas for RFID & Fixed Wireless applications offers large portfolio with over 90 models of Linear and Circular, Single and Dual polarity antennas for active and passive RFID Systems. The frequencies that MTI offer antennas for are 450MHz, 865-870MHz, 902-928MHz, 950-956MHz, 2.4GHz as well as Integrated Enclosure Antenna solution (IAE). MTI Military products include a wide range of broadband, tactical and specialized communications antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide. (MTI28.04)
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9.9 Silicom Chosen by Leading Manufacturer of Application Acceleration Appliances
Silicom announced that it has been selected by one of the world's largest manufacturers of application acceleration solutions to supply multi-port cards for its appliances, and that, based on customer's forecasts, it expects the volume of associated purchase orders to begin ramping up gradually to an annual level of $3 million. Silicom will deliver two types of multi-port gigabit Ethernet server adapters customized for deployment within the customer's newest application acceleration appliances. All of the customer's appliances of this model will include at least one of the Silicom cards as a standard, with an option for additional cards as well. Silicom has already received initial purchase orders amounting to approximately $ 150,000 for these cards. Kfar Sava's Silicom (http://www.silicom.co.il) is an industry-leading provider of high-performance server/appliances networking solutions. The Company's flagship products include a variety of multi-port Gigabit Ethernet, copper and fiber-optic, server adapters and innovative BYPASS adapters designed to increase throughput and availability of server-based systems, WAN Optimization and security appliances and other mission-critical gateway applications. (Silicom27.04)
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9.10 VocalTec Announces Partnership and a New Joint Customer with AMT Group
VocalTec Communications announced the signing of a partnership agreement with AMT Group, a Russian systems integrator. The partnership has already yielded a first joint customer. The partnership will focus on the delivery of VocalTec's comprehensive set of VoIP solutions to service providers and enterprise customers across Russia. AMT Group is fully certified to market, sell, install and support VocalTec's products and solutions. The partnership is part of VocalTec's strategy to expand the sales of its Essentra VoIP solutions through well respected channel partners in Russia. AMT Group specializes in the in design, implementation and technical support of complex telecommunication and information systems, having already successfully implemented and delivered thousands of projects. AMT Group's experience and large local presence will serve to further promote VocalTec's widely accepted solutions in Russia. VocalTec and AMT Group are happy to announce the first customer of this partnership. Ijsvyaz Invest, an alternative carrier in Russia, has deployed VocalTec's Essentra BAX, class 5 application server enabling the delivery of residential and hosted enterprise VoIP services over any broadband infrastructure. The deployment also features VocalTec's Essentra iCX, a uniquely integrated SIP-to-SS7 solution enabling seamless interworking between IP and legacy networks. Herzliya's VocalTec Communications (http://www.vocaltec.com) is a global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers. A pioneer in VoIP technology since 1994, VocalTec provides proven VoIP trunking, VoIP peering and residential/enterprise VoIP application solutions that enable flexible deployment of next-generation networks (NGNs). (VocalTec26.04)
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Unemployment Rate Climbs
On 27 April, the Central Bureau of Statistics announced that the rate unemployment in Israel rose in February to 6.9% of the workforce. The CBS found that there are 205,500 unemployed people in the economy, in contrast with 179,000 at the beginning of the economic crisis. The Central Bureau of Statistics also revised the January figure, from 6.8% to 6.9%. According to a Bank of Israel forecast, the unemployment rate at the end of 2009 will reach 8%, or about 238,000 people. That means that approximately an additional 30,000 workers will lose their jobs. Nonetheless, the Central Bureau of Statistics figures are based somewhat on a lag, and primarily show trend figures, so that the current situation may be somewhat different. (Globes 27.04)
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10.2 Israel's Annual Exports to Fall For First Time in its Modern History
According to the Israel Export & International Cooperation Institute, for the first time since regaining its independence in 1948, Israel's exports are expected to fall in 2009 by about 17% in dollar terms. Exports of goods and services are expected to total $67 billion in 2009 compared with $80.4 billion last year. The estimate is based on the influence of the global economic crisis on international trade and a drop in demand in the 20 main export destinations for Israeli goods and services. This fall comes after exports doubled between 2003 and 2008 from $39.5 billion in 2002 to $80.4 billion in 2008. Analysis of the Export Institute's figures also shows that the US surpassed Europe as the number one destination for Israeli exports in the 1970s. In the 1950s and 1960s, some 70% of Israeli exports were sold to Europe. Today 35% is sold to North America and 35% to Europe. Asia has grown in significance for Israeli exports with 20% of goods sold there today compared with just 1% in the 1950s. (IE&ICI26.04)
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10.3 Israel's First Quarter Tourist Overnights Drop By 26%
On 27 April, the Israel Hotel Association today reported that there were 1.7 million tourist overnights at hotels during Q1/09, 26% fewer than during the corresponding quarter of 2008. Tourism during the quarter was also affected by Operation Cast Lead in Gaza in January, as the military operation as well as a poor global economy combined to reduce the number of tourists entering Israel. Hotel overnights by Israelis totaled 1.9 million during Q1, 3% fewer than during Q1/08. Some 60% of hotel overnights by Israelis were at the Dead Sea or in Eilat. Hotel overnights by Israelis in Eilat rose by 35% to 815,000 during the first quarter, but fell by 4% at the Dead Sea to 357,000. The nationwide average room occupancy rate was 48% during the first quarter, down from 66% in the corresponding quarter. Hotel overnights by tourists and Israelis totaled 3.6 million altogether during the first quarter, 15% fewer than during the corresponding quarter. The sharpest declines were hotel overnights in Herzliya, Haifa, Jerusalem and Tel Aviv. (IHA27.04)
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11: In Depth
11.1 ISRAEL: Summary of High-Tech Company Capital Raising - Q1 2009
The following are the findings of the Quarterly Survey conducted by the IVC Research Center, which for more than 10 years has been at the forefront of high-tech, venture capital and private equity research in Israel. This Survey reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds, foreign investors and other investors. The Survey is based on reports from 85 investors of which 50 are Israeli management companies and 35 are other – mostly foreign – investment entities.
In the first quarter of 2009, ninety three Israeli high-tech companies raised $265 million from venture investors – both local and foreign. The amount raised was 57% below that raised by 135 companies in the year-earlier period (which was the highest in seven years) and 33% below the amount raised by 109 companies in Q4/08. Q1/09 was the lowest quarter recorded in the last three years.
"The ramifications of the economic slow-down are being felt in Israel as we anticipated,” said Koby Simana, CEO of IVC Research Center. "The decrease is similar to that being experienced in the rest of the world, and as a result, we believe that Israeli high-tech companies' capital raising will not exceed $1 billion in 2009.”
Fifty-one companies attracted more than $1 million each. Of these, 10 companies raised $5 million to $10 million each, six companies raised $10 million to $20 million, and one company raised over $20 million. The average financing round was $2.85 million, compared to $4.57 million in the first quarter of 2008 and $3.61 million in the previous quarter.
Israeli VC Fund Investment Activity
In the first quarter of 2009, Israeli VC funds invested $106 million in Israeli companies, 60% below the amount invested in the first quarter of 2008, and 30% below investments made in the previous quarter. However, the Israeli VC funds' share of the total amount invested in Israeli high-tech was 40%, compared to the 2008 average of 38%. The remainder of capital came from foreign investors as well as non-VC Israeli investors.
First investments by Israeli VC funds accounted for 29% of their total dollar investments in the first quarter, compared to 42% and 23% in Q1 of 2008 and Q4 of 2008, respectively. The average First investment by Israeli VCs was $3.05 million, while the average Follow-on investment was $1.03 million.
Capital Raised by Sector and Stage
The Communications sector led capital raising in the first quarter with $91 million or 34% of capital raised, followed by the Software sector with $56 million or 21%, and the Life Sciences with $50 million dollars or 19%.
Twenty Seed companies attracted $13 million, 5% of the total amount raised in Q1, compared to $35 million raised by 27 companies in Q1 of 2008, and $31 million raised by 10 companies in the previous quarter. The figures confirm that seed activity has slowed considerably over the past year.
IVC Research Center (http://www.ivc-online.com) is Israel's leading research center providing business leaders with an unmatched wealth of data on Israeli high-tech, venture capital and private equity industries. IVC products and services are used regularly by high-tech companies, venture capital funds, private investors, financial investors and institutions, as well as public entities such as the Office of the Prime Minister, the Central Bureau of Statistics, the Bank of Israel and the Office of the Chief Scientist. (IVC27.04)
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11.2 JORDAN: Pharmaceuticals and Healthcare Industry
Research and Markets (http://www.researchandmarkets.com) announced the addition of the "Jordan Pharmaceuticals and Healthcare Report Q2 2009" report to their offering.
BMI has revised its extended forecast for Jordan's pharmaceutical and healthcare market for our Q209 report. We expect the total drug market to grow from $370mn in 2008 to $540mn by 2013, representing a compound annual growth rate (CAGR) of 7.87%. The main drivers for growth include the continuing high volume medicine export activity, generated by Jordan's domestic drug manufacturers. Additionally, the epidemiological profile of Jordan indicates an increasing burden of obesity and diabetes- related disorders, which will drive spending in overall healthcare.
The Ministry of Health in Jordan announced that healthcare services are facing rising pressure as rapid population growth increases demands. The efficiency and allocation of available public medical resources needs to be revised to account for the influx of refugees, in addition to the year-on-year (y-o-y) 2.8% population growth rate. BMI notes that, while government healthcare spending must adjust to match demand, consistent public health insurance policies will result in more efficient spending in this sector.
Overall health expenditure in Jordan rose by 7.9% during 2008, which we expect to continue through to 2009. We believe that increasing resources for medical services by providing more hospitals and doctors will address the main issues outlined by the Ministry of Health. Previous temporary measures to alleviate public sector shortages involved medically insured government employees paying 20% toward the cost of fees at participating private hospitals, with the remainder paid by the state.
The Private Hospital Association (PHA) ended the scheme and further negotiations with the government later in 2008. BMI believes this is a major setback for Jordan, however it will further underline the inefficiencies of the public health sector and will encourage the government to re-evaluate its strategies for financing and providing medical services. While the state plans to restructure the Jordanian healthcare system, we note that existing health facilities are under-utilized, mainly due to the lack of interaction between the three main health providers.
Increasing the capital allocated for healthcare will be achieved through the government's target to 100% public or private medical insurance coverage by 2012. Currently, the government estimates that 86% of people are covered by either type of health insurance, and therefore we believe its target is achievable. (R&M20.04)
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11.3 LEBANON: IMF Executive Board Concludes 2009 Article IV Consultation
On April 15, 2009, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Lebanon.
Background
The Lebanese financial system has so far weathered the global financial crisis. Deposit inflows decelerated briefly in the aftermath of the Lehman Brothers bankruptcy, but have resumed at a rapid pace since then, and deposit dollarization has been declining steadily. Consequently, the Bank of Lebanon (BdL) has continued to accumulate international reserves at a swift pace. Eurobond spreads have come down markedly since spiking following the Lehman bankruptcy, and are now below the emerging market average. Helped by strict financial oversight, the domestic financial system has had very little exposure to distressed financial products or markets and remains liquid.
Despite its vulnerabilities, the Lebanese economy has shown a remarkable macroeconomic performance. Lebanon's public debt-to-GDP ratio remains very high, its large banking system is highly exposed to the sovereign and dependent on nonresident deposit inflows and the country lies at the crossroads of regional political tensions. Nonetheless, Lebanon has achieved a strong macroeconomic performance, helped by prudent policies and an improvement of the political and security situation after the May 2008 Doha agreement. Real GDP growth exceeded 8% in 2008. CPI inflation dropped to 4% in January 2009, down from the double digits briefly reached last summer in the wake of soaring international food and fuel prices. With a primary fiscal balance of 0.5% of GDP, the debt-to-GDP ratio declined by 6%age points to 162% of GDP in 2008. All end-December quantitative targets under the Emergency Post-Conflict Assistance -supported program were met with substantial margins.
The global recession and tight international capital markets weigh on the economic and financial outlook. Lower global liquidity and economic growth, particularly in the Gulf, are likely to affect merchandise exports, tourism, remittances, foreign direct and portfolio investment, and deposit inflows. Economic growth in Lebanon is likely to slow to 3% this year, and deposit growth could decline to about 10% from over 15% in 2008. Nonetheless, helped by a reduced oil import bill and ongoing deposit dedollarization, international reserves are likely to increase further. Inflation will likely remain low, in line with international price trends.
Executive Board Assessment
Executive Directors welcomed the remarkable resilience of the Lebanese economy in the face of the global financial crisis, and commended the authorities for their macroeconomic policy discipline and strict oversight of the financial system. Their implementation of the program supported by EPCA has contributed to a strong economic and financial performance and a reduction in the government debt-to-GDP ratio.
Directors considered that the deepening global recession, unsettled international credit markets and Lebanon's exposure to regional spillovers underscore the importance of making further progress in addressing Lebanon's macroeconomic and financial vulnerabilities. Near-term policies should aim at mitigating downside risks by safeguarding the recent progress made toward achieving debt sustainability and strengthening the external position. This will involve continued prudent fiscal and monetary policies, vigilant financial supervision, proactive contingency planning and a resumption of the Paris III reform policy agenda to reduce structural vulnerabilities.
Directors supported the authorities' monetary policy aimed at safeguarding the exchange rate peg and facilitating a further buildup of international reserves. The large currency mismatches in the debt held by the governmental, corporate, and household sectors, along with the high level of government foreign currency debt and debt-service obligations, underscore the central role played by the peg in maintaining financial stability. Given heightened near-term risks, Directors agreed that there is little scope for lowering interest rates over the coming months. They took note of the staff assessment that the real effective exchange rate of the Lebanese pound appears to be broadly in line with fundamentals.
Directors cautioned that Lebanon's still very-high level of government debt and the need to support the exchange rate peg leave little room for countercyclical fiscal policy. A number of Directors encouraged the authorities to aim for a higher primary fiscal surplus than implied in the draft budget to reduce the debt burden, while a few others saw the planned pause in fiscal consolidation as justified by the slowdown in economic activity. Directors recommended that any revenue over performance or capital spending shortfall in the 2009 budget be saved. They were encouraged by the authorities' assurance that implementation of the 2009 budget will be prudent, and their readiness to consider additional measures if needed to maintain the government debt-to-GDP ratio unchanged, and ensure government financing in the event of a shortfall in deposit inflows.
Directors welcomed the reintroduction of gasoline excise taxes, which will help bolster the revenue position. They considered that carefully targeting social expenditures would lead to a more efficient allocation of public resources and achieve social and development objectives better than generalized public sector wage increases.
Directors were encouraged by the resilience and profitability of the banking sector in the face of the global crisis. They commended the authorities for their prudent regulation and supervision of the sector, and the progress they have made in strengthening the bank resolution framework. At the same time, banks' large exposure to the sovereign, maturity mismatches, and the still-high degree of dollarization constitute vulnerabilities. Directors therefore stressed the need for continued vigilance in bank regulation and supervision.
Directors considered that progress on structural reforms under the Paris III reform agenda, especially in the energy sector, will warrant heightened attention in the period ahead. This should include a revision of electricity tariffs to ensure cost recovery, which will boost Lebanon's growth potential and reduce a large drain on budgetary resources. The privatization of the mobile telecommunications providers as soon as market conditions allow would promote private sector growth and reduce debt-related vulnerabilities. Directors underscored that fiscal reforms, including an increase in the VAT, will be needed to achieve the desired sizeable primary fiscal surplus in the medium term. They stressed the importance of timely and full disbursement of donor commitments to support Lebanon's reform agenda, including through the provision of budgetary support. (IMF17.04)
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11.4 LEBANON: Enlightening Strategies
As Lebanon moves towards the warmer months of summer, when demand for electricity traditionally spikes, there is some good news for consumers and the economy as a whole, but fundamental weaknesses in the country's energy sector remain unresolved. For a country that relies on imported resources to meet up to 97% of its energy needs, the dramatic fall in oil prices comes as a welcome relief to the stretched budget and has had a direct impact on the economy. As observed by the Oxford Business Group, inflation, which was running at 14% last July, fell to 2.8% as of the end of February, according to central bank statistics, with the decline in fuel costs being cited as one of the major factors for the slowing of price increases.
A recent review of the Lebanese economy by Standard Chartered Bank stated that oil's contribution to the country's overall import bill should fall to 14% this year, having peaked at 23% in 2008, thanks to an estimated 40% drop in the value of fuel imports. This would contribute significantly to a narrowing of Lebanon's current account deficit, which would shrink from last year's 15% of GDP to 11.5%, the bank said.
While fuel to keep the country moving might be cheaper, this has done little to improve delivery of electricity to clients, a situation that has a direct impact on the economy and daily life. Lebanon's electricity sector is in urgent need of overhaul and investment. According to a report commissioned by the Energy Ministry, power demand peaks at around 2200 MW, but that current generating capacity is just 1500 MW. With demand expected to grow by 3% a year, this figure will be 2550 MW in five years, and with the minimum reserve required for adequate reliability being at least 20%, generating capacity should be 3000 MW.
The cost to the Lebanese economy due to power shortages could be up to $1bn a year, said the study, prepared by German-based firm DECON Deutsche Energie-Consult. The energy and water minister, Alain Tabourian, has called for Lebanon to adopt a policy of greater diversity in energy supplies to overcome fluctuating fuel prices and a shift away from outdated technology. "We need a power-generation strategy that enables us to work cost effectively with all common combustibles, which are oil, natural gas and coal-petcoke," he told a conference in Beirut on March 26. "What was most common in Lebanon during the past 15 years was the availability of projects and not strategies, which is leading us to a disaster."
In response, the government is trying to develop long-term strategies for the energy sector. In its latest report on progress towards implementing the commitments made at the January 2007 Paris III donors conference, released in late March, the Finance Ministry said the new electricity-generation master plan was in its final draft and that a feasibility study for increasing hydroelectric production had been completed.
The report also said that the government would focus on strengthening the policymaking capacity at the Energy and Water Ministry, and setting a comprehensive reform strategy for the power sector. Meanwhile, efforts will continue to improve the efficiency of Electricite du Liban (EDL), the state-owned electricity monopoly.
Improving EDL's efficiency is central to any strategy on reforming the energy sector. Last year, state subsidies to the company totaled more than $1.5bn, some 15% of budget spending and 20% of government revenue. Much of EDL's power stations are old and prone to breakdowns, while most are either heavy oil or gasoil fired. The monopoly's distribution grid is also in urgent need of upgrading and the company also has problems in collecting fees, with many people tapping into power lines illegally.
According to some estimates, EDL will need at least $2bn of investments in new generating capacity to meet the country's needs by the middle of the next decade, though with public debt standing at around $47bn, or 162% of GDP, it is hard to see where funds will come from. While privatization is seen by some as a solution, and indeed the parliament passed a draft law in August 2002 authorizing the partial sell off of the utility, it is unlikely this step will be taken any time soon. Tabourian told the Reuters news agency late last year that EDL needs a complete corporate overhaul before any sell off could be contemplated.
Another solution that has been touted is gas to replace at least some of the oil used as fuel. Two out of Lebanon's four major power plants were originally built to use natural gas, but the required pipelines were never made operational. Though Lebanon has been in the process of striking a deal with Egypt to import gas via Jordan, with initial deliveries scheduled for January, a final agreement on price and quantities to be supplied has yet to be reached. Lebanon may be paying less for its fuel, but until it can develop and enact long-term strategies to overcome the problems afflicting its energy sector, the lights will continue to flicker for the economy. (OBG20.04)
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11.5 KUWAIT: Learning Curve
The Oxford Business Group observed that Kuwait is looking to balance the demands placed on its budget by falling oil prices and the global economic downturn along with the need to support and strengthen its education system - and through it the country's long-term prosperity. The country generally scores well in assessments of its education provision. Enrolment rates at the primary and secondary school levels are at 87% and 84%, respectively, more than 22% of students go on to higher education and the adult literacy rate is 93%, according to various international studies.
In its 2008 Human Development Report, the UN Development Program ranked Kuwait higher than all other countries in the Gulf region for spending on education, with expenditure averaging around 4.8% of GDP and more than 12% of the state budget. A 2008 report by the World Bank, entitled "The Road Not Travelled: Educational Reform in the Middle East and North Africa", found that Kuwait, along with Jordan, were the leaders in implementing educational reforms in the region. Kuwait scored strongly across the board in the survey's four main categories of access, equity, integration and quality.
Among the strengths cited by the report were Kuwait's education network having better evaluation, monitoring and reward systems in public schools; greater private sector participation; solid levels of teaching capacity; a structured education system; and better resources of mobilization than other countries in the region.
Though Kuwait's education system has been rated highly, there have been increasing calls for it to be overhauled, especially leading up to the country's early general election, to be held on May 16. One candidate, Obaid Al Enezi, believes there should be a more targeted approach to education, with a focus on training the country's youth for future employment in key sectors of the economy, in particular the energy industry. According to Al Enezi, a clearer vision and strategy for higher education is needed. "Graduates from the applied education institutions don't have any interest in the oil sector, so it's necessary to create this interest; the country's human resources must be developed," he said in an interview with the Kuwait Times on April 14.
While this may be contrary to Kuwait's long held policy of diversification to the economy, such a shift might improve employment prospects and serve to meet the requirements of another state policy, that of Kuwaitization. By encouraging students to train for careers in the oil industry, which remains the backbone of the economy and contributes more than half of GDP, graduates and school leavers could be prompted to abide by the dictum of "follow the money".
By directing education towards the main industries, Kuwait could also cut unemployment and reduce its dependence on overseas workers. While estimates still place Kuwait's unemployment rate among the lowest in the region, with figures ranging between 2.2% and 5%, the country still has a very high level of foreigners in the workforce. As of December 2008, more than two-thirds of Kuwait's population were from overseas, most employed in the local economy.
There has also been criticism that the government's $5.2bn economic stimulus program, ratified in mid-March, was focused on providing support to the country's financial sector rather than allocating funds for new infrastructure projects, including the construction or upgrading of educational facilities. A report by Global Investment House (GIH), issued at the beginning of April, said the Kuwait government should adopt an expansionary fiscal policy at this critical juncture to minimize the impact of the economic crisis. "Directing accumulated surpluses towards increasing capital expenditure and quick implementation of development projects would serve lots of goals, such as creating new jobs, boosting economic growth and securing its sustainability, diversifying the Kuwaiti economy away from oil and improving the overall social and economic development plans," the GIH report said.
In its 2009 - 10 budget, which came into effect as of April 1, the government announced a 36.1% reduction in expenditure compared with that of fiscal year 2008-09, with overall state spending of $41bn and revenue of $27.2bn, giving a deficit of $13.8bn. It is unclear as to what impact, if any, the cut in budget expenditure will have on the education system. In January, while the budget was being drafted, local media reported that an agreement had been reached between the Ministry of Finance and the Ministry of Education (MoE) that there would be no reduction in the $1.72bn budget allocation for development projects in the education sector, though this was not confirmed by officials.
Despite having to operate in somewhat troubled economic times, the Kuwaiti Ministry of Education (MoE) is moving forward with plans to strengthen the system. In mid-March, the ministry announced it would be recruiting up to 700 qualified teachers from Egypt to work in Kuwaiti schools, while in early April the MoE issued a statement that it was reviewing draft legislation to improve the regulation of private schools in the country, to ensure they met the state's educational standards. While Kuwait is among the best education performers in the region, the country will need to continue investing in education if it is to remain at the forefront of academic standards and provide skilled staff for its economy. (OBG27.04)
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11.6 BAHRAIN: Sustaining Energy
Despite one of the most successful diversification strategies in the region, Bahrain's energy sector is by no means overlooked in the country's drive to attract investments; rightly so, as the sector continues to be pivotal to the Kingdom's economy. According to a recent report by Global Investment House as cited by the Oxford Business Group, a Kuwait-based investment company, the contribution of oil to the country's total exports increased from 66% in 2001 to 82.4% in Q3/08. Contribution to GDP for the year 2007 was 24.6%, while three-quarters of government revenue stemmed from the sector.
Despite signs of resource depletion, Bahrain remains confident that, at least for the medium term, it can keep production levels stable. In the recently approved government budget for 2009-10, the petroleum sector accounts for 76% of total income in both fiscal years. Aware of the need to increase energy supplies, the Kingdom aims to double output and increase refining capacity over the next 15 years.
The National Oil and Gas Authority (NOGA) has progressively opened up the sector for private companies tasked with optimizing production levels of existing resources as well as exploring new ones. In a combined press release in March this year, US-based Occidental Petroleum Corporation (Oxy) and Abu Dhabi's Mubadala Development Company declared to have entered into an interim agreement with NOGA for the further development of the Bahrain Field. According to Oxy, the agreement's term is likely to be set for a period of 20 years in which production of oil is estimated to increase from 35,000 barrels per day (bpd) today to over 100,000 bpd. Gas production is also expected to rise, although no estimations have yet been disclosed.
In a bid to renew offshore exploration, in 2007 NOGA invited international companies to bid for one of four offshore oil fields. As a result, Oxy and Thailand's PTT Exploration and Production were awarded the exploration and production-sharing agreements, and will start drilling in early 2010.
Besides efforts to increase domestic supplies, initiatives are also being implemented to establish or upgrade supplies from surrounding countries. One such example is Bahrain's eastern neighbor. In January, Saudi Aramco formally announced its plans to replace and expand the existing 114-km oil pipeline that connects Bahrain to the Abu Saafa oil field, which the country shares with Saudi Arabia. The projected increase in capacity will raise supplies to Bahrain to a level of 350,000 bpd, compared to the current 235,000 bpd. The new pipeline is due for commissioning in 2011. Whereas an increase in the level of oil would be a welcome addition to the government's treasury, an increase in gas supplies is vital to support the growth of the country's industrial sector as well as its population.
Current levels of gas are ample to satisfy the status quo; however, "gas requirements are more likely to go up than down", Abdul Hussain bin Ali Mirza, the minister of oil and gas affairs and chairman of NOGA, told OBG. "Users such as Aluminium Bahrain, the Gulf Petrochemical Industries Company and the Electricity and Water Authority will need more gas for their investment plans. The growing domestic population will also require an increasing amount of gas. Therefore we will remain committed to exploring gas at full capacity." Similar to oil supplies, the focus for additional gas is on domestic resources.
Besides the anticipation of striking associated gas in oil explorations, an international tender for deep onshore gas exploration was launched in October 2008. Despite the current economic crisis and volatile price of oil, the response to the tender has been positive, with 19 international oil companies having expressed serious interest. Furthermore, NOGA expects more signs of interest over the coming months. The eventual set of companies will be invited to submit their bids by May 2009 after which the evaluation and selection stages take place.
In an effort to further secure gas supplies from abroad, the Kingdom signed a memorandum of understanding with Royal Dutch Shell in February of this year. The agreement includes importing liquid natural gas shipped in tankers from the company's projects in Qatar or Iraq. "The new agreement with Shell... opens a whole set of new opportunities," Mirza told OBG. "Bahrain could even look beyond its immediate neighbors for supplies, to North African producers such as Algeria."
Although the variety of options and the involvement of internationally renowned commercial enterprises bodes well for the Kingdom's chances of securing its energy needs, policymakers take into account that the country may have to face a future without domestic production facilities. As a result, parliamentary dialogue is increasingly arising on more effective use of resources.
Energy efficiency remains a primary challenge. The 2008 "Key Statistics Report", published by the International Energy Agency, shows that in 2006 Bahrain's per-capita electricity consumption was 12,627 kWh, compared to the Organization for Economic Cooperation and Development average of 8381 kWh and 3163 kWh for the Middle Eastern region. Abdul Majeed Ali Alawadhi, the chief executive of the Electricity and Water Authority (EWA) charged with designing the strategy for the country's utility sector, told OBG that, "Largely due to subsidized gas prices people have never been made aware of efficient energy usage. As the country increasingly experiences gas shortages, efficient use is a prerequisite for energy sustainability." Although politically sensitive, there is a growing urgency among policymakers to review the subsidies on gas prices; a sentiment that is even more pressing today as the financial crisis and depressed oil price impact the government budget.
Meanwhile, EWA has begun targeting efficiency standards by the introduction of public awareness campaigns, as well as the enforcement of stricter control on the number of independent power and water plants. Furthermore, the government's new industrial growth strategy, with its focus on light industry, will also help relieve some of the strain on the energy sector. The current abundance of initiatives underlines the country's commitment to secure energy supplies, as well as their importance in sustaining economic development. Although the expectation on foreign operators to discover new sources of oil and gas is high, more efficient energy usage is a necessity in prolonging the life span of the country's natural resources. (OBG27.04)
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11.7 BAHRAIN: Food and Drink Report Q2 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Bahrain Food and Drink Report Q2 2009" report to their offering. Bahrain Food and Drink Report provides independent forecasts and competitive intelligence on Bahrain's food and drink industry.
Moving into 2009, there is barely a country in the world for which we have not revised down our growth forecasts, and Bahrain is no exception. However, on the consumer front, we believe that Gulf Cooperation Council (GCC) consumers will remain more bullish than their Western counterparts. While a slight deterioration in consumer sentiment is unavoidable owing to the severity of the global crisis, the fact that the GCC block will be one of the few regions to register respectable economic growth in 2009 means that the psychological impact to consumer confidence will be far less pronounced than in the West. While we believe that Bahraini consumers are much less likely to trade down to cheaper, private label products or to shop at discount stores, we do expect a mild regression in the trend towards trading up to premium food and drink products.
The government is doing its part to support the food and drink sector by encouraging investment into the industry. In February 2009, the Bahraini Ministry of Industry and Commerce released figures indicating that investors plan to pump more than $2.65b into new industrial projects in Bahrain. There were 296 applications to projects in various industries, including 34 in the food items and medicine industries, up from 27 projects in this category last year. The government looks to attract investors by offering favorable terms and tax breaks, for without such incentives there would likely be little investment in the sector. The food and drink market is quite unattractive, held back by the population's low spend, which is expected to experience very limited growth over our forecast period to 2013. Another factor is the highly negative food and drink trade balance owing to the country's very limited agricultural resources, with the tiny size of the population constituting another major drawback.
The government will be hoping that Bahrain's hosting of the Gulf's inaugural International Food and Hospitality Expo - held in mid-January 2009 at the Bahrain International Exhibition & Convention Centre - will help to boost investment. The government promoted the Expo as a means of advertising the country as an ideal point from which to conduct business in the Middle East, stressing its status as the region's financial hub, as well as its high foreign direct investment (FDI) figures, favorable business environment, attractive taxes and exclusive free trade agreement (FTA) with the US. The Expo had exhibitors from a wide range of countries as well as the participation of some of the country's major mass grocery retailers (MGRs) and hotels.
With the economy deteriorating, such support is needed to keep the industry growing. We have revised down our forecasts for Bahraini economic growth, and now see overall real GDP expansion of just 1.0% in 2009, down from our previous projection of 4.3% - the second-slowest anticipated growth rate among GCC member states, after the United Arab Emirates (UAE). Given this current climate, such government incentives are needed to ensure continued growth in the food and drink sector. (R&M15.04)
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11.8 QATAR: A Reliant Partner
Though international oil and gas prices have fallen steeply resulting in the economies of many countries in the Middle East facing negative growth and large-scale cut backs in energy projects, the Oxford business group says that Qatar stands out as an exception. Though the country's hydrocarbons sector and the economy it underpins will not enjoy the same heady rates of growth seen over the past few years - with GDP estimated to have expanded by 18% in 2008 - predictions suggest that the economy will grow by around 9% this year.
Much of this growth will come through Qatar's increased gas exports. With proven reserves of 25trn cu meters and production capacity expected to reach 77m tonnes by the end of the decade, Qatar has positioned itself to be the world's leading supplier of liquid natural gas (LNG) for the foreseeable future. Though gas prices have dropped over the past year, this is expected to have less impact on Qatar's overall economy than falling oil prices on some of its neighbors. This is due to the fact that many of the export contracts it has with overseas clients are long-term deals, rather than the more usual spot contracts in the oil industry.
Another factor in Qatar's favor is its ongoing program of increasing output, meaning it can maintain earning levels even if prices fall simply by selling more gas at a lower price. There have been some claims that the international LNG market could see a glut this year, as the global recession pushes down demand and production increases. With Russia looking to ramp up output and break into the Asian market - a traditional stronghold of Qatar - as well as other gas production projects due to start this year in Indonesia and Yemen, competition is increasing.
Though there could be a brief period of oversupply, Faisal Al Suwaidi, the chief executive of Qatar Gas, believes the recovery of the global economy will bring about a balance. "I would be lying if I said I wasn't worried about the short-term outlook, but in the longer term the world will need this gas," Al Suwaidi said in an interview with British daily The Times on April 6.
Though there may be concerns over pricing levels and oversupply, Qatar can look to the future with optimism, with clients lining up to secure imports. An increasing number of these new customers are in Europe, as the continent becomes increasingly disenchanted with Moscow as its main supplier, and Qatar is set to be one of the main benefactors from the recurring spat between Russia and Ukraine, which has seen pipelines running across Ukrainian territory into Europe closed twice in two years.
On April 16, Qatar Gas signed a 20-year agreement, due to come into force in 2014, to supply Poland's state-owned gas company Polskie Gornictwo Naftowe i Gazownictwo with 1.4bn cu metres of LNG annually, equivalent to 10% of present consumption. Currently, Poland imports around one-quarter of its gas needs from Russia and like many European countries saw supplies disrupted in January after Moscow turned off the taps during its latest pricing dispute with Kiev.
Bulgaria, another country that experienced supply cuts in January, could become the latest in the line of clients for Qatari gas imports, the subject being discussed during talks held in mid-April between Qatar's ruler, Sheikh Hamad bin Khalifa Al Thani, and Bulgarian President Georgi Parvanov. Sofia also suggested the proposal of building an LNG terminal on Greece's Aegean coast to allow shipped gas to be unloaded before being piped to Bulgaria itself and other customers across Europe, a move that would further expand Qatar's export reach.
Established customers too are looking beyond the current economic crisis and are seeking to secure additional supplies. One of these is India, which Qatar is already contracted to supply 7.5m tonnes annually. On April 20, the Qatari deputy prime minister and minister of energy and industry, Abdullah bin Hamad Al Attiyah, told local media that India was seeking to increase its imports to feed a new regasification terminal under construction in Kochi. Al Attiyah stated that one of the reasons India was looking to Qatar to meet its additional needs was down to the country's reputation for reliability. "Since we began supplying to Petronet, there was no disruption in our LNG cargoes to India. We remain committed to being a reliable supplier and supplier of choice," he said.
It is this reliability as a supplier that is increasingly making Qatar the preferred choice for energy-hungry importers. With the country not using gas as a weapon of diplomacy as Russia has done; not being subject to sanctions or political concerns as is the case with Iran; and putting conditions on sales that Algeria, which is calling for the right to sell directly to consumers in some European markets, has done, Qatar has earned its reputation as a dependable business partner. It is this standing, along with reserves estimated to be able to maintain production at proposed levels for 100 years, which will aid the country's economic growth. (OBG27.04)
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11.9 UAE: RAK Transport on Track for a Boost
The Oxford Business Group reported that plans by the government of Ras Al Khaimah (RAK) to bolster the emirate's infrastructure in order to support a more diverse and expanded economy are on track, in more ways than one. One of the cornerstones of the government's plan is an efficient transport infrastructure network. Over the past decade, there has been significant investment in the emirate's transport grid, with projects such the Emirates Road linking RAK to Dubai and the country's ports all supporting the long-term plans to promote industrial production, logistics services and tourism, while improving transport links for the local community.
Having set itself the goal of becoming one of the leading logistics and cargo-handling centers in the Gulf, the emirate has upgraded Mina Saqr Port to enable it to handle 350,000 twenty foot equivalent units of containers a year. Additional plans are being developed by the contracted operator, Kuwait-based KGL Ports International, to expand this to 1.7m by 2011. The emirate's main airport has also been extended in keeping with the government's objective of attracting 2.5m foreign visitors a year by 2012, and making the tourism sector one of RAK's main revenue earners.
Furthermore, RAK is in the process of upgrading the emirate's local road and highway network as part of a $800m program to meet the needs of its rapidly expanding population, which is projected to reach between 500,000 and 600,000 by 2015 from the present level of around 260,000.
According to Oussama El Omari, the CEO of the RAK Free Trade Zone, the program of developing the emirate's transport infrastructure will not be affected by the global financial crisis, though the government was looking to attract further private equity from port and airport operators once the infrastructure was put in place. "The roads and port require more than $5bn of development, and the government is looking to private equity partners to come in on this," El Omari said during an interview with Dubai-based business publication Citscape Intelligence in late March. "The airport is also a huge project and the government is interested in recruiting an operator on a long-term basis."
One of the strong points of RAK's transport infrastructure plans is that they were based on current and projected demand, rather than speculation. "We are developing projects that are market-driven," he said. "We attract good companies and then build infrastructure for them, so it is a more sustained economy."
Two new projects currently in the planning stage would firmly place RAK as a regional transport centre and integrate it into the economies of the other states of the UAE and the wider Gulf Cooperation Council (GCC). With the exception of Saudi Arabia, little attention has been paid to railways in the Gulf region, a situation that is in the process of changing. The federal government of the UAE plans to construct a rail network linking all seven emirates with tracked freight and passenger lines. Though tenders for the $3bn UAE-wide network are not expected to be called until 2015, the project will strengthen RAK's transport links along the coast and into the interior of the UAE.
These links will be further reinforced by the connection of the UAE rail grid with that of a larger network being planned to join all of the member states of the GCC. Construction on this wider network, planned to have 1900 km of track, is scheduled to start next year, and will speed up the transfer of goods throughout the region when services begin, a date tentatively set for 2016.
Not only will RAK's freight handling capacity be boosted by the rail links, the emirate's tourism sector will also benefit thanks to the high-speed passenger services that will operate on the two networks, with plans calling for non-freight trains capable of travelling at up to 180 km an hour.
A supporter of the proposed rail link is Sheikh Saud bin Saqr Al Qasimi, RAK's crown prince and deputy ruler. In mid-2008, following a briefing on the planned system, he said that, as part of a wider grid of transport infrastructure, the UAE rail network would assist in maintaining the pace of economic growth. "An integrated and reliable transportation network across the country would greatly help in reducing congestion and increase productivity and economic growth of the country," he said. Both through its own efforts, and through those of the UAE federal government, RAK is fast-tracking its transport infrastructure and so putting its economy on the road towards future growth and sustainability. (OBG16.04)
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11.10 OMAN: Pharmaceuticals and Healthcare Report Q2 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Oman Pharmaceuticals and Healthcare Report Q2 2009" report to their offering. BMI's Oman Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Oman's pharmaceuticals and healthcare industry.
In the BMI's Business Environment Ranking matrix for Q2/09, Oman is once again ranked in 9th place (which is this time not shared with Morocco) out of the 17 regional markets surveyed in the Middle East and Africa (MEA) region. The country's strengths as a destination for investment by foreign drug makers include its wealthy and rapidly ageing population, preference for branded products, and an improved intellectual property (IT) environment. Additionally, the country has emerged as an important provider of medical tourism services, with Majan Development Company (MDC) scheduled to start the construction of $1bn healthcare city near the country's capital of Muscat. However, Oman's strict price controls and small population continue to keep the overall pharmaceutical values at levels virtually negligible in global terms.
In fact, despite boasting one of the most efficient healthcare systems in the region, Oman's pharmaceutical market was only worth $117mn in 2008 at consumer prices. By 2013, we expect the market to grow at a compound annual growth rate (CAGR) of some 7.43%, which is higher than that of the larger market, such as Kuwait. However, at $167mn in 2013, Oman's pharmaceutical market will not command major attention of multinational companies, especially as the need for cost-containment in the largely publicly funded system increases in the coming years.
Still, US companies - especially those involved in research and production of novel long-term treatments - should benefit from an improvement in operating conditions, following the recently signed free trade agreement (FTA) between the two countries. In December 2008, an FTA was also signed between the Gulf Cooperation Council (GCC), of which Oman is a member, and Singapore, becoming the first-ever bloc-wide agreement. While the key desire of the two sides is to enhance air services, pharmaceuticals from Singapore are also likely to find a receptive audience across the GCC.
In the meantime, though Oman's financial sector is relatively insulated from global problems, the oil and gas sector's reliance on commercial finance will undermine some of the country's major economic projects. Economic activity will be hit by the tail-wind of the global financial crisis, but the healthcare sector financing seems assured following the news that, despite the sharp downturn in oil prices, Oman was planning to increase its budgetary expenditure in 2009 by almost 20%. However, economic growth in 2009 will be significantly down on the 2008 figure (which we forecast to come in at 6.4%), and the loss of an annual $7bn in oil export earnings over the previous year, as oil prices remain under sustained pressure in 2009, will imperil new project activity, feeding through into a dampened domestic demand outlook. (R&M17.04)
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11.11 OMAN: Setting the Stage
On 8 April Oman went one step further in achieving its goal of developing a top-tier academic system with the unveiling of a new classification framework for higher education. The latest guidelines, as observed by the Oxford Business Group, are expected to, among other things, aid the development of more accurate educational data, thereby quickening the alignment of Oman with international benchmarks.
The Oman Accreditation Council, founded in 2001 with the goal of setting and regularly monitoring education standards, reviewed the classification framework of over 20 countries before deciding to adapt that of Australia and New Zealand - known as the Australian Standard Classification of Education framework - to an Omani context.
Classification of higher education essentially breaks down programs of study under three tiers. "Broad fields" are distinguished from each other based on theoretical nature and reason for study; "narrow fields" are subdivisions of the former and are distinguished by a more specific purpose of study; and "detailed fields" are a subset of narrow fields and are distinguished by particular methods of study
The hierarchal system is useful in recording more complex data across national lines and is now one of many country-specific classification frameworks generally thought to be more comprehensive than the first international system developed by UNESCO in the 1970's, known as the International Standard Classification of Education. This measure was last updated in 1997, but most countries have since developed their own frameworks in light of the evolving effects of recent technologies on nearly all fields of study
Like many states in the region, Oman is embarking on an economic diversification program, a large part of which is aimed at developing a knowledge-based economy and a well-trained population to guide it.
Accordingly, improving the quality of education within the country has been a primary concern of the government and especially Sultan Qaboos bin Said al Said, who has pushed for extensive educational reforms since coming into power in 1970. Expansion in the higher education sector has been remarkably swift – the Sultanate's first public university, Sultan Qaboos University, opened in 1986 - and today the country boasts seven public and 24 private universities.
The introduction of a new classification framework represents a significant step in the Ministry of Higher Education's (MoHE's) push towards meeting international best practices in higher education, although there is still work to be done.
"Our institutions are not quite there yet," Patricia Groves, an adviser to the MoHE, told OBG last year. "But we're striving for international standards - we should be there within five years at the very most."
The MoHE is taking a multi-pronged approach to quality improvements within the sector. It encourages foreign investment by offering tax, land and grant incentives to private universities. In return, the ministry screens investors through its stringent quality standards, only accepting private institutions affiliated with a Western university.
It is also planning to establish an academic chair program in a bid to increase the level of instruction by attracting professors from Western universities to the Sultanate for short periods of time.
Developing an internationally recognized higher education system is also crucial to the long-term economic development plans of Oman. As oil and gas prices remain volatile, the importance of the non-hydrocarbon sector grows. To achieve a shift towards a knowledge and service-oriented economy, the Omani people must have the skill set to match. Moreover, the Sultanate's population is predominantly composed of young people, making an education sector of both sufficient capacity and high quality doubly important.
With the adoption of a new, more comprehensive classification framework, the Sultanate is one step closer to making the goals of economic diversification and Omanization a concrete reality. (OBG17.04)
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11.12 OMAN: Developing Supply
Despite the global economic downturn continuing to effect world energy markets, Oman has found success in attracting international energy companies to explore its large natural gas reserves. The Oxford Business Group noted that since the discovery of Oman's non-associated gas reserves in the late 1980s and early 1990s, domestic demand from industry expansion and population growth has led to a shortage of gas supplies. Yet in reality, there is no shortage of gas in the country's reserves, which stand at 0.69trn cu meters according to the BP Statistical Review of World Energy 2008. The problem is one of supply. By involving international energy companies in the exploration and production of the Sultanate's reserves, the government hopes to speed the momentum at which discoveries are made.
On April 15, the Ministry of Oil and Gas signed an exploration and production sharing agreement (EPSA) with Petronas to explore gas in Block 63, marking the Malaysian-based oil and gas giant's first foray into the Sultanate. This was the second concession agreement signed by the government in less than a week, with US-headquartered Harvest Natural Resources receiving Block 64 for gas exploration on April 11.
The Block 63 concession, which covers an area of 3709 sq km straddling the boundaries of the Al Dahirah and Al Dakhiliya regions of the Sultanate, was carved out of Petroleum Development Oman's (PDO) Block 6. The company has established an unincorporated joint venture with two local firms - the government-owned Oman Oil Company and Industrial Petrochemicals.
The Petronas vice-president, Datuk Abduallah Karim, who signed the EPSA on behalf of the Malaysian firm, spoke to local press about the challenges and opportunities ahead. "We know there is gas. It's been discovered before, but the volumes will have to be determined," he said. "We will have to do appraisals, drill wells and confirm that the volume is good in order to make the development viable. At the same time, there are other prospects not explored yet, which we know of from seismic studies and we hope to drill wells in these prospects also," he added.
Harvest's Block 64 concession, which is spread over an area of 3874 sq km, was also carved out of PDO's Block 6 and is located in the prolific Ghaba Salt Basin. According to Harvest president and CEO, James A Edmiston, his company will be focused on exploring the deep gas potential of its concession. "We have been able to work with the Omani side on a breakthrough agreement that allows us to explore for deep gas in the block. All sides are hoping for a successful ending to that," he told local press.
Harvest will have 100% control during the exploration phase but has a joint operating agreement with Oman Oil Company. The US-based company will invest around $30m in the initial thee-year exploration phase, of which $4.8m is earmarked in 2009 towards geology and geophysics, seismic reprocessing and drilling preparation.
Mohammed Al Barwani, the chairman of MB Holding Company, told OBG that he is very optimistic about Oman's exploration industry. "The future is bright as scientists gain a better understanding of the country's complex geology and the industry figures out better and more efficient drilling methods." Karim agrees. "We intend to study other blocks that are available. If the opportunity is right, then we will want to venture into those blocks as well," he said.
As Oman creates new gas concessions and continues to attract major firms to invest in the country's energy sector, it will no doubt set an accelerated pace for gas exploration and development that will bring the country closer to satisfying its burgeoning energy needs. (OBG24.04)
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11.13 SAUDI ARABIA: Built to Last
Although the credit crisis has had a considerable impact on the real estate sector across the Gulf, Saudi Arabia appears to be one of the least-affected countries in the region, with a strong portfolio of government project helping to keep local contractors busy.
According to a recent report by Business Monitor International, the Kingdom's construction sector is forecast to lose 0.7% of its value during 2009. The same study estimates that the industry will be worth around $19.38bn by the end of this year. Yet even with this small reduction, Saudi Arabia's construction industry is expected to be buoyed by government-led infrastructure development plans and the need for more housing. The authorities expect to spend around $400bn over the next five years on such projects, while the total budget expenditures for 2009 alone are expected to reach $126.7bn - the largest in the country's history.
One indicator that the construction sector remains robust in the Kingdom, despite the international economic downturn, is that sales of cement have gone up. According to figures compiled by HSBC Holding and quoted in the local media, sales of cement in Saudi Arabia rose by 15% in the first two months of 2009, compared to the same period last year, reaching 5.6m tonnes in January and February. "Around 70% of the current available work is government-based," Samir Kreidie, the managing director at Rabya, a construction and design company, told OBG. "Despite the crisis, this huge budget will positively impact the country, and all the companies involved in contracting are going to have a surge, bigger than the last one."
So, whilst there is expected to be a reduction in privately financed development, government projects are anticipated to more than compensate. "The private sector is scared," Kreidie told OBG. In reference to the tighter lending conditions he went on to say, "We got all our new projects approved for financing, because we are working with the government. The banks are certainly being harsher on the private sector."
In the short term, just how well Saudi contractors fare will likely be determined by their client list, and how many government-related projects they are involved with. A shortage of cash might affect smaller companies. "Maybe some of the bigger companies will buy the smaller ones. We might also see some smaller companies going under, because of cash-flow problems," Maher Luqman, the president of Maher Muhammad Luqman Contracting, told OBG.
But the crisis might also make some contractors more resourceful and expand the range of their operations. "Some companies are looking for new markets to work in, like Africa, because there are contracts to be found there and at this juncture it is important for companies to get any work they can," Luqman told OBG.
Another factor that will likely provide work for the country's contractors is Saudi Arabia's large and growing young population, which is adding to demand for new homes. The mid- to low-income housing segment is viewed as having enormous potential. It is estimated that currently over 70% of Saudis live in rented accommodation, with the Kingdom needing to build homes for about 800,000 people a year until 2020 to satisfy demand, according to local media reports.
If the government can continue on with its expenditure plans, as it has committed to with a very generous 2009 budget, contractors in the Kingdom should have enough work to weather the crisis. Eventually, eased credit facilities will help developers on the private side. "We are very bullish here in Saudi Arabia. Now that company results are coming out and people know the banks have not been affected, things will start to get going again," Mutaz Sawwaf, the CEO of CPC Holding, a major Saudi-based construction company, told OBG. "We believe that the long-term future is very positive for Saudi Arabia." (OBG21.04)
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11.14 EGYPT: In Good Shape
Egypt's banks appear to be weathering the global financial storm far better than many of their regional and international counterparts, due not only to the reform efforts of the Central Bank but also to the underlying strength and prudent management of domestic banks. The Egyptian Central Bank and its policies received special mention in the IMF's latest World Economic Outlook, issued in mid-April, praising it for moving to cushion the impact of the global crisis. In particular, the IMF report cited the bank's provision of liquidity and the lowering of interest rates, saying the reserve had "acted appropriately".
That appropriate action included cutting overnight lending rates to 12% in late March, thus making capital more accessible to private banks in a bid to stimulate lending. The reduction followed a cut in interest rates in February of 100 basis points, reversing a series of increases aimed at curbing inflationary pressures.
Among the longer-term measures promoted by the Central Bank and the Ministry of Finance was a consolidation of the financial sector, through the raising of the capital requirements of banks and the privatization of a number of state-owned institutions. This brought about a series of mergers in the sector, with the number of banks falling from more than 60 nine years ago to just 40 today.
Though the Central Bank has cuts its rates, it still has to be wary of increasing liquidity to the point where it starts to overheat domestic demand. Inflation has been a massive issue for Egypt, and while it fell from 22% in July last year to 11.6% at the end of March, the reserve has to tread a fine line between stimulating the economy, providing it with the liquidity to maintain growth, and over-priming the pump.
After its latest rates cut, on March 27, the Central Bank warned that inflation had not yet been fully brought under control. "It is important to emphasize that the sharp retrenchment in international commodity prices, which had begun in the second half of 2008, has not been fully reflected in domestic price levels due to the downward price rigidities in domestic markets," the bank said in a statement announcing the rates reduction.
While Egypt is faring better than most in these turbulent times, the Central Bank also noted that the slowing global economy could have "unfavorable repercussions on the domestic growth outlook". Though the Egyptian economy is expected to grow at a comparatively healthy rate in 2009, with the IMF predicting GDP to expand by 3.6%, this is still just half of the growth rate of the preceding two years. This deceleration will affect Egypt's banks, with applications for loans and export credits already dropping, according to Salwa El Antari, the general manager of the National Bank of Egypt's research department. "There is slower lending activity not merely because it is becoming harder to find creditworthy clients, but there is also less demand for loans to expand or open new businesses," she said in an interview with the local press on April 23.
Egypt's banks have also benefitted from their low exposure to the toxic asset market, with most institutions focusing on domestic investments and thus avoiding any involvement in risky instruments like derivatives and securitized bonds. This prudent approach was highlighted in a report released in February by Global Investment House, the Kuwait-based financial services company, which said that while a slowdown of the Egyptian economy could pose risks to the local banking sector through a rise in loan defaults, the general outlook for the market was positive. "With the banking sector being primarily influenced by the economic status of the country, we maintain a stable outlook for the industry in 2009," the report said.
The global recession has certainly not slowed interest in Egypt's banking sector from abroad either, with Dubai's Mashreq Bank becoming the latest entrant to the market, launching retail operations at 10 branches on April 1. Abdul Aziz Al Ghurair, Mashreq's chief executive, said there was great potential for banking service penetration in the country. "We believe that Egypt is the ideal platform to grow our business regionally," he said. "The Egyptian banking sector is a key player in the growth of the country's economy, especially in light of the remarkable GDP growth that has averaged 7% over the last two years."
The slowdown of the Egyptian economy has meant that Mashreq is taking a slightly more cautious approach than previously planned, but overall Egypt's banks should remain in positive territory this year buoyed by effective government regulation and monetary intervention. There will be less black in the ledgers over the coming year, but the inherent strength of the country's financial system should ensure that very little red appears. (OBG29.05)
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11.15 EGYPT: Per Capita Spending on Pharmaceuticals Will Continue to be Relatively Low
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Egypt Pharmaceuticals and Healthcare Report Q1 2009" report to their offering. BMI's Egypt Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Egypt's pharmaceuticals and healthcare industry.
In this quarter's report, BMI has extended its forecasts for the Egyptian pharmaceutical sector from 2009- 2013. Overall, we expect the total drug market expenditure to increase from $2.3bn 2008 to $3.8bn by 2013. In our view, one of the main drivers for growth will be a significant increase in the uptake of health insurance, anticipated by the Egyptian government to achieve full coverage by 2010. However, the government's approach to the pharmaceutical environment must target other areas, particularly the over-the-counter sector, where consumer awareness remains very limited. Per capita spending on pharmaceuticals in Egypt will continue to be relatively low compared to its Arab neighbors, at $46 by 2013.
In November 2008, Egypt donated $125,000 worth of essential medicines to Tanzania, with the view that the improvement of healthcare in Africa is more likely to be realized through the collaboration of African countries. The World Health Organization (WHO) approved the medicines in adhering to international safety and quality standards. We view this as significant in promoting the stricter manufacturing regulations on pharmaceuticals in Egypt. While anti-smoking campaigns began in Egypt in 2005, the number of bans on smoking in public have been gradually increasing. While such restrictions are to be encouraged to decrease the burden of disease imposed on the country from smoking-related diseases, we caution that enforcement and full compliance must also be achieved. This may not be a simple task, particularly since the culture of smoking in Egypt has formed an integral part of social interaction. We believe that more direct and explicit campaigns are necessary to separate smoking from positive connotations.
According to BMI's Burden of Disease Database (BoDD), the number of disability-adjusted life years (DALYs) lost to lung cancer in Egypt will increase from 51,567 in 2008 to 112,019 by 2030. The percentage of DALYs attributed to smoking related diseases from all cancer DALYs in Egypt will increase from 8.8% to 11.7% during the same period. (R&M16.04)
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11.16 ALGERIA: A Fresh Look at Reform
Amid global economic turmoil and faced with dropping oil prices, Algerian authorities are nonetheless taking advantage of their relatively sheltered position to expedite economic reforms under a renewed mandate. Following the re-election of President Abdelaziz Bouteflika to a third term, the Algerian government looks set to continue its policy of increased spending, including a €113.6bn development fund. While critics have lamented the slow pace of investment reforms during President Bouteflika's first two terms, few investors doubt that Algeria today is a much safer place to invest than before, thanks in part to the government's steady policy of liberalization.
Heralding a steady stream of investment projects, the president's €113.6bn development fund, which was unveiled in December 2008, will be put into motion as the election excitement subsides. Abdelmalek Sellal, Bouteflika's campaign manager, told local press recently that the "amount was calculated based on [Algeria's] foreign exchange reserves… which will allow Algeria to fund upcoming investments with ease". According to Kamel Mansouri, the CEO of Sofinance, a financial services firm, "The authorities can greatly help economic diversification by investing the fund in strategic forward-looking industries and decrease the reliance on imports."
The start of Bouteflika's third mandate has given the government an opportunity to push through some of the more urgent economic reforms that had previously been put on hold as state coffers overflowed with oil revenues. Among the priorities for the coming months include an emphasis on clarifying the legal framework that regulates foreign ownership. In December 2008, Prime Minister Ahmed Ouyahia unveiled a set of guidelines establishing limits on foreign ownership, but vagaries in the text have led many investors to adopt a wait-and-see strategy before proceeding with new projects. Authorities have already begun to try and provide additional guidance on the new ownership regulations, announcing that state-owned companies will henceforth have a majority stake in any new partnerships with foreign companies. Similarly, the Ministry of Commerce recently asked that local shareholders hold at least a 30% stake in foreign-owned importers.
While the global crisis seems to have spurred a raft of reforms throughout the world's economies, Algeria is better positioned than most to push through much-needed reforms. While the drop in barrel prices have left Algeria's lucrative oil windfall looking less robust than in years prior, Algeria's deferred entry into the global economy has left the country's financial system relatively protected from the worst excesses of the global recession. Indeed, an IMF Staff Country Report released this week indicates that the Algerian economy is "insulated from the direct financial contagion" of the global financial crisis. The government's fiscal and monetary policy has already limited the economy's exposure to external factors, with the exception of global energy prices. Similarly, Algeria boasts a low rate of external debt, at 3% of GDP, a prohibition on foreign portfolio investment and a highly liquid banking sector that is 90% state-owned. The IMF reports that the central bank has managed foreign currency reserves prudently, with the large portion of these revenues invested in high-grade, fixed-income securities. Inflation also remains among the lowest in the region, which the report attributed to "stable domestic energy prices, high import content of domestic demand, subsidies on wheat and milk".
Yet, Algeria's steady performance in the face of the global credit crisis should not imply that economic restructuring is unnecessary. With 98% of total exports and 75-80% of budget revenue still coming from hydrocarbons, the country's GDP is highly dependent on volatile energy prices. Further fluctuation in European demand for energy will make development in the non-hydrocarbon sector even more pressing.
Furthermore, the public sector continues to drive the economy, something that will likely continue in the coming year as the €113.6bn spending plan is implemented. The minister of energy and mines, Chakib Khelil, told the press in March that the national energy company, Sonatrach, will carry out €47.7bn of projects over the next five years alone.
Still, in spite of these hurdles, in the prevailing global economic climate, Algeria is able to provide a refuge for companies with an appetite for long-term investments. The end of the election season will bring much-desired clarity to the government's vision for the medium term and empower the authorities to take constructive steps in building a diversified economy. (OBG16.04)
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11.17 MOROCCO: Maintaining Momentum
As Morocco's primary export markets (the Eurozone) begin to contract, the Kingdom has been looking to boost alternative sources of revenue, with noticeable success. The Oxford Business Group notes that while trade flows are decreasing and remittances from Moroccans living abroad are expected to decline in 2009, the influx of Persian Gulf investment and the resurgence of the agricultural sector should buoy the country in the coming year.
In a recent televised statement, the Moroccan minister of economy and finance, Salaheddine Mezouar, said that in spite of a drop in certain sectors, the government expects GDP growth to range between 5.8% and 6.7% in 2009, roughly the same as 2008 and an impressive performance considering the impact the slowdown has had on other regional economies. The robust growth is expected to come on the back of a turnaround in the agricultural sector, one of the largest sectoral contributors to Morocco's GDP.
Heavy rains in recent months are expected to lead to a good harvest, which will be particularly welcome following the serious droughts of 2007. Output began to increase with the onset of the rainy season in 2008 and it looks set to continue to grow this year. With accumulated rainfall exceeding 106% of that of a normal year and dams showing a filling ratio of 66.6%, up 46.3% over the period in 2008, agriculture looks set to regain its position as a major contributor to both the country's GDP and to the pool of available jobs. The government predicts that it should add 3.2% to GDP growth in 2009, up from 1.3% in 2008, and it is seeking to develop a new national strategy to expand growth further. In January 2009 the government confirmed that the Plan Maroc Vert (Green Morocco), a program to upgrade Morocco's agricultural competitiveness, integrate it into global markets and increase added value, will have a budget of €1.8b for the next five years. The plan will renovate the sector through increasing investment, improving management and training, and working to provide access to water and land.
The agricultural surge will help to ease the drop in some of Morocco's other primary sectors. Manufacturing, a traditional strength of the country, has been hit hard, with exports down 32% in the first two months of 2009 and electric cables, textiles and electronic components falling a combined 25%. However, phosphate, Morocco's number-one export, has witnessed the biggest contraction. Morocco, which has over 50% of the known phosphate reserves worldwide, depends on the sector as a driver of industrial growth. As prices increased on the international market, phosphates and phosphate derivate exports declined by 59.5% in February alone. The country exported 447,400 tonnes of phosphates in February 2009, for a gross of €63.7m, compared with 1.97m tonnes during the same period in 2008. Despite the current downturn, however, the Kingdom recognizes the segment's potential and will invest about €4.5bn in phosphates by 2012.
The slowdown of the Eurozone not only impacts Morocco's export flows, but also limits the amount of money flowing into the Kingdom from Moroccans resident abroad (MREs). Remittances have become a crucial source of foreign currency. According to the Securities Commission (Conseil Deontologique des Valeurs Mobilieres, CDVM), the country's capital market authority, 58% of overseas investors in the Casablanca Stock Exchange are expatriates. More broadly, remittances continue to play their traditional role of supplementing the income of expatriates' families, and boosting foreign currency earnings. This year, however, it is unlikely that MREs will be sending back money at quite the same rate. Over 80% of Morocco's expats are based within the EU, mainly in France and Spain. In recent years, for example, the booming Spanish construction sector has employed many MREs, but with the segment ailing, remittances will likely fall in 2009.
Still, in spite of the drop in some of the traditional export markets, Morocco's trade deficit is likely to remain stable in 2009, with low oil prices drastically reducing imports. Imports were down 16% to €3.6b in the first two months of 2008, as the price of crude oil declined 49.2%, slashing the country's oil bill by 54.9%. Given Morocco's lack of oil and its heavy reliance on imports, the easing prices offer a bit of respite.
Furthermore, while 2008's robust FDI growth will be difficult to sustain in 2009, a number of projects announced in recent months suggest that foreign investors, especially from the Gulf, still expect safe returns in Morocco.
The last week of March alone saw the announcement of two major infrastructure commitments in the Kingdom. On March 30, the Abu Dhabi National Energy Company (TAQA) unveiled plans to invest €1.9bn into three electric power plants in the Maghreb over the next four years. While some of the funds will be directed to a project in Tunisia, Morocco is the main beneficiary. TAQA will begin operations sometime this year, with an upgrade of the Jore Lasfer power plant and on a 300-MW wind farm in Tarfaya, in partnership with Spain's Iberdrola Ingernieria Construccion. Commercial operations are expected to begin in 2012 or 2013.
Following TAQA's announcement, Air Arabia, the Middle East's largest low-cost carrier, unveiled its plans to invest €37.8m in Morocco's Regional Airlines to launch its second hub in Casablanca, at the Mohammed V International Airport. The agreement, signed in November 2007, gives the UAE-based company management control of the Moroccan airline, which will take the name "Air Arabia Maroc” and will fly to France, Italy, Spain and the UK starting in the second quarter of 2009.
These increasing international connections might be just the thing to protect Morocco over the next few months. The Kingdom's investment opportunities are spread broadly across a variety of sectors and their diversity will continue to attract attention from a wide range of sources. Although manufacturing may not rebound immediately, by building up infrastructure now, Morocco will be ready when demand from the Eurozone stabilizes. (OBG16.04)
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11.18 GREECE: EIU Feels Greece's GDP Will Contract by 3.6% in 2009 & by 1.1% in 2010
The Economist Intelligence Unit sees Greece posting a negative economic growth of 3.6% in 2009 and 1.1% in 2010 before turning to positive growth area of 2% in 2011. EIU cites weak domestic demand and sharply falling foreign demand. Private consumption growth will remain sluggish at an average of 0.5% in 2009-10, constrained by growing unemployment and low consumer confidence. Personal indebtedness, although still moderate compared with some other EU countries, continued to increase rapidly in 2008. The consequent rise in the cost of servicing personal debt will lead to a slowdown in both consumer demand and house building in 2009.
Still, the EIU expects consumer demand to be underpinned by moderately strong real wage growth. Also, it expects investments to be helped by the implementation of projects funded by the EU's Community Support Framework. It also projects budget deficit of 3.7% of GDP in 2008, to rise to 5% in 2009, before easing moderately to 4.8% of GDP in 2010 and 3.3% of GDP by 2013. Greece's high deficit and public debt will adversely affect international confidence in the Greek economy. Although not our central scenario, there is a risk of Greece defaulting on its long-term bonds during the forecast period. If this happens, Greece would seek support from the IMF and the EU, both of which would force tough austerity measures,” the EIU stresses.
Finally, the EIU expects the ruling New Democracy party to hold early elections before the end of the parliamentary term in 2011, potentially in March 2010, when a new president must be elected.
However, "if an early election is called, the opposition Panhellenic Socialist Movement (Pasok) would be unlikely to secure an absolute majority, implying that an agreement with at least one other party would be needed,” it says. Greece's score in the EIU business environment rankings has deteriorated between the historical period (2004-08) and the forecast period (2009-13), largely as a result of lower scores for political environment, macroeconomic environment, market opportunities and financing. Problems with the quality of public administration and with the public finances will persist.
"We expect incidents of social unrest to increase in the medium term. Greek banks are well capitalized, but have a high degree of exposure to the Balkans. Although there has been some improvement, weak institutional effectiveness, owing to the pervasiveness of red tape, corruption and an overstaffed, underworked and poorly educated civil service, is a source of operational risk. The bureaucracy is largely unaccountable, energetic in resisting change, and of mediocre quality, but the level of expertise is expected to improve, as civil-service hiring becomes more flexible and more graduates are attracted to the civil service on a contract basis. Recently, there have been some apparent attempts by the government to tackle corruption, but their effectiveness remains open to question. New Democracy won the election in September 2007 on a platform of administrative reform and transparency, but has so far done little to improve government effectiveness.” (EIU29.04)
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11.19 GREECE: Pharmaceuticals and Healthcare Report Q2 2009
Research and Markets(http://www.researchandmarkets.com) has announced the addition of the "Greece Pharmaceuticals and Healthcare Report Q2 2009" report to their offering. The Greece Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Greece's pharmaceuticals and healthcare industry.
Pharmaceutical spending in Greece has experienced high levels of growth in recent years, making it the highest spending country per capita in Central and Eastern Europe (CEE). For this reason Greece is positioned top in BMI's Pharmaceuticals & Healthcare Business Environment Ranking for CEE in Q209, and eighth position globally. Over the next five years, sales of pharmaceuticals, which include prescription drugs and over-the-counter medicines, will increase, albeit at a slower rate, from $8.43bn to $10.78bn, representing a compound annual growth rate (CAGR) of 5%.
There are several key macroeconomic, demographic and epidemiological reasons behind our more negative outlook, however, the most pertinent threat to increased spending are the accumulation of debts within the hospital sector. The amount owed to members of the Hellenic Association of Pharmaceutical Companies (SFEE) has spiraled to €2.36b ($3.23b) by most recent estimates. Payment delays have grown to almost two years, a factor which shows considerable risks for pharmaceutical companies.
Success in resolving this issue will be a significant determinant of future direction for pharmaceutical policy and represents a significant risk to further growth and Greece's standing in the Business Environment Rankings. The current political situation may not be conducive to resolving this situation in the short term. A move towards reduced reimbursement could help develop the over-the-counter (OTC) sector over the long term.
In addition to topping our Business Environment Rankings, Greece is also the healthiest country in Central and Eastern Europe according to BMI's Burden of Disease Database (BoDD). Despite recently being dubbed the heaviest smokers in Europe, healthy Mediterranean diet and lifestyle, in addition to projects such as a recently created model for co-operation in the area of prevention, monitoring and control of endemic and parasitical diseases, limit the number of disability-adjusted life years (DALYs) lost in the country.
Greece's high per capita spending and reasonably sized population makes it a relatively attractive location to conduct clinical trials. While the country lags behind locations such as Czech Republic, Hungary, Poland and Russia, 115 phase II to IV clinical trials were registered in 2008.
Parallel trade remains prevalent in Greece, thanks to low prices. While prices are not likely to experience any dramatic increases in future, traders' activities are being increasingly spread to new, low cost bases, such as Romania. Furthermore, the weakening of the sterling has seen a major parallel export market (R&M17.04)
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11.20 BULGARIA: Statement by the IMF Staff Mission
An International Monetary Fund (IMF) mission headed by Bas Bakker visited Sofia during April 14–22 to hold regular discussions with Bulgarian authorities. At the conclusion of the visit, Mr. Bakker made the following statement:
"The global financial and economic crisis has turned out to be more severe than had been anticipated during the mission's last visit in December 2008. Global GDP is now projected to shrink by almost 1% this year, the first decline in at least sixty years and by even more in the EU.
"As a result of the global turmoil, capital flows to Eastern Europe have declined. Western European banks are no longer providing new funding to their local subsidiaries, and private sector credit growth has slowed, in many countries to near zero. Consequently, domestic demand growth has also slowed, and has in many countries become negative. At the same time, demand for Eastern Europe's exports has shrunk, as its principal trading partners are in recession. With both exports and domestic demand shrinking, GDP in the region is declining.
"Bulgaria has been affected by the global crisis through similar channels as other countries in the region. Capital inflows have declined, and credit growth has ground to a near-halt. Nominal exports in the first two months of 2009 were 27% lower than in the first two months of 2008. Imports dropped even more sharply (32%), suggesting that domestic demand is declining, and the current account deficit is adjusting rapidly. High frequency indicators suggest that the economy may already be in an economic downturn. Manufacturing production in February was 23% lower than a year earlier; retail trade turnover in February was 4.7% lower in volume terms; and new car sales in the first quarter were 51% lower than a year earlier.
"As a result of these shocks, the mission now projects that the Bulgarian economy will shrink by around 3% this year and 1% next year. The projection is a downward revision of our projection in the April 2009 World Economic Outlook, which was prepared a few weeks ago, prior to our current visit. The current account deficit is expected to decline from 25% of GDP in 2008 to around 12% of GDP in 2009, while inflation, which less than a year ago had increased to over 15%, will decline sharply to around 1½% by end-2009.
"Bulgaria has strong buffers—the result of prudent policies during the boom years. The public finances are in surplus, the balance sheets of the central bank and the government are strong, with considerable foreign and fiscal reserves. The banking system has remained stable and benefits from the additional cushions created by regulation put in place during the boom years. These policies have supported the currency board, which has and should continue to anchor economic policies. To maintain confidence, it is important that these buffers not be eroded quickly, and policies adjust to the worsened reality in a timely manner.
"As a result of the economic downturn, fiscal revenues are likely to disappoint. So far, this has been most visible in VAT receipts, which have been hurt by the sharp drop in imports. But other categories are likely to be affected as well, and total tax revenues may well decline in nominal terms.
"The original budget of September 2008, which envisaged 16% tax revenue growth, was too optimistic. But even after the decision made in December to limit spending to 90% of the budgeted amount (the 90% rule), spending plans are not sufficiently tight. Our current revenue projections suggest that such a spending level would result in a deficit of about 1% of GDP. To avoid fiscal deficits, expenditure will need to be reduced.
"It is desirable and should be feasible to maintain a small surplus in 2009. There is room to cut expenditure further, including by lowering the growth of spending on maintenance, operating costs and government subsidies, containing the public wage bill, and streamlining public investment. Keeping fiscal surpluses is important to prevent an erosion of the fiscal reserve account - an important component of international reserves - and maintain confidence in the currency board.
"Keeping the public finances in surplus next year will be even more difficult—nominal revenues are likely to decline and nominal expenditure will need to be reduced accordingly.
"To sustain a future recovery, private sector resources will need to be shifted to external trade-oriented sectors. The sectors that have contributed the bulk of the growth in recent years (financial sector, real estate, construction) were dependent on large capital inflows. With a prolonged drop in capital inflows, these sectors are likely to decline in the near future and may see little, if any, growth thereafter. A market driven reorientation toward the tradable sectors is needed. This will only be possible if the rapid rise in unit labor costs of recent years comes to an end. Anecdotal evidence suggests that wages are indeed slowing rapidly, but it will be important that wage moderation is sustained.” (IMF22.04)
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