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Qatalum to support ‘Made in Qatar 2017’ expo

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Islamic finance can play key role in PPP deliverySatish Kanady The Peninsula

The fast-growing Islamic finance industry can play a significant role in closing the infra-structure gap in the

region and beyond, through pub-lic-private partnerships (PPP).

Given the potential of Islamic finance to support infrastructure development in emerging and developing countries, it is criti-cal to address how to best deploy Islamic project finance in PPP delivery frameworks, noted lat-est World Bank report on ‘Mobilising Islamic Finance for

infrastructure PPPs’. According to the World Bank document, shari‘ah -compliant assets have grown exponentially in the past

two decades, accumulating nearly $1.9 trillion in assets and spreading across 50 Muslim and non-Muslim countries around the world.

The Gulf Cooperation Coun-cil has the largest share of shari‘ah-compliant assets, at 42 percent of the global total, fol-lowed by the remainder of the Middle East and North Africa region (excluding GCC) at 30 per-cent, and the rest of Asia at 22 percent. These three regions together account for the bulk of the world’s Islamic finance assets, at 95 percent. The World Bank data demonstrates that from 2008 to 2013, Islamic

banking and Islamic deposits grew faster than their conven-tional equivalents in Qatar, UAE, Saudi Arabia, Malaysia, Indone-sia and Turkey, indicating a growing number of people in these countries is using Islamic banks rather than or in addition to conventional banks. In Qatar, for instance, Islamic banks’ com-bined assets grew by 19.3 percent compared to 16.5 percent recorded by the conventional banks during the period; and the deposits in Islamic banks surged by 37.4 percent, compared to 17.2 percent growth in conventional banks.

Developing countries in Asia

will need to invest $26 trillion from 2016 to 2030, or $1.7 tril-lion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change. Without investments for climate change mitigation and adaptation, $22.6 trillion will be needed, or $1.5 trillion per year (baseline esti-mate). Of the $26 trillion estimate (including investments for cli-mate change needs) over 2016–30, $14.7 trillion will be for power, $8.4 trillion for transport, $2.3 trillion for telecommunica-tion, and $800bn for water and sanitation. The $1.7 trillion annual estimate is more than

double the $750bn.The infra-structure needs of Sub-Saharan Africa exceed $93bn annually.

Istisnā and ijārah are the most common forms of Islamic finance instruments used for large, longer-term financing arrangements, such as financing for power projects, infrastruc-ture, and transport equipment. These two instruments are used in combination most of the time—istisnā for the construc-tion and procurement stage, and ijārah for the operation stage. Many power, water, and trans-port projects have been financed through a combination of istisnā and ijārah structures.

Qatar banks

In Qatar, Islamic banks’ combined assets grew by 19.3% compared to 16.5% recorded by the conventional banks during the period; and deposits in Islamic banks surged by 37.4% compared to 17.2% growth in conventional banks.

22 MONDAY 27 NOVEMBER 2017BUSINESS

‘Business Continuity’ key to risk mitigationMohammad Shoeb The Peninsula

The ‘Business Continu-i ty and Risk Management’ provi-sions in companies and government enti-

ties, especially organisations of strategic importance, should be given more emphasis to deal with disruptive and emergency situations, noted an industry expert.

Business Continuity in an organisations means working to decrease the likelihood of a disruptive incidence and con-tinuing the delivery of essential products and services in case of a disruption caused by any inci-dence, including natural disasters. It is known by many names such as Organisational Resilience, Business Recovery, Disaster Recovery, Emergency Resonse, Continuity Planning and Preparedness among others.

Abdullatif Ali Al Yafei, Chair-person of Qatar Business Continuity Forum, which is organising Qatar’s first confer-ence on “Business Continuity…Stability and Achievements” on December 3 at Four Seasons Hotel-Doha, said: “Although

most strategic organisations in Qatar have business continuity and risk management system in place, that’s why we have not seen any major impact. But given the growing challenges facing the world, more empha-sis need to be given.”

“Business Continuity has also become part of the sustain-ability programme for strategic

organisations and many compa-nies, but to achieve sustainable development in the country as a whole, more need to be done,”, Al Yafei told The Peninsula on the sidelines of a joint press con-ference, yesterday.

He also noted that be it’s a government, semi-government or private organisation, every entity that provide strategic goods and services must have ‘Business Continuity’ plans. This will give assurance to manage-ment, a company and enhance the sustainability of the State as a whole.

The one-day conference, being held under the patronage of the Minister of Energy and Industry, H E Dr Mohammed bin Saleh Al Sada, has got the sup-port of several key organisations and companies, including Qatari Businessmen Association, Qatar Chamber, Qatar Development Bank, Qatar Primary Material Company (QPMC), Vodafone Qatar, QIMC and many others.

During the conference indus-try experts from around the world will discuss the impor-tance and benefits of Business Continuity planning and prepar-edness, new challenges and ideas on the subject, including some success stories.

Also present at the press conference were Sarah Abdul-lah, Deputy GM at QBA and Ahmed Abdulla Al Suwaidi, Act-ing Operations Director at QPMC and representatives from other sponsors.

For his part , Al Suwaidi, said that QPMC, through its applica-tion of the latest business continuity systems, aims to achieve three main objectives, the first is the provision of raw

materials to Qatar to meet the needs of the market of raw materials such as Gabbro, lime-stone, fine sand and washed sand. The second is to maintain the provision of materials at the same cost price to enable con-tractors to meet their commitments and complete the major construction projects according to their time plans, and thirdly, the commitment to providing high quality

materials. He confirmed that the company has succeeded in achieving all its three objectives based on advanced planning for the continuity of business and provided sufficient stock to meet the needs of the market of raw materials.

The Qatar Business Continu-ity Forum was established in 2014 and is part of the 110th Forum of the UK-based Business Continuity Institute.

Abdullatif Ali Al Yafei (centre), Chairperson of Qatar Business Continuity Forum; Ahmed Abdulla Al Suwaidi (right) , Acting Operations Director at QPMC; and Sarah Abdullah, Deputy General Manager, Qatari Businessmen Association at a press conference held at Marriott City Center, yesterday. Pic: Kammutty VP / The Peninsula

Forum on Dec. 3

During the conference, industry experts from around the world will discuss the importance and benefits of Business Continuity planning and preparedness, new challenges and ideas on the subject, including some success stories.

Qatar’s first conference on “Business Continuity…Stability and Achievements,” will be held on December 3 at Four Seasons Hotel-Doha.

Vodafone & GWC develop innovative digital customer service solution The Peninsula

Vodafone Qatar and GWC brought together their expertise to launch an

innovative digital solution for e n h a n c e d c u s t o m e r experience.

Vodafone’s Logistics depart-ment and GWC’s Contract Logistics and Information Tech-nology department, worked closely to develop an Android App and a web based order management system (OMS) which allows for end-to-end management of the supply chain cycle. This includes, real-time stock visibility and allocation, order placement, work flow approvals and notifications, dis-tribution and delivery to Vodafone end customers.

In addition, the system cap-tures digital proof of delivery

statements, all signed forms and cash collection details all through digital devices at the time of delivery to customers.

This has enhanced effi-ciency and significant reduction in delivery time of Vodafone products to customers, result-ing in a better customer experience.

Vodafone Qatar’s Chief Operating Officer Sheikh Hamad bin Abdulla bin Jassim Al Thani stated: “As a company we’re committed to leading on digital innovation, blending the best of technology and human interaction in a personal, instant and easy way. The solution with GWC is an example of this where we now have a state of the art logistics facility with a scalable IT based digital solu-tion for Vodafone’s operations. This ensures greater customer

satisfaction whether through our various retail outlets or through our online portal.”

The success of the OMS solution developed by GWC for Vodafone is now being looked at as an industry best practice that GWC will extend to its other customers.

GWC Group CEO Ranjeev Menon stated: “It is GWC’s pas-sion to foster and pursue innovation in all our operations. This collaboration with Voda-fone establishes a unique solution for Vodafone’s supply chain operations supported by our bespoke IT systems, and this

is a testament to Qatar’s ability to set a world-class standard in logistics operation.”

Vodafone Qatar held a site visit on November 23, 2017 to its dedicated facility at GWC’s Logistics Village Qatar (LVQ) with senior officials from both companies present.

Vodafone Qatar and GWC officials during the site visit.

QLC encourages Qataris to join Cambridge MBAThe Peninsula

Dr Jane Davies, Director of the Cambridge MBA, addressed an intro-

ductory session on Cambridge MBA at an event hosted by Qatar Leadership Centre (QLC). QLC and the Univer-sity of Cambridge have a long-standing relationship, and Dr Davies is a regular instructor on both the Exec-utive and Rising Leaders Programmes offered by QLC.

Dr Davies said that through her experience working with QLC she had interacted with many impres-sive Qatari participants and welcomed the occasion to share with the QLC network the opportunities offered by the programme. During the session, Dr Davies highlighted the distinctive aspects of the Cambridge MBA.

Qatalum to support ‘Made in Qatar 2017’ expoThe Peninsula

Qatar Aluminium Limited (Qatalum) is supporting the ‘Made in Qatar 2017’

exhibition as a silver sponsor, according to Qatar Chamber (QC).

The expo, scheduled to be held between December 14 and 17, 2017, will be organised by Qatar Chamber in cooperation with the Ministry of Energy and Industry on an area of 29,000 sqm. at the Doha Exhibition and Convention Centre.

With the participation of over 300 Qatari companies and factories, the exhibition aims to promote locally-manufactured products.

Hussain Yousef Al Abdul Ghani, Head of Administrative and Financial Affairs at the QC, and Qatalum’s Communications Manager, Ibrahim Jassem Fakhri, signed the sponsorship agree-ment at Qatar Chamber yesterday.

Speaking at the agreement signing ceremony, Fakhri said: “Though Qatalum has been proudly sponsoring the ‘Made in Qatar’ exhibition since its very b e g i n n i n g , l o c a l l y

and internationally, this year’s edition is special. Qatalum would especially like to be part of the state’s efforts in encouraging people to do business in Qatar as a way of increasing self-reli-ance and diversifying income,”

Fakhri expressed his hope that Qatalum’s support to QC’s

efforts would contribute to “boosting local production and showcasing the Qatar brand in the world of commerce and industry, so that by the grace of Allah and under the wise lead-ership of His Highness the Emir, we shall be self-sufficient, and raise Qatar’s name.”

Meanwhile, Al Abdul Ghani said that QC extends its deep thanking to Qatalum for its sponsorship which emphasises its interest in supporting the country’s strategies of growing the industry sector. He praised the key role played by Qatalum in the national economy.

Hussain Yousef Al Abdul Ghani (right), Head of Administrative and Financial Affairs, Qatar Chamber; and Ibrahim Jassem Fakhri, Qatalum’s Communications Manager; shake hands after signing the sponsorship agreement at Qatar Chamber headquarters, yesterday.

QNB debit cards enhanced with e-shopping featureThe Peninsula

QNB, the leading bank in the Middle East and Africa region, further

enhanced its debit cards fea-ture by introducing International e-commerce transactions on 3D Secured websites. Cardholders can now enjoy greater peace of mind when using QNB debit cards through the One Time Pass-word (OTP) delivered to the registered mobile phones of the cardholder.

This free service protects cardholders against unauthor-ised transactions in line with International standards for secured online transactions.

The user experience is very friendly and straightforward as the cardholder will only be required to enter the required data to perform a transaction and click on the payment icon, a 3D Secure screen will then appear and prompt for the OTP. The transaction will be com-plete upon entering the correct OTP.

Heba Al Tamimi, General

Manager, QNB Group Retail said:” The implementation of the new 3D Secure security fea-ture for QNB Debit Cards is another important step towards providing our customers with the most innovative products and services.”

Al Tamimi added: “ QNB’ s keenness to provide the most up-to-date security features for online shopping is rooted in the bank’s commitment to offer a wide range of products tailored to meet their needs.”

“Our Customers can now shop globally whether to pur-chase flight tickets, book hotels or purchase any products online in a safe and secured manner on 3D Secured web-sites. We continue to lead the market with a host of benefits and privileges that customers can avail’’ said Al Tamimi.

QNB Group’s presence through its subsidiaries and associate companies extends to more than 31 countries across three continents providing a comprehensive range of advanced products and services.

23MONDAY 27 NOVEMBER 2017 BUSINESS

Employees working on a production line of automobiles at the BMW factory in Shenyang in China’s northeastern Liaoning province.

BMW China plantASTAD showcases expertise at Kuwait Projects Forum

The Peninsula

ASTAD, leading inte-grated project and asset management solution provider, participated in the

‘Kuwait Projects Forum’ to introduce their project manage-ment expertise to the Kuwaiti market. The forum was organ-ised with the official support of Kuwait’s Ministry of Public Works at the Radisson Blu Hotel in Kuwait City.

ASTAD Chief Executive Officer, Ali Al Khalifa explained that this was the second Kuwait event that ASTAD was proud to support as it highlights the

building and infrastructure efforts needed to accomplish Kuwait’s 2035 vision ‘New Kuwait’.

He stated: “ASTAD’s opera-tions outside of Qatar are underway and we are fully pre-pared to support the building and infrastructure develop-ments that will support the fulfilment of Kuwait’s 2035 vision. We plan to utilise the experience, knowledge, and excellence that we have built in Qatar with over 250 projects across a diverse variety of sec-tors to support our international client’s needs.”

ASTAD International Gen-eral Manager, Abdulaziz Al Mulla

made a presentation on best practices in project manage-ment at the forum, shedding light on the key principles ASTAD takes into account to ensure the successful delivery of projects, stating: “Under-standing the local culture, using advanced technology and implementing a safety conscious culture all while ensuring sus-tainability and project legacy are some of the key principles we take into account at ASTAD.”

Al Mulla went on to discuss the key principle of incorporat-ing a country’s national values into corporate philosophy, and how that commitment was key to ASTAD’s success in Qatar, stating: “Our success would not have been possible if it wasn’t for our commitment to the Qatar National Vision. This commit-ment enabled the successfully delivery of projects that are piv-otal to Qatar’s diversification.”

The ‘Kuwait Projects Forum’ conference highlighted invest-ment opportunities, project timelines and infrastructure development plans for realisa-tion of a ‘New Kuwait’.

ASTAD International General Manager, Abdulaziz Al Mulla addressing the Kuwait Projects Forum.

Gold rekindles appeal for asset managersNew York Bloomberg

Bulls haven’t quite given up on gold yet. As of 2:20 p.m. in New York, volume on

the Comex was 52 percent above the 100-day average for this time of day, as traders and investors roll their positions into February futures from the December con-tract that’s expiring today.

Aggregate open interest is headed for a third straight quar-terly gain, the longest stretch since 2009, while holdings in exchange-traded funds are near the highest in a year.

Prices have advanced this month, keeping the metal on course for the biggest annual

gain since 2010 after two monthly declines. Gold has ben-efited from a weakening dollar, tepid inflation that’s spawned divisions among US Fed officials over a policy path forward, and uncertainties over President Donald Trump’s plan to cut taxes. In Europe, wrangling over Brexit and Germany’s struggles to form a coalition government have underpinned demand for the metal as a haven.

“Gold is starting to attract attention of asset allocators,” George Gero, a New York-based managing director at RBC Wealth Management, said in an email. The bullion futures market is “quiet and steady as we wait for more headlines on taxes in the

US and a Fed hike in December,” he said.

Bullion futures for February delivery slipped 0.4 percent to settle at $1,291.80 an ounce on the Comex in New York. The contract’s open interest has sur-passed December’s since Tuesday. The metal has advanced 1.7 percent this month and is up about 12 percent in 2017. Aggregate open interest, a tally of outstanding futures con-tracts, rebounded on Wednesday after declining the previous two sessions.

In other precious metals, Sil-ver futures slipped on Comex Platinum futures rose on New York Mercantile Exchange, as palladium futures slid

Beyond Qatar

ASTAD’s operations outside of Qatar are under way and is fully prepared to support the building and infrastructure developments that will support the fulfilment of Kuwait’s 2035 vision.

Bond traders start to see crack in Fed’s resolve about inflationNew York

Bloomberg

Traders are about to find out just how worried Federal Reserve officials are about

the outlook for inflation. The depth of that angst has ramifica-tions for the US bond market’s dominant trend: the flattening yield curve.

Fed Chair Janet Yellen and the nominee to succeed her, Jer-ome Powell, lead a busy lineup of central bankers speaking this week. They may opine on infla-tion after minutes of their most recent meeting published last

week showed several policy makers were concerned about low expectations for consumer-price gains and underscored that further interest-rate hikes will hinge on economic data. It’s only fitting, then, that the Fed’s pre-ferred gauge of price growth will also be released this week, with a survey of economists indicat-ing it’s likely to slow to a 1.5 percent year-on-year pace.

For the bond market, the expectation of further rate hikes amid below-target inflation has big implications. It’s been per-haps the key reason why the U.S. curve has flattened in the past

month at the fastest pace in nearly three years. That com-pression has already elicited responses from some Fed offi-cials, and investors will be attuned to any indications from Powell or Yellen about how that might affect their thinking. After the minutes, traders may ques-tion the Fed’s resolve anew, pondering whether they were wrong to push two-year Treas-ury yields to the highest level since 2008.

“We are starting to become afraid that a few Fed inflation scaredy cats will grow to many more Fed officials next year if

core PCE inflation does not start showing some signs of moving up,” Chris Rupkey, chief finan-cial economist with MUFG Union Bank in New York, wrote in a note November 22. “One thing is for sure, the Fed is more data-dependent than ever, and the key data are inflation.”

The bond market isn’t going as far as taking the latest fretting among policy makers as reason to abandon bets on a December rate hike.

The implied probability of an increase next month is more than 90 percent, based on over-night index swaps and the

effective fed funds rate. But investors are once again temper-ing their enthusiasm about the central bank’s ability to stoke consumer prices in the longer term, with so-called breakeven rates on inflation-linked bonds dipping. The dollar’s fledgling rally also came to a halt with the currency dropping to an almost two-month low after Yellen cau-tioned about allowing inflation to drift lower.

Yellen and Powell will both be in Washington this week. Yellen goes before the Joint Eco-nomic Committee of Congress, while Powell appears at the

Senate Banking Committee as part of his confirmation process. Since the Fed’s November 1 deci-sion, the yield curve from two to 10 years has flattened by 15 basis points and is now close to the lowest level in a decade. Fed offi-cials including James Bullard and Robert Kaplan have given their views on the trend in the curve since then and they’re on tap to speak again this week. Traders will monitor all of these speak-ers with one question in mind: after a year in which the Fed has largely stuck to its script, will inflation drive policy makers to improvise?

Blockchain is latest pixie dust for stocksNew York

Bloomberg

A market truism for our time is that whenever a company touches any-

thing related to blockchain -- or claims to -- its stock shoots up, sometimes even before it enters the industry. The latest exam-ple? Riot Blockchain Inc., formerly known as Bioptix Inc.

The former maker of diag-nostic machinery for the biotech industry (a penny stock with three reverse splits in five years) now invests in cryptocurrency-related businesses, leading its stock to more than double just since Nov. 16, when it bought a minority stake in audit and accounting firm Verady LLC. That merely added to gains since renaming itself and buying a stake in blockchain-based pay-ments provider Tess Inc. in October. Meanwhile, cyprocur-rency king bitcoin has remained uncharacteristically steady at around $8,100 for the past week.

The reaction reflects huge investor interest for exposure to this year’s cryptocurrency rally, as bitcoin soars by more than 700 percent and a flurry of new digital tokens spring up, with the market ballooning to $260bn in market capitalization from just $17bn at the start of the year. Bit-coin derivatives have yet to start trading on a major exchange, exchange traded funds haven’t been approved and there’s only a handful of trusts and notes holding digital assets, so block-chain-related stocks provide an alternative for investors who want in on the boom but are wary of buying cryptocurren-cies directly.

Overstock.com Inc. soared after announcing the launch of a Securities and Exchange Com-mission-compliant digital tokens exchange. Goldmoney Inc. jumped after saying it will offer its clients the ability to trade bitcoin and ether and store the assets in auditable and insured vaults.

South Africa to outline decisive policy in 2018 after debt rating cutJohannesburg

Reuters

South Africa will use its annual budget next year to outline “decisive” policy to

strengthen its fiscal framework, the finance ministry said on Sat-urday after S&P Global Ratings cut its local currency debt to “junk” status.

S&P announced the down-grade on Friday, citing a further deterioration in the country’s economic outlook and public finances. Moody’s, meanwhile, placed South Africa on review for a downgrade.

“The 2018 Budget will out-line decisive and specific policy measures to strengthen the fis-cal framework,” the finance ministry said in a statement, without giving more detail.

The downgrade by S&P comes after Finance Minister Malusi Gigaba shocked markets on Oct. 25 by flagging sharply weaker growth expectations, a wider budget deficit and rising

government debt. The govern-ment has since appointed a judicial commission of inquiry into the causes of a 50 billion rand ($3.6bn)revenue shortfall and to investigate a possible ero-sion into the nation’s revenue collection capability.

Economic growth has slowed to near zero in recent years and business and consumer senti-ment have p lumbed multi-decade lows as political uncertainty weighs on the economy.“Restoring business and consumer confidence, and catalyzing inclusive growth is the top priority of government,” the

finance ministry said. South Afri-can businesses have been in talks with government more than a year to try to avoid credit ratings downgrades, but when Zuma in March replaced finance minis-ter Pravin Gordhan with Gigaba, S&P and Fitch cut its ratings a notch within a week. Nedbank, one of the nation’s largest lend-ers, on Saturday warned that the latest move by S&P will make it more expensive for government and the private sector to raise funding.

“The February budget state-ment is South Africa’s last chance to demonstrate the structural reforms and fiscal consolidation that are required to improve eco-nomic growth prospects and prevent Moody’s from also downgrading the local currency debt to below investment grade,” Chief Executive Mike Brown said.

A Moody’s downgrade would trigger the exit of South Africa’s local currency debt from impor-tant global bond indices, Brown added.

Iraq plans $2bn bond issueIRAQ is planning a $2bn sov-ereign bond issue in 2018, the central bank governor said yesterday, after the country successfully returned to the international debt market by selling a $1bn bond in August.

“The economy is seeing a recovery with the increase in oil prices and measures of the government on financial con-solidation,” Ali Ismail Al Alak said. On the sovereign bond, he said: “It is in process, await ing parl iament approval. It is to cover the budget deficit.”

Iraq’s budget deficit, according to a draft budget, is running at around 18 tril-lion to 19 trillion Iraqi dinars ($15.4bn to 16.3bn), he added.

The country’s $1bn bond sale in August was its first international debt issuance as a stand-alone credit since 2006, and an attempt to put decades of turmoil behind it.Alak said Iraq’s foreign cur-rency reserves had risen to $49bn currently from $46.5bn at the end of 2016.

24 MONDAY 27 NOVEMBER 2017BUSINESS

A tram of the Luxtram company, is pictured in a street of Luxembourg ahead of its official inauguration on December 10, more than 60 years after the tram service was removed in the city.

New-look tramMUFG eyes co-operation& hirings in China Shanghai

Reuters

Mitsubishi UFJ Finan-cial Group (MUFG) is looking to co-oper-ate with regional

banks in China, as well as hire more risk and compliance staff, in a bid to navigate the coun-try’s tighter regulatory environment.

Beijing has launched a slew of new regulations this year to reduce leverage across the financial sector, from rules to rein in risky off-balance sheet bank lending to halting new licences for micro-loan firms.

“We have to meet such requirements and we need more talented people,” said Eiichi Yoshikawa (pictured), a senior managing executive officer at Japan’s largest bank by assets.

In order to “provide more diversified financial services” to meet the changing needs of cus-tomers, MUFG will “need partner banks in China”, Yoshikawa added.

He did not give any details on prospective partners nor e x i s t i n g c o - o p e r a t i o n agreements.

MUFG’s clients would pre-viously make in China with the aim to export their products but now they are looking to sell more in the domestic market, he said, as soaring disposable income drives up demand in the

country.This means customers are

increasingly looking for cash collection services, dealer finance, supply chain finance, all of which can be better pro-vided through co-operation with regional banks, Yoshikawa added.

MUFG needs “talented, resourceful Chinese people” for risk management and compli-ance, Yoshikawa said, but added the bank would not increase its headcount in the country.

MUFG’s current headcount in China is 2,400.

Faced with sluggish growth at home, due to lower returns from lending under the Bank of Japan’s monetary easing, MUFG has been trying to expand its presence overseas.

In Southeast Asia, MUFG

already holds stakes in Viet-nam’s Vientinbank, Thailand’s Bank of Ayudhya and Security Bank Corp of the Philippines.

The Japanese lender’s next plan is to invest in Bank Dana-mon Indonesia, sources have told Reuters.

While Yoshikawa did not confirm the news that MUFG was in talks to buy a 40 percent stake in Danamon for around $1.75bn, he said MUFG was interested in investing in Indonesia.

Faced with sluggish growth at home, due to lower returns from lending under the Bank of Japan’s monetary easing, MUFG has been trying to expand its presence overseas.

Tighter regulations

Beijing has launched a slew of new regulations this year to reduce leverage across the financial sector, from rules to rein in risky off-balance sheet bank lending to halting new licences for micro-loan firms.

Poland adopts ban on Sunday shoppingWarsaw

AFP

Poland adopted legislation on Friday that will ban most Sunday trading by

2020, with opinion surveys showing that consumers have mixed feelings about the move.

First presented last year by Poland’s Solidarity trade union as a citizens’ initiative bill, the new legislation limits shopping to the first and last Sundays of the month as of March 2018.

Trade will only be allowed

on the last Sunday of the month in 2019 before a wider ban takes effect in 2020 that will allow shopping on seven Sundays per year, including two before Christmas and one before Easter.

The move applies to foreign-owned hypermarket chains as well as other non-Polish play-ers, but will still allow online shopping as well as smaller locally-owned shops including bakeries and petrol stations to do business.

The Solidarity trade union

says it sought the move to ensure retail staff get free week-ends, but opposition politicians and other critics argue that it will limit job opportunities for students and cramp cross-bor-der shopping from the Baltic states, Belarus, Ukraine and Slovakia.

Sunday shopping became a popular family pastime in Poland with the advent of the free market.

Switzerland and Norway limit Sunday shopping, while Austria has a blanket ban.

Automakers struggle with the future in Los AngelesDetroit

Reuters

Car manufacturers ’ attempts to square what US consumers want

against the clean vehicles reg-ulators and investors demand will be on display in Los Ange-les this week at an auto show that has moved away from call-ing itself just an auto show.

Automakers will begin pre-viewing new models for the media at an event called Auto-Mobility LA, today, reflecting an emphasis on digital technology

and new ways to get around, such as self-driving cars. On Friday, the Los Angeles Auto Show will open to the public for 10 days, attracting visitors from one of the world’s most affluent and culturally influential met-ropolitan markets.

For now, self-driving cars are not ready for consumers, and sales of the battery-pow-ered vehicles demanded by California regulators remain marginal and money-losing.

Automakers caught between the petroleum past and the dig-ital future will send muddled

messages. Volkswagen AG will try to replace memories of the diesel emissions cheating scan-dal that tarnished its image with many California customers by promoting its $40bn wave of electric vehicles.

In the next breath, the Ger-man automaker will tout its gasoline-fueled Audi A8 large luxury sedan, which can pilot itself under limited circum-stances but is out of step with a market where buyers are switching to sport utility vehi-cles. Rivals overshadowed by electric vehicle pioneer Tesla

Inc are in a quandary, too. Despite a booming stock mar-ket, sales for luxury brands BMW, Daimler AG’s Mercedes-Benz and Toyota Motor Corp’s Lexus are down for the first 10 months of 2017.

BMW AG is expected to roll out new versions of its i8 plug-in hybrid sports car. But for those not interested in electri-fication, the company will use the show to promote a high-performance version of its 5 Series sedan.

Tata Motors unit Jaguar Land Rover will accompany its

new gasoline-powered Range Rover SVAutobiography, billed as the “pinnacle” of a lineup that already has models priced above $100,000, with its first plug-in hybrid Range Rovers.

At AutoMobility LA, auto and technology industry executives will debate how ride-sharing, self-driving vehicles and elec-tric cars will shape the future. At the auto show itself, the stars will be gasoline-burning SUVs, such as the Subaru Ascent, a large, three-row SUV from a brand known for compact, all-wheel-drive cars.

Norway’s $1trn wealth fund steps up `no’ votes on CEO payOslo

Bloomberg

When Norway’s $1 tril-lion sovereign wealth fund said it wanted

companies to curb excessive and opaque top-management pay, it meant business.

Since releasing a position paper in April, the world’s big-gest wealth fund has increased the number of votes against management compensation proposals in the companies it invests in, Carine Smith Ihena-cho (pictured), its global head of ownership strategies, said.

It has this year voted against pay plans at Alphabet Inc., Google’s holding company, off-shore driller Noble Corp. and media company Liberty Global Plc, among others.

The fund was unable to pro-vide aggregated statistics on its publicly available votes, but plans to do so in connection with its annual report on responsible investment, due in February.

Built on the country’s petro-leum income over the past 20 years, Norway’s wealth fund has more than doubled in size since 2012 and crossed the $1 trillion

mark earlier this year. It owns about 1.5 percent of all listed stocks in the world and invests in almost 9,000 companies, having opted to hold equities, bonds and real estate abroad to avoid spurring inflation in Norway.

The fund operates accord-ing to a set of ethical guidelines that span from human rights to environmental issues, and has cut its investments in tobacco and certain weapons produc-ers, as well as in mining and in utilities that rely heavily on coal. It’s also taken on a more activ-ist role in voting on management proposals, after flagging preferences such as the separation of CEO and

chairman positions. The fund earlier this year urged compa-nies to ensure that a “substantial proportion” of annual pay be provided as shares that are locked in for at least five years, but preferably 10.

Pay practices should also be simple and total remuneration should be transparent.

The fund has strict guide-lines of its own. For example, it bars its senior executives from receiving performance-based bonuses and sets management wages at “competitive levels” while avoiding becoming the market leader. It’s CEO, Yngve Slyngstad, earned $810,000 last year. NBIM regularly talks to individual companies, includ-ing about pay, Smith Ihenacho said, declining to comment on how the fund plans to vote in the next big round of general meetings in May and June next year.

“We have issued a position paper on what we believe to be good remuneration practices,” she said.

“We’re primarily hoping that companies will follow those, rather than us finding a lot of companies to vote against.”

Brexit spurs European banks to trim exposure to UK assetsLondon

Bloomberg

European banks pared their exposure to Britain in the aftermath of its vote to quit

the European Union, slashing their UK assets by $425bn in the span of a year.

The decline was driven by a 35 percent drop in derivatives exposures, showing European banks are preparing for the risk that the UK fails to reach an agreement on its future relation-ship with the bloc before its departure. Banks in the 27 other EU countries had ¤1.59trillion euros ($1.9trillion) in total assets tied to the UK at the end of June, about ¤356bn less than a year earlier, data from the European Banking Authority shows. Brit-ons voted to leave on June 23, 2016.

More than one third of banks questioned by the EBA are wor-ried that Brexit could upend derivatives and other financial contracts, leading to potential losses and legal risks for banks. The EBA, which coordinates reg-ulatory standards across the bloc, said firms need to prepare

for a possible cliff-edge, in which EU rules cease to apply in the UK and a new agreement isn’t in place when the U.K. exits in early 2019.

“It is important that banks and their counterparties, as well as consumers and public author-ities, consider appropriate mitigating actions and contin-gency plans to address these concerns,” the EBA said in the report.

Regulators on both sides of the Channel have sounded the alarm about the risks Brexit poses to derivatives and other financial contracts.

The Bank of England has said a “comprehensive solution” is needed as part of the Brexit process to protect the “long-term validity” of £20trillion ($26.7tril-lion) of existing derivative contracts. European Central Bank President Mario Draghi has similarly warned that contract continuity could be imperiled.

“Tens of thousands of coun-terparties could be affected, representing around a quarter of both UK and EU client uncleared derivative contracts,” the BOE said in September.

Iraq & Kuwait near agreement on price for gas exportsKuwait City Reuters

Iraq and Kuwait have reached a preliminary agreement on a price for

gas exports, Kuwaiti oil min-ister Issam Al Marzouq said, clearing the way to a deal for a pipeline and petrochemi-cal project.

Kuwait is waiting for the Iraqi government’s final approval this week, Marzouq told Al Siyasa, without stat-ing the price.

Iraq would agree to export 50 million cubic feet (mcf) of gas per day for ten years, increasing to 200 mcf per day during that time, he said.

The exports, to come from Iraq’s Rumaila field, would pay off Baghdad’s final $4.6bn in war reparations owed for its 1990 invasion of Kuwait.

Marzouq announced the proposal last month, but talks between the two countries have faltered since then over price and the location of the petrochemical plant.

Iraq hired Japan’s Toyo Engineering to help build the project.

Iraq used to supply Kuwait with gas from Rumaila. Volumes reached as much as 400 mcf per day but stopped shortly after the 1990 invasion.

In his interview, Marzouq also expressed optimism that the Organization of Petro-leum Exporting Countries (OPEC) and others would agree to extend their agree-ment limiting crude production.

“There is almost agree-ment to extend it, but the duration is still under study,” he said. OPEC meets on Nov. 30 in Vienna to decide whether to extend global output cuts beyond March.

25MONDAY 27 NOVEMBER 2017 BUSINESS

Airbus set to poach Rolls exec to head jetliner sales Paris

Reuters

Airbus is poised to hire the head of Rolls-Royce’s civil engines unit, Eric Schulz (pictured), to lead its

commercial jetliner sales, after months of uncertainty over the successor to sales kingpin John Leahy, three people familiar with the matter said.

Schulz, president of the civil engines division at the British engineering firm, has been rec-ommended for the post to bring in outside blood as the company faces turmoil over the impact of UK and French corruption investigations.

Christian Scherer, chief exec-utive of turboprop maker ATR, jointly owned by Airbus and Ital-ian aerospace firm Leonardo , had also been considered for one of aviation’s highest profile roles.

Scherer, an Airbus veteran

of 30 years before joining ATR, was seen by many as a leading candidate and enjoys close ties to Chief Executive Tom Enders. But although Scherer has not

been linked to the compliance investigations, industry sources said the board is insisting on a break with the past.

A final decision will be taken by the Airbus board based on a panel’s decision to put forward one name, that of Schulz.

Airbus and Rolls-Royce declined to comment. Schulz and Scherer could not immediately be reached for comment.

Leahy has been in the post since 1994 and is a dominant fig-ure in the $100bn-a-year aerospace industry, making his succession one of the sector’s most closely watched moves.

He is expected to retire around January 25 after defer-ring his departure for several months when his hand-picked successor, deputy sales chief Kiran Rao, pulled out of the race.

Schulz, an affable 54-year-old French engineer, began his career at one of Airbus’s found-ers, France’s former state-owned Aerospatiale, before working at aerospace supplier Goodrich via a stint at two French airlines: UTA and Air Liberte.

He is part of a relatively new management team that pulled Rolls-Royce out of its own com-pliance scandal and financial problems and has been running civil engines since January 2016.

His experience reinforces close ties between Airbus and

Rolls-Royce on wide-body jets, mirroring last year’s decision by rival Boeing to recruit a top exec-utive from its own top supplier, General Electric, to run its com-mercial unit.

“Rolls-Royce and Airbus are joined at the hip so they must know him well, and he them,” said Agency Partners analyst Nick Cunningham, adding Schulz came across as “open and realistic”.

But he will inherit a Toulouse sales organisation unsettled by recent defeats against Boeing and widely seen as desperate for stability amid the probes, which centre on a now defunct Paris-based unit of Airbus headquarters.

“They have chosen a clean break but that is not without risk,” a senior industry source said.

If, as expected, he is con-firmed by the Airbus board, Schulz will need to act quickly

to restore staff morale and rebuild bridges with customers, industry sources said.

But although he has twice worked for firms linked to Air-bus, Schulz’s independent career path may give him a freer hand to shape a marketing machine urgently needing a fresh spark after prolonged uncertainty over Leahy’s succession.

“He is very straight; not polit-ical,” said a person who has negotiated with Schulz.

Analysts say investors are for now playing down the probes and loss of order momentum because Airbus, like Boeing, is cushioned by record backlogs of jets waiting to be produced.

But the choice of sales boss is a decision that many say will influence the direction of the aerospace giant for years.

Airbus shares have risen 18.5 percent in the past six months, outperforming an almost-flat French CAC40 index.

Sales boss

Schulz will inherit a Toulouse sales organisation unsettled by recent defeats against Boeing and widely seen as desperate for stability amid the probes, which centre on a now defunct Paris-based unit of Airbus HQ.

The choice of sales boss is a decision that many say will influence the direction of the aerospace giant for years.

Nepal state firm to build $2.5bn power project Kathmandu

Reuters

A state-owned Nepali power company will develop the Himalayan

country’s biggest hydroelec-tric plant after the government scrapped a deal with a Chinese company, a government official said yesterday.

Nepal’s cabinet scrapped a $2.5bn deal with China Gezhouba Group Corp to build the Budhi Gangaki hydroelectric plant this month citing lapses in the award process.

“The cabinet has decided to entrust the Nepal Electric-ity Authority (NEA) to develop the plant,” Pushkar Dhungel, an aide to Deputy Prime Min-ister Kamal Thapa who is also the energy minister, told Reuters.

The government has also set up a panel to arrange for funds for the project, the energy ministry said in a notice, adding that the plant was expected to be ready in eight years.

The opposition Commu-nist UML party, however, has said it would hand back the project to China if voted to power after elections that began yesterday.

Election results are expected next month after the second phase of voting on December 7.

Nepal’s giant neighbours China and India both vie for influence in the country and have been lobbying for infra-structure projects there.

Soon after the China Gezhouba deal was scrapped, India’s state-run power com-pany NHPC Ltd expressed its interest in bidding for the project to build the 1,200 megawatt (MW) plant.

Nepal’s rivers, cascading from the snow-capped Hima-layas, have vast, untapped potential for hydropower generation, but a lack of funds and technology has made it lean on India to meet annual demand of 1,400 MW.

Kathmandu has cleared a 750 MW project to be built on the West Seti River in the western part of the country by China’s state-owned Three Gorges International Corp.

It has also permitted two Indian companies - GMR Group and Satluj Jal Vidyut Nigam Limited - to build one hydropower plant each, both capable of generating 900 MW of power each, mainly to be exported to India.

China’s tech giants reach global elite with gamers & shoppersBeijing

AFP

Powered by Chinese smart-phone users splurging billions on mobile games

and online shopping, China’s tech giants Tencent and Alibaba are racing up the elite league of the world’s most valuable companies.

Hong Kong-listed Tencent, famous for its games and WeChat messaging service, became the first Asian firm to break into the $500 billion league last week -- briefly over-taking Facebook as the world’s fifth biggest company in terms of market value.

Alibaba is just a few billion shy of joining its Chinese com-petitor at the top table of public listings -- and is already there when taking into account its pri-vate affiliates.

While the top five -- Apple, Google’s parent company Alpha-bet, Microsoft, Amazon and Facebook -- thrive across the world, the two Chinese firms have made their fortunes by cor-nering China’s own vast market of 750 million internet users.

Tencent and Alibaba do have

a major advantage over Ameri-can rivals because China severely restricts access to its internet, with Facebook and Google kept outside the “Great Firewall”.

But they have also deftly tapped into smartphone technol-ogy to woo China’s large, adaptable population.

“Chinese consumers’ accept-ance of new technology is faster than nearly anywhere,” said Zhao Chen, a managing partner at the China office of tech accel-erator Plug and Play.

“Even my grandpa, who is 88 years old, uses WeChat and WeChat payment.”

Tencent boasts nearly one billion monthly active users of WeChat, known as a “super app” for its combination of instant messaging, social media, mobile payment options, games and publishing.

Half of WeChat users spend more than 90 minutes a day on the app.

In smartphone games alone, the company’s revenues surged by 84 percent in the third quar-ter, driven by the success of the “Honour of Kings” title.

Alibaba, meanwhile, has

dominated the e-commerce market, with Chinese consum-ers flocking to its shopping platforms to buy everything from laundry detergent to Boeing 747s.

The firm created an annual sales promotion held during Chi-na’s “Singles Day”, with consumers spending a record $25 billion on November 11 -- 40 percent up from last year.

Both companies have bene-fited from China’s rapid smartphone adoption, with cheap phones flooding the mar-ket and bringing millions online for the first time.

“This is basically a story of the mobile internet,” said Shameen Prashantham, an asso-ciate professor at China Europe International Business School, of the tech giants’ growth.

“This country leapfrogged the (personal computer) stage straight onto the smartphone stage.”

Today, there are more than one billion smartphones running in China, according to iResearch. Both Tencent and Alibaba earn most of their revenue from mobile.

They have also developed

mobile payment applications -- WePay and Alipay -- that are driving hundreds of millions of Chinese to pay for everything from groceries and eating out to water bills.

People simply aim their smartphone cameras at a “QR code”, similar to a barcode, and click.

For merchants, the transac-tion fees cost just a fraction of swiping a credit card in most countries, and can be completed on the go.

This has also unlocked new business models, like for com-panies who offer sharing services, which now range from bikes to basketballs.

Although Alibaba and Ten-cent have grown in a protected corner of the internet, they have developed unique ways to rake in cash.

While Amazon takes a cut from the sale of goods like tra-ditional retail, Alibaba takes a different approach.

The company earns most of its money from charging mer-chants to advertise on its Tmall and Taobao platforms.

“If you don’t buy ads, you won’t have any business,” said

Liu Song, owner of the Sweet Lisa Flagship Store, which sells women’s dresses, rompers, and skirts on Alibaba’s Tmall store.

Liu frequently buys those keywords on Alibaba’s platform, paying anywhere from eight to 18 cents when shoppers click into his online store.

Unlike Facebook, Tencent earns most of its money from selling virtual items to its mil-lions of users rather than selling their eyeballs to advertisers.

WeChat users pay for emoti-cons they send to friends; players of its slash-and-burn hit game “Honour of Kings” purchase new outfits for their characters for 30 yuan ($5) up.

Recently, Tencent has begun to sell some advertising and ana-lysts believe this could be its next big growth driver.

The world beyond China also offers opportunity, though nei-ther Tencent or Alibaba can yet challenge their American rivals on the global stage.

Should US tech giants fret?“Not really,” investor Zhao

said. “But they should be alert that Chinese companies are coming up with new business models that really work.”

Oi CEO resigns after dispute with board over debt talkSao Paulo

Bloomberg

Oi SA Chief Executive Officer Marco Schroeder (pictured) submitted his

resignation after tensions boiled over with the Brazilian phone carrier’s board, plunging the company’s $19bn bankruptcy proceedings into chaos.

Schroeder concluded he could no longer work with the board and had grown frustrated with what he considered a slow pace of government action to help Oi emerge from bankruptcy protection, said a person famil-iar with the matter, who asked not to be identified discussing private information. A crucial creditors’ meeting is coming up in less than two weeks.

“The most recent meetings of the board of directors have made the necessity of my exit clear,” Schroeder said in a res-ignation letter seen by Bloomberg. “Along with Oi’s board of directors and manage-ment colleagues, in recent months I’ve experienced great challenges to make the formu-lation and approval of our judicial recovery process viable. I’m certain that there’s a path

through the judicial recovery that will permit the continuity of Oi as an important company in the telecommunications sec-tor of the Brazilian market.”

Oi declined to comment, and Schroeder couldn’t immediately be reached.

The CEO’s departure com-plicates the attempts by bondholders and the govern-ment to work out a restructuring plan that would be more palat-able to creditors than the board’s proposal. Schroeder, 53, took the job in June 2016, days before Rio de Janeiro-based Oi filed for bankruptcy protection with $19bn in debt. He had been negotiating in recent months with a group of bondholders and government officials to develop

a plan before the Dec. 7 credi-tors’ assembly.

Schroeder’s exit is likely to heighten the frustration in Bra-silia over Oi, which is the nation’s biggest landline phone provider and operates essential parts of the nation’s telecommu-nications infrastructure. President Michel Temer has been pushing for a resolution to the 17-month standoff between bondholders -- advised by Moe-lis & Co. and G5 Evercore -- and a group of shareholders led by businessman Nelson Tanure’s Societe Mondiale.

The government has sided with Schroeder and the man-agement team in the standoff. Anatel, the telecommunications regulator, expressed support for the executives’ discussions with bondholders in October meet-ings. After that, the board named two of its members as statutory directors, a move considered worrisome by the court over-seeing Oi’s bankruptcy proceedings, which also expressed confidence in the company’s independence in the negotiations.

Anatel hasn’t been notified of the CEO’s resignation, Presi-dent Juarez Quadros said.

Investment bankers are hard to replace with robots: Nordea Helsinki

Bloomberg

Not all bankers need to fear the march of the robots. Nordea Bank AB,

which last month said it will need to cut 6,000 jobs as part of a process to become a more digital firm, is now offering some insight into who’s likely to be hardest hit.

Ewan MacLeod (pictured), Nordea’s chief digital officer, says customers should expect to be able to get advice from a human when it comes to things like wealth management, choosing a mortgage or an array of investment banking services. They shouldn’t expect human contact if they lose and need to replace their credit card.

“Some transactions can simply be just automated, but many, and particularly in the investment banking industry, many of those transactions require humans, are based on the human contact,” he said.

The Nordic region’s biggest bank has yet to outline how its planned job cuts will be

distributed. Nordea said last month the cuts will be spread evenly across the bank, and Chief Executive Officer Casper von Koskull even painted a specter of a financial industry 10 years from now with only half as many employees as today.

MacLeod says there are plenty of tasks more sophisti-cated than replacing a credit card where there’s potential for automation. And while Nordea may be more aggressive in its digital push than many of its competitors, MacLeod says it’s clear others in the financial industry have now “woken up and smelled the coffee.”

26 MONDAY 27 NOVEMBER 2017BUSINESS

QATAR STOCK EXCHANGE

QE Index 7,758.08 0.20 %

QE Total Return Index 13,009.84 0.20 %

QE Al Rayan Islamic Index 3,039.03 2.51 %

QE All Share Index 2,142.45 1.05 %

QE All Share Banks &

Financial Services 2,462.98 0.08 %

QE All Share Industrials 2,405.62 0.28 %

QE All Share Transportation 1,502.90 2.24 %

QE All Share Real Estate 1,385.16 5.78 %

QE All Share Insurance 2,815.08 0.65 %

QE All Share Telecoms 995.59 0.69 %

QE All Share Consumer Goods & Services 4,305.50

2.09 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

26-11-2017Index 7,758.08

Change 15.62

% 0.20

YTD% 25.67

Volume 14,429,102

Value (QAR) 275,681,241.01

Trades 4,944

Up 31 | Down 05 | Unchanged 223-11-2017Index 7,742.46

Change 55.93

% 0.72

YTD% 25.82

Volume 9,091,407

Value (QAR) 160,172,866.98

Trades 3,209

EXCHANGE RATE

GOLD QR150.7544 per grammeSILVER QR1.9961 per gramme

Index Day’s Close Pt Chg % Chg Year High Year Low

All Ordinaries 6067.609 23.409 0.39 6124.7 5635.1

Cac 40 Index/D 5364.58 -1.57 -0.03 5536.4 4733.82

Dj Indu Average 23590.83 160.5 0.69 23617.8 18883.1

Hang Seng Inde/D 30003.49 185.42 0.62 29818.07 21883.82

Iseq Overall/D 6916.81 -5.57 -0.08 7157.43 6369.05

Kse 100 Inx/D 40591.87 43.04 0.11 53127.24 39478.05

S&P 500 Index/D 2599.03 16.89 0.654109 2597.02 2245.13

Currency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.7954 QR 4.8628

Euro QR 4.2528 QR 4.3119

CA$ QR 2.8238 QR 2.8790

Swiss Fr QR 3.6566 QR 3.7086

Yen QR 0.03221 QR 0.03284

Aus$ QR 2.7292 QR 2.7824

Ind Re QR 0.0556 QR 0.0567

Pak Re QR 0.0342 QR 0.0350

Peso QR 0.0713 QR 0.0727

SL Re QR 0.0235 QR 0.0239

Taka QR 0.0430 QR 0.0440

Nep Re QR 0.0347 QR 0.0354

SA Rand QR 0.259 QR 0.2642

Algerian lawmakers approve budget calling for hikes in fuel prices, taxesAlgiers

Reuters

Algeria’s lower house of parliament yesterday approved increases in

subsidised gasoline and diesel prices for the third straight year as part of the 2018 budget, amid government attempts to com-pensate for a sharp fall in oil and gas revenues.

The budget also includes higher and new taxes on some imported and local products in a bid to diversify funding away from oil and gas exports.

The budget calls for a 25 percent rise in spending to 8.628bn Algerian dinars after two years of cuts.

In order to cover the extra expenditure the government has amended a law to allow the central bank to lend directly to the public treasury. The budget is widely expected to win approval from the Senate, where the government also has a majority.

Oil and gas revenues account for 95 percent of the Opec member’s exports and 60 percent of the state budget.

State finances have been hit since crude oil prices first fell in mid-2014, forcing the gov-ernment to cut spending on

some subsidised goods and seek and new financing alternatives.

“Your support will help us cope with the current financial problems,” Finance Minister Abderrahmane Raouia (pic-tured) told parliament.

Algeria has announced plans to reform its susidy sys-tem, which covers almost everything from basic food-stuffs and drugs to energy.

Under the new increases, the price for premium gasoline, unleaded gasoline and regular gasoline will go up by 16.65 per-cent, 16.84 percent and 18.20 percent per litre respectively, while diesel will rise by 11.65

percent next year. Domestic fuel prices are very low by international standards. Unleaded gasoline costs 35.33 dinars (31 US cents)per litre.

Taxes will rise by 10 per-cent on tobacco and 25 percent on instant coffee, LED torches, almonds and dried fruits.

The budget also includes plans to launch Islamic finan-cial services in an attempt to attract money from the infor-mal market and religious conservatives who oppose pay-ing interest.

The overwhelming major-ity of lawmakers approved government policies in the finance bill while rejecting a proposal to impose a wealth tax.

“We want to avoid capital flight from the formal sector to informal one and abroad,” said Toufik Torche, head of the finance committee, referring to a provision on wealth tax.

Opposition lawmakers crit-icised the budget, however, saying it would hit normal Algerians.

“The increase in taxes is an additional burden,” said Djamel Messaoudi from the Party for Freedom and Justice. “This will inevitably weaken the purchas-ing power of citizens.”

Online sales? Maybe one day, says ChanelParis

Reuters

France’s Chanel has no immediate plans for online sales of its coveted

outfits or handbags, a senior executive said on Friday, mak-ing it one of the fashion world’s last hold-outs as rivals experi-ment with websites to win over new clients.

The label, known for its tweed suits and $4,300-plus quilted leather bags, already sells perfumes online, like its Chanel No 5, as well as eye-glasses and beauty products.

But it will draw the line there for the foreseeable future, said Bruno Pavlovsky, president of fashion at Chanel.

Luxury goods brands were slow to develop e-commerce sites as they worried that mak-ing products too widely available would erode their cachet. But most have now taken the plunge. Conglomer-ate LVMH , parent to Louis Vuitton, hired a former Apple executive and recently launched a site hosting multi-ple labels, though its online strategy at each of its brands still varies wildly.Web sales will make up some 10 percent of

revenues in the luxury goods market this year, according to consultancy Bain, which projects they could reach 25 percent by 2025.

But Chanel’s out-of-step attitude was not a drag on the business, Pavlovsky said, add-ing that the label, founded by Gabrielle “Coco” Chanel in 1910, was reaching an increasingly young audience and had wait-ing lists for best-selling bags.

Controlled by secretive bil-lionaires Alain and Gerard Wertheimer, Chanel does not regularly release financial results. According to figures filed with the Amsterdam exchange, Chanel’s net profit fell nearly 35 percent in 2016 and sales dropped 9 percent to $5.7bn.

Most major rivals have enjoyed a sales bounce in 2017.

Chanel is no stranger to dig-ital marketing, however, showing images on media like Instagram and Twitter from its extravagant catwalk shows and collections by designer Karl Lagerfeld. But buyers want to try on the clothes, Pavlovsky said, adding that the business would look into providing “e-services” to allow buyers to reserve items online or make store appointments.

Iraq to build new oil pipeline to TurkeyBaghdad

AFP

Iraq is to build a new pipe-line to allow oil exports to resume from the northern

province of Kirkuk to neigh-bouring Turkey, the oil ministry said yesterday.

Oil Minister Jabbar Al Luaybi has ordered docu-ments to be prepared towards building the new pipeline to “transport crude oil from Kirkuk’s oilfields to the port of Ceyhan” in Turkey, a min-istry spokesman said in a statement. Iraq had exported 250,000 to 400,000 barrels per day (b/d) through that pipeline before IS jihadists swept across large parts of the country in 2014.

The new pipeline is to stretch for around 250 kilo-metres (150 miles) from the area of Baiji, in the province of Salaheddine to the south of Kirkuk, to the Fishkhabur border post with Turkey fur-ther north. Earlier this month, the oil minister said Iraq aimed to double the output of Kirkuk oilfields to one mil-lion b/d after retaking the province from Kurdish forces in October.

China’s new plan to slash import taxes on a wide range of consumer goods promises to boost the prospects of multinationals in the Chinese market, with eve-

rything from Procter & Gamble Co’s baby diapers to Diageo Plc’s whiskey becoming more affordable to local consumers.

Tariffs for 187 product categories will drop from an average 17.3 percent to 7.7 percent after the cut takes effect on December 1, the Ministry of Finance said in a state-ment Friday, citing the need to help consumers access quality and specialty products which aren’t widely pro-duced locally.

The new policy follows President Xi Jinping’s call at the October Communist Party conclave to meet citizens’ demands for improved living standards and better qual-ity products in the world’s largest consumer market. Foreign multinationals stand to benefit as middle-class consumers seek out goods stamped with foreign brands, while the cuts also encourage consumers to spend at home rather than on trips overseas. “It’s aimed at three things: helping boost consumption in China, reforming the Chi-nese economy by continuing to open it up, and sending a signal to the world and particularly to the US that it is committed to advancing global trade,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd in Sydney. Tariffs for some types of baby formula were cut to zero, triggering losses in Chinese dairy stocks while European food and beverage companies climbed.

The moves will help companies like Danone and Nes-tle SA that compete with local brands in the large market for infant formula. The country’s infant formula market will increase about 15 percent to 123bn yuan ($18.7bn) by 2020, according to a Goldman Sachs Group Inc report in October. Chinese parents worried about a series of food-safety scandals often favor foreign brands.

“This is very good news for Nestle, and excellent news for its infant milk formula,” said Jean-Philippe Bertschy, an analyst at Bank Vontobel AG. “It’s a win-win situation for both consumers and high-quality global consumer-goods companies.”

Nestle generated some 7.3 percent of revenue in the Greater China region last year, with sales of 6.5bn francs ($6.6bn). Nestle is the market leader in China’s $21.5bn baby-food market with a 17 percent share, followed by Danone with a 9.3 percent share, according to Euromon-itor International.

Nestle added 0.2 percent in early trading in Europe, while Danone rose 1.3 percent, as food and beverage com-panies climbed the most among industries in the Stoxx Europe 600 Index.

Among other foreign companies poised to benefit is Procter & Gamble, which gets 8 percent of its sales from Greater China. P&G, the owner of brands such as Crest, Gillette and Tide, may get a lift from cuts to items includ-ing diapers, personal care products and dental products. For instance, the tariff on electric toothbrushes will fall from 30 percent to 10 percent.

The CSI 300 Consumer Staples Index fell as much as 2.6 percent on Friday, led by Inner Mongolia Yili Indus-trial Group Co and food companies Henan Shuanghui Investment & Development Co and Muyuan Foodstuff Co. The gauge has plunged 6.1 percent this week, the most since January 2016. “China is trying to encourage more foreign companies to sell locally and wants to give con-sumers more choice,”said Matthew Crabbe, Mintel International Group Ltd’s director of Asia-Pacific research. “What it will do is help foreign products already within the market get more competitive.” Robust consumption is an increasingly important stabilizer for the world’s sec-ond largest economy, as it shifts away from an investment- and export-led growth model.

The world just can’t get enough chocolate. With “tremendous” demand in emerging markets looking set to continue this sea-son, the world’s third-largest

cocoa processor is projecting a sharply smaller global surplus. Excess cocoa sup-plies that reached a record last season will probably drop to about 50,000 metric tons, said Gerry Manley, head of cocoa at Olam International Ltd.

Demand has picked up in Asia particu-larly, where countries including the Philippines, Indonesia, India and China are consuming more cocoa powder used in prod-ucts like cookies and ice-cream, Manley said. And while West African growers may reap a second year of bumper crops, top producer Ivory Coast is unlikely to repeat last season’s record harvest.

“We are very positive on demand,” Manley said in an interview at the compa-ny’s London offices Thursday. “We are seeing good demand for cocoa powder across the world, but mainly emerging markets are in a leading position there.”

Benchmark cocoa futures traded in Lon-don tumbled 23 percent last year, the biggest decline since 2011, as output climbed to a record in Ivory Coast, while Ghana, the No. 2 grower, also reaped a big crop. The large African harvests helped push the global sur-plus to 371,000 tons, according to estimates from the Abidjan-based International Cocoa Organization.

This season, global cocoa processing will probably rise by more than 3 percent, Manley said, adding that the forecast is conserva-tive. Processing exceeded 5 percent growth in 2016-17. About 8,000 new products were launched in the confectionery market last

year, Manley said. Lower costs are boosting demand, with the global chocolate confec-tionery market expanding 2.3 percent in the three months to June and 2.2 percent the fol-lowing quarter, the world’s top cocoa processor Barry Callebaut AG said earlier this month, citing data from analytics firm Nielsen. The rebound came after at least six consecutive quarters of contractions.

Underestimating GrowthChanging consumer habits mean some

traders may be underestimating growth. Trends including online shopping as well as the rise of artisan shops and bakeries are often missed by traditional data sources, Manley said.

Global cocoa powder demand is fore-cast to grow at 5 percent and Olam is looking to capitalize on that. The Singapore-based company is investing to increase its capac-ity to mill cocoa cake into powder in Asia and is also planning a new milling facility just outside Chicago, Manley said. The fac-tory should be commissioned later this month.

Demand for cocoa butter and cocoa liq-uor, used to make chocolate bars, is also growing and the market is tight despite last season’s record surplus, Manley said. That has helped boost cocoa-processing margins, with the so-called combined ratio—the price of cocoa products relative to beans—reach-ing the highest in more than a decade this year, according to KnowledgeCharts.

“There’s a lot of cocoa which is availa-ble today that’s not of the quality that we can put through our processing factories nor can chocolate industries use,” Manley said. “What we have seen, and it follows on from the El Nino year, is a destruction in quality and a reduction in fat content in beans, an increase in free-fatty-acid levels, which have served to deteriorate much of the cocoa that’s today in the surplus figures.”

“Extraordinarily” good weather will probably ensure a large crop of 1.9 million

to 1.95 million tons in Ivory Coast this sea-son, down from over 2.1 million tons last season, Manley said. Ghana production is forecast little changed at 800,000 tons, while output will decline in Ecuador, Peru and the Dominican Republic, which was hit by hur-ricanes earlier this year.

There has been very little smuggling between Ivory Coast and Ghana, partly due to better border controls, Manley said. Olam doesn’t currently see a need for concern this year about the Harmattan, the dry desert winds that usually blow from December and can damage cocoa pods.

“We’ve had extremely good weather, otherwise this could have equally been a def-icit year,” Manley said. “We do believe low prices will curtail production and we do believe there’s only so much further that Ivory Coast can grow.” While a second year of surpluses will probably keep cocoa prices range-bound, macro events could force spec-ulators to cover their short positions. Speculators have been betting on falling cocoa prices in London for more than a year, data from the ICE Futures Europe exchange show. “Since the beginning of 2017, we’ve seen a much sharper correlation between the gross short in cocoa and the gross short

in the wider agricultural complex, especially softs,” Charles Leslie, at trader at Olam in London, said in the same interview.

John VoskuhlBloomberg

The $1.4trn item on President Donald Trump’s wish list—a package of tax cuts for

businesses and individuals that he has said he wants to sign before year’s end—is headed into the leg-islative equivalent of a Black Friday scrum next week.

Senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday—a dramatic moment that will come only after a marathon debate that could go all night. Democrats are expected to

try to delay or derail the measure, and the GOP must hold together at least 50 votes from its thin, 52-vote majority in order to prevail.

Their chances improved this week when Republican Senator Lisa Murkowski of Alaska said she’ll support repealing the “individual mandate” imposed by Obamacare—a provision that Senate tax writers are counting on to help finance the tax cuts. Murkowski had earlier signaled some reservations about the provision; and her support was widely viewed as a positive sign for the tax bill’s chances.

Trump is scheduled to address Senate Republicans at their weekly luncheon Tuesday afternoon on taxes and the legislative agenda for the rest of the year, according to a statement from Senator John Barrasso, chairman of the Senate Republican Policy Committee.

The White House previously

announced that the president would talk with Republican and Democratic congressional leaders at the White House the same day about an agreement on spending to keep the government open after funding expires on December 8. David Popp, a spokesman for Senate Majority Leader Mitch McConnell, and Drew Hammill, a spokesman for House Democratic leader Nancy Pelosi, both said that meeting is still on the schedule.

If the tax bill clears the Senate—a step that’s by no means guaranteed—lawmakers in both chambers would have to hammer out a compromise between their differing bills, a process that presents potential pitfalls of its own. For now, though, much of the Senate’s attention will focus on its legislation’s price tag.

Three GOP senators—Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma—have cited concerns about how the measure would

affect federal deficits. Independent studies of the legislation have found that—contrary to its backers’ arguments—its tax cuts won’t stimulate enough growth to pay for themselves. Both the Senate bill, and one that cleared the House earlier this month, would reduce federal revenue over a decade by roughly $1.4trn, according to the Joint Committee on Taxation.

On Wednesday, a report from the Penn Wharton Budget Model at the University of Pennsylvania said the bill would reduce federal revenue in each year from 2028 to 2033. That finding would mean it doesn’t comply with a key budget rule that Senate Republican leaders want to use to pass their bill with a simple majority over Democrats’ objections.

In essence, that rule holds that any bill approved via that fast-track process can’t add to the deficit outside a 10-year budget window. The JCT has already

found that the Senate bill would generate a surplus in its 10th year because it has set several tax breaks for businesses and individuals to expire. But JCT hasn’t yet weighed in publicly on the revenue effects in subsequent years. Senate GOP leaders have expressed confidence that their proposal will satisfy the rule ultimately.

Another potential stumbling block stems from the fact that Congress is trying to act on complex tax legislation under a tight, self-imposed timeline in order to deliver on promises from Trump, House Speaker Paul Ryan and McConnell.

For example, Republican Senator Ron Johnson of Wisconsin has said he can’t support the current Senate bill because it would give corporations a tax advantage—a large rate cut to 20 percent from 35 percent—that other, closely held businesses wouldn’t get.

Danone to Diageo set for boost from China cuts on import taxesBloomberg

Global chocolate binge results in smaller surplus

An inside view of cocoa producing company, Olam.

Isis AlmeidaBloomberg

This season, global cocoa processing will probably rise by more than 3%, Manley said, adding that the forecast is conservative. Processing exceeded 5% growth in 2016-17.

Senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday—a dramatic moment that will come only after a marathon debate that could go all night.

Trump’s $1.4trn tax cut to enter make-or-break week

BUSINESS VIEWS 27MONDAY 27 NOVEMBER 2017

28 MONDAY 27 NOVEMBER 2017BUSINESS

BACK TO BUSINESS

Small businesses getting into the tax optimisation game

sight

AFP

Tax optimisation is no longer a matter just for the multinationals. A

number of market players are now tailoring strategies originally drawn up for the corporate whales to the min-nows, or small businesses and independent entrepre-neurs. Whether the businesses are active in imports and exports, or in services, recent scandals involving document leaks, such as the so-called “Para-dise Papers” earlier this month, show that a wider variety of companies are try-ing to lower their tax bills.

“When people talk about tax evasion, they think about multinationals. But the prob-lem affects smaller companies, too,” said Oxfam France spokeswoman Manon Aubry, noting that owners of several small and medium-sized firms have also been caught up in scandals recently.

While tax evasion is ille-gal, there are a number of strategies that experts have devised for firms to structure their business operations to avoid tax. Called tax plan-ning, tax avoidance, or tax optimisation, these strategies stay within the letter of the law, if not the spirit. Never-theless, they are spreading.

“These are practices that are going mainstream,” said Christian Chavagneux, an editorialist at the French magazine, Economic Alter-natives, who has written a book on tax havens. Never-theless, given the opacity of the practice, it can be diffi-cult to measure exactly how

widespread it has become. Jean-Eudes du Mesnil du Buisson, head of the French confederation of small and medium-sized businesses, CPME, said there was “no doubt some small and medium-sized businesses involved, but it is far from being a common practice.” By contrast, Paul Duvaux, a Paris-based tax lawyer, said he has seen “frequent use” of these tax schemes by own-ers of small businesses.

Manon Aubry of Oxfam France said that, in reality, the use of such schemes was somewhere between com-monplace and niche.

Aubry pointed to a number of firms offering tax optimisation services that advertise on the internet, including helping businesses create subsidiaries in Lux-embourg, or a European headquarters in Ireland, or creating offshore companies. One firm, Bethel Finance, says on the French version of its website that “all of these techniques are used by big groups and they are per-fectly legal. Our goal is to offer them to small and medium-sized businesses.”

And it isn’t just business owners looking to lower their taxes. These tax advi-sors are known to prospect as well.

Given the differences in their operations, the strate-gies don’t work for the all businesses. “Tax havens are mostly for professions where the work can be done at a distance and no physical place to work is needed, such as consulting and mail order,” said Duvaux, the tax lawyer.

Capital Comment

About half of the UK’s trade is already on WTO terms, with the US, China & several large emerging nations where the EU doesn’t have trade agreements.

Roberto Azevedo, Head of the World Trade Organization (WTO).

Annual Budgets

An illustration of gold bars.

Gold industry to face short supplyToronto

Bloomberg

A gold industry obsessed with con-taining costs and minimizing risks will find itself at the edge

of a cliff by 2020 as supply tight-ens, according to one of the most profitable producers.

Despite prices recovering from 2015 lows, the industry has been slow to reinvest in explo-ration or sustaining capital, Randgold Resources Ltd CEO Mark Bristow said. Half of the gold coming out of the ground isn’t profitable to mine based on the true extraction costs, he said.

“The one thing this industry does very well is mine gold at a loss,” Bristow told analysts at a breakfast meeting in Toronto on Friday.

The weakening outlook is being masked by a focus on all-in-sustaining costs rather than cash costs, he said. While com-panies can lower AISC and boost earnings by reducing spending to sustain operations or tighten-ing exploration budgets, the tactic erodes asset quality in the long run, the CEO said.

Similarly, severe damage has been done by high-grading, which shortens the life of a mine by focusing on the best quality ore. Since 2007, grades have dropped from an average of 2.5 grams a ton to about 1 gram, Bristow said.

In a wide-ranging chat with analysts, and during an inter-view afterward, Bristow was characteristically frank, saying bitcoin should be viewed as the “underworld of currencies” and criticizing the world’s largest producer of gold, Barrick Gold Corp, for it’s record in Tanzania.

But most of his remarks involved what he sees as a sys-temic failure by the gold mining industry to do its job properly. It’s not the first time Bristow has warned the industry is effec-tively producing at a loss. Two years ago, as prices hit a five-year low, he told analysts that half the metal coming out of the ground wasn’t profitable. That hasn’t changed despite a 20 per-cent-plus improvement in prices because it was accompanied by a drop in grades, he said in the interview.

In addition, large producers

have re-focused on the devel-oped world to minimize risks at the expense of asset quality, he said: “If you want to find ele-phants, go to elephant country.”

Meanwhile, Bristow blamed the widespread use of proxies by fund managers for the failure of executives and boards to be held accountable. He’s not the first to call for a reckoning within the industry. In September, bil-lionaire John Paulson’s firm called for the creation of a coa-lition of gold investors to curb years of value destruction.

Paulson’s presentation cited $85bn in lost value in the gold industry since 2010, but listed Randgold as offering the best shareholder total returns. The Jersey, Channel Islands-based company has the highest profit margin among large producers after Polyus PJSC, according to data compiled by Bloomberg.

But Bristow said Paulson’s Shareholder’s Gold Council isn’t the best way to clean up the industry.

“Management can’t be overly reckless with capital if it’s not allowed to be,” he said. “What’s missing there is a recognition

that fund managers have been equally, or more reckless. I’m not sure that creating another club is the right approach.”

Large funds need to become much more active in working to appoint and remove board members rather than relying on proxy managers, Bristow said.

Meanwhile, “survival merg-ers” are needed because the industry has too many junior miners with single short-lived assets, he said.

The industry is headed for a dramatic supply shortage from 2020 if gold prices stay between $1,000 and $1,400 an ounce, he said.

Input costs probably will rise as “you’ve got a complete over-inflation of value in just about every asset class and industry in the world, with burgeoning cen-tral bank balance sheets.”

The result will be higher gold prices—but history has proven that’s not necessarily what’s best for the industry, he said.

“It would have just been very nice for the gold price to stay at $1,040 for another six months so it would clean the industry up,” Bristow said. “It just was too short-lived, that low gold price.”

Talks heat up ahead of election of Eurogroups’ new presidentBrussels

AFP

Negotiations are heating up ten days ahead of the election of a new president of the Eurogroup,

whose job will be to shepherd major reforms to the eurozone currency bloc.

Elected for two and a half years, the head of the Eurogroup chairs the monthly meetings of finance ministers of the 19 countries that use the single currency, with the main responsiblity of coordinating the often clashing eco-nomic policies and priorities of its members.

The job was especially crucial dur-ing the tumultuous years of the eurozone debt crisis, when the bloc’s ministers faced the daunting task of saving the euro from near collapse.

Currently held by former Dutch finance minister Jeroen Dijsselbloem (pictured), the job is considered one of the most strategic in Europe and on par with the head the Commission, held by Luxembourg’s Jean-Claude Juncker, and the head of the Council, held by Poland’s Donald Tusk. The position only has one requirement: the applicant must be a eurozone finance minister currently in office, which excludes Dijs-selbloem, who was forced to leave the

Dutch government after an electoral defeat earlier this year.

Long tipped as a contender, French Finance Minister Bruno Le Maire is not a candidate and will instead focus on defending the reform ambitions of Pres-ident Emmanuel Macron within the Eurogroup. Spaniard Luis de Guindos, who lost to Dijsselbloem two and a half years ago, has a lot of support, but refuses to express interest, especially since the post is unofficially designated for someone from the centre-left. “The Socialists consider that it is still their job,” said a diplomatic source, with two names emerging from Europe’s left-of-centre parties: Italy’s Pier Carlo Padoan and the Portugal’s Mario Centeno.