Clear roadmap for currency union by September

UAE Central Bank Governor Sultan Nasser Al Suweidi said the draft agreement by GCC central bank governors on the creation of a monetary authority by 2009 and an eventual currency union is almost final except for some minor errors, ...

But a clear picture about the roadmap would emerge by September this year at a crucial meeting in Jeddah.

Speaking to the media on the sidelines of a meeting of the national anti-money laundering committee in Dubai, Suweidi said the draft agreement would be presented to GCC finance ministers at the Jeddah meeting.

'I can give you all the details in September after the meeting,' he said when asked about the location of the headquarters of the new regional monetary authority and the timeframe for the currency union, which was originally scheduled to be in force by 2010. However, following the Doha meeting of the governors last week, some conflicting statements sparked scepticism about meeting the common currency deadline.

The UAE Central Bank governor, reaffirming UAE's stance to continue with the dollar peg, also ruled out any possible revaluation of the dirham, a much debated issue in the backdrop of the country's soaring inflation stoked by a weakening currency. Dollar pegs restrict Central Bank's ability to fight inflation by forcing it to shadow US monetary policy of cutting interest rates instead of raising it to stem inflationary trends.

He said the Central Bank is not involved with a probe into bribery allegations against a former vice-president of Dubai Islamic Bank and others.

The governor urged banks in the UAE to report suspicious bank account movements in the wake of a series of financial scandals in the country.

He said the money laundering law ,which came into existence in January 2002, has been effective with the cooperation and 100 per cent compliance by the local financial institutions. 'All banks are abiding by the law and we see a success rate of almost 80 per cent in fighting this crime.'

The law, which defines money laundering offence as any act involving transfer, conversion or deposit, or concealment or disguise of property derived from various offences, has brought the UAE in league with the first group of countries in the world to have a special law that deals exclusively with money laundering offences, in keeping with the country's distinctive position as a leading trade and banking centre in the region. The law prescribes penalties for perpetrators of offences relating to money laundering, as well as for those who assist perpetrators and those who know but fail to report such offences. While authorising the Central Bank to freeze dubious assets for up to one week, the law confers unlimited powers to judiciary to freeze any asset proven to have been derived from money laundering activities.

Following the meeting, members of the National Anti-Money Laundering Committee visited Lieutenant General Dhahi Khalfan Tamim, Dubai Police Chief, at his office in appreciation of Dubai Police role in combating money laundering and terrorist financing.
/WAM/

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UAE needs to earn only $32.4 per barrel to balance budget

The UAE, the most diversified economy in the region, needs to earn $32.40 per barrel — less than one-third of the current crude price — to balance its budget, according to the EFG-Hermes Holding.

Egypt's largest investment bank said in an e-mailed research report that the world's largest oil exporter Saudi Arabia, on the other hand, needs to earn $54 per barrel of oil in 2008 to balance its budget while Kuwait needs $45.70. The report underscores UAE's economic diversification and steadily decreasing dependence on oil revenues meet its budgetary requirements, analysts said.

Gulf states may post record fiscal surpluses this year after crude oil increased more than 90 per cent in the past 12 months to $127 a barrel today. The six states in the Gulf Cooperation Council own about 40 per cent of the world's proven oil reserves.

''This provides the GCC countries with a huge safety net to continue to spend, even if oil prices weaken,'' said Monica Malik, chief economist at EFG, in the research note. ''We believe that as long as oil prices are between $55 and $60 per barrel the expansionary stance of the GCC countries will continue.''

According to International Monetary Fund (IMF), the GCC is enjoying unprecedented balance of payments surpluses and record foreign direct investment flows. The size of the GCC economies expanded to more than $800 billion million in 2007. Gross domestic product per capita rose above $20,000 for the GCC as a whole. In Qatar it rose above $70,000, while in the UAE the figure rose above $40,000. "Strong growth, coupled with an inflation rate above 7 per cent on average, is expected across the GCC in 2008," it said.

IMF figures show that the GCC current account surplus rose to $225 billion in 2007 compared with about $200 billion in 2006. This was the third consecutive year that the surplus was more than 25 per cent of GDP and it has raised the total surplus over the last five years to $750 billion.

EFG-Hermes research said large budget surpluses make it difficult for Gulf states to curtail spending to help slow inflation, which has quickened to records across the region. Kuwait became the fourth Gulf states to report an inflation rate above 10 per cent, while Qatar reported price-growth of 14.8 per cent.

Spending will increase 28.9 percent in the UAE. this year, 25.6 per cent in Qatar and 7.1 percent in Saudi Arabia, the EFG report said.

The six GCC states control as much as $1.5 trillion of assets through their sovereign wealth funds, about half the $2.9 trillion global total, according to the International Monetary Fund. Such funds may grow to $12 trillion by 2012, the IMF said.

The funds have invested at least $59 billion in the past year to shore up the balance sheets of Wall Street banks, including Citigroup Inc. and Merrill Lynch & Co., prompting calls from the US Congress for more openness.
/Khaleej Times/

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Sheikh Nasser bin Zayed dies

President HH Sheikh Khalifa bin Zayed Al Nahyan today announced the death of Sheikh Nasser bin Zayed Al Nahyan, who died last night when a helicopter carrying him and his colleagues crashed into the Arabian Gulf.

Sheikh Nasser was the brother of President HH Sheikh Khalifa bin Zayed.

The Ministry of Presidential Affairs announced three days official mourning.During this period, flags shall fly at half-mast.

Funeral prayers for Sheikh Nasser and his colleagues will be performed at the Sheikh Sultan bin Zayed Mosque in Al Bateen.

President HH Sheikh Khalifa will receive condolences at his Mushrif Palace after the funeral service.
/WAM/

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UAE and Greece initial double taxation avoidance deal

United Arab Emirates and Greece initialled on Tuesday a draft treaty for the avoidance of double taxation on income.

The agreement was reached at the end of the first round of negotiations that started in Athena earlier in May. The next round will be held in UAE in September.

The two sides have reached a deal to continue to avoid taxation levied on air transportation by national carriers of both countries.

/WAM/

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Healthcare market size to touch $12b by 2015

The total healthcare market in the UAE is expected to touch $12 billion by 2015 from the current $3 billion and wellness products will have a salient role to play in this growth market," a senior company official said.

"Over the years, the UAE has witnessed significant expansion in health care and wellness facilities, which in turn has positively catalysed the appeal for healthy living. Also the potential for growth has exponentially increased with the emirate emerging as a destination for health care and wellness," Dr Zeyad Al Moosa, managing director of Gulf Med FZE, the wholly-owned subsidiary of Gulf Drug Establishment (GDE), told The Business Weekly.

GDE, owned by Dr Hasan Al Moosa family, has been in the healthcare market in the UAE for over 40 years and is today a major player which represents over 80 major multi national companies. Dr Zeyad was speaking to TBW on the sidelines of a ceremony marking Gulf Med's partnering with the US-based HoMedics, global leader in personal wellness solutions, to cater to the increasing demand for affordable personal health care and wellness products in the region. "According to our studies, the market for wellness products is growing in the UAE. However, our aim is to exploit the potential and develop the market more by increasing the awareness on this area of health care. Gulf Med will not only look at increasing the market share but also to influence the consumer towards improving the quality of life," he added.

Under the terms of the partnership, Gulf Med will be the sole distributors for HoMedics products for the UAE, Qatar, Oman, Bahrain and Jordan. For HoMedics, the partnership offers a debut foray into the Middle East market where health care market is growing at a rapid pace

"Personal wellness market is a relatively new category in the Middle East health care sector, but with the rise in disposable incomes, increase in population and a fast emerging health and wellness conscious lifestyle, the demand for personal wellness products and solutions is set to grow exponentially in the coming years," Dr Zeyad said.

Elaborating on the partnership, he said that initially Gulf Med will focus on the UAE market, which is the second largest health care market after Saudi Arabia, and develop other GCC markets in the second phase.

Gulf Med had done soft marketing and road shows of HoMedics products in the UAE in partnership with leading pharmaceutical/ retail outlets and the results have been extremely encouraging.

"Significantly, the idea of personal wellness has trickled down from the rich to middle-income segments of the population, expanding the market further. In this context our partnership with HoMedics will enable us to offer affordable, easy-to-use, personal wellness products which can be used at home (or office) with minimum time investment and is a significant opportunity to contribute to healthy living," Dr Zeyad said.

Commenting on the partnership with Gulf Med, Stuart Burrows, the international sales manager of HoMedics said the Middle East now offers a robust market for health care and wellness products compared to a few years ago with increased spending power.

/The Business Weekly/

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