Design and construction supervision of BIW works assigned to Hyder -
Times of Oman - 01/12/2006
- Bahrain Investment Wharf (BIW), under development by Bahrain-based
Tameer, has assigned the detail design and construction-supervision
services of the primary infrastructure facilities contract to Hyder
Consulting Middle East Limited, says a press release from Manama.
The contract was signed by BIW vice-chairman and managing director
Laith Al Memar and the area director for Northern Gulf Alan Lord of
Hyder Consulting Middle East Limited, in the presence of Muhannad Al
Durrah, CEO of BIW; Yazan Haddad, BIW's project director; Mohammed
Khalil, projects manager of Tameer; Zahir Al Ugaily, Bahrain area
manager and Michael Wing, regional business development director of
Hyder Consulting Middle East Limited. Hyder Consulting will be
responsible for the detail design and construction-supervision of
the primary infrastructure facilities within the BIW development
such as roads, water and electrical distribution networks, storm
and sewer drainage systems, district cooling system,
telecommunications, street lighting, landscaping and other
Bahrain Investment Wharf is planned to house an industrial park for
medium and light industries, a logistics park for storage and
logistics purposes, in addition to residential, commercial and
Powering a new beginning
than a decade ago, Arab Gulf states were beset by financial
troubles, as governments grappled with budget deficits and rising
public debt, and fretted about falling per capita income and rising
But times have changed and dramatically so. Thanks to the rise in
oil prices, the region has emerged from the shadows to shake off its
financial worries and ride a wave of unprecedented financial
True, the Middle East is still plagued by wars and political crises.
But despite the US invasion of Iraq in 2003, a wave of terrorist
attacks in Saudi Arabia, and tensions over Iran's nuclear programme,
the Gulf is experiencing an economic and financial boom that is
delivering double-digit economic growth rates and large fiscal and
external account surpluses.
The most visible signs may be in the frenzied rise of Dubai as a
leading regional financial centre. But new cities are emerging in
Abu Dhabi, Qatar and Saudi Arabia as construction projects across
the region reach beyond the $1,000bn mark.
Conventional bank profits soared last year. The rush to capture the
liquidity has also fuelled explosive growth in Islamic finance,
tapping into funds only willing to invest according to Sharia, or
Islamic law, which bans dealing in interest.
"The vast pools of liquidity are allowing investments to be made
within Gulf countries," says John Weguelin, chief executive of the
European Islamic Investment Bank, a new UK-based institution helping
companies tap into Gulf liquidity.
"There's been a lot of innovation and an increase in demand for
alternative forms of asset classes, as people look to diversify away
from local real-estate and equity markets."
The boom has accelerated the development of a financial services
industry and introduced sophisticated instruments. With much of the
liquidity staying within the Middle East, a rash of new private
equity and investment firms have been set up.
The economic expansion has lured international financial
institutions, with investment banks flocking to Dubai to establish
Bankers speak of a "war for talent" as expanding regional firms and
international banks compete for a limited supply of Arab finance
"This is a region that's come of age in its requirements for global
investment banking services," says May Nasrallah, managing director
and head of investment banking for the Middle East and North Africa
at Morgan Stanley in Dubai.
"Companies and institutions have substantial financial and strategic
aspirations and are looking within the region, as well as
internationally, for investment opportunities and consolidation
According to the Institute for International Finance, the size of
the economy of the Gulf Cooperation Council which groups Saudi
Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman has grown by 74 per
cent over the last three years, making it the world's 17th largest.
Per capita income, the IIF estimates, surged to more than $17,000 in
2005, from less than $11,000 three years earlier. Qatar, with a per
capita income of over $50,000, now ranks as the fourth highest in
Soaring oil revenues have boosted the GCC's aggregate current
account surplus, which should average around 30 per cent of GDP this
year and next, raising foreign assets by nearly $450 billion over
the same period.
The financial liquidity has spurred a new wave of petrodollar
recycling, sending government investment arms on an aggressive
global acquisitions spree.
In the oil booms of the 1970s and 1980s, Kuwait led the pack in
global investments. But now the UAE, and to a lesser extent Qatar,
are competing with international companies for acquisitions.
"Everyone is beginning to take notice that there's a lot of money in
the region and that there are sophisticated investors here," says
Sameer Al Ansari, head of Dubai International Capital, one of the
new investment arms set up by the government.
Analysts say that since the attacks of September 11, 2001, Arab
money has been more cautious about US investments.
The trend has been accentuated by the quest for greater
diversification, and by this year's controversy over Dubai ports
operator DP World's purchase of the UK's P&O. The deal provoked a
political storm in Washington and forced the Dubai company to divest
P&O's US port facilities.
Europe appears to be a main beneficiary of the globalisation of Gulf
money, with a string of transactions announced this year. Government
investment arms, however, are also increasingly looking for
acquisitions in China and India.
The region's financial boom, however, has not been without excesses.
And, given the dependence on hydrocarbons in Gulf economies, there
are still doubts about whether current trends can produce lasting
Too much liquidity chasing too few investment opportunities led to
an extraordinary surge in stock markets in 2004 and 2005 as small
retail investors rushed to buy into initial public offerings. But a
wave of selling earlier this year provoked a bruising crash, driving
prices down by as much as 60 per cent.
The speculation that has also driven real estate prices to new highs
is creating fears of a similar correction, a downturn that could
have a bigger impact on a banking sector that has been active in
financing the real- estate boom.
Moreover, newfound confidence and unbridled ambition is leading at
times to a duplication of projects, with virtually every Gulf state,
for example, planning its own financial centre. Some analysts say
there will be room for everyone, but others are more sceptical.
"It's a catch 22: to have a market you need to have issues but
issuers want to see depth in the market first," says Eyad Duwaji,
chief executive officer of Dubai-based Shuaa Capital, an investment
The liquidity flows have been so rapid that they have challenged the
physical and financial infrastructure of the region. Companies
complain of shortages in talent, materials, and long-term project
Stock markets are not sufficiently open to foreign investors the
largest, in Saudi Arabia, remains closed and this has deterred
institutional buyers which could provide more stability through less
On the private equity side, raising money is far easier than
executing deals, as many companies are still reluctant to sell
shares to the public.
In the UAE, for example, the ministry of commerce determines the
value of companies going public and dictates that they sell off a
Still, economists and bankers find comfort that government spending
has been more prudent than in the past and that it has largely
targeted more productive sectors. They estimate that this will
create a more diversified economic base.
Mukhtar Hussain, a senior HSBC official who until recently co-headed
corporate and investment banking for the Middle East and North
Africa, says three factors make the Gulf's economic transformation
First, oil prices are unlikely to fall below the $40 per barrel mark
over the next three to five years. Second, the liquidity flows have
been largely towards the productive sector, with infrastructure, oil
industry and industrial investments taking priority.
Finally, he says, the private sector is now more viable and active,
unlike the 1970s where all economic growth was largely
In Saudi Arabia, where tales of waste during previous oil-fuelled
surges in liquidity are legendary, Samba, a leading Saudi bank, says
management of the economy this time has been cautious and has not
derailed economic liberalisation, including World Trade Organisation
In Qatar, meanwhile, the government is hoping that oil and gas will
contribute less than 50 per cent of the state budget requirements
over the next decade, down from near 70 per cent today, says Philip
Thorpe, head of Qatar's Financial Centre Regulatory Authority.
Finance specialists in the region say that while much remains to be
done, the progress of recent years should not be underestimated.
"Finance in the Gulf is still at an embryonic stage but it has gone
a long way in the last five years," says Ali Shihabi, head of
Rasmala Investments, a Dubai-based investment bank.
There will be corrections when oil prices drop, and some smaller
financial firms may not survive.
"But you have a lot of exciting opportunities now, and it's long
overdue," says Shihabi. "The region needs a more diverse, creative
financial services sector."