Thursday, March 19, 2009

Abandoning Dubai

Commentary - Executive
By Paul Cochrane in Dubai

Dubai has been getting a lot of negative coverage in the media lately. One story stands out in particular, the frequently spouted ‘3,000 cars abandoned at Dubai airport,’ which has been used to suggest the emirate’s economy is sinking into the sand.
It is a story I’ve had recounted to me from barbers to businessmen, with figures metamorphosing like in a massive game of Chinese whispers, from hundreds of cars left a day to up to 30,000 having been abandoned.
India’s Daily News & Analysis broke the story, citing 3,000 cars had been abandoned over four months at the Dubai International Airport (DXB) and quoting the director general of airport security.
The story was soon picked up elsewhere, with websites firing off sensational headlines: ‘DXB clogged with cars abandoned by fleeing construction workers,’ and ‘Thousands of luxury cars abandoned at DXB as expats flee debts’.
The curious thing is that within a week of The Times of London carrying the 3,000 figure, and then a local newspaper quoting an anonymous airport security source that “every day more and more cars were found,” and “Christmas was the worst - we found more than two dozen on a single day,” the chief of Dubai’s police force came out with a different figure.
“Only 11 cars have been abandoned at Dubai airport in over a year,” said Lieutenant General Dhahi Khalfan Tamim, before lambasting the media for its reports on the decline of the economy as being “out of proportion.” He went on to say that Dubai still has “a smooth economy and the problems attributed to the emirate both in the local and international media were completely false.”
The original report and the government’s eventual response all happened in the first two months of the year, but I kept hearing stories about dumped cars at the airport when in Dubai in March. Either people had not read the clarification, or no one really believed the police chief’s claim.
So who to believe? We have the press reports on one hand and on the other a statement by a government spokesman that will presumably not be changed. Whether the abandoned cars story is an urban legend or not is now hard to ‘prove’.
But what the story does suggest is that if the government is not forthcoming about the gravity of the situation we are left with no choice but to fall back on what the police chief urged the media not to use: anecdotal evidence to gauge how healthy Dubai’s economy really is.
There are also economic indicators, but this requires a cross examination of numerous sectors, which is problematic given the nature and secrecy of many institutions and family businesses in Dubai, often unwilling to disclose to business journalists how their business is faring. This is compounded by a dearth of collaborative data amongst players as well as official statistics on economic sectors.
As one industrialist remarked when we talked about Dubai’s economy, “our clients don’t read the news about the sector, we get together to talk and see how we’re really doing.”
Ultimately, all we can do is piecemeal data and anecdotal indicators together. Judging from everything I’ve read, seen and heard, I’ll stick my neck out to say Dubai is in a downturn, despite the government’s spin.
In the first two months of the year the automobile sector declined 45% in the UAE, advertising is set to plunge 50% in 2009, and economic growth is projected to be between 2-4%, while real estate prices have dipped, construction projects have stopped, and banks are not lending like before.
All of this is evident from visibly fewer vehicles on the road – as observed by the head of GM Middle East – and from the huge blank billboards on Sheikh Zayed Road that previously advertised real estate projects.
Conversations with Dubai residents are a further indicator. A plywood distributor’s business was down 90% from 2008, from 100 containers a month to only nine; a taxi driver sent 35-40% less cash home than before; an import/export firm registered a 35% decline in orders; a colleague’s flat mate lost her job as a graphic designer.
I even heard of a friend’s relative abandoning his car at the airport. Given such anecdotal evidence, it would be no surprise that people are leaving their cars at DXB or in parking lots elsewhere as jobs are lost.
Denials of Dubai’s economic situation by the government are frankly disingenuous. Dubai needs to face up to this to be able to think hard about the direction it wants to take its economy. There are no easy answers, but short-term thinking has to be sidelined, as does the official reticence on the true state of the economy.
After all, stories like the abandoned cars at DXB can quickly get out of proportion and become believed, no matter claims to the contrary; it is a human fallibility we have seen time and again, yet also an understandable one given people’s desire to know what’s going on, especially during a crisis.

Photo by Paul Cochrane

Oman ups infrastructure development

Ras al Jinz, famous for nesting sea turtles, near Sur

By Paul Cochrane in Muscat

While construction workers are downing tools throughout the Gulf and the future of massive infrastructure projects are in jeopardy, the Sultanate of Oman is bucking the regional trend by investing billions of dollars to bolster its nascent tourism sector, aviation and industrial base.
Compared to its GCC neighbors that have spent lavishly over the past decade on infrastructure and real estate projects the Sultanate, the relatively poor man of the Cooperation Council, has lagged behind in infrastructure roll out.
That Oman is doing so now is not down to Muscat possessing a financial crystal ball that foresaw the cost of raw materials plunging from record highs and that contract bidding would become more competitive. For Oman, the projects are out of necessity, to catch up with regional developments and be viewed as more of a GCC player than merely the better half of the lower Arabian Peninsula.
The Sultanate has always had to be prudent with its revenues, and never so much as the present with energy accounting for some 75% of national revenues yet oil prices having tumbled. The last two immediate budgets, which ran a $1.04 billion deficit in 2008 with revenues of $14.06 billion, were both based on $45 a barrel. Conservative thinking 16 months ago when oil hovered around the $100 mark, but roughly on par for this year.
If prices drop, some projects could be frozen, but Oman also has new oil and gas fields coming online, and is aiming to average out production at 550,000 barrels of oil per day.
Furthermore, Oman has not been hit to the same degree by the financial crisis as the more service-based economies of the rest of the Gulf, in addition to only relaxing property laws as late as 2006, which had previously prevented foreigners from owning property and restricted GCC citizens to just three plots of land. As a result, the real estate sector has only started to flourish over the last few years, further compounded by the entrance of international realtors that have changed the face of the sector as well as driving up rents.
But the path the Sultanate wants to tread doesn’t differ much from that of other GCC countries: investing heavily in airports, roads, ports, industrial zones and high-end tourism projects. Oman is just the last member of the GCC to board the ‘speed-development’ train.

The Corniche in Mutrah, Muscat

Infrastructure roll out

Talking of trains, Oman is mulling the idea of its first railway, a goods carrier that would run 200 kilometers between the industrial city of Sohar and Barka. Reportedly in its consultancy phase, the line would eventually cater to passengers.
But where Oman is really placing its transport infrastructural emphasis is on roads and airports. In such a large country with populated areas confined to Muscat and the cities of the northeast, and a vast, relatively empty expanse of 1000 kilometers to the second major city, Salalah in the south, a developed road network has been vital. Some $1.9 billion was earmarked in the 2008 budget for highway and road development, in addition to improving traffic flow in Muscat, according to Gulf Construction.

With only airports in Muscat and Salalah 1,000 km away, the bus network is the only way to get around

The impacts are already being felt, with the newly opened Muscat-Sur highway – so new the tollbooths are still not operational - slashing two hours off drive time.
But with tens of billions to be spent on industrial projects, ports and tourism projects, roads alone are not enough to connect areas like Duqm, Salalah and Sohar.
“To speed up access to Duqm, as four to five hours by road from Muscat, an airport is ‘essential’ infrastructure,” said George Bellew, Chief Executive Officer of Oman Airports Management Company.
Airports are where the big money is being invested, to the tune of $3 billion for the expansion of Muscat International Airport and billions on six other airports.
“Like everywhere else, there has been an increase in travelers, tourism and commercial trade in Oman. Six airports are to be built, maybe more,” said H.E. Sheikh Mohamed Bin Sakhar Al-Amry, Under Secretary for Civil Aviation Affairs. “We will build airports as needs dictate,” he added. Some $43.86 million has been earmarked for consultancy studies, design and supervision of the airports.
All airports are to be located in areas of industrial activity and/or tourism, a potential major currency earner given Oman’s nature, history, 2,700 kilometers of coastline, and two months in the summer – known as Al Khareef – when the area surrounding Salalah is uniquely endowed with monsoon rains that transform the landscape into a lush green oasis.
“There is a determination by the Omani government to diversify non-oil revenues, and an aspect of that is clearly tourism and air travel,” said Bellew.
Numerous multi-billion dollar tourism projects are underway in Oman, including the $7 billion Blue City, the $2.5 billion Wave Muscat, the $2 billion Salam Yiti, the $1.6 Omagine, and the $400 million Muscat Gulf Course.
In Salalah, the Dhofar Tourism Company is developing the $2.85 billion Mirbat project, consisting of residencies and hotel resorts, while the Muriya Tourism Development Company, a JV between Oman’s Ministry of Tourism and Egypt’s Orascom Development Holding, is developing Salalah Beach. Covering 15.6 million square meters, the project will have 3,000 residences, a marina, PGA golf course and hotels from the major chains, Club Med, Rotana, and Movenpick.

Herons and waders on Salalah beach

To meet the expected surge in tourism when such projects are finished, Salalah’s airport is being expanded from the current needs of 300,000 passengers per year to two million in phase one, and eventually four million.

Domestic links

Three domestic airports are to be built in the southern towns of Haima and Shaleem, as well as in Adam, a gateway city to Oman’s interior region some 300 km south of Muscat.
Duqm is to be the country’s third international airport with a capacity for 500,000 passengers per year, and is the site of a $1.8 billion port project, refinery, shipyard and tourism resorts. Firms are currently bidding for a $200 million contract for the construction of the airfield and infrastructure projects.
Further airports are to be built in Ras al Hadd and Sohar, located 200 kilometers from Muscat on the way to Dubai. “Ras Al Hadd is being progressively developed as a tourist area, where turtles nest [at Ras al Jinz], and covers the local area of the city of Sur. There also is the expectation of eco-tourism developing along the Eastern coastline,” said Bellew.

An archaeological dig at a 3BC site in Ras al Jinz

Sohar has risen as the country’s foremost industrial hub, driven by over $12 billion of investment in the city’s port, a joint venture between the government and the Port of Rotterdam. The Sohar Special Economic Zone is also under development, primarily catering to downstream petrochemicals and the steel industry as well as logistics at a 500-hectare site. The SSEZ will compliment the 220-hectare Sohar Industrial Estate, and Oman International Container Terminal, which the country is banking on to bolster trade due to Sohar’s proximity to Muscat and the nearby Emirates.
The Sohar airport is slated for completion by 2013, although a $300 million tender for the passenger terminal has not yet been appointed.
The biggest airport development is at Muscat International Airport (MIA). “MIA is a gateway airport with one main runway, two in both directions. The plan is to build a standalone midfield terminal,” said Bellew.
The first expansion phase will allow for 12 million passengers a year, with a new passenger terminal control tower, 32 air bridges, VIP building, air traffic management centre, 6,000 car parking spaces, and a cargo terminal to handle some 200,000 tons per year. The second terminal will be connected to the rest of the airport via an underground metro system, with the design brief making it possible to expand to 48 million passengers per year by 2050. “In six months we will finish the planning and award contracts,” said Bellew.
There was a need however to open a new pier in March to increase capacity to 7 million per year. Indeed, last year MIA saw air traffic rise 18% on 2007, to 4.5 million passengers. In January, passenger numbers were up by 19%, largely due to Oman hosting the Gulf Football Cup.
“January figures are an anomaly to the global figures, where there has been a lot of negative results, largely due to the underdeveloped nature of the market here,” said Bellew.
The Sultanate will no doubt be hoping that Oman is an anomaly in weathering the financial storm as so many projects get off the ground. Economic growth, however, is expected to slow from 7% in 2008 to 3% this year, but major projects are nonetheless still years off completion.
“We budgeted for this a long time ago, so I don’t think we will change plans,” said Al-Amry.

Photos by Paul Cochrane

Tuesday, March 10, 2009

The Near Death of a Star

Executive - Commentary

In late January I was asked to look into the closure of The Daily Star, Lebanon’s only English language daily. But discussions to financially prop up the paper were going on behind closed doors, so without a shareholder to quote, the story, as they say, was dead in the water. It also looked as if ‘the DS’ could be as well, and that this commentary might have been a eulogy of sorts.
For on January 14, the DS was ordered to cease operations following a court order requested by Standard Chartered Bank over a loan of some $700,000. The presses were at a stand still, staff were on leave until further notice, and the website frozen on the date the plug was pulled. It took until February 2, for the paper to raise the cash to get back on the newsstands.
To the hacks, editorial staff and interns that have spent time at the Gemaizeh offices (of which I am one), the closure was but another episode in the drama of the DS.
As the old hands can readily recall, the newspaper has had many ups and downs, from the deal with The International Herald Tribune that gave the DS a much needed boost in the early 2000s, to the unification of the Lebanon and Regional editions, to the downsizing of the paper’s staff in 2005, when it shrank from occupying two floors of Marine Tower to only one. Then there was the ill-fated plan to gain a bigger slice of the regional market by moving to Dubai – I was even asked if I would be willing to make the move, it was seemingly that certain – and the loss of the IHT alliance in 2006.
Older staff still working at the paper were pragmatic following the shutdown, feeling the causes would be rectified as so many times before when the paper was in dire straits. Former staff were somewhat nostalgic – they certainly let each other know about the closure – but equally not surprised when recalling the financial constraints and lack of dynamism and morale in the newsroom itself.
The discontinuation of the DS did not bring about any schadenfreude though, but rather handwringing. For despite all of the paper’s shortcomings, notably reduced pagination and a heavier reliance over the years on the wire services as well as interns to churn out content, readers bemoaned the loss.
There was talk of what news options were left to English-speakers in Lebanon and for readers abroad interested in this perpetually problematic country. For Lebanon is extremely limited when it comes to daily news coverage in English, confined to a handful of mostly partisan websites, such as, which is linked to March 14,, equally pro-March 14, and, linked to Hizbullah.
Although no details were forthcoming about the re-financing of the DS, the fact that it is not openly sponsored by any political group and regularly has Lebanon’s two opposing camps breathing down its neck, makes the Star’s position in Beirut a much needed one.
Sure there is a need for less wire copy and more original content, as well as an overhaul of the Opinion page, which more often than not reflects the ideas of those outside the region than in it – running counter to what anecdotal evidence suggests, that people want another perspective on Middle Eastern issues than what the Western mainstream media offers. The website also needs to be seriously revamped in keeping with the shifts in the media environment.
But these constraints appear to be acknowledged by the DS, as stated in a ‘We’re back’ announcement: ‘Expect to see some changes in format and style over the coming months as this newspaper tries to revitalize.’ That has, however, been heard before, so let’s hope some real change is afoot to boost readership and not lose the DS, again.
Media coverage of Lebanon aside, the loss of the DS would have deprived the world of a journalistic incubator for the numerous reporters, editorial staff, photographers and graphic designers that have passed through the Star since it was re-launched in 1996. From my time there and before, former DS staff have gone on to work for Britain’s The Financial Times, The Economist, The Guardian, The Independent, and for Reuters; The Los Angeles Times, The Washington Post, The New York Times, Christian Science Monitor, Newsweek and Time; Germany’s Frankfurter Allgemeine Zeitung; Belgium’s De Standaard; Canada’s Globe and Mail; the UAE’s The National and The Gulf Times; Australia’s The Age; and on television Al Arabiya, Al Jazeera, Future, and ABC.
The aforementioned are clearly some of the biggest names in global media, and a fact the Star’s management can take pride in. It is another good reason why it’s good news to have The Daily Star back in print.

PAUL COCHRANE is a Beirut-based journalist. He worked at The Daily Star from 2002-2005