Reflections on Discussions
By John Kidd, Research Fellow,
After gathering in the warm evening we were welcomed during the reception by Khater Massaad, Chief Executive Officer, RAK Investment Authority, UAE, and Horasis Chairman Frank-Jürgen Richter while we were discussing with friends and meeting friends-to-be. Afterwards we repaired to the Welcome Dinner and were further welcomed by H.H. Sheikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah, UAE, in a most courteous and amiable manner.
Other notables – Moh’d Abu-Hammour, Minister of Finance of Jordan and Vayalar Ravi, Union Cabinet Minister of Overseas Indian Affairs, India – addressed us in a similar fashion. Afterwards we enjoyed our dinner and looked forward to the next day’s activities.
Four parallel breakfast sessions opened the day: A new world order; Fuelling economic growth;The sustainable corporation and Real Estate & infrastructure – the road ahead). I want to report upon the third group’s discussions. Here we heard delegates discussing sustainability and inevitably Corporate Social Responsibility (CSR), though it was CSR with local flavours.
There is always a need to define CSR, but this is no easy task. Indeed the delegates found this to be so, becoming concerned upon the potential lack of transparency within Arabian firms, until it was pointed out that often the Arabian chief executive was often of the opinion that ‘this firm is my house: and like my house it is not open to view – as it is private’.
Nevertheless there is often a spirit of ‘giving’ via donations that look to increase social welfare rather than directly using the gift in some ‘for profit’ fashion. But the gift-giving is under some pressure as it was recognised that the firm must remain profitable or it could not maintain donations and some firms were recognised as making self-seeking donations (such as Microsoft, whose gifts often tie-in the recipient to the MS World).
On reconsidering the ‘privacy of one’s house’ delegates found this concept aligned with a lack of Internet presence of several listed firms in the UAE, and that most of the Arabian Webpresentations lacked detailed transparency. In this digital age we noted that a Web presence is required to do business.
Further, the CEOs must learn to respond quickly to digital exposure (on Face Book,Twitter and Four Square, etc) as images of any problems will be flashed round the globe in minutes denying the CEO the possibility of denouncing a failure of the firm’s systems – nowhere may remain ‘private’ any longer.
In the opening plenary session the meeting co-chairs informing us of their thoughts on the economic outlook and how the Gulf impacts on the global economy. Apart from the views on the negative impact of the recent global financial crash on the Gulf’s stock the speakers turned to note a longer view – the need to boost education from primary schools up.They accepted there were some excellent universities in the region, but given the demographics) heavily laden towards the young it is necessary to educate these well so as be able to integrate them into the future of the Gulf to benefit its future growth potential.
The region needs to transform itself to an advanced knowledge deploying industrial society to face the challenge.
This was recognised as a long-term issue and would have a strong a long term benefit: as were other programmes that were to designed to alleviate water and food shortages.
The opening plenary also provided an opportunity to hear a second address by H.H. Sheikh Saud Bin Saqr Al Qasimi wherein he discussed his Emirate’s rapid progress urging us to come to invest and live in this interesting area with its vigorous economy and its pleasing situation.
Four Boardroom Dialogue Sessions followed: Arab entrepreneurs spearheading globalisation; Investing overseas; Strategies for success in the Middle East and Scorecard on logistics. It was the last group I attended, focusing on three key aspects of logistics – warehousing, transportation and information technology support – which in the Gulf usually depend on governments’ installing the hinterland infrastructures (of roads, railways, sea and air ports as well as services such as electricity, water and telecommunications: and of course creating a well educated population).
All these complex support systems require a long-term vision that was perhaps a little lacking in some States in the region, but most States were now addressing them as they impact on their growth potentials.
We noted how Dubai had grown with the aid of its ports and airports locally and how they have increased their presence overseas with high-value but invisible investments and purchases: it is an excellent exemplar.There was some acceptance of the ‘business as usual’ growth model, yet also some recognition of the problems that may face the region following the loss of oil and gas flows which will inevitable occur.
Partly issues of travel may be offset by greater use of teleconferencing, however minerals and raw materials will still need shipping, as will more finished goods as global growth looks to recover. It was seen that the region will continue to act as a central re-distribution point for many goods.
Just before lunch Michael Wette, Partner, Roland Berger Strategy Consultants, announced the results of a jury run jointly with Horasis – they nominated three prominent figures to be honoured as Arab Business Leaders of the Year 2010.
Lunch provided opportunities to network. After lunch we attended a plenary session addressing the Arab World’s global trade and investments.We heard that the region’s sovereign wealth funds are about 43% of the global total indicating a practical effort to avoid risk during the recent financial crisis had been maintained. Even so, we were urged to find some mechanism to prevent the poor world’s savings flowing to the ‘rich’ world only to be reinvested from them in risky ventures that, if failing, would harm us all.
In other words, to reconsider the Anglo-Saxon financial model and to choose the better aspects of the region’s wealth management. It was of course beneficial in the region to have few legacy systems to dismantle or absorb so new systems could be installed quickly which would work to the highest global standards.
This plenary was followed by a further four group sessions: A roadmap for the acquisition of foreign firms; Attracting international talent; Creating Arab brands and The Arab world’s natural resources).
In the last section we talked on two broad issues – the need to care for climate change and the need for the Gulf to invest its oil/gas wealth in new [energy] technologies for the future. Solar and nuclear power were two aspects that were of interest to the region.
It was expected that solar power in particular could be exported to Europe soon from developments talking place in the deserts of the Sahara, while more generally solar power systems could be deployed across the region to substitute for oil/gas consumption – thus saving these fossil fuels for uses better than simply using for heating or for transport.
After the tea break we entered our last four session: Riding the next wave of financial services in the Arab world; Renewable energy – the Arab world’s new growth pattern; Arab technology pioneers’ global awakening; How can the Arab world become a global manufacturing hub? – of which the second was observed by me.
The delegates’ main concern was the general lack of strong political will to invest heavily in the R&D needed to develop new energy technologies. Once more solar energy was highlighted as the best recipient of new grants and financing to aid the globe’s future.
The closing plenary discussed if the Arab firms were building enough firms with a global reach. Some clearly were global leaders, for example RAK ceramics or Dubai Ports group. But otherwise investments were often hidden as sovereign wealth funds were deployed across the globe.
Several themes emerged from the discussions – education for all, and from a young age, was perhaps the primary need; deeper corporate social responsibility (CSR) and more transparency was a need of all firms, especially those who desired a global presence; and we needed to be wary of the ’business as usual’ growth model; and to invest in sustainable and novel energy technology for the future.
The region is an entrepôt with a vast potential, but leaders need to guide more firmly and look further to the future engaging in new technologies rather than rely of the old energy-based model.
We closed the meetings at the Farewell Dinner, being addressed by H.H. Sheikha Lubna Bint Khalid Al Qasimi,Minister of Foreign Trade, UAE, and Khater Massaad, Chief Executive Officer, RAK Investment Authority, UAE.