This document discusses state-owned enterprises (SOEs) in Gulf Cooperation Council countries and the potential for listing some of these companies on stock exchanges. It notes that governments in the GCC region own substantial stakes in major listed companies. It also discusses the rationale for and risks of SOEs, as well as ongoing efforts by GCC governments to reform economies and potentially privatize some SOEs. From an investor perspective, ensuring strong corporate governance will be important for the success of any privatization programs and new stock listings.
Venture capitalists influenced significantly the information and industrial technology revolution of the twentieth century. If we want to make up for lost time in Africa, it would be perhaps time to solicit the creation and access of funds from Capital Risks.
Will China continue to drive the rally in GEM Equities?Emad Mostaque
Analyses whether the current Chinese equity boom is sustainable with reference to underlying fundamental factors, particularly focusing on the stock market in Shanghai and Shenzen as well as the real economy
Venture capitalists influenced significantly the information and industrial technology revolution of the twentieth century. If we want to make up for lost time in Africa, it would be perhaps time to solicit the creation and access of funds from Capital Risks.
Will China continue to drive the rally in GEM Equities?Emad Mostaque
Analyses whether the current Chinese equity boom is sustainable with reference to underlying fundamental factors, particularly focusing on the stock market in Shanghai and Shenzen as well as the real economy
4th Venture Capital in MENA Report ( 2013 in review) MENA Private Equity Asso...Rami Al-Karmi
4th Venture Capital in MENA Report ( 2013 in review) MENA Private Equity Association includes my thought leadership piece on page 19 - Section4 titled :
Entrepreneurship versus Business as usual in MENA - the "new reality"
Saudi Arabia on the Move - An Aranca Special Report 2013Srinivas Macha
The Kingdom of Saudi Arabia (KSA), a completely oil-dependent economy until a few decades ago,
has now transformed into one of the most vibrant economies in the Middle East. Today, the country has
a diversified economic structure, strong international trade links, a stable political environment, strong
fiscal surplus and a vibrant financial services sector. Saudi Arabia’s increasing contribution to the global
economy has earned it a permanent seat at the G-20 -- the only OPEC member to get the honour. As the
exclusive knowledge partner for The Euromoney Saudi Arabia Conference 2013, Aranca has compiled
a special report on Saudi Arabia’s journey till 2025, highlighting the Kingdom’s economic potential,
its influence on the region’s economy and opportunities available. Given Saudi Arabia’s tremendous
potential as an attractive investment destination, we foresee opportunities in the financial sector as
the Kingdom looks to fund its growth plans. We also delve into the challenges around fully exploiting
demographic dividends, reducing reliance on public funding, attracting foreign investors, and reforming
capital markets and financial institutions
Aranca has compiled a special report on Saudi Arabia’s journey till 2025, highlighting the Kingdom’s economic potential, its influence on the region’s economy and opportunities available. Check out the report here!
While Polish government has started legislative works aimed at introduction of new type of sp. z o.o. to be incorporate with only PLN 1 (=0,24 € and =0,30 USD) as my Colleague Michał Żołubak advised me, here is an interesting reading: 'Why are minimum capital requirements a concern for entrepreneurs?'

Dubai for Business | Starting a Business in DubaiOneworld Mideast
The UAE is a white listed onshore jurisdiction that offers business opportunities that exist
only in mature industrial and financial hubs. International Businesses moving to the UAE find
themselves in a thriving market with excellent infrastructure.
Private Equity in Africa – thoughts and comparisons from the Middle East…Ben Sims
Darren Harris and Ben Sims, both of Addleshaw Goddard's Dubai office, outline some of the common characteristics between the landscape in the Middle East and that in Africa, investing in Africa from the Middle East and the challenges facing the landscapes.
The GCC is in a fateful economic battle that has troubling cyclical, structural, and systemic components — driven by risks around oil and a disruptive post-pandemic digital world for which it is ill-prepared. Businesses are unravelling as entitlements are withdrawn and regulations rolled back. This paper proposes to reframe relationship between the public and private sectors, rewarding companies that transition from dependency and hopeless business models, while helping govts achieve fiscal sustainability.
4th Venture Capital in MENA Report ( 2013 in review) MENA Private Equity Asso...Rami Al-Karmi
4th Venture Capital in MENA Report ( 2013 in review) MENA Private Equity Association includes my thought leadership piece on page 19 - Section4 titled :
Entrepreneurship versus Business as usual in MENA - the "new reality"
Saudi Arabia on the Move - An Aranca Special Report 2013Srinivas Macha
The Kingdom of Saudi Arabia (KSA), a completely oil-dependent economy until a few decades ago,
has now transformed into one of the most vibrant economies in the Middle East. Today, the country has
a diversified economic structure, strong international trade links, a stable political environment, strong
fiscal surplus and a vibrant financial services sector. Saudi Arabia’s increasing contribution to the global
economy has earned it a permanent seat at the G-20 -- the only OPEC member to get the honour. As the
exclusive knowledge partner for The Euromoney Saudi Arabia Conference 2013, Aranca has compiled
a special report on Saudi Arabia’s journey till 2025, highlighting the Kingdom’s economic potential,
its influence on the region’s economy and opportunities available. Given Saudi Arabia’s tremendous
potential as an attractive investment destination, we foresee opportunities in the financial sector as
the Kingdom looks to fund its growth plans. We also delve into the challenges around fully exploiting
demographic dividends, reducing reliance on public funding, attracting foreign investors, and reforming
capital markets and financial institutions
Aranca has compiled a special report on Saudi Arabia’s journey till 2025, highlighting the Kingdom’s economic potential, its influence on the region’s economy and opportunities available. Check out the report here!
While Polish government has started legislative works aimed at introduction of new type of sp. z o.o. to be incorporate with only PLN 1 (=0,24 € and =0,30 USD) as my Colleague Michał Żołubak advised me, here is an interesting reading: 'Why are minimum capital requirements a concern for entrepreneurs?'

Dubai for Business | Starting a Business in DubaiOneworld Mideast
The UAE is a white listed onshore jurisdiction that offers business opportunities that exist
only in mature industrial and financial hubs. International Businesses moving to the UAE find
themselves in a thriving market with excellent infrastructure.
Private Equity in Africa – thoughts and comparisons from the Middle East…Ben Sims
Darren Harris and Ben Sims, both of Addleshaw Goddard's Dubai office, outline some of the common characteristics between the landscape in the Middle East and that in Africa, investing in Africa from the Middle East and the challenges facing the landscapes.
The GCC is in a fateful economic battle that has troubling cyclical, structural, and systemic components — driven by risks around oil and a disruptive post-pandemic digital world for which it is ill-prepared. Businesses are unravelling as entitlements are withdrawn and regulations rolled back. This paper proposes to reframe relationship between the public and private sectors, rewarding companies that transition from dependency and hopeless business models, while helping govts achieve fiscal sustainability.
This presentation by OECD's financial markets expert Adrian Blundell-Wignall shows the highlights from the 2016 edition of the OECD Business and Finance Outlook. http://www.oecd.org/daf/oecd-business-and-finance-outlook-2016-9789264257573-en.htm
Private sector driven development financing in fragile and conflict stateseduokolo
Promoting private sector growth in fragile states could be one tangible first step toward better governance and more diverse, robust economies. However, despite a sound rationale for public sector intervention in the private sector, private sector development (PSD)–focused activities in fragile state environments remain vulnerable to a range of binding or limiting constraints.
A.T. Kearney: GCC Family Businesses: Unlocking Potential Through Active Portf...Semalytix
Since 2008, times have been tough for family businesses. The antidote: tapping into hidden value.
Like families in general, family businesses seem to function relatively well in troubled times. In fact, many studies show that, in the long run, they perform better than other business models. Key factors for their ongoing success include a management perspective that emphasizes the long term, strong brand and family name recognition, and often a strong focus on the core business.1
But in the Gulf Cooperation Council (GCC), family businesses are trending in the opposite direction.2 During the recent crisis, they have been less resilient than the rest of the economy despite a pre-downturn history of rapid growth and market dominance. Since 2008, the A.T. Kearney GCC Family Conglomerate Index has decreased by 60 points, while the Bloomberg GCC 200 Index has decreased by 40 points, a 20-point performance gap (see figure 1).3 After a tough 2008, GCC family businesses rebounded to some extent (as did the market), but this did not last. As the overall market has trended mostly up, family businesses have trended downward.
- See more at: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/gcc-family-businesses-unlocking-potential-through-active-portfolio-management/10192#sthash.sb692Hgw.dpuf
State-Owned Enterprises: Catalysts for public value creation?PwC
The motivations for state ownership can
wax and wane over time, but state-owned
enterprises appear to be an enduring feature of the economic landscape and will remain an influential force globally for some years to come. As such, it is
important to ensure that – whether held
nationally, regionally or locally – the state’s
investments actually deliver the societal
outcomes desired.
State-Owned Enterprises Catalysts for public value creation?PwC España
Informe sobre cuál deberá ser el papel de las corporaciones de titularidad estatal para que el sector público aporte valor necesario y para que logren crecimientos sostenibles al largo plazo
The Greater Good; How to Make State Owned Enterprise better by kashif mateen ...Kashif Mateen Ansari
This is the presentation I made at the E3 Conference in Bhutan. The main theme was increasing efficiency in the SOEs specially in the energy sector. The presentation does not dwell upon privatization as that was not in the scope of this paper. Though I have separately written on Privatization.
This is all about Corporate Governance ...
Responsible business conduct is an essential part of an open international investment climate. MNE activities often span multiple countries and many cultural, legal, and regulatory environments. This complexity, coupled with the intensely competitive nature of international business, presents MNEs and their stakeholders with unique and specific challenges. Although many MNEs demonstrate a respect for high standards of business conduct, some may neglect the appropriate principles and standards of conduct in an attempt to gain undue competitive advantage. This may be particularly true in environments where regulatory, legal, and institutional frameworks are underdeveloped or fragile. More and more enterprises are responding by committing to responsible business practices, promoting dialogue, and engaging with stakeholders. Addressing societal concerns while advancing enterprise interests can be mutually supportive
Saudi Arabia economic transition beyond oilBruno Gremez
Very interesting report prepared by Mc Kinsey in December 2015, which resonates today as we have heard about many key initiatives taken by Crown Prices Mohammad bin Salman.
• Over the past year global assets have shed trillions in value and recoveries have been narrowly focused and tepid.
• Fortunately, investors are being rewarded handsomely not to gamble unnecessarily with attractive risk free rates — the most important single factor to determine asset prices — also providing optionality.
• Lots of stocks appear on sale but credit spreads remain tight and earnings have yet to decline significantly, leaving scope for further deterioration in valuations if economies slip into recession.
• US inflation has peaked but getting to 2% on a sustainable basis will be neither quick nor straightforward. Bond investors may enjoy a euphoric summer but could be underestimating reversals in structural factors.
• GCC stock markets have given back some of the relative gains achieved during the pandemic but continue to comfortably outperform their peers across the emerging markets. Most EM funds have been underweight Saudi Arabia and the GCC.
• It is now widely accepted that Saudi Arabia is implementing the necessary economic reforms. The debate is less about the direction and more over the speed and the timeframe.
• The PIF is nurturing programs for which the Saudi private sector has insufficient skills and low risk appetite but has limits on how much J-curve deficits it can sustain until these greenfield ventures turn a profit.
• The good news is that the private sector is beginning to jump on board the Vision train by participating in selective projects without insisting on SIDF sponsored loans, PIF capital and guaranteed off-takes.
• One problem is that many companies remain focused on managing existing operations, often hanging on to archaic business models instead of adapting, investing in new technologies or in research and development.
• Perspective is important and claims that the regional economy is well on its way to being independent of oil revenues is bold but disingenuous. Oil accounts for the overwhelming bulk of exports, state revenues and lubricates the non-oil economy.
• Lost in the recent focus on Saudi Arabia is the continued and remarkable evolution of other economies such as Qatar and the UAE.
• Notwithstanding the multitude of remaining challenges, it’s important to recognize that this is a Golden Era for the gulf region.
• The GCC economies have never been bigger, stronger, more diversified or more integrated into the global economy.
• These are the good old days.
* A soft landing is the least likely outcome for the US economy. Inflation, stagflation and recession have higher probabilities.
* Yield compression (amplified by years of financial repression) has left valuations extremely vulnerable to sharp increases in risk-free rates.
* Disorder in markets may produce dislocation and price distortions that could lead to generational investment opportunities.
* GCC stock markets reflect twentieth-century economies based on traditional industries and outdated business models .
* There is little evidence that the regional economy is weaning itself quickly enough away from oil.
* Each GCC country is on its own distinctive journey towards reform and diversification, and success will vary.
* There is a war on fossil fuels and the stakes could not be higher.
The litmus test for diversification must be based on the ability of countries to meet their bills even if oil prices remain low. No #GCC country passes that test without dipping into savings or borrowings.
The GCC economies need stimulus through focused spending on transformative programs that can boost qualitative growth.
Alas, regional SWFs continue to be fairly shy about engaging proactively in the domestic economy despite the clear opportunities.
· US equity markets have performed very well but the MSCI World (excluding US) has been relatively subdued and remains 20% below its 2008 peak.
· The global outlook for the twenty-twenties is distinctly ominous with China, Europe, the UK and the US facing systemic challenges.
· High equity yields, creative fiscal measures and unorthodox monetary tools might help markets temporarily but can only delay the day of reckoning.
· The TASI was as much as 19% higher at the end of April ahead of a massive inflow of foreign money but the index trade is now over.
· There are at least seven signs that could limit the scale of the economic rebound and make it difficult for the stock market to move higher.
· Marmore forecasts aggregate GCC profits to decline by 1.8% this year with earnings in Saudi Arabia dropping by 6.1%.
· A lower risk profile can mitigate the lurking dangers as is optimizing portfolios to benefit from falling interest rates and avoiding cyclicals.
• The recent deterioration in global asset prices illustrates the moral hazard of keeping interest rates too low for too long and normalising prices at inflated levels.
• GCC profits rose by an estimated 12.7% last year and are expected to increase by 5.2% this year but 75 banks (11% of all listed companies) will account for 55% of total profits.
• All things being equal, the central case is that the Saudi market should rally modestly in the first few months of the year but could succumb to selling before Ramadan.
• There is strong support for regional reforms but anxiety over the lack of “breakthrough” developments that might move the economic needle in the short term.
• Oil prices will continue to fluctuate in a wide range, and to spike periodically, but the changing product mix in the auto sector will bring the long-term equilibrium price down.
• The key risk is that we may be headed into a global slowdown with a deteriorating ability to respond due to ruinous levels of systemic debt that limit fiscal and monetary tools.
• It paid to be cautious in 2018 and the next twelve months should be no different with a likely rebound in the early part of the year giving way to renewed volatility.
· After a lengthy period of financial repression the era of global asset reflation appears to be reaching its inevitable conclusion.
· As the outlook for the global economy appears to be weakening, the prospects for the GCC economies may be getting better.
· Elevated oil prices have helped replenish state coffers and a flurry of policy initiative should revive economies.
High valuations and a loss of momentum in risk assets have left them vulnerable to rising volatility
The focus now is on quantitative tightening but the increase in global debt poses bigger risks over the longer term
Sweeping societal changes in Saudi Arabia are breathtaking in scope but it’s difficult to attach a numerical value to developments or model for stock values
The Saudi stock index is having a stellar year so far but not all is well across the other GCC markets
The Aramco IPO has raised questions about its impact on the Tadawul index and the GCC markets more broadly
The consistent call on the banks and petrochemical companies has been vindicated by their steady performance
The bar to transformational change is very high and the obstacles significant. Pain before gain
- The subsidy arbitrage that many companies had relied upon to generate their generous margins is gone for good and the environment will continue to be challenging, and indefinitely so.
- The case for consolidation across several sectors is overwhelming but activity remains low. Managers are in denial and holding out for miracles.
- The closing window for regional economies to reduce their dependence on oil (highlighted in the Countdown to Midnight, November 14th, 2016) has been validated by the rapidly rising forecasts for the electrification of the global passenger vehicle fleet, which accounts for over a quarter of global oil demand.
- Reform is not a magic wand and hope is not a strategy. To transform the economy from its dependency on oil and subsidies requires pain, sacrifice and perhaps a decade of disruption to the status quo.
Frothy global assets are flashing warning signs despite the lack of an obvious catalyst to sell
Political action to redress rising inequality may provide the trigger
Avoiding major market corrections can have a huge impact on long term portfolio returns
The outlook for oil remains murky but expectations for a significant rally have receded
Macro-economic indicators suggest a subdued outlook for the GCC
Profits for listed regional companies are stable but the ‘subsidy arbitrage’ is over
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Setting The Tone For Listing GCC State Owned Enterprises
1. the hawkamah journal
a journal on corporate governance & leadership
issue09
16
SETTING THE TONE FOR LISTING
GCC STATE OWNED ENTERPRISES
– AN ASSET MANAGER’S
PERSPECTIVE
A State Owned Enterprise (SOE) is a
business that is wholly, or partially, owned
by a government. Although SOEs are
ostensibly commercial organisations, they
are often managed with a broader mandate
to help develop economies, provide
essential services and create employment
opportunities.
Over the past fifty years SOEs have been
an important tool for managing economic,
political and social development,
particularly, though not exclusively, in
emerging countries. They have been used
to incubate industries, redistribute wealth,
correct market failures and even promote
national agendas on the world stage. They
Tarek Fadlallah
CEO, Nomura Asset Management Middle East
2. the hawkamah journal
a journal on corporate governance & leadership
issue09
17
typically account for a significant proportion
of economic output, employ thousands of
citizens and can be absolutely critical in
the provision of certain services that might
otherwise not be supplied, or perhaps not
at affordable prices.
The rationale for the creation of SOEs is
clear but riddled with risks including the
potential for the misallocation of scarce
resources, the misuse of public funds,
higher fiscal burdens, and the scope
for political interference and excessive
bureaucracy. In aggregate, the proliferation
of SOEs across several sectors can also
encroach on the free market and raise
all sorts of costs that are detrimental to
economic competiveness over the long
term.
By virtue of the obligations that arise from
their virtual monopoly of the region’s natural
resources,aswellasthepaternalisticnature
of local societies, governments across the
Arabian Gulf have been extensively and
intricately involved in overall economic
activity both directly and through SOEs.
Some of these entities whose ownership
takes various forms, including direct
shareholding by ministries, sovereign
wealth funds, state corporations or even
government sponsored pension plans,
have been used to channel subsidised
products and services, including food, fuel
and domestic utilities to citizens.
In many cases these SOEs have been
nurtured under public ownership but then
listed on the national stock exchanges,
partly so that local investors can share
in their success, and partly so that the
companies can tap the capital markets
for funding, and benefit from the discipline
imposed by the marketplace. As a result,
government ownership in listed companies
is substantial, and accounts for a significant
weighting in the local stock indices.
The Saudi Tadawul All Share Index (TASI)
currently consists of 176 companies with
the largest 27 companies accounting
for about 72% of the adjusted index
weighting. The market value of these
companies is around SAR 1,270 billion
($338 billion) of which approximately half is
held by government institutions including
the Public Investment Fund, the General
Retirement Organisation, the General
Organisation for Social Insurance and
SABIC (which is 70% government owned).
Saudi Arabia’s Public Investment Fund
alone holds declared stakes worth over
SAR 390 billion ($104 billion) in 19 locally
listed companies.
Companies that in some cases started off
as relatively small providers of important
services such as electricity and power,
telecommunication and financial (banking)
services, have mushroomed into enormous
organisations. Many of these have grown
well beyond their initial remit and expanded
into other sectors or to new geographies.
The Saudi Telecom Company, for example,
in which government related entities hold
over 83% of outstanding shares and
that retained a monopoly in its domestic
market until 2007, now operates in Kuwait,
3. the hawkamah journal
a journal on corporate governance & leadership
issue09
18
Bahrain, India, Malaysia, Turkey, South
Africa, Lebanon and Jordan. It continues
to provide fixed line and mobile services
but has expanded into internet services,
technology investments and on-demand
television.
Despite such exponential growth
governments have barely diluted their
holdings over recent years. Four of the
largest five listed Saudi banks continue
to have a significant government
shareholding, while in the United Arab
Emirates sovereign ownership in various
guises dominates the shareholder register,
and the Qatar Investment Authority
appears as a double-digit shareholder in
the largest local banks.
Such ownership is not necessarily a
drawback to those institutions or indeed
to other shareholders, after all, they may
benefit from implicit government support,
preferential dealings and access to key
policymakers. SOEs may also profit
from advantages in obtaining finance,
particularly in times of tight liquidity, and in
the procurement of public contracts.
However, such close links can raise
questions about conflicts of interest, the
absence of a level playing field for private
sector competitors and the oversight of
related party transactions.
Governments can also offer SOEs
excessive protection so that it hinders
economic development, promotes
inefficiencies or imposes higher burdens
on society. While still subsidised to the
consumer, the cost of producing electricity
and water across the Gulf remains
arguably higher than might be expected
in a more competitive environment, while
certain telecom services are unavailable or
prohibited to the detriment of users.
With the days of plenty now seemingly
behind, policymakers across the GCC are
taking a hard look at ways to develop and
diversify their economies, and reassessing
the role of SOEs. Their urgency is a
function of deteriorating public finances
but also a belated acknowledgement that
economies have continued to operate
under an archaic framework more suited
to the last century than the present.
Many proposals have been articulated in
publically announced, and fairly detailed,
plans that target lofty objectives over the
coming years. Saudi Arabia’s Vision 2030 is
perhaps the best known, but each country
has its own variation. The expectation is
that governments will offload, partially
in most cases, stakes in a large number
of businesses from the strategically
important oil and gas sectors but also the
transportation, healthcare and education
industries. It is difficult to estimate the
value of companies that will be privatised
over the next few years, but it is likely to
be substantial and may dwarf the value of
existing listings on the regional exchanges.
In order to meet the increase in supply of
shares it will be essential to engage with
foreign investors and attract international
capital that is typically risk averse and
increasingly sensitive to matters of
4.
5. governance in the emerging economies.
Indeed, institutional investors managing
over $60 trillion have signed up to the UN’s
Principles for Responsible Investing which
requiresthemtoincorporateEnvironmental,
Social and Governance (ESG) factors into
their investment processes.
Investors will be keen to understand the
process by which conflicts that may
arise between the profit maximizing
objectives of private companies and the
national, or indeed international, interests
of governments will be managed. Can a
privatized healthcare system treat poor or
uninsured patients? How will a nominally
private oil company manage obligation
to industry associations and international
organisations?
The point at which companies cease to be
SOEs and become private companies in
which the government is simply another
shareholder can be difficult to establish,
especially in the emerging markets. The
size of shareholding is perhaps the most
obvious yardstick except that it is not
unusual for influential shareholders to
effectively control companies through a
relatively small stake.
Nonetheless, corporate governance of
SOEs in the emerging markets has taken
giant leaps over the past twenty years as
part of the trend towards globalisation
and due to increased cross-border capital
flows. In addition, governments across the
Gulf can rely on a reasonably robust track
record based on their management of
existing holdings in listed SOEs. A positive
evaluation of governments in their role as
leading shareholders in existing listings can
provide a huge boost to prospective new
listings. Saudi Arabia’s Sabic, for example,
has often been lauded as a world class
petrochemical company even though
it remains largely under government
ownership.
From an asset manager’s perspective
investing in privatisations may be attractive
if potential commercial, operational and
financial risks can be mitigated and if
there is confidence in the role of market
regulators, stock exchanges and the
financial authorities.
The capital market discipline and
regulatory governance standards imposed
on listed SOEs is the first line of protection
for shareholders. However, governments
have an additional onus to separate their
ownership from any policy making or
regulatory function that may have influence
on the businesses.
From the SOE’s vantage, preparing for
a stock market listing should involve
improved reporting and disclosure,
safeguards against continued government
intervention and a clear and transparent
process for nominating qualified and
independent board members, and
establishing a credible evaluation and
remuneration process for managers and
directors. Protecting minority shareholders
by promoting their active participation in
shareholder meetings and representation
on the board should also be enshrined in
the constitution. And while a high degree of
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6. the hawkamah journal
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transparency should ease many concerns,
it is important to detail conflict resolution
mechanisms. Ultimately, however, it is
really about implementation and in this
regard the capital markets have become
increasingly adept at sorting out effective
commitment to good governance from
cosmetic ones.
The advantages of good governance,
including easier and cheaper access to
capital, better operational performance
and higher profitability, as well as improved
valuations for listed companies, are widely
recognised.
The listing of Saudi Telecom Company in
2005 was a massive catalyst for change
and improvement at the company but
also across the industry. Within a short
period the company managed to shed
its antiquated image as a bureaucratic
monolith, riddled with vested interests,
fiefdoms and inefficiencies to become
a modern and customer friendly service
provider that helped set industry standards
across the region.
Although the rationale for continued
government ownership of mature and
increasingly international companies
is questionable, there are examples
of successful SOEs that are entirely
government owned, such as in the
massive and hugely successful airline
industry. These companies would be
unmanageable and probably unprofitable
without a significant degree of good
governance.
As such, there is reason to be optimistic
that the privatisation of state owned
companies across the Arabian Gulf will
find widespread investors interest and that
the relatively healthy state of corporate
governance in the region will be an
important contributor.