1997 10 29 Wednesday No. :24797
OFFSET GROUP SEEKS TO EASE SNAGS IN MILITARY MEETINGS
The United Arab Emirates Offset Group, UOG, is working to iron out problems Western arms makers have in meeting what they say are stiff requirements tied to military sales, but UOG will not relax these conditions. UOG Project Manager Peter Eident said the programme was also trying to solve issues local firms complain of having in dealing with foreign firms, which are required to invest part of the value of their defence deals in local joint ventures.
"There are problems and we are sympathetic to those problems," Eident told Reuter on the sidelines of the two-day 'Forum on Investment in Gulf Economic Communities, FIGEC '97', conference which ended yesterday.
"The problems have to do with red tape, underdeveloped commercial laws, a perception that there is not a long-term investment mentality in the UAE and they (the arms makers) say the market is small and that skilled labour is not available," he said. Defence contractors have also complained of limited investment opportunities.
"We are working with local companies to improve the business environment," Eident said. "Local companies are complaining that defence contractors are going through the motions, that they aren't sincere in their efforts and they haven't studied the market well enough." UOG was launched in 1990 when Abu Dhabi began a shopping spree for advanced weaponry that has lured a procession of international arms makers seeking multi-billion dollar deals.
It expects these international defence suppliers to invest in projects which will inject some $ 3.0 billion into the UAE's oil-driven economy over the next seven years. Twenty-six projects, ranging from a hospital to a garment factory and leasing company, have been launched, Eident said. All have been in Abu Dhabi. "We have looked and we will continue to consider other emirates."
However, some companies say they are frustrated by the task of investing in non-familiar, non-military ventures. Defence firms are required to set up 49%:51% joint ventures with local partners that generate added value to the UAE over seven years equal to 60.0% of the sales contract. This compares to a requirement in Saudi Arabia of 30.0% and of 100.0% in many European states.
However, Eident said the rules were not going to change: "We are consistently talking, saying they have to do the offset obligation, the requirements are not going to change and there will be penalties if they don't perform." UOG penalises firms 8.5% of the unfulfilled portion of the offset at various milestones before the seven years.
Eident said defence contractors also needed to work harder on their offset projects and look to the international market for sales of the project's goods. "They should think exports," he said, adding that the UAE's labour market was flexible and offsets could "import labour at will."
He said that some firms like France's GIAT and Dassault and the US's Westinghouse had "people on the ground looking at investment opportunities." Many had already entered into offset projects, including GIAT, Dassault, Thomson CSF, GEC Marconi, Westinghouse and a string of others. (Reuter)
UAE TO INVEST $ 3.0 BILLION IN PETROCHEMICALS
The UAE Government is to invest $ 3.0 billion (Dh 11.0 billion) developing the country's petrochemical industry in the next five years in a move to help reduce the country's dependence on oil revenues. Minister of Petroleum and Mineral resources Obaid bin Saif al Nasiri made the announcement on the concluding day of the third Forum on Investment in Gulf Economic Communities, FIGEC '97, in Abu Dhabi.
The Minister said that although the UAE has approximately 9.5% of world reserves of oil and 4.0% of natural gas stocks, it would be unwise for the country's economy to rely totally on that sector.
"The substantial reserves of natural gas in the UAE are considered a strong incentive to establish a petrochemical industry. The Government has created an atmosphere conducive to investment. The Ruwais Fertiliser Company, FERTIL, was established to exploit natural gas from on-shore fields to manufacture ammonia and urea," he said.
He continued, "The UAE will build petrochemical complexes to produce polyethylene, ethylene di-chloride, caustic soda, chlorine and salt. The complexes will be supplied with chloride gas and are planned to come on stream by the end of the year 2000. Furthermore, the Government intends to expand the existing plants by investing $ 3.0 billion in this sector in the coming three to five years."
Al Nasiri outlined a number of the effects of petroleum wealth on the UAE, including a rise in gross domestic product from Dh 39.6 billion in 1975 to Dh 165.0 billion last year. He added that the effects of investment of the petrol wealth had led not only to an increase in the population but also better living standards.
However, he warned that "the brief explanation of the effects of oil revenues on social and economic development in the UAE as demonstrated that although oil revenues have contributed the pre-dominant share, and in spite of efforts to use these revenues properly, we cannot depend in the long run on oil revenues alone to bring about a strong, modern economy. Instability in the international oil markets can drastically reduce these revenues because prices are tied to the world economy."
The Minister also said that growing interest in the environment and the search for newer and safer sources of energy conribute to the instability of an economy dependent on oil for revenue. He added that the UAE should reduce its dependence on oil not only because it is a non-renewable resource but also because of growing international focus on the environment which may contribute to future of greater price fluctuations.
"Needless to say, we disagree with the role assigned to oil in environmental pollution," he said, adding that another factor is the continuing search for new sources of energy "although we do not believe that these efforts will be successful in the foreseeable future."
Al Nasir set out a seven-point plan for the creation of a sustainable industrial economy, which included increased investment in training for nationals, investment in capital-intensive, high-technology projects, setting priorities for investment projects, selecting suitable long-term foreign partners, fostering economically, socially- and environmentally-friendly research, making use of international trade agreements and investing savings from oil revenues in long term projects both within the UAE and abroad.
Diversification can be realised only in a sustainable industrial economy, he said, adding that the transformation has to take place systematically on several levels. To this end, there had to be increased investment in training Emiratis for technical, administrative and financial jobs, he said.
"This must be started before any major project is initiated so that the necessary personnel to run the project will be available when the project is finished. The Government has to set specific priorities for investment projects and focus more on capital-intensive, high-technology projects dependent on raw material available locally."
Savings from oil revenues, he said, should be used mostly in investment in long-term projects both internally and overseas. Programmes should be selected with long-term foreign partners "and on condition that they are prepared to transfer technology and experience to us," he said, adding hat the UAE should harness the positive effects of international trade agreements. (The Gulf Today and the Gulf News)
BANKS FOR STRONGER CURBS AGAINST MONEY LAUNDERING
A senior banker yesterday called upon financial institutions in the country to "review and strengthen the anti-money laundering controls within your institutions."
Stressing that money laundering is a vast and international crime, John Milne, Senior Manager, Bank of England, urged delegates at the Forum on Investment in Gulf Economic Communities, FIGEC '97, conference, which wrapped up yesterday in the UAE capital, "to give your vocal encouragement and support to your national authorities both in introducing legislation to fight this menace and in their efforts to co-ordinate with the international anti-money laundering network," which includes the Arab Gulf Co-operation Council, AGCC, member countries - Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the UAE.
Underlining the international dimension of the problem, according to a United Nations, UN, report earlier this year, the estimated value of the drug-trafficking business is $ 400.0 billion every year. "In context, it is equal to the entire visible exports of Japan. It is around five times the annual value of all oil exports from the Arab Gulf," Milne said, by way of explaining the magnitude of the problem.
He added that "it is equivalent to $ 13,000.00 every second of every minute of every hour of every day. However, this is only the value of drug-trafficking and does not count the value of the proceeds of other crimes. Thus, while national action is important as the first platform for the fight against money laundering, it cannot hope to be successful without being firmly locked into the international dimension of the crime it seeks to combat," he said.
According to Milne, although the fight is only in its infancy, there are signs that it is having an impact. "A recent estimate has suggested that the cost of money laundering has grown from around 6.0% to around 25.0% - 28.0% today." The main handicap against this menace is the increasingly sophisticated methods used by criminals.
To fight against this, Milne urged the (AGCC and other) financial institutions to join the international efforts through sharing information, turning down any dubious proposal for investment and keeping fully abreast of the potential for money laundering in recent advances in electronic funds transfer systems. (The Emirates News)
ARCHAEOLOGY SEASON OPENS IN AL AIN
The winter season of archaeological work by the Department of Antiquities and Tourism in Abu Dhabi's Eastern Region has commenced, an announcement from the Department said on Monday. Omeir Mohammed al Sabusi, the Department's Deputy Director, said that the programme of work has been approved by the Department's Under Secretary Saif bin Ali al Darmaki. The work included further excavations within the Hili Archaeological Garden, where a number of major sites from the early Bronze Age, in the Third Millennium BC, have already been uncovered, including the well-known Hili Tomb.
In the same area, al Sabusi said, a number of sites from the Bronze Age and the Iron Age have been identified, including settlements, 'falaj' water channels and burial sites. In the Bida bint Saud area, north of Al Ain, further work is being planned on the 'falaj' discovered during excavations in a previous season, added al Sabusi. A preliminary report on the 'falaj', which is believed to date back to the local Iron Age, was presented to the 1996 Seminar for Arabian Studies in London by the Department's archaeology expert Dr Walid Yasin al Tikriti.
Work would also be undertaken on tombs on Jebel Hafit (Hafit Mountain) near Mazyad, the Department's Deputy Director said. These tombs, he explained, were believed to date back to around 4,000 BC and he added that the excavations would be carried out with a view to examining the possibility of restoring them. A number of repairs to tombs at Umm al Nar, near the capital, were also planned during the course of the winter season, al Sabusi said.
Other work on the Department's programme includes a continuation of restoration in the Qattara and Muwaidi areas of Al Ain and in Mahadhir Liwa. This work will be carried out in collaboration with Khalifa Mohammed al Dhaheri, head of the Antiquities Section of the Department, and under the direction of Dr al Tikriti. (The Emirates News)