Secretary of Iranian Airlines Association Maqsoud Asa'adi Samani said the 8th International Aviation Exhibition will be held in November.

"The 8th International Aviation Exhibition will be held on Kish Island on November 17-20," Asa'adi Samani told reporters in Tehran on Sunday.

Noting that the biennial exhibition is the first major event after the removal of sanctions against the aviation industry, he said the biggest international aircraft manufacturers, including Airbus and spare parts companies will be in attendance.

"The 8th exhibition will be the biggest industrial event in Iran after the nuclear deal (with the world powers)," Asa'adi Samani said.

Tehran has become a hot destination for foreign delegations, jockeying for position in the lucrative new market opening for business. The nuclear agreement explicitly prioritizes the sale of commercial passenger aircraft and related parts and services to Iran, with Airbus and Boeing are poised to rebuild the fleet and secure an enormous payday.

Iran Civil Aviation Organization acts as a policy maker and coordinator to promote an indigenous Iranian aeronautical industry by providing and assisting the aircraft industries with needed technologies, knowledge and parts.

Qais Mohammad bin Yusuf, Oman's Minister of Trade, Industry and Investment met and talked with Seyyed Shamsuddin Hossein, the head of the Special Commission for Growth and Development of Production and Monitoring the Implementation of Article 44 of the Constitution of the Islamic Council, at noon (Monday, May 18).

At the beginning of this meeting, the head of the special commission for the jump and boom of production and the principle 44 of the Islamic Council assessed the closeness and strength of relations between FIMA as continuous and stable and said: "Iran and Oman have always had close cooperation and continuous relations with each other and all-out efforts The government and parliament of the two countries have led to the deepening and development of relations in the political and economic fields.

Hosseini pointed out: "The indicators of the cooperation between the two countries are moving forward, but the economic relations between the two countries have not progressed in accordance with the political relations, and the efforts of the two countries to improve the level of economic cooperation equal to the friendly and political relations are important."

The head of the Special Commission for Growth and Development of Production of the Islamic Council added in the continuation of this meeting: "The Islamic Republic of Iran is looking for convergence between regional and neighboring countries".

Referring to the developments in the region and Iran's cooperation agreement with some countries in the region, he said: "The Islamic Republic of Iran has always welcomed the development of cooperation with the Persian Gulf countries and the establishment of regional cooperation in the direction of peace and international stability."

Referring to the readiness of our country to cooperate with Oman in various fields, Hosseini pointed out: "Iran has made significant progress in various industrial fields such as energy, industry, medicine and medical equipment, and the field of technology, and the interaction with Oman in these fields has been successful. It will benefit both countries."

The representative of the people of Tunkabon and Ramsar in the Islamic Council called for the promotion of parliamentary relations, especially in the economic field, and considered the role of parliamentary interactions between Iran and Oman in strengthening the relations between the governments to be effective and to expand the parliamentary relations between the two countries. And he emphasized the readiness and support of the Islamic Council for the approval of the agreements signed by the governments of the two countries.

In this regard, he emphasized: "Parliamentary movements in the fields of joint and special commissions and chambers of commerce of the two countries will strengthen the level of bilateral relations."

Shamsuddin Hosseini stated the importance of improving the level of relations between Iran and Oman in line with the strategic goals and in the direction of advancing bilateral relations and supporting the government and people of the two countries and emphasized the need for the increasing development of economic cooperation.

Qais Mohammad bin Youssef, Minister of Trade, Industry and Investment of Oman, expressing his satisfaction with the warm reception he and his accompanying delegation received in the Islamic Council, called for the promotion of commercial and economic cooperation between Iran and Oman, and expressed hope that the level of bilateral relations in parliamentary affairs would improve. And the governments of the two countries should be strengthened even more.

By stating Iran's industrial, pharmaceutical and technological advances and achievements, he stated his country's serious determination to strengthen relations with Iran, and for the development of joint cooperation, he considered the industrial capacities of our country as a basis for promoting trade exchanges and deepening cooperation.

The Minister of Trade, Industry and Investment of Oman, while inviting the members of the Special Commission for Growth and Development of Production of the Islamic Council to Muscat, said: "Strengthening parliamentary relations and exchanges is the source of improving the level of commercial and economic relations and improving the level of interactions between the two countries. It will be opened between Oman and Iran.

It is worth mentioning that in addition to the president of the Chamber of Commerce and the Omani ambassador and the economic delegation of that country, Dr. Nouri Qazaljeh, Dr. Ali Akbar Karimi, Dr. Mohammad Rashidi, Dr. Reza Taqipour, other members of the commission were also present in this meeting.

On the trends shaping the Kingdom’s real estate market
Which factors are driving the growth of the real estate sector in Saudi Arabia, especially in relation to the economic diversification efforts outlined in Vision 2030?

DAVID GROVER: The market in Saudi Arabia has experienced a significant transformation in recent years. Giga-projects have been instrumental in driving investment across various sectors, and the real estate sector is poised for substantial growth in the medium term. As a result, international and regional investors have shown a keen interest in this market, fostering increased competition and raising industry standards.

The ongoing economic diversification efforts aligned with Vision 2030 have played a pivotal role in fuelling the expansion of the real estate sector. For instance, as Saudi Arabia invests in the development of its tourism industry, there is growing demand for infrastructure such as hotels, retail spaces and entertainment venues. The country boasts several alluring destinations, including Al Ula, which shares cultural heritage with Jordan’s Petra but has remained relatively untouched. Similarly, the Red Sea coast offers attractive beaches without the crowds found at renowned tourist destinations. However, to fully establish a thriving tourism industry, it is essential to develop the necessary real estate infrastructure to cater to the needs of visitors.

To what extent are demographic trends and changing preferences influencing the design of new communities in Saudi Arabia?

GROVER: About 63% of the Kingdom’s population is under 30 years of age, so younger generations make up a significant segment of new homebuyers. Younger generations have different preferences and priorities when it comes to the homes and communities they want to live in. For example, young people are concerned about environmental issues and sustainability, and they want homes and communities that prioritise eco-friendly features and practices.

Many young people value open spaces and green areas where they can connect with nature, exercise and socialise. Walkable neighbourhoods with access to public transportation are highly desirable for those who want to reduce their reliance on cars and minimise their carbon footprint. The presence of trees and shaded green spaces not only mitigates high temperatures, but also enhances the overall quality of life in a neighbourhood, all while reducing the demand for energy.

At the same time, younger homebuyers are usually tech-savvy, and expect homes and communities to be equipped with modern technology. This includes high-speed internet access, smart home features and electric vehicle charging stations. Young adults often prefer homes and communities that are designed for practicality and efficiency, with well-designed storage spaces, efficient layouts, and easy access to essential services like grocery stores, health care facilities and schools.

The Covid-19 pandemic influenced the aspects considered essential within a home or neighbourhood, particularly in light of the mobility restrictions experienced during that period. Notably, we have observed the emergence of inclusive communities that foster opportunities for neighbours to forge connections with one another.

What other sustainability measures and innovations are being adopted within the industry in Saudi Arabia?

GROVER: Vision 2030 places sustainability at the forefront of the country’s economic development objectives. While the younger generation possesses a heightened awareness of the challenges posed by climate change, regulatory and policy initiatives have expedited the private sector’s adoption of sustainable practices.

The production of building materials in the real estate and construction sector is having a notable impact on climate change. Developers are taking proactive measures, opting for more sustainable materials and embracing innovative community design concepts to mitigate their environmental footprint. For instance, the incorporation of smart technologies is enhancing energy and water efficiency, whereas the integration of solar panels ensures that a substantial portion of energy is generated from renewable sources.

Saudi Arabia stands at the forefront of sustainable community development, largely due to substantial investment in the country’s giga-projects, which has attracted a pool of innovative global talent. People are coming together to tackle the challenges posed by climate change, and Saudi Arabia is playing a vital role in this process.

Source:

https://oxfordbusinessgroup.com

Fifty years ago, he had just attended a conference in Tehran. He loved it — as did his fellow delegates. In a note afterwards, he wrote of their “surprise with the striking contrasts” all over the city, noting the “watermelon stalls on one side of the road” with “new factories for assembling Leyland lorries and Mercedes ‘buses’ on the other”.

He was impressed by Iran’s firm sense of nation, its pride in its ancient civilisation, and the “the stability and continuity provided by the personality of the Shah”. He noted Iran’s steadily improving relationship with the Soviet Union and eastern Europe and the growing ease with which companies — and car companies in particular — could do business in Iran.

Tehran, he reported, was a “Mercedes museum” in that “almost every model ever produced was on the streets”. Leyland had “established a strong and flourishing bridge head”; British double-deckers looked “surprisingly at home under the blue skies of Tehran”; and a new factory was being set up to produce 7,000 Rootes Group saloons a year (Rootes was a UK car manufacturer that had disappeared into Chrysler by the end of the 1960s).

Anyone who thought that Iran was “ripe for revolution” was just wrong, said Mr Bruce-Gardyne. He even dared to hope that “the example of Persia’s prosperity through stability might even prove infectious” in the region.

Forecasts made about the Middle East tend to be even riskier than those made about regions elsewhere. And Mr Bruce-Gardyne was of course wrong on every single point.

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Merryn Somerset Webb column sparks a surge of comment

Since the country approved its theocratic-republican constitution in 1979 there has been less “prosperity through stability” than anyone at the 1966 convention might have expected. But could it now return? The end of the sanctions against Iran (at least by the EU and the UN) and the results of recent elections show the reformers have made gains.

Interest in the country has soared: there are conferences aplenty both here and there — including one hosted by the Financial Times in London this week — and the talk is all of prosperity and stability once more.

I listened to Michael Axworthy of Exeter University speaking at an event held by Scottish-based fund manager MacInroy & Wood last week. His positive case for Iran is hugely compelling. Iran has a young and highly literate population, 60 per cent of which is aged under 35 (no pension problems there) with a wealthy, entrepreneurial and still interested diaspora.

Rouhani brings hope that this time it might be different in Iran
The snow capped peaks of the Alborz mountain range stand beyond buildings and rooftops on the city skyline in Tehran, Iran, on Wednesday, Nov. 25, 2015. Iran will encourage foreign partners and investment as sanctions are lifted and the country seeks to boost its economy after July's nuclear agreement with the world powers, President Hassan Rouhani said. Photographer: Simon Dawson/Bloomberg

The coalition should be better placed to enact the economic reforms the country desperately needs

The literacy rate is over 85 per cent, with 68 per cent of university entrants being women and some 234,000 new engineers graduating every year. The young are also very “IT savvy”, says Mr Axworthy. Think of an interesting IT firm in the west and you can be sure it is already replicated in Iran.

A chat with Iran specialist Dominic Bokor-Ingram of Charlemagne Capital cemented the image. He reckons that Iran can grow its GDP at 6-8 per cent for the foreseeable future. It has all the things it needs to do so. Certainly, sanctions have left plenty of spare capacity — Iran currently uses only 42 per cent of its generating capacity. It has the right sort of population. It has very low debt: net government debt to GDP is a mere 4 per cent (this is the kind of figure that George Osborne fantasises about) and its companies and consumers are all but debt free too.

It has a good starting point — Iran’s economy is already bigger than Australia’s and it is also surprisingly diverse. You might think Iranian prosperity is likely to be based on the fact that it has some of the largest oil and gas reserves in the world (fourth-largest oil reserves and the largest gas reserves of all). You’re wrong, says Mr Bokor-Ingram. Despite all this underground sun, the oil and gas industry made up only 10 per cent of GDP in 2014.

There around 30 other sectors listed on the stock exchange: there may be no Rootes left, but the car industry remains Iran’s second-biggest contributor to GDP (look up Iran Khodro — I wouldn’t mind one of their four wheel drives). You might also think that much GDP is devoted to military spending. Again, wrong. It’s 2.7 per cent.

Sounds good doesn’t it? There are risks. Lots of them. There is the risk that the reformers’ progress is shortlived — that religious hardliners take back control. And that the result of that is the thing investors in Iran most fear — “snapback,” or the automatic reimposition of sanctions.
"There are risks. Lots of them. There is the risk that the reformers’ progress is shortlived — that religious hardliners take back control. And that the result of that is the thing investors in Iran most fear — “snapback,” or the automatic reimposition of sanctions"

There are many geopolitical tensions: Iran is fighting a good few proxy wars. Mr Axworthy also points to nasty signs of family breakdown, gender discrimination and drug addiction (Iran takes a hard line on drugs but is also home to 2.4m heroin addicts) and high levels of corruption. Then there is oil. It might be only 10 per cent of GDP but revenues from it make up some 30 per cent of government income. So oil at $20 rather than $60 does matter.

Still, I’m prepared to overlook most of these risks. Why? Price. The Iranian stock market has risen 20 per cent since the end of sanctions but that still puts it on a 2016 price/earnings ratio of 5.5 times with a dividend yield of 13 per cent (Mr Bokor-Ingram’s numbers). The Mobile Telecommunications Company of Iran has 6.5m subscribers and trades on a price/earnings ratio of 3.5 times. Buy it today and you’ll get a 12 per cent dividend. All this discounts the kind of political and economic disasters that look increasingly unlikely (note that Russia, which I am also prepared to hold on the basis of cheapness is on over seven times) — and makes very little allowance for the improvements that look increasingly likely.

At this price, Iran has to be one of the best opportunities in the investment world right now — even if the “E” in the PE equation isn’t 100 per cent accurate. The bad news is that I’m not the only one to have noticed. Charlemagne Capital held a conference that included Iran this week: it was packed and I was getting texts from excitable rich friends in the audience by coffee time.
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And it isn’t easy for ordinary investors to get in: there are technical problems (with foreign exchange and with custodians) and the US sanctions make it hard for US banks to do much. And of course the whole idea is rather new — foreign buying is a mere 1 per cent of the market.

Charlemagne has the only fund I know (with its Iranian partners) — the Turquoise Variable Capital Investment Fund. Unfortunately, to get in you need to invest $125,000, pay high fees, and not mind there being no liquidity if everyone piles in and then tries to get out again (almost inevitable with newish markets like this). But if you can cope with all of that, Iran is definitely worth a look.

Privatization in Iran making good progress. State-run company should privatized and it seems huge amount of money will injected to Economy. There are excellent opportunity for foreign investor to buy governmental companies or make joint-venture with Iranian partners to set-up investment in Iran.

By governmental  assignments envisioned in “The law of Enforcing of General Policies of Article 44 of the Constitution”, its relevant rules and regulations, and approvals of the Divesture Board, hereinafter the Board, the Iranian Privatization Organization, hereinafter the Organization, intends to transfer stocks/assets of the following enterprises with the terms and conditions as mentioned in this advertisement. Tender documents and other transferring conditions are accessible via the official website of the Organization at the following addressess: www.ipo.ir. The applicants are highly requested to consider the condtions mentioned in the bid proposal form and transferring contract.

South Korea’s president heads to Iran on Sunday targeting billions of dollars of economic and energy deals in a landmark visit.
President Park Geun-hye will help establish a “foundation of cooperation” with Iran by becoming the first South Korean president to visit Tehran since the nations established diplomatic ties in 1962, a presidential spokesman said ahead of the visit, The Wall Street Journal reported.
She will meet Iranian President Hassan Rouhani on Monday and possibly hold talks with Leader of the Islamic Revolution Ayatollah Ali Khamenei.
Officials in Seoul say the primary purpose of the visit is economic, as Korean companies eye deals in areas such as construction, autos and electronics.
Park will be accompanied by Seoul’s biggest-ever traveling business delegation of over 230 executives during the three-day visit.
East Asian nations are scrambling to boost economic links with Tehran after it won relief from western sanctions last year by agreeing to restrictions on its nuclear program.
Chinese President Xi Jinping visited Iran in January and announced ambitious trade plans, while Japan signed an investment treaty with Iran a month later.
South Korea is also eager to boost its oil supply from Iran, which used to account for 10% of its oil imports before sanctions were imposed.

 Banking on Past Loyalty

According to South Korean government sources, contractor Daelim Industrial is expected to sign a $4.9 billion contract to build a railroad in Isfahan and a $2 billion contract to build the Bakhtiari hydroelectric power plant, Korea JoongAng Daily reported.
These will be the first major contracts won by a South Korean company since GS Engineering & Construction won a gas field development project in South Pars in October 2009, which was before the imposition of western economic sanctions on Iran in 2010.
Daelim’s advantage is its strong connection with Iran. The contractor maintained four employees in Iran even after the economic sanctions went into effect. That kept its networks going and earned points with Iranian government officials and businesspeople.
The company is known for having successfully completed the Kangan gas refining building project during the Iran-Iraq War. In 1998, the year that war ended, 10 of its employees were killed in an airstrike by Iraq. The contractor has completed 26 projects worth $4.55 billion in Iran over the past 40 years.
“Earning and keeping the trust of clients are very important,” a Daelim spokesman said. “No matter what happened, it was important for us to finish our jobs there. We have been carefully monitoring what is going on in Iran and we are happy to resume our partnership with the country this time.”
Daelim is not the only company with such a history. Contractors like Hyundai, Daewoo, Samsung and GS have similar experiences. They also maintained offices in Iran all through the sanctions, even though they couldn’t do any business, to keep up their connections. Now, they’re poised for new contracts.
Earlier this year, the Iranian government announced the launch of large construction projects totaling 214 trillion won ($186 billion) through 2020. The big opportunities are in construction, automobiles, information technology and consumer goods.
Iran is poised to grow faster than most countries in the Middle East, thanks to its nuclear accord with the international community and its enormous oil and gas reserves.
“Korean companies and Iran are expected to carry out new deals as early as the second half of this year,” said Kim Hyung-keun, a researcher at NH Investment & Securities.
“Major contractors that have experience in Iran will try to penetrate sectors they are strong in. Daelim will knock on the doors of the gas and oil refining companies, while Hyundai will look into power plant projects and Daewoo will focus on industrial infrastructure.”
Construction is the most promising sector.
According to the International Contractors Association of Korea, Korean companies completed projects worth $1.2 billion through 2009 and Korean builders could win projects of up to $20 billion in the next few years, nearly twice the size of contractors’ overseas orders, which hit $11.8 billion as of last month, a 44% drop from a year earlier.
Last year, South Korea only won $46.1 billion worth of projects, the lowest amount since 2007, mainly due to shrinking demand in the Middle East.

 Ambitious Lineup

Hyundai Engineering is close to signing a framework agreement on the Iranian South Pars Gas Field’s Phase 12 extension work worth $3.6 billion.
Hyundai and Posco Daewoo are trying to join a project for building a 1,000-bed hospital for Shiraz University of Medical Sciences worth $500 million.
Now that sanctions are removed, Iran is preparing to export more crude oil. According to industry data, Iran currently has 30 to 50 million barrels of oil ready to be shipped.
The Iranian government said in April that it will increase its daily crude oil exports from 2 million barrels to 4 million barrels until next March. That policy will positively impact South Korean oil refiners, as the average international oil price is expected to fall.
In January and February, South Korea imported twice as much crude oil from Iran than it did last year and that significantly helped oil refiners improve their profits.
Korea’s No. 1 oil refiner, SK Innovation, reported 844.8 billion won operating profit in the first quarter, a 153.2% rise from a year earlier. Iranian crude is about $2.5 cheaper per barrel than Saudi crude.
Korean automakers like Hyundai Motor, which is sending its president, Chung Jin-haeng, as a member of President Park Geun-hye’s delegation, expect to resume their partnership with Iran.
“Car sales in Iran shrank from 2011’s 1.7 million units to 1.1 million units in 2014, but we believe that the market will grow in the future, as the country’s overall economy is expected to boom,” said Hwang Kwan-sik, a spokesman for the carmaker.
Joo Won, a researcher at Hyundai Research Institute, said opportunities in consumer goods like cosmetics and electronics, as well as airlines, will be seen in Iran.
“The most important key to successfully launching businesses will be financing. The Korean and Iranian governments need to seriously discuss how they will support businesses,” he said.

 Posco to Export Technology

Pohang-based multinational steelmaker Posco is looking to enter the Iranian market through exports of its proprietary technologies.
Since the inauguration of current CEO Kwon Oh-joon, the company has raced to procure new sources of revenue through sales of self-developed technology like Finex and Compact Endless Cast & Rolling Mill.
In March, the company formalized plans to begin selling its steelmaking technologies, engineering models and management systems during its 48th general shareholders meeting.
Under this new business model, Posco will collect royalties from steelmakers who make direct use of their technology, as well as part of the revenue from orders won by companies using their management systems. Posco also expects to profit by dispatching its engineers to overseas facilities.
The company’s decision comes amid saturation in the global steel market. Having determined only so much profit can be made from the sale of steel products, it is looking to capitalize on the wealth of technology it has accumulated through 48 years of constant research and development.
This February, Posco signed a memorandum of understanding with Iran’s Pars Kohan Diar Parsian Steel (PKP) to tap into the country’s high-potential market. Under the agreement, it will build a plant with an annual production capacity of 1.6 million tons in Iran’s Chabahar free economic zone.
The project will be carried out in two stages, with the first involving construction of an integrated steel mill using Finex and CEM technology. The second stage will involve the addition of a cold rolling mill and a continuous galvanizing line.
Posco aims to break ground on the plant within the first half of next year, with commercial production slated to begin in 2018.
The MoU also involves Posco transferring its innovative steelmaking technology, which combines Finex and CEM, to its Iranian partner.
Posco’s subsidiaries are partnering with South Korean companies to ease the multinational steelmaker’s entry into the Iranian market.
Posco Daewoo, along with Hyundai Engineering & Construction, signed a deal with Iran’s Ministry of Health and Medical Education to build a hospital for Shiraz University of Medical Sciences, one of the country’s top medical schools. Posco Daewoo will supply medical equipment, while Hyundai will be responsible for construction.
Posco Energy, in cooperation with the Korea Electric Power Corporation, Posco and PKP, recently signed an MoU for an off-gas power plant and desalination project in Iran. Posco Energy and Kepco will be in charge of operating and maintaining the plant and desalination facility, while Posco will oversee their construction.

Saudi Arabia entered 2023 on the back of its fastest economic expansion in over a decade, with its growth rate exceeding that of other G20 countries in the face of a variety of macroeconomic headwinds. Factors buffeting Western economies as a result of Russia’s invasion of Ukraine, not least higher energy prices, proved to be a boon for the Kingdom, lifting oil sector activity by 15.4% over the course of the year (see Energy & Utilities chapter). Additional revenue has helped generate a rare fiscal surplus, which in turn offers the government more leeway as it continues to finance efforts to diversify the economy and grow the non-oil sector. Despite slowing growth in 2023, the Kingdom remains a dynamic place to do business, both for major firms engaging with its large government-owned players, and smaller companies looking to benefit from steady private sector growth.

Structure & Oversight
The World Bank classifies Saudi Arabia as a high-income country, with a per capita income of $30,400 in 2022 and a population of 32.2m people. The monarch and the government are situated in the capital, Riyadh, which together with Jeddah houses just under a third of the Kingdom’s population. Dozens of smaller cities, including the Islamic holy cities of Makkah and Medina, are scattered around the vast country.

The king presides over the Council of Ministers, or the Cabinet, which includes heads of a range of ministries with responsibilities directly or indirectly relating to the economy. The Majlis Ash-Shura, or Consultative Council, has an advisory role in the government and can interpret existing laws or propose new legislation to be passed by the ruler.

Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud took the reins as prime minister in September 2022 after 87-year-old King Salman bin Abdulaziz Al Saud, who has been in power since 2015, ordered a Cabinet reshuffle. In doing so, King Salman continued an ongoing transfer of power that formalises his son’s stewardship of the government. The crown prince is pioneering the restoration of diplomatic ties with multiple countries in line with Vision 2030, an economic diversification plan with the central focus on growing the domestic non-oil economy, particularly the tourism and hospitality sectors.

In March 2023 the government of Saudi Arabia signed a deal with its counterparts in Iran to resume diplomatic ties after a seven-year freeze, following China-brokered talks in Beijing. The détente comprises the revival of cooperation and security agreements, which could boost economic advancement for the region. Stable relations will also allow two of the Middle East’s biggest economies to refocus more of their resources on domestic affairs, rather than regional security concerns.

The Kingdom is structured around 13 provinces, each headed by a governor, who is aided by a deputy and advisory council. Key ministries include the Ministry of Economy and Planning, the Ministry of Finance, the Ministry of Human Resources and Social Development, the Ministry of Energy, the Ministry of Investment (MISA), the Ministry of Commerce, and the Ministry of Industry and Mineral Resources.

Funding Growth
The Public Investment Fund (PIF) – the sixth-most valuable sovereign fund in the world, with assets of $607.4bn in 2022 – is increasingly positioned as the vehicle through which the government drives economic activity, both domestically and beyond the Kingdom’s borders. The PIF launched initiatives in March 2023 aiming to increase its contribution to local content to 60% of its portfolio by 2025, with a focus on localising technology.

The fund holds investment portfolios across 13 strategic sectors, and spearheads the implementation of giga-projects. These include NEOM, a 26, 500-sq-km city that will be entirely powered by renewable energy in line with the Kingdom’s aim of lifting the contribution of renewables to half the overall energy mix by 2030. This strategy spans 58 GW of wind and solar and $270bn worth of investment by 2030.

The Red Sea Project to build a new luxury tourism destination along the eponymous coastline; the Qiddiya sport and wellness mega-complex; the Roshn homeownership scheme, which involves more than 200m sq metres of integrated neighbourhoods and housing; and the Diriyah tourism development, housing the At-Turaif mudbrick city, a UNESCO World Heritage site, complete the giga-project portfolio.

Other critical institutions include the Saudi Central Bank (SAMA), the Capital Market Authority (CMA), and two subcabinets established by King Salman in 2015 and headed by the crown prince – the Political and Security Affairs Council and the Economic and Development Affairs Council, which formulates economic policy in order to fulfil the goals of Vision 2030.

Performance
Finalised in 2016, Vision 2030 represents an ambitious but necessary roadmap to guide the Kingdom away from its reliance on oil. One area of success has been lifting the workforce participation rate of women to 37% by 2022, outstripping the target of 30% and helping to support the development of the domestic labour force.

There are 2.2m Saudis working in the private sector, which is the highest number on record and denotes an important change in perceptions. As of August 2023 more than 90% of unemployed citizens said they would accept private sector work, whereas in the past many would have held out for public sector roles. Progress on lowering the unemployment rate has also been encouraging, with the rate for Saudis falling from 15.4% in early 2020 to 8% at end-2022, and the overall rate at a long-time low of 4.8%.

Robust GDP growth of 8.7% in 2022 helped drive the fall in unemployment, and pushed nominal GDP beyond the $1trn mark for the first time to make Saudi Arabia the world’s 17th-largest economy. Oil activities expanded by 15.4%, the non-oil sector grew by 5.4% and government activities achieved a growth rate of 2.6% over the year. Crude petroleum and natural gas activities achieved the highest contribution to GDP, at 32.7%, followed by government services activities at 14.2% and manufacturing excluding petroleum refining at 8.6%. While growth in the private sector’s contribution to GDP has been less pronounced – reaching 43% as of November 2022 versus a target of 65% – a number of new and ongoing initiatives should help move the needle on this target in the coming years.

Looking ahead, the IMF forecasts GDP growth will moderate to 1.9% in 2023 due to a slowdown in oil production mandated by cuts agreed by the Organisation of the Petroleum Exporting Countries (OPEC), before rebounding to 3.4% in 2024 as those cuts unwind. Saudi crude production reached a record 10.6m barrels per day (bpd) in 2022, helping drive an 800,000 bpd increase in crude oil exports compared with 2021, with overseas shipments exceeding 7m bpd for the first time since 2017. Ongoing investment in refining capacity saw throughput in the first 10 months of 2022 average 2.7m bpd versus 2.5m in 2015 (see Energy & Utilities chapter).

Trade
Investment in domestic refining, along with efforts to diversify the economy, helped reduce trade as a share of GDP to 59% in 2021, down from 96% in 2008. In 2022 oil exports were valued at SR1.2trn ($327bn), up 68.1% on the year, accounting for almost 80% of overall outbound shipments. Non-oil exports rose by 13.7% to SR316bn ($84.2bn) and overall exports increased by 49.9% to SR1.54trn ($411bn). Imports of merchandise were up 24.2% to SR139bn ($37bn), as overall imports reached SR712bn ($189bn), versus SR573bn ($153bn) in 2021. The balance of trade consequently reached a surplus of $221.6bn at year end versus $123bn in 2020.

Saudi Arabia is party to multiple international trade agreements, and has been a member of the World Trade Organisation (WTO) since 2005. In 2019 the Kingdom entered into the Agreement on Liberalisation of Trade in Services among Arab States, which extended commitments made under WTO membership to loosen restrictions on services trade across the region. Otherwise, the Kingdom tends to negotiate trade deals under the GCC umbrella, most recently signing a deal to liberalise trade in goods by removing or reducing tariffs with the European Free Trade Association in 2015.

Several new agreements are on the drawing board, including a GGC free trade deal with the UK, talks regarding which are ongoing. While a GCC-China free trade agreement has been mooted for decades, there are indications that China is pushing for a deal to be finalised, with the scope expected to extend beyond energy to cover areas such as digital and technology services, and direct and indirect portfolio investment. The Kingdom has been strengthening economic ties with China, with Aramco in March 2023 agreeing to supply two Chinese companies with a combined 690,000 bpd of oil, while taking a 10% share of Rongsheng Petrochemical worth some $3.6bn. The oil giant is also developing a refinery and petrochemical project in the north-eastern province of Liaoning, in the city of Panjin, as part of the joint-venture company Huajin Aramco Petrochemical. Both deals serve to lock in China as a long-term customer for Saudi crude and its by-products. Saudi Arabia is a signatory to the Belt and Road Initiative, which facilitates investment in infrastructure and digital capabilities by Chinese companies.

China is Saudi Arabia’s leading trade partner; bilateral trade was worth $87.3bn in 2021, with imports totalling $30.3bn and exports valued at $57bn, driven by China’s appetite for Saudi crude – which accounts for a fifth of the East Asian country’s total crude purchases – and plastics. Textiles, electronics and machinery are among the top imports from China.

That said, the UAE remains the largest customer for Saudi exports, with India, Egypt and the US the other primary destinations. The US is the Kingdom’s main supplier of imports behind China, followed by the UAE, India and Germany. Oil and related products dominate exports, while vehicles are the top import, with telephones and gold – mainly from the UAE – also featuring prominently. Travel and transport are the top services exports, and rank second and third for imports behind government services, which account for over one-third of the total by value.

Stabilising Effects
Saudi Arabia’s strong trade performance, in tandem with higher global energy prices, helped Aramco record $161bn in annual net profit in 2022, the highest ever by a listed company. Energy costs have driven an uptick in global consumer prices, but Saudi Arabia has proved resistant to inflation, which averaged 2.5% in 2022 and remained at roughly the same level in early 2023. The setting aside of about SR10bn ($2.7bn) to secure strategic supplies of essential goods and services – as well as subsidies allocated to Aramco to facilitate an energy price ceiling within the Kingdom – helped keep a lid on domestic prices.

Monetary policy also played a part, with SAMA tracking the US Federal Reserve in implementing interest rate hikes amounting to 400 basis points throughout the course of 2022, taking the Saudi repurchase agreement rate to 5% by year end. This helped to ease pressure on the Saudi riyal, which maintains a peg with the US dollar, in global currency markets. The government has predicted that inflation will fall to 2.1% in 2023. Ayman Al Sayari took over as governor of the central bank in February 2023, while his predecessor, Fahad Al Mubarak, was appointed adviser to the royal court. As growth moderates, a key goal for Al Sayari will be to ensure that small and medium-sized enterprises (SMEs) receive adequate bank funding (see Banking chapter).

Fiscal Policy
Saudi Arabia recorded a budget surplus of SR104bn ($27.7bn) in 2022, roughly 2.6% of GDP, as higher oil prices boosted government revenue by 31% to SR1.3trn ($339bn). This was the first budget surplus the Kingdom had recorded in almost a decade, with the budget deficit averaging 9.9% of GDP between 2015 and 2020.

The surplus, which was largely earmarked to be lodged as central bank reserves – among the 10th largest in the world, valued at more than $400bn in March 2023 – is a testament to the success of fiscal consolidation measures, particularly the 2020 increase in value-added tax (VAT) to 15% after its introduction in 2018, and the adherence to a medium-term fiscal stability programme that has helped rein in government expenditure. Revenue from oil hit SR857bn ($229bn) in 2022, up 52% from the previous year. Non-oil revenue rose by 19% year-on-year in the fourth quarter, versus a 17% increase for the oil sector, boding well for diversification efforts.

Total government spending in 2022 was up 12% to SR1.2trn ($319bn), with current expenditure 14% over budget, and capital spending 64% higher than planned due to larger outlays on military and security, as well as health care. Total public debt stood at about SR990bn ($264bn), roughly equivalent to 24.9% of 2022 GDP – significantly lower than mature economy peers. This is expected to fall slightly in 2023 to 24.6%, or SR951bn ($254bn), amid a continuation of fiscal stabilisation measures.

The Council of Ministers has approved total expenditure of SR1.11trn ($296bn) for 2023, on estimated revenue of SR1.13trn ($301bn) for a forecast surplus of SR16bn ($4.3bn), or 0.4% of GDP. Large outlays are approved to instigate structural economic changes in line with Vision 2030 goals, and to rebalance the monetary tightening necessitated by the US Federal Reserve’s aggressive monetary policy. As regards the former, the government plans to direct spending towards the aforementioned giga-projects, as well as key programmes such as the National Transformation Programme, the National Industrial Development and Logistics Programme, the Quality of Life Programme, the Pilgrim Experience Programme and the Saudi Green Initiative.

Saudi Arabia accrues considerable fiscal revenue despite a 0% individual income tax. Aside from the aforementioned VAT, the exchequer derives income from corporate income taxes of 30-85% on natural gas and oil activities, and 20% on non-oil activities, applicable to the share of profits of non-GCC shareholders or individuals doing business in the Kingdom.

Zakat – a payment under Islamic law that is used for charitable or religious purposes – is imposed according to the nationality and residence of investors.

Driving Investment
In 2022 Saudi Arabia issued 4358 investment licences, up 53.9% compared to 2021, reflecting the Kingdom’s efforts to establish itself as a leading investment destination in the GCC. However, foreign direct investment (FDI) in the Kingdom dropped by nearly 60% from $19.6bn in 2021 to settle at $7.9bn in 2022, the first contraction in five years. That said, the 2021 figures were elevated by the $12.4bn deal by Aramco to sell a large minority stake in Aramco Oil Pipelines, as well as a recovery in deal flows following pandemic-induced stasis.

Efforts are under way to increase FDI figures from 2022 levels. The Investment Promotion Authority came into being in August 2022 to help fulfil Vision 2030’s goal of attracting $100bn in FDI per year. A new investment law in the works is slated to level the playing field for foreign investors, endowing their investment with a status equal to those of domestic players under the law in terms of licensing, permitting, registration and project approvals. In the meantime, the government is bolstering its Programme HQ, launched in 2021 by MISA and the Royal Commission for Riyadh City, which aims to encourage multinational firms to relocate their base of operations to the Saudi capital.

In May 2023 Mohammed Al Jadaan, the minister of finance, announced that Saudi Arabia would provide a permanent VAT exemption on transactions between entities within and between special economic zones (SEZs). It also plans to offer permanent exemption for social insurance tax for the employer as well as for transactions between companies in SEZs. A 20-year tax discount will be offered to all businesses within the zones, which include King Abdullah Economic City and the King Abdullah Financial District.

Shareek
In the meantime, the government has been encouraging the PIF and government-owned companies to spearhead investment, with localisation and self-sufficiency top of mind. The Shareek initiative, under which domestic companies receive government support for investment in Vision 2030 target sectors, is of key interest to investors. The first wave carries an aggregate project value of $51bn and should help lift GDP by more than $125bn before 2040, creating approximately 65,000 local jobs.

Some 28 companies were enrolled in the programme as of mid-2023, with SR192bn ($51.2bn) worth of support for investment earmarked for eight major companies. First among these is Aramco, which is developing five projects, including the $11bn Amiral petrochemical complex with TotalEnergies. The site is due to come on-line in 2023, producing 1.7m tonnes of ethylene and 1m tonnes of polyethylene each year. Other Aramco-led initiatives include a steel plate manufacturing facility, a cloud project that aims to facilitate the entrance of Google Cloud services to the Kingdom, an engine-building project, and a casting and forging operation.

Meanwhile, electricity firm ACWA Power is aiming to build the world’s largest green hydrogen plant, with $8.4bn in investment, under its NEOM Green Hydrogen joint venture with US-based industrial gases company Air Products. Financing for the plant had been secured, and engineering, procurement and construction agreements had been signed as of August 2023. Ma’aden, a mining company, is being backed to implement a phosphate project in Wa’ad Al Shamal, while petrochemicals manufacturer SABIC is pushing to establish both a catalyst manufacturing centre and a liquid methionine and ammonium sulphate plant, with the latter tipped to create more than 20,000 jobs. The first round of Shareek-backed investment, which overall seeks to unlock SR5trn ($1.3trn) in domestic investment capital by 2030, is advancing progress towards the goal of increasing the private sector’s contribution to GDP to 65%, and non-oil exports to half the total.

At the same time, the Kingdom’s various giga-projects are continuing to attract new investment capital. In March 2023 NEOM announced that it had awarded €1.4bn in contracts to Italy’s Webuild and joint-venture partner Shibh Al Jazira Contracting to design and build 57 km of a high-speed railway.

The year 2023 should also see the first Red Sea Global venues open their doors, with the St Regis Red Sea Resort, the Nujuma Ritz-Carlton Reserve and Six Senses Southern Dunes welcoming their first guests. The built-for-purpose Red Sea International Airport is also poised to launch its first flight, beginning with a seaplane terminal, before opening to international air carriers later in the second half of 2023.

Elsewhere, the new King Salman International Airport, located in Riyadh, is earmarked to be built following the unveiling of its master plan in November 2022. The project will span six parallel runways, hosting 185m passengers per year by 2050, up from the 29m who entered via the Kingdom’s airports in 2022. The new airport is expected to contribute SR27bn ($7.2bn) annually to non-oil GDP.

The airport plan tracks the Kingdom’s efforts to establish itself as a regional centre for logistics, an ambition furthered by the 2022 opening of an inaugural Special Integrated Logistics Zone (SILZ) in Riyadh next to King Khalid International Airport. The SILZ aims to dispatch goods just four hours after they enter the zone, versus the 24-hour window common in other GCC SEZs.

SME
One key Vision 2030 target is to grow SMEs’ contribution towards GDP to 35%, from about 20% in 2023. The SME General Authority (Monsha’at) oversees the sector, which comprised 1.1m companies at end-2022, double the number registered in 2017, with some 45% of Saudi SMEs headed by women.

SME Bank, launched in 2021 as a standalone digital financing portal, wields SR10.5bn ($2.8bn) in capital to finance direct and indirect lending, as well as financial guarantee programmes that aim to promote sector growth. In 2022 the Council of Ministers greenlit the transfer of the SME Financing Guarantee Programme, known as Kafalah, from Monsha’at to SME Bank. Aramco is also working to nurture smaller companies via its Taleed Programme, which aims to deliver financial solutions to existing and new businesses through five funds and 20 initiatives, with a combined capital exceeding SR3bn ($800m).

The government is working to improve the regulatory environment for SMEs. In June 2022 it signed a new Companies Law that aims to galvanise all aspects of the economy by removing restrictions on the incorporation, practice and exit phases, as well as on company names (see Legal Framework chapter). SMEs are also now given priority where possible in government tenders and procurement, though some analysts suggest more could be done to improve visibility of the government’s project pipeline. SME exporters are also receiving support from the Saudi EXIM Bank and the International Islamic Trade Finance Corporation to digitalise their offerings and reach new markets.

Improvements in local human capital also serve to support SME growth. Saudi Arabia ranked first globally for the percentage of students enrolled in post-secondary non-tertiary education under technical and vocational training programmes, according to the 2022 UN Development Programme Global Knowledge Index (see Education & Training chapter). “As Saudi Arabia nurtures talent at home, the competition for skilled individuals has intensified, underscoring the need for innovative strategies to nurture valuable expertise,” Hussein Fares, CEO of Abdulla Fouad Group, told OBG.

Outlook
The trajectory of the Saudi economy depends to a large extent on price and demand dynamics in the global energy market, though the non-oil economy now plays an increasingly important role in stimulating wider economic growth. At the halfway stage of Vision 2030, the Saudi economy is pursuing a balance of old and new, with the energy sector continuing to localise and expand, even as the various giga-projects provide opportunity for smaller companies to benefit from public incentives. Despite lower FDI levels in 2022, the CMA had more than 70 applications from companies seeking to list on the country’s two equity markets as of mid-2023, illustrating the depth and strength of interest in participating in the Kingdom’s continuing growth story.

Source:

https://oxfordbusinessgroup.com/reports/saudi-arabia/2023-report/

Saudi Arabian billionaire Prince Alwaleed Bin Talal will team with Egyptian developer Talaat Moustafa Group to invest $800 million in Egyptian hotel projects, one of the largest planned injections of foreign cash since Egypt embarked upon a major economic reform program.

Talal’s Kingdom Holding Co. and TMG plan to expand the Sharm el-Sheikh Four Seasons resort on the Red Sea and build new two hotels, at El Alamein on the north coast of Egypt and at Madinaty in Cairo, the Ministry of Investment and International Cooperation said in an emailed statement. Talaat Moustafa said in a filing to the Egyptian exchange that it is studying the projects.


“This is a global investor and he compares between places to decide where to invest,” Investment Minister Sahar Nasr told reporters in Cairo. “He sees that the business environment is now attractive and he is committed to investing in Egypt.”

Egypt has said it hopes to exceed its $10 billion target for foreign direct investment this year, after taking a series of steps meant to restore investor confidence, including easing currency restrictions and cutting subsidies in a successful bid to win a $12 billion International Monetary Fund loan. The government sees investments by the world’s 48th-richest man, with a net worth of $18.7 billion according to the Bloomberg Billionaires Index, as a positive signal about its economy that would draw in more cash.

Boosting tourism is a key component of Egypt’s economic recovery program. The industry has been battered by the bombing of a Russian passenger plane over Sharm in 2015 that killed all 224 people aboard, and by other militant attacks on security forces and civilian targets.

Iran’s Sina Financial and Investment Holding Company plans to launch a new investment bank this year with a target size of $500 million by 2021, its CEO has revealed.

The Tehran-based holding group offers financial leasing and insurance services related to commodities, funds and stocks and shares.

CEO and board member Behzad Golkar told Arabian Business on Wednesday that Sina had applied for permission from the government to open a new investment bank in Iran.

He said the group has also begun courting international banks in an attempt to find a shareholder based outside of Iran with whom to partner and access global investment markets.

Under the plans, the bank would be seeded with an initial $100 million, with a target to grow to $500 million within the next five years.

It would seek to invest in capital markets in Iran and beyond, with Golkar saying that the partner bank would help Sina to form “a bridge” into foreign markets.

The board has decided on a name for the new investment bank – it will fall under Sina Holding’s branding – but Golkar declined to reveal the exact name until the plans are approved by government.

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It is understood that current restrictive rules related to financial custodianship in Iran would have to be amended before the bank can be incorporated.

However, Golkar said Sina Holding is eyeing a launch by mid-2016.

The group has also launched two €50 million funds targeting the UK and Germany, Golkar said.

One is a fixed income fund and the other is a liquidity fund, and both are open-ended.

Sina Holding has advisors in both the UK and Germany that are helping to raise the money. It is targeting a 20 percent rate of return for each.

Iswaran signs agreement in Tehran as part of effort to explore business opportunities


Singapore has moved quickly to sign an investment treaty with oil-rich Iran to support Singapore firms investing in an economy that is emerging after the recent lifting of global sanctions.

The treaty offers a legal framework to protect investors and promote bilateral investments.

Minister for Trade and Industry (Industry) S. Iswaran signed an Agreement on Reciprocal Promotion and Protection of Investments, also known as a bilateral investment treaty, with Iran's Minister of Finance and Economic Affairs Ali Tayyebnia in Teheran yesterday.

Singapore is the second country, after Japan, to sign a bilateral investment treaty with the Middle Eastern nation after international sanctions were lifted in mid-January.

"We are here now to deepen the economic collaboration between our two countries," Mr Iswaran told the media after the ceremony.

"We see significant opportunities to do so because of the size of the market in Iran and in the region, and the capabilities of the people.

"For Iranian businesses, there are interesting opportunities in Singapore and through Singapore into South-east Asia and the larger market of Asia," he added.

Mr Iswaran arrived in Teheran on Sunday for a three-day visit to explore new business and investment opportunities. His trip coincides with a one-week mission by the Singapore Business Federation (SBF) to the Iranian capital.

Mr Iswaran also met Iranian Minister of Industries and Business Mohammad Reza Nematzadeh and Minister of Cooperatives, Labour and Social Welfare Ali Rabiei.

With this agreement, Singapore investments will be treated as favourably in Iran as any other investments - foreign or local. And businesses can transfer capital and returns between the two countries without obstacles.

The treaty also provides Singapore investors with the option to resolve investment disputes through international arbitration.

The Ministry of Trade and Industry said Singapore's bilateral trade with Iran was $6.6 billion in 2011, before the sanctions were imposed. It fell to $2.6 billion in 2012, after the sanctions kicked in. Last year, trade stood at $171.4 million, with Singapore exporting $158 million worth of goods to Iran, while imports from Iran to Singapore amounted to $13.4 million.

Singapore firms have shown renewed interest in the oil-rich country, which is just re-opening its doors after a prolonged period of under-investment.

A total of 51 firms from various sectors, including oil and gas, petrochemicals, logistics and information communications technology, have been in Teheran since last Friday, gaining first-hand knowledge about the business environment and investment opportunities.

This is the SBF's fifth delegation to Iran, and the largest group that it has taken to the Middle East so far.

The delegation comprises two main groups - companies that were previously doing business in Iran and are now seeking to re-establish dealings after the lifting of the sanctions, and companies that are completely new to the market.

"Singapore companies are known for our quality, reliability and the service we deliver... but competition is greater than before and others are running very fast," said Mr Teo Siong Seng, SBF chairman and leader of the business mission.

Singapore businesses are facing stiff competition from South Korean and European companies, which are pursuing deals in Iran, he noted.

According to the Teheran Times, South Korea on Sunday signed a memorandum of understanding with Iran to provide €5 billion (S$7.7 billion) in financing for infrastructure, development and manufacturing projects in the country.

Many of these businesses tend to be bold and are willing to put in huge investments. Singapore companies, however, tend to be more careful, said Mr Teo.

"We could start in a smaller way, but we should start to see some activities going forward," he added.

By Fatemeh Shokri & Farzam Vanaki

Iran is required to attract more than 20 million tourists by 2025 as stipulated in the Sixth Five-Year Economic Development Plan (2016-20).

This is not an unattainable target in the light of the fact that the country's provinces boast 19 tourist attractions, which are registered on the UNESCO list of world heritage sites, in addition to thousands of natural and historical tourist attractions.

Although, international sanctions and Western media's negative propaganda have adversely impacted Iran's tourism industry in the past few years, the irresistible attractiveness of the country's tourist resorts have always lured foreign tourists to the country even during the years of stringent embargoes.

In addition to the large number of tourists currently flocking to Iran's historical and natural sites, scores of political and trade delegations are, at present, being provided accommodation at the country's top hotels as well as facilities for holding meetings with Iranian counterparts, thanks to the removal of the sanctions.

Although Iranian provinces are equipped with favorable tourism infrastructures, it is a herculean task to address the needs of the increasing number of tourists that have, all of a sudden, decided to visit the country.

With the growing enthusiasm of foreign tourists to visit Iran, travel agencies have encountered daunting challenges in lodging them or reserving hotel rooms for them.

To tackle this challenge, Iranian officials plan to convert historical houses into tourist lodgings and build hotels in joint ventures with foreign investors.

A large number of foreign investment delegations have visited Iran over the past few months for talks in this respect. Due to Spain's considerable experience in the tourism sector, the officials of Iran Cultural Heritage, Handicrafts and Tourism Organization attach great importance to expanding cooperation with the country.

This is while, in light of Iran's huge tourism potentials, Spain has decided to seize this opportunity and voiced willingness to participate in the construction of hotels in the Middle Eastern country.

A little while has elapsed since the visit to Iran by Spanish Minister of Industry, Energy, and Tourism José Manuel Soria López and significant steps have been taken by both sides to forge favorable ties in this respect. Spain has signed a contract with Iran to build a five-star hotel in Mazandaran Province by the end of 2017. This will be the first part of a project by Spain to construct a hotel chain in Iran.

During his visit, López voiced his country's willingness to construct 300 hotels in Iran. Meliá Hotels InternationalGroup is the Spanish company responsible for building the hotels.

Commenting on the project in an exclusive interview with Iran Daily, Maria Zarraluqui, the global development managing director of Meliá Hotels International Group, said Iran is a very exciting country with huge tourism potentials and a large number of tourist attractions.

"This made us absolutely determined to initiate the project in the country. We believe that Iran's tourism potentials as well as Iranian's rich culture will bring a large number of tourists to the country in near future."

She added given the removal of the sanctions, the ground is fully prepared for initiating the mutual cooperation.

Commenting on the number of Iranian tourists visiting Spain each year, Zarraluqui said, "I do not know the exact figure. All I know is that Iranians constitute a significant percentage of tourists to Spain."

She noted that the Spanish people know a great deal about the Iranians and the country's tourist attractions, adding perhaps, they constitute a significant number of tourists to Iran.

"Following the launching of the first phase of our chain hotels in Mazandaran Province, we plan to construct hotels in other Iranian provinces such as East Azarbaijan, Tehran, Gilan, Khorasan Razavi and Isfahan."

 

 

Regional tourism hub

----------------------------

Speaking on the sidelines of the ceremony to sign the agreement between Iran and Spanish company for constructing the hotels, Carlos Aragon Gil de la Serna, the deputy head of the mission at the Spanish Embassy in Tehran, said Iran is capable of turning into a regional tourism hub in the near future.

"He added relations between Iran and Europe are at their peak. Following the July 14 nuclear accord between the country and P5+1, ties are strengthening."

Iran is interested in competing with its international rivals in the field of tourism and constructing quality hotels across its provinces, Serna stressed, adding the country would soon turn into the region’s main trade and tourism destination.

"Our aim is to increase our trade volume with Iran in the coming years."

According to the envoy, international investors are interested in business with Iran in various sectors including tourism.

Serna further described the construction of qualified hotels as an essential requirement for investment in tourism industry.

The envoy further said Iran’s ties with the EU have improved since President Hassan Rouhani assumed office in 2013.

 

 

Hotels for all social classes

-----------------------------------

In another exclusive interview with Iran Daily, Sirous Etemadi, a member of the Iranian Tour Operator Association, put the annual number of tourists visiting Iran at 4.5 million, adding, efforts are underway to increase the figure to more than 20 million by 2025.

He said due to the row between Turkey and Russia, there is growing probability that Iran would replace Turkey as a destination for Russian tourists.

Etemadi added, "Given its high tourism capacities, Iran will soon turn into a regional tourism hub. A tsunami of tourists is headed for Iran."

He further underline that the country faces a serious challenge in providing accommodation for the growing number of tourists.

The head of Iran Cultural Heritage, Handcrafts and Tourism Organization, Masoud Soltanifar, he said has predicted that Iran is required to increase the number of its five- and four-star hotels to 400 in the next 10 years.

"There are about 1,100 hotels across the country, of which only 130 are four- and five-star. Although we are required to build luxury hotels, we should not forget about other [low-income] classes of our tourists."

He stressed that in addition to being a regional tourism hub, Iran is an important scientific center.

A large number of university students visit the country annually to carry out their research activities, Etemadi said, adding they need cheap but clean lodgings.

Tourism industry fetched Iran about at least $6.1 billion during the year to mid-March 2015.

 

 

An NPC official has announced that two Spanish and Danish firms have voiced readiness to participate and invest in Iran's petrochemical industry.

Director for Investment of National Petrochemical Company (NPC) Hossein Alimorad, while describing the latest status of negotiations with new developmental partners in the country's petrochemical industry, said "following the talks with German banks and firms on reopening a three-billion-euro Line of Credit (LOC), similar dialogues have been conducted with companies from Spain and Denmark."

"SERCOBE (Spanish National Association of Capital Goods Manufacturers) has expressed willingness to partake in the Iranian industry," noted the official asserting "reopening of new LOCs remains as one axis of talks with the Spanish side."

He stressed that talks have begun to determine timespan of joint cooperation estimating that final agreement will be soon reached with SERCOBE.

A high-ranking SERCOBE official, on the sidelines of a meeting with NPC authorities in Tehran, had voiced his company's eagerness to provide Damavand Petrochemical Company with long-term financing.

Alimorad also elaborated on the held talks with Haldor Topsøe, as the largest chemical industry company of Denmark, explaining "three issues have so far been dealt with in the course of negotiations with the Danish firm."

"The three axis of talks include transfer of technical knowledge, investment and finanicng," said the official reiterating that Haldor Topsøe has expressed readiness to continue its participation in Iran's petrochemical industry.

Earlier on the sidelines of K Trade Fair 2016, the world's premier fair for the plastics and rubber industry in Germany, Managing Director of the National Petrochemical Company (NPC) Marzieh Shah-Daei and Director general of the Association of Petrochemical Industry Corporations (APIC) Ahmad Mahdavi held talks with top officials of Haldor Topsoe over investment, knowledge and technology transfer and the supply of Iran’s petrochemical projects with licenses.

On the basis of the negotiations, the Danish firm expressed readiness to participate in new projects for production of urea, ammonia and methanol in Iran’s petchem industry.

 
Spanish Secretary of State for Trade met and talked with Mohammad Khazaei, President of Organization for Investment, Economic and Technical Assistance of Iran.
 
Mohammad Khazaei pointed to the potential for high investment in Iran and added  Spain is willing to invest in Iran's insurance coverage with no limitation.
Mutual economic cooperation, investment in automobile parts, tourism industry, petrochemicals, oil and gas, and financial cooperation, particularly insurance coverage, were among the issues discussed in the meeting, he said.The volume of bilateral trade has declined since 2011 and we are trying to increase the volume of trade relations to $3 billion,he added.
Spain's economy is a great economy and it is necessary that the two countries' banks, which did not work together for a long time, become familiar with each other to facilitate investment, Khazaei stressed.
It was agreed that Spain's banking board would begin serious negotiations to renew relationships and facilitate financial transactions with the banking system of our country, he added.
In the meeting, García-Legaz, Spanish Secretary of State for Trade, expressed his country's interest to expand economic cooperation and investment with Iran.
Spain is ready to cover the funding needed to provide investment in Iran, he stated, adding: the financial measures are scheduled to take place from October.
Investment in petrochemical sphere is important to us, because we have strong companies that currently operate in various countries including America, García-Legaz stressed.

Switzerland's MSC - the world's second largest shipping company - plans to expand its services to Iran.

Iran said on Sunday that the world’s second largest shipping company MSC from Switzerland will soon expand its services to the country’s ports.

Iran’s Ministry of Roads and Urban Development in a statement said an agreement had been signed with the MSC by means of which the global shipping giant will increase calls to Iran’s Bandar Abbas, Chabahar and Bandar Imam ports.

The agreement – that has been signed with the Ports and Maritime Organization Iran - will also facilitate the shipment of Iranian goods from international ports to the country through MSC.   

This came at a time that Swiss President Johann Schneider-Ammann is in Iran on a landmark three-day visit.   

The media reported in January that the MSC had started calling at the country’s southern ports after a hiatus of six years.

This came after an MSC container ship has docked at Shahid Rajaie port in the Persian Gulf coastal city of Bandar Abbas.

Iran’s shipping industry became the target of a series of US-led sanctions over the past few years that disrupted the traffic of ships to the country’s ports.

Those sanctions were officially removed last July when Iran and P5+1 group of countries – the five permanent members of the Security Council plus Germany - marked a milestone with their conclusion of nuclear negotiations.

Iran relies on container and bulk carriers to transport much of its basic needs, including food and consumer goods. Those willing to risk the liability associated with the Iran trade faced further deterrents as they could not get insurance coverage.

The governor of the Central Bank of Iran has called on the government of Switzerland to help introduce Iran’s banking sector to Swiss business leaders and entrepreneurs to help build cooperation between the two countries in the post-sanctions era.
Pointing to the banking relations between the two sides in the past, including during the nuclear-related international sanctions, Valiollah Seif welcomed the resumption of bilateral ties to the pre-sanctions level.
During a meeting with a Swiss economic delegation at the CBI headquarters in Tehran, Seif asked Swiss authorities to remove Iran from the list of countries that allegedly finance terrorism.  
“In light of the anti-terrorism bill passed by the Majlis we ask Switzerland to take the necessary measures to remove Iran from the list of states (accused of) sponsoring terrorism and the high-risk countries,” the CBI website quoted him as saying late Saturday.
Iran’s Parliament passed a bill in February 2010 to counter terrorism financing, but due to some flaws, the Guardian Council –a vetting body which oversees the passage of laws -- sent the proposal to the judiciary to resolve some aspects it said were ambiguous. The amended bill is still pending final approval.
“We suggest regular meetings between the two countries’ banks to familiarize you with Iran’s progress in anti-money laundering measures and enhance banking ties,” Seif said.

  Anti-Money Laundering Agreements
 Iran’s anti-money laundering initiatives, consists of about 45 technical ordinances concerning banks, insurances, stock market, customs and notary publics. Iran has also signed six anti-money laundering agreements with other countries to share knowledge and experience in relevant fields.
Seif said Iranian banks have been trying to improve their operations in accordance with international standards, including Basel II and III. “The Majlis has also ratified anti-money laundering laws and laws against financing terrorism.”
Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. Basel III is a comprehensive set of reform measures designed to improve the regulation, supervision and risk management within the banking sector.
Seif noted that some of the terms in Iran’s nuclear accord with the six world powers last July need to be clarified .“The central bank has formed a special committee to clarify any misunderstanding about the nuclear agreement concerning banking relations with Iran.”
The Swiss delegates may refer to this committee should they have any questions, Seif said.

  Issues Clarified
René Weber, Swiss Head of Markets Division at the State Secretariat for International Finance told the meeting that his country is keen on enhancing ties with Iranian banks and provide training and technical knowledge as well as boost cooperation in legal and financial areas.
“In the meetings so far many issues have been clarified,” he said, welcoming Seif’s proposal for holding joint meetings.  “Such events can help expand corresponding banking relations between the Iran and Switzerland.”
Weber invited CBI officials to visit Switzerland to prepare the grounds for normalization of banking relations between the two sides.
A delegation of Swiss officials, led by President Johann Schneider-Ammann arrived in Tehran Saturday for an official visit. The two countries released a joint statement on Saturday, outlining a roadmap to expand cooperation.
It set out the details of the roadmap in 13 articles covering a wide range of areas, including politics, trade and finance, transport, agriculture, tourism, science, research and technology, environment, human rights, migration and consular relations.

After JCPOA and Iran's deal with 5+1 ,many delegations from around the world flock  to Iran to grab opportunities.
Based on Report ,South Korea and Iran are set to begin discussions on boosting bilateral cooperation in the fisheries sector that will include a joint fish farming venture, the Seoul government.
The talks will be held in Iran from Thursday involving officials from South Korea’s Ministry of Oceans and Fisheries and their Iranian counterparts, South Korea’s largest news agency Yonhap reported.
The two sides will discuss follow-up measures for a memorandum of understanding for cooperation in the fisheries area signed in May during South Korean President Park Geun-hye’s visit to Iran.
The visiting officials from the South Korean ministry will also check the feasibility of a joint venture in fish farming.
Iran is already the largest fish farming nation in the Middle East, annually producing some 325,000 tons of fishery products through farming, the ministry said in a press release.
South Korea is the world’s seventh-largest fish farmer.
In 2015, Iran purchased 155,000 tons of fishery products, worth $21 million, from South Korea.
“A joint venture in the Iranian market will not only provide an opportunity for our fish farming industry to leap forward, but it may also help create a Korean wave of fishery products in Iran,” the ministry said.

View from Singapore: one year of the VCC structure

At the start of 2020, Singapore introduced a new corporate entity structure, the Variable Capital Company (VCC), and by June the number of incorporated VCCs had grown to over 300. This has now sparked the interest of larger asset managers, and helped to further solidify Singapore’s reputation as a leading financial centre
By Ashmita Chhabra, Managing Director, Business Development, Asia Pacific at Apex Group
August 18, 2021
 

On January 15, 2020, the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA) launched the Variable Capital Company (VCC) framework, a new corporate structure specifically designed for investment funds, strengthening the foundations for its continued prominence as a global financial services and fund domiciliation hub. We are now over a year on from its introduction and it is time to take stock of its initial impact. In this piece, we examine the early adoption of the structure and consider the areas of focus to build on its early successes.

 

Background to the VCC

The VCC is a new corporate entity structure that is purpose built for investment funds. It also offers the flexibility of compartmentalisation via umbrella structure, just like a Protected Cell Company or a Segregated Portfolio Company. Umbrella funds can house different strategies/investors in different compartments called sub-funds, with each of the underlying sub-funds ring-fenced from one another providing legal segregation of assets and liabilities. As it’s a corporate fund structure with no regulatory definition of investment strategies that can be housed in it, VCC can be used across alternative fund strategies (both open-ended and close-ended). This new corporate entity structure gives funds an alternative to existing fund structures available in Singapore, such as limited partnerships, unit trusts and private limited companies, as well as plugging some of the gaps and constraints of using these structures.

Along with this, the VCC offers the flexibility of incorporating via re-domiciliation. Re-domiciliation is a feature of incorporation that allows a corporate entity in other compatible jurisdictions to be brought over to home jurisdictions and retain its characteristics from day-one, thereby retaining the track record.

 

The attraction of VCC for fund managers

For Singapore-based managers, the VCC provides them with an additional option for structuring their funds. In the past, managers here have mainly used offshore structures, and now they have a flexible and versatile framework in the same jurisdiction.

    Service providers in Singapore will play a crucial role in supporting funds looking to adopt the VCC structure

Primarily, the VCC benefits those fund managers with a broad Asian investor base or those who invest in Asia, as they can take advantage of access to Singapore’s 90+ tax treaties.

The structure offers significant flexibility as it can be used to incorporate new funds or re-domicile existing comparable and compatible overseas investment funds. It can also be used for both closed-ended and open-ended funds, unlike some structures offered in other jurisdictions. We see that this flexibility is proving to be one of the key attractions behind the popularity of the VCC and has been central to its early success.

 

Early successes

The VCC structure proved to be immediately popular: the VCC went live on 15 January 2020 and 20 VCCs were launched on the same day. Data shows that total of over 50 VCCs were incorporated in the first four months, and over 300 VCCs by June 2021. This compares favourably with the initial rate of take-up of similar structures in other geographies such as Europe, especially when taking into account the added complications of Covid.

We have seen many of the early adopters of the last year hold similar characteristics: early stage wealth managers, smaller investment groups and debut funds. In part, this is due to the generous financial incentive which plays a powerful role in the decision-making process for these players: as part of the launch of the VCC, the MAS introduced the VCC Grant Scheme (VCCGS) to encourage adoption and conversions to VCC. This grant covers 70% of eligible expenses (capped at $150,000 per VCC, and up to three VCCs per fund manager) for work done in Singapore in relation to the incorporation/re-domiciliation of the VCC. This includes legal fees, tax advisor fees, regulatory advisory fees towards set up, and consulting fees.

Into late 2020 and certainly in 2021, we have seen the adoption extend to mid and larger asset managers and global players taking up the VCC.

In addition, the speed and simplicity of incorporation is a unique benefit of the VCC which has contributed to this initial success. It takes 14 days (for the most straightforward structure) to 60 days to get approval with the ACRA. The process is accelerated, because, unlike Hong Kong, there is no pre-approval process for at least alternative funds by the regulator. As such, many of the early adopters are those for which speed to market is a key priority.

 

Areas of future focus

Undeniably, Singapore has seen initial success with the launch of the VCC, with the market welcoming the new structure and we expect it to gain further momentum as the market becomes more familiar and comfortable with the regime. We see international funds looking to re-domicile under the VCC to be a key source of future growth.

To build on the initial success of the VCC in the years ahead, the market and regulator will continue their focus and collaboration to attract a diverse range of asset and wealth management niche sectors, to accommodate complex investment strategies and investor pooling concepts. With the VCC framework in place for over a year and half, enhancements are being proposed based on feedback and experiences from the industry that are being reviewed by the regulator. Included in these proposals are an extension of VCC’s utility ranges from family offices to real estate funds.

    The structure offers significant flexibility as it can be used to incorporate new funds or re-domicile existing comparable and compatible overseas investment funds

At the end of April 2021, MAS also established the Singapore Funds Industry Group, a new public–private sector partnership to strengthen Singapore’s value proposition as a global full-service asset management and fund domiciliation hub. One of the points of focus under SFIG would be working on enhancing and further developing the VCC framework.

Service providers in Singapore will play a crucial role in supporting funds looking to adopt the VCC structure – ensuring managers have access to the right advice, expertise and operational excellence. For example, experienced service providers are required to navigate the structure, help funds come to market swiftly and efficiently, as well as adhering to and understanding the requirements for the umbrella VCC with respect to corporate secretarial, fund administration, custody, directorship, and audit to name a few.

 

Outlook for the VCC

Singapore has always been an attractive financial hub, with a stable political climate and a proactive regulator which sets a legislative environment to encourage innovation, foster continued growth and provide certainty of its application.

As global investors become more familiar with the VCC, it will emerge as a very strong contender to attract capital flows and further support Singapore’s growing aspirations as a global financial jurisdiction.

As banks in the Middle East cope with the impact of the oil price slump on domestic economies by increasingly looking to new markets – Turkey and Egypt in particular – lenders from countries that had retreated in the aftermath of the global financial crisis are heading back into the region.

AbuDhabi_mainpic

The Middle Eastern banking sector has been one of the few bright spots in the global banking industry since the onset of the financial crisis. In stark contrast to many Western banks that reported catastrophic losses in 2008 and have spent the subsequent years licking their wounds, Arab banks on the whole escaped relatively unscathed.
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And so while European and US banks have been battening down the hatches, Arab banks have spent the post-crisis years blazing an expansionary trail in markets across the world.

Liquidity dries up

However, the sharp drop in the price of oil over the course of 2015 was keenly felt by the region’s banking industry, especially within the Gulf Co-operation Council (GCC) countries that derive much of their liquidity from oil exports.

And the likelihood of a quick recovery certainly does not appear to be on the horizon. Rather, there are fears that the lifting of Western sanctions on Iran in January 2016 could compound the existing problem, as the country prepares to pump more oil into the market.

The global market’s unease was reflected by the fact that on January 18, two days after sanctions on Iran were lifted, oil prices fell to their lowest level since 2003, sinking below $28 a barrel. With the outlook for oil prices remaining subdued, the trend of tightening liquidity within the GCC is expected to continue in 2016.                                            

“Expenditure cuts, lower growth prospects and tighter liquidity will lead to a significant moderation in credit growth across the Gulf in 2016,” says Alyssa Grzelak, an economist at IHS Global Insight.

“Lower oil prices have already resulted in a drawdown in government deposits. In the United Arab Emirates and Qatar, for example, government deposits have fallen by a cumulative 10% since the second half of 2014 while Kuwait and Saudi Arabia have seen growth rates fall to near zero.”

In light of this challenging domestic operating environment, many industry observers are now questioning whether the Gulf banks will finally be forced to curb their trailblazing activities after many of them highlighted international expansion as a key pillar of their growth strategy for 2016 and beyond.

However, in 2015, the Union of Arab Banks, which represents about 330 banks and financial institutions, warned that falling oil prices could impede Arab banks’ overseas growth. Furthermore, there are concerns that the restricted liquidity will make it easier for foreign players to compete in the home markets where Arab banks are already under pressure.

Foreign banks move in

Foreign banks are regaining lost ground in the GCC’s financial sector, with Japanese, French and US banks looking to ramp up business in the region as the oil price slump compels Gulf lenders to halt the flow of their trademark cheap loans.

“The drop in oil prices has accelerated what will be a long-term trend of Asian banks building up their presence in the Gulf,” says Ms Grzelak.

“Over the longer term, Chinese banks are likely to build their presence in the Gulf to capitalise on growing trade links. So far, ample liquidity among Japanese banks has allowed them to fill the void created by tighter liquidity within the Gulf and the recent pull-back of European banks.”

Flush with the proceeds of their government’s ‘Abenomics’ quantitative easing programme, Japan’s megabanks Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group and Sumitomo Mitsui Financial Group (SMFG) are making a noticeably strong comeback in the market. MUFG and SMFG secured second and third spots in the year to November 30, 2015 league table for Gulf syndicated lending, according to Thomson Reuters data.

By contrast, only one regional bank – Saudi Arabia’s Riyad Bank – has a top-six slot, down from fourth in 2014, while Samba Financial Group, also from Saudi Arabia, slipped to 23rd position from second in 2014.

The total value of project contracts to be awarded in the GCC in 2016 is expected to reach $140bn this year, according to a report by MEED Projects. “Despite the drop in oil prices, the region still needs to build lots of infrastructure and is continuing to invest in it. The past four to five months have proved to be our busiest period in the region for a long time,” says Elyas AlGaseer, managing director, deputy head of Middle East, at MUFG.

“Our bank has been taking a lead role in major regional transactions. Project finance and infrastructure will comprise our core projects but we are also looking to get involved in structured financing with regards to telecoms, transportation, oil and gas, and industry. And we are now seriously considering establishing public-private partnerships with GCC governments,” adds Mr AlGaseer.

“The massive contraction in liquidity over the past year has made it apparent that the Gulf banks that will continue to expand – both inside and outside the region – are those that have a clear strategy and deep pockets.”

Strategically positioned

Indeed, the National Bank of Abu Dhabi (NBAD) is a good example of that. Cognisant of the tightened liquidity, the bank has strategically positioned the duration of its balance sheet to be short term. It finished 2015 with an advances/deposits ratio of 88% versus the market benchmark of 101% and so has the ability to fund further growth.

Moreover, as one of the region’s largest banks with assets of Dh406.6bn ($110.7bn) at the end of 2015, NBAD has generated headlines for crafting an ambitious five-year international expansion plan, conceived by Alex Thursby, who was appointed group chief executive of the bank in July 2013. NBAD is half-way through this expansion plan. The bank is targeting specific client segments and focusing on strengthening its dominant position in the UAE while also building its wholesale and wealth network across the “west-east corridor”, which NBAD defines as the region from west Africa to east Asia.

“Notwithstanding the plan that we have got, a lot of the focus will come back to the home market this year,” says James Burdett, group chief financial officer of NBAD. “With a growing pressure on banks’ liquidity, there may be good opportunities for us to lend in the marketplace to our traditional client base. So my sense is that we will be more UAE and Gulf focused this year and less about the international scene.”

That said, international expansion will continue to play an important role. NBAD currently generates 21% of its revenues from its international operations, which grew at 11% in 2015 compared with a slight reduction (-1%) for its domestic operations. It predicts that its international operations will continue to grow at a faster rate than its domestic business – albeit from a lower base.

Crucial to the plan is the development of eight markets focused on providing wholesale products and an international network proposition, targeting approximately 600 clients within five specific sectors across its wholesale business. It is also planning to target what it terms ‘franchise countries’.

“If we take a long strategic timeframe, the UAE can only take us so far because the market is the market size, capped by its gross domestic product,” says Mr Burdett. “So we believe that at some point in the future, we need up to five what we are terming franchise countries. We have not selected them yet but the first one is likely to be Egypt, which will be a full franchise country that will be retail, commercial and wholesale with a big branch platform and a country that we are looking to accelerate growth in.”  

Egypt's potential

NBAD already has a substantial retail banking franchise in Egypt, but Mr Burdett says the bank is confident that the country still holds a lot of opportunity and economic upsides for the bank. “We have been there for a number of years and we are still relatively small compared with the big players so we think there is room to grow. There are a lot of trade flows between Egypt and the UAE and a lot of Egyptian expatriates in the UAE and vice versa, so we think there is a good opportunity for us to make significant inroads there,” he says.

Dubai-based Emirates NBD also views Egypt as a key market for its future growth after buying the Egyptian subsidiary of BNP Paribas for $500m in December 2012. “Following the successful rebranding and integration of the Egyptian business onto the Emirates NBD platform, the focus is now on expanding high-value customer segments,” says Shayne Nelson, group chief executive of Emirates NBD.

“We will also pursue growth in our current international markets by focusing on cross-border trade and other opportunities. In the short term we will continue to develop our footprint with more cross-selling in our core markets, namely the UAE, Saudi Arabia and Egypt.”

Another key regional player that has strong confidence in Egypt’s future is Lebanon’s Bank Audi, which also already has a strong foothold in the market. It also ranked as the bank’s most profitable overseas operation in 2015, recording a net profit after provisions and taxes of $69.5m in 2015, which equates to a 21% increase over the $57.6m recorded in 2014. The profit increase is even more impressive given it factors in the 10% depreciation of the Egyptian pound. Meanwhile, its total revenues in Egypt grew by 36% over the course of 2015.

However, Egypt’s contribution to Bank Audi’s group performance remains small – representing about 12% of the bank’s consolidated assets. “We have a strong appetite for growth in Egypt that has been confirmed in a revised business plan that was submitted to the board in the last quarter of 2015, supported by our recent very good financial performance,” says Dr Freddie Baz, group strategy director at Bank Audi.

“Certainly, Egypt suffered economically as a result of the successive political transitions it went through, but it has proved to be much more resilient than many other Arab countries in transition and the economy never fell into recession. We are now planning to recruit high-skilled staff and further invest in new business lines there.”

Bank Audi Egypt plans to add 20 branches in Egypt in the coming three years, building on its existing 34. It is also considering large funding opportunities worth more than E£11bn ($1.4bn) in various economic sectors throughout 2016.

Banking on Turkey

Along with Egypt, Bank Audi is betting big on the untapped potential of Turkey. “We are aiming to add 60% to 70% more assets in both Egypt and Turkey over the next four to five years,” says Mr Baz. “These two countries are our two main development pillars after our home market of Lebanon and we are hoping to achieve targeted market shares in both these countries.”

Bank Audi has already enjoyed considerable growth in Turkey through Odeabank, its fully owned Turkish subsidiary, which began trading in November 2012.

“We are hoping to increase Odeabank’s assets from an existing $10bn to $18bn over a three- to five-year horizon,” says Mr Baz. “We are today the 10th largest bank in Turkey among 30 private banks as ranked by deposits – that is not a bad position to be in after just three years of activity.”

Another regional heavyweight that is focusing strongly on Turkey is Qatar National Bank (QNB), which signed an agreement in December 2015 with the National Bank of Greece to acquire its 99.81% stake in Finansbank, Turkey’s fifth largest private bank as ranked by total assets, customer deposits and loans. QNB expects to finalise the transaction during the first half of 2016.

“Turkey, with its significant market size, population, growth track record, strong economic and banking sector prospects and strategic location as a gateway between Europe, Asia and Africa represents a promising market and is therefore of strategic importance to us,” says QNB Group’s executive general manager and chief business officer, Abdulla Mubarak Al-Khalifa.

“Furthermore, QNB intends to capture a growing share of the increasing trade and investment flows between Turkey’s and QNB’s international footprint. For example, Turkey’s trade with the Middle East and north Africa region has risen nearly tenfold from $5.6bn in 2000 to $52.2bn in 2014,” he adds.

QNB has been expanding its international operations significantly over the past few years, leading to an increase in loans from 19% in 2013 to 24% in 2015, deposits from 37% to 39% and net profit from 28% to 31% over the same period. It predicts that its international operations will contribute 40% of its net profit by 2017. Its goal is to become a leading bank in the Middle East and Africa region as well as south-east Asia by 2020.

Therefore, it is clear that the key regional players in the Middle East remain both committed to and bullish on expanding their international footprint. Indeed, the outlook for the Gulf banking sector remains broadly positive, with the consensus among industry analysts being that banks will be able to weather the prevailing oil slump in the near term without experiencing a significant decline in asset quality and profitability.

“Gulf banking sectors expanded their loan books at a more modest pace over the past three years than was the case leading into the global financial crisis, non-financial corporations have restructured debt taken on during the last oil price boom, banks have built up countercyclical provisions, and macroprudential regulations have been tightened,” says Ms Grzelak at IHS Global Insight. “Overall, Gulf banks are more resilient to the current slump in oil prices.”

Source:Banker

The Role of Engineering, Procurement, and Construction (EPC) Contractors

By Taylor Riso
and Jacob Kunken

The Role of Engineering, Procurement, and Construction (EPC) Contractors

By Taylor Riso
and Jacob Kunken
Photo of a contractor in a bright yellow reflective vest on a jobsite
Last Updated Nov 17, 2023

Engineering, Procurement and Construction, also known as EPC, refers to a specific type of contracting arrangement or project delivery method that is often used for large-scale infrastructure work, industrial facilities, power plants, and other complex construction projects.

Engineering, Procurement and Construction contractors (EPC contractors) are responsible for the entire project lifecycle, from engineering and design to procurement of materials and construction, as well as commissioning and project handover. The EPC contractor provides a comprehensive, turnkey solution, overseeing and managing all aspects needed to deliver a successful project to the client.

In this article, we’ll dive into the roles and responsibilities of EPC contractors as well as the benefits of their involvement in specific types of construction projects.

Table of contents

Roles and Responsibilities of EPC Contractors
Engineering
Procurement
Construction
Other Key Responsibilities
Benefits of using an EPC Contractor
Importance of EPC Contractors
Roles and Responsibilities of EPC Contractors
At a big-picture level, the role of the EPC contractor is to provide an integrated and comprehensive approach to project delivery, managing all aspects of engineering, procurement, and construction to successfully deliver a functioning project to the client.

Throughout a project's duration, the responsibilities of an EPC contractor can be categorized into three major categories that we’ll dive into below:

Engineering
Procurement
Construction
Engineering
Project owners will frequently engage EPC contractors to undertake feasibility studies aimed at evaluating the project's viability. In these assessments, the EPC contractor thoroughly examines the technical, financial, and logistical aspects of the project. These studies play a pivotal role in ascertaining whether the project's engineering prerequisites can be accomplished while adhering to certain constraints such as location, budget, and schedule.

Once the project's scope of work is defined, the EPC contractor assumes the responsibility of crafting comprehensive engineering plans, specifications, and designs for the project. An EPC contractor typically employs a team of skilled engineers and designers who possess expertise in various disciplines such as civil, mechanical, electrical, and other specialties. They collaborate to ensure that all technical aspects of the project are meticulously addressed and that the plans outline all of the project's structural, architectural, and functional aspects.

The EPC contractor also ensures that the engineering designs adhere to all local and national regulations, codes, and standards as well as adhere to required safety, environmental, and building codes.

In addition, EPC contractors actively participate in value engineering, proposing alternative, budget-friendly solutions that simultaneously enhance the design and fulfill the intended functions. Their objective is to strike a harmonious balance between performance, quality, and cost, all while aligning with the owner’s overarching objectives of the project.

Throughout the project's duration, the EPC contractor employs creative approaches to address any engineering challenges that emerge. Their efforts aim to refine designs, enhance efficiency, and overcome any technical obstacles that may impede the successful delivery of the work.

For example, project executives on a New York City subway project opted for aluminum pipes over steel in order to run a glycerin solution through the pipes to freeze the ground in preparation for a tunnel boring machine (TBM) to cut its path.

This ingenuity saved the contractor millions of dollars because the TBM’s cutting head was strong enough to cut through the aluminum, whereas the steel pipes would have to be extracted before the tunnel’s excavation.

Procurement
Procurement is a fundamental pillar within an EPC contractor's role in a construction project. The EPC contractor's involvement in procurement spans the entire spectrum, from selecting and negotiating with suppliers to meticulously managing supply chains and orchestrating logistics.

These contractors bear the responsibility of not only identifying and acquiring all essential materials, equipment, and components from suppliers, manufacturers, and distributors but also evaluating and choosing these suppliers based on critical factors like quality, reliability, cost, and delivery timelines. Beyond the task of identifying and sourcing, EPC contractors are also responsible for managing the purchasing and logistical aspects associated with these components.

During the procurement phase, the EPC contractor also selects their subcontractor partners who will be responsible for specialty scopes. This often involves issuing a request for proposal (RFP) or an invitation to bid (ITB) to attract potential subcontractors. Much like the process of procuring suppliers, the EPC contractor engages in a bidding process when selecting and finalizing contracts with specialty contractors.

As part of their comprehensive approach, EPC contractors often formulate a procurement management plan, essentially functioning as a strategic schedule that ensures the timely receipt of materials, thereby upholding key construction milestones. This plan serves as a blueprint, offering a framework for the entire procurement process, thus ensuring punctual deliveries to uphold the overall construction schedule.

The procurement management plan outlines the schedule for acquiring each item and pinpoints essential procurement benchmarks, which will be continuously adjusted throughout execution to assess potential project effects. EPC contractors will communicate this strategy to the project owner to ensure complete transparency concerning crucial procurement-related pieces. One key component of the procurement management plan is supply chain management. The EPC contractor monitors inventory levels, lead times, and potential supply disruptions to maintain smooth operations.

Once suppliers are identified, the EPC contractor engages in negotiations to secure advantageous terms and conditions, aiming to attain competitive pricing and ensure the timely delivery of materials. Additionally, they formulate contracts that meticulously detail expectations, quality benchmarks, delivery timetables, and terms of payment. The EPC contractor then arranges for the transportation and delivery of materials to the construction site, and accounts for factors such as transportation costs, distance, and other logistics pieces.

After the materials are delivered, the EPC contractor conducts inspections, testing and verification to ensure that they meet the specified quality and safety standards.

An EPC contractor’s proficiency in procurement ensures that the necessary resources are available on time, within budget, and in compliance with quality standards and is key to the successful delivery of the project.

Construction
In the construction phase, the plans and designs developed during the engineering phase are executed. The EPC contractor is responsible for managing construction crews, contractors, and subcontractors to ensure that the project is built according to specifications, safety standards, and timelines. Put simply, the EPC contractor spearheads the construction project management process.

The EPC contractor is responsible for overseeing and managing all of the construction activities of the project. This entails maintaining project schedules, milestones, and timelines to meet project objectives. In addition to ensuring the project stays on schedule, the EPC contractor is responsible for cost control and monitoring construction expenses so that they remain within the predetermined budget.

The EPC contractor additionally enforces quality control procedures to guarantee adherence to predetermined quality assurance criteria and specifications. This encompasses performing thorough inspections and tests to validate the quality and operational integrity of finalized scopes as well as promptly addressing any shortcomings or challenges that arise.

During construction, the EPC contractor implements and enforces on-site safety protocols. With the welfare of all crews, contractors, and subcontractors in mind, the EPC contractor abides by regulatory guidelines and industry best practices to mitigate potential risks.

Throughout the entire construction phase, the EPC contractor oversees both their work crews and subcontractors, while also providing the project owner with regular updates on construction progress, challenges, and any deviations from the devised plan.

Project Management
Build Predictability and Productivity
Deliver projects on time and on budget with greater visibility.

Illustration of graphs layered into a building.
Other Key Responsibilities
In addition to overseeing all aspects of engineering, procurement and construction, an EPC contractor is also responsible for the following:

Risk management: Under an EPC contract, the contractor assumes a higher level of risk, as they are accountable for the successful completion of the project within the agreed-upon parameters. Any delays, cost overruns, or quality and safety issues can have financial and reputational implications for the contractor. A key piece of project execution for EPC contractors entails proactively identifying, assessing and mitigating risks.
Change management: If changes in project scope, design modifications, or unforeseen circumstances arise, the EPC contractor evaluates the impact of these changes on the project's overall schedule, budget and final result and adjusts their course of action accordingly.
Commissioning: After construction is complete, the EPC contractor is responsible for commissioning. All systems and elements are tested and validated to ensure they operate according to their intended function before the project is fully handed over to the client.
Benefits of using an EPC Contractor
EPC contracts offer advantages to both project owners and contractors.

Benefits of an EPC Contractor
Owners Contractors
Turnkey solution
An EPC contract offers the project a turnkey solution, meaning the project owner receives a fully operational building or project at the end of the process. This eliminates the need for separate contracts for design, procurement, and construction, simplifying an owner's responsibilities. The EPC contractor handles all aspects of the project, from inception to completion. Competitive advantage
Contractors with EPC capabilities are less common compared to general contractors and distinguish themselves by offering comprehensive solutions. This competitive edge allows them to stand out, specifically on complex industrial projects or those requiring integrated services.
Single point of responsibility
In an EPC contract, a single contractor (the EPC contractor) takes on the responsibility for the entire project, from engineering and design to procurement of materials and construction. The EPC contractor is responsible for delivering a fully functional project to the client. This streamlines communication and coordination, reducing the owner's administrative burden and the risk of miscommunication between multiple parties. Steady workload
As EPC contractors cover the entire project lifecycle, the workload is more consistent, particularly due to the longer duration of such projects. This extended visibility also allows EPC contractors to forecast farther ahead, leading to more efficient resource allocation and workforce management.
Minimizes risk
Under an EPC contract, the EPC contractor shoulders the majority of the project risk and is responsible for managing and mitigating various risks, such as delays, cost overruns, design issues, and construction challenges. Profitability
An EPC contract typically entails lump-sum or fixed-price arrangements. This empowers EPC contractors to manage costs more effectively and potentially attain higher profit margins as long as they successfully control project costs.
Importance of EPC Contractors
EPC contractors play a pivotal role in delivering complex, infrastructure-heavy projects. Their unique ability to seamlessly integrate engineering, procurement, and construction phases provides a holistic approach that streamlines project execution and minimizes risks for project owners. Whether navigating complex engineering challenges, delivering turnkey solutions, or effectively managing risks, EPC contractors bring a comprehensive approach to deliver efficient project execution.

By carefully evaluating the project's unique requirements, owners can make informed decisions on whether the expertise of an EPC contractor is needed. This decision isn't just about project execution; it's about finding a partner that not only ensures timely and high-quality delivery but also offers an avenue for innovation, optimal resource allocation, and long-term project performance.

As projects become increasingly complex and timelines tighter, the role of EPC contractors and the utilization of EPC contracts continues to be paramount. In an era where projects span multifaceted industries and require intricate engineering feats, the need for a comprehensive approach to project execution is essential in the world of construction.

Turkish energy company Unit International has reached a deal worth $4.2 billion with Iran’s Energy Ministry to build seven natural gas power plants, in what it said was the biggest investment in Iran since the lifting of sanctions.

A total of seven power stations, to be built in seven separate regions of Iran, would have a combined installed capacity of 6,020 megawatts, said the company in a statement, as reported by Reuters.

“Unit International has reached a deal with the Iranian Energy Ministry worth some $4.2 billion to build natural gas combined cycle power plants,” Unit said, adding that the agreement was signed at a ceremony in Tehran on June 1.

Unit International is owned by Ünal Aysal, the former chairman of major Turkish soccer club Galatasaray.

Aysal said to reporters that when completed, the power plants would meet 10 percent of Iran’s energy needs. Construction of the seven plants was planned to begin in the first quarter of 2017.

The company signed a 20-year agreement with Iranian officials to build the power plants on a build-operate-transfer (BOT) model.

“Over this period, Iran will provide natural gas to us. Iran will also purchase the power that will be generated by us on a pre-defined price for a six-year period. After this, the electricity will be exported by Iran or sold in the country’s free market,” Aysal said, adding that such investments had only been made by Iranian companies up to now.

“This agreement represents a first in terms of the opening of Iran to foreign direct investment,” he added.


1,000 hours of negotiations 

Mohsen Tarztalab, the head of Thermal Power Plant Holding, which is responsible for the deal on behalf of the Iranian Energy Ministry, said the sides negotiated for the deal over more than 1,000 hours in the last 12 months.

“As the gas-fired power plants have outmoded technologies, their efficiency levels are low. The power plants that will be built by Aysal’s company will be two times more efficient than the existing ones,” he said.

Iran’s deputy energy minister, Husheng Felahetiyan, told daily Hürriyet last week that the country would soon sign a deal worth around $3 billion with Turkish companies to build power plants with an installed power of 5,000 MW.

Felahetiyan also noted that the power trade between Iran and Turkey would increase, adding that Iran now sells around 350 MW of electricity to Turkey.

The United States, the European Union and the United Nations lifted most sanctions on Iran in January under a deal with world powers whereby Tehran agreed to curbs on its nuclear program.

Turkish companies  have seen Iran as best Investment hub andmove as a major trade and investment opportunity, with the car, clothing, textiles, machinery and chemicals sectors seen as offering particular potential.

Investment Process
 


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