Arabia-Asia: Two Regions At a Crossroads

For the last few months, I’ve been focused on editing a 10-story package for Forbes Asia exploring trade ties between Gulf and Asian companies written by the magazine’s contributors all over the Asian continent. We’ve covered a lot of ground, from Taiwan to Saudi, from Singapore to Oman. Please see below for a full listing of our coverage.

(Getty Images)

Karl Shmavonian, Forbes Staff

It’s debatable whether the historical metaphor is the Silk Route or Spice Route, but neither still matters literally, so we’ll say that Arabia-Asia is a commercial and financial link that is ever more important in the world economy.

In this special section, to correspond with the first Forbes Global CEO Conference in the Middle East (being held in Dubai), we take a look at parts of this expanding trade. We do so in the FORBES ASIA way, through profiles of several significant business personalities and the firms they founded.

The package was nimbly edited by Angela Shah, a writer and editor based in Dubai. Her work has also appeared in The New York Times, Time, and Newsweek/Daily Beast. For more about Angela, see

Personalities play a big part in our coverage. Few people have as much boots-on-the-ground experience in both regions as does David Eldon, former chairman of HSBC Asia-Pacific. Since retiring from the bank in 2005, he has served as chairman of the Dubai International Financial Centre Authority. In our interview with him he discusses a variety of issues and affirms that “trade links are trending east and south, away from the West.”

Another dealmaker in the region is Pakistani Omar Lodhi, of Dubai’s Abraaj Capital. He opened the firm’s Singapore office two years ago and is leading Abraaj’s push into Asia, particularly the ASEAN countries, whose population and GDP offer plenty of opportunity: “These regional Asian economies are akin to Europe.”

Growth in the region isn’t just about finance–even the most ambitious high-rollers take a break for dumplings and spring rolls after a long day of puts and calls. Lin Chao Wen, founder of Gulf Royal Chinese Restaurant chain, started out as a failed serial entrepreneur in Taiwan in the 1970s before he eventually ended up in Saudi Arabia, bringing Chinese food to the masses. In the process he immersed himself in Arab culture, eventually converting to Islam and building himself a lavish home in Taiwan that resembles an Arabian palace.

Just as Lin could never have known as a young man in Taiwan that he would end up in Saudi Arabia, P.N.C. Menon, founder of Sobha Developers, could never have predicted while growing up in a small Kerala village in India that he would end up being a big player in Gulf-region real estate. Says the man who appeared on the FORBES Billionaires List in 2006: “It came from nothing. I went [to the Gulf] with $7. I must have been making a little bit of money here and there to make myself comfortable.”

Another Indian who has spent a significant part of his life in the Mideast is Shaukat Ali Mir, chief operating officer for international electromechanical projects at Mumbai’s Voltas, a Tata Group company. Voltas has been providing infrastructure (plumbing, firefighting, drainage and electrical systems) for the Mideast since 1976, and Mir came to the region in 1982. Voltas’ most prestigious, and perhaps most challenging, project was providing the electromechanical guts for Dubai’s Burj Khalifa building, the world’s tallest. Mir is globalization on two legs: “I grew up in India. I am living in the Middle East. My children live in Canada, and I plan to retire in Europe.”

Just as Voltas provides infrastructure for the rapidly expanding Gulf, Korea’s Doosan Heavy Industries & Construction is supplying power and desalination for the parched regionDoosan, which expects sales to hit $10 billion this year,  is increasingly going head to head with industry leaders GE, Alstom and Siemens in building power plants in overseas markets.

No survey of Asia and the Mideast would be complete without drilling into oil production. China’s biggest oilfield pipe maker, Hilong Holding,  is one of the few Chinese companies with manufacturing plants in the Middle East, its fastest-growing regional market. Hilong’s business in Saudi Arabia, its main target, is a classic example of synergy: You provide oil, I’ll provide the means to get it out of the ground–everybody makes money.

But enough about electrical systems, plumbing, turbines and dirty oil fields, what about technology and all those sleek toys that everybody wants? Vincent Lai and Andy Soh, who share a “curiosity in playing with cool stuff,” are the founders of Tocco Studios, a maker of touchscreens and software. In 2009, when Lai and Soh were students at Singapore Management University, a group of Omanis visiting the university’s business incubator wanted to learn more about the budding entrepreneurs’ screens. The Omanis were captivated, and soon Lai and Soh were doing business in the Gulf, as well as having a Singapore office.

With all the money being made these days, we would be remiss if we didn’t offer a profile of a company offering folks a way to show off their wealth. Jeweler Joy Alukkas, like our other Indians profiled, made his entry in the Mideast decades ago. He opened his first store in Abu Dhabi in 1987, offering his wares to expat Indians. Eventually he moved back to India, bringing back with him an intangible commodity: marketing and business practices accrued in the Gulf. His Joyalukkas stores had $1.33 billion in sales last year.

For slightly less upscale shopping, consumers can go to the Dragonmart mall, a mass-market oasis on the outskirts of Dubai.

Finally, we profile five companies that are learning how to navigate the cultural and business currents that join China and the Mideast. One of our snapshots is of China’s Shenguan Holdings, a maker of sausage casings that recently announced it would be offering halal meat to the Muslim world.

The Arabia-Asia economy is not on a glide path. It has famously been interrupted through the centuries but also in recent times, as global busts in commodities or real estate, or other home-market vagaries, got in the way of would-be Marco Polos. But the lure of the great crossroads and the increasing wealth they connect makes it likely that the tales here are just an inkling of many more to come.

Arab Spring backlash?

One by one, the Arab world is commemorating and marking the first anniversary since the uprisings toppled autocrats in Egypt, Tunisia and Libya a year ago, last year’s “Arab Spring.” Even in places where there wasn’t regime change, leaders paid attention and in many Gulf countries doled out pumped up benefits programs for their citizens.

But it seems that a spreading of protected free expression is not necessarily a part of the rebellions’ young legacy so far.

For example, I can’t imagine what’s going on in the mind of 23-year-old Hamza Kashgari right now. Let me explain. Kashgari was a 23-year-old Saudi columnist who, like many other writers, was a prolific user of Twitter. And according to many media reports, last month on the occasion when Muslims celebrate the Prophet Mohammed’s birthday, Kashgari tweeted: “On your birthday, I will say that I have loved the rebel in you, that you’ve always been a source of inspiration to me, and that I do not like the halos of divinity around you. I shall not pray for you.”

Another post read: “On your birthday, I shall not bow to you. I shall not kiss your hand. Rather, I shall shake it as equals do, and smile at you as you smile at me. I shall speak to you as a friend, no more.”

Those sentiments set off a firestorm on Twitter, with tens of thousands of posts condemning him of apostasy, a crime punishable by death in Saudi Arabia. Someone even created a Facebook page calling for his immediate death. He apologized for his tweets but the calls for dire punishment continued. He fled Saudi to New Zealand but had to stop in Malaysia along the way. Even though Malaysia does not have an extradition treaty, it refused Kashgari entry into the country and he was put on a private jet back to Saudi Arabia.

The personal, almost casual, way Kashgari addressed his tweets to the Prophet was a red line that, if crossed, must be punished severely, according to his critics. He’s back in Saudi now, presumably awaiting trial in a religious court.

The concept of red lines that cannot be crossed played a part in what became the #UAE5. Emirati authorities last April arrested five bloggers for threatening state security and for comments about U.A.E. leaders deemed unacceptable. After a trial which resulted in  3-year sentences, they were pardoned last November.

Even Oman, which has been relatively peaceful in comparison to North Africa, the Levant and Bahrain, recently decided to detain  Muawiyah Al Rawahi for blog posts. The Gulf News in Dubai recently reported that Al Rawahi “had apparently written, in his now erased post, about him being working for the security agencies, being abused in the childhood and his sex escapades,” the newspaper reports. “He had also criticized the ruler as well as written about his lack of faith in religion. In 2009, he had created a storm by asking for alcohol to be made available freely to Omanis also.”

He was released last week after a 10-day detention. According to GN, he hasn’t  said anything publicly about the arrest or detention, only apologizing that “I regret that I let down many [people], and I regret that I let down myself.”

I’m not sure if exuberance over the Arab Spring prompted more candid postings from these writers or if governments are feeling more sensitive because of the changes the Arab world has seen in the last year. I wonder what impact this will have on writing going forward.

A rose by any other name …

Saw this post from fellow blogger-in-the-Gulf Andy In Oman and just had to share. Since, I’ve been in India the last two weeks I haven’t seen any TV ads or movie posters from the Shrek spinoff, but apparently “Puss” was just a little too much for the Gulf censors to swallow.

The UK’s The Guardian newspaper writes that officials at the Doha Tribecca Film Festival last month also urged Antonio Banderas, who voices the feline character, not to refer to the original title during interviews there promoting the movie. The story says it’s not the first time Hollywood has fun afoul of Gulf sensitivities.
(via 7days)
“The change in title reflects edits made to previous films deemed to conflict with the UAE’s moral values. Sex and nudity are taboo, as is any attempt to depict a holy power on screen. This resulted, according to Time Out Dubai, in a cut of Bruce Almighty – a comedy in which a man meets God and is granted omnipotence – notable for the complete absence of Morgan Freeman as the heavenly father. Similarly, Sex and the City was stripped of its sex scenes and subsequently never shown in the Middle East. It was rumoured that the popular franchise would have been renamed ‘Shoes and the City’ had it been released.”

The growth of sukuk

Shari’ah, or Islamic, finance is coming back after the global economic crisis caused all capital markets to dry up. In particular, companies and governments are turning to sukuk, or Islamic bonds, for financing. Shari’ah finance has long had a foothold in the Gulf, especially Bahrain which is considered to be its banking center, and in Malaysia. But it’s also gaining interest in places you wouldn’t expect: parts of Africa and Russia. Here is my latest story in Institutional Investor magazine.




Dubai Leads the Rise in Islamic Finance

By Angela Shah

As they were reviewing the bank’s funding needs recently, executives at HSBC Holdings decided to take a fresh look at sukuk, or Islamic bonds. Three years earlier the London-based bank had announced plans to issue up to $5 billion of sukuk under a medium-term financing program, but it never proceeded because the sukuk market, which seized up during the financial crisis, failed to recover. In recent months, however, a decline in yields and a revival of activity persuaded HSBC that the time was right to dust off its plans.

In June the bank’s subsidiary HSBC Bank Middle East sold $500 million of five-year sukuk priced to yield an expected 3.575 percent. It was the largest shari’a-compliant financing ever arranged by a non-Islamic institution. The deal saved money: At a yield of 155 basis points over midswaps, the cost was 15 to 20 basis points cheaper than the bank would have paid on a conventional bond issue. The offering also helped HSBC deepen ties with investors in the Gulf, an increasingly important market for the bank.

“We wanted to ensure we were capturing as much of the Islamic investor base as possible,” says Mohammed Dawood, head of global capital financing at HSBC in Dubai. “With this issue we ticked all of the boxes in terms of geographic distribution, Islamic accounts going into the transaction and overall successful secondary market trading as well.” About half of the deal was placed with investors in the Gulf, primarily family offices.

Once again, the sukuk market is open for business in the Gulf. In addition to HSBC, a number of regional entities have tapped the market recently. In May, Sharjah Islamic Bank, a leading Islamic lender in the United Arab Emirates, sold $400 million of sukuk yielding 4.75 percent and the Jeddah, Saudi Arabia–based Islamic Development Bank raised $750 million at 2.35 percent. Several other banks in the region are said to be considering entering the market later this year, and bankers say the Palestine Monetary Authority plans to offer its debut Islamic bond, worth about $50 million, this summer.

We wanted to ensure we were capturing as much of the Islamic investor base as possible,” says Mohammed Dawood, head of global capital financing at HSBC in Dubai

The market revival is part of the broader global economic recovery, says Afaq Khan, chief executive officer of Standard Chartered Saadiq in Dubai, the London-based bank’s Islamic banking subsidiary. “As the cost of capital has come down and adjusted to the new financial growth rates and companies are again looking at expansion, we’re seeing a growth in sukuk issues,” he says. “There is a lot of liquidity looking for a good credit, good management and a good growth story.”

Continue reading “The growth of sukuk”

Union Railways becomes Etihad

Last fall, I wrote a small story about the starting efforts of Union Railway, the Abu Dhabi government-owned company which was building the first-ever rail system in the country. For Gulf Business magazine this month, I wrote a larger story about updating the project both here and in other parts of the Gulf. Union renamed itself: “Etihad” is Arabic for “union.” (Yes, that’s also the name of Abu Dhabi’s airline. I wonder what branding executives would say. Consistent or confusing?)

Continue reading “Union Railways becomes Etihad”

The Quiet Amidst the Storm

Living in Dubai is like being in the eye of the hurricane.

A few nights ago I was at a party at the Capital Club in the Dubai International Financial Centre, sipping cocktails and making small talk. It was a breezy evening – we still have a few weeks before summer’s assault on the Arabian peninsula – and everyone wanted to take advantage of the ability to be outside.

To the north (Bahrain) and the south (Oman and Yemen) of us, protesters were clashing with government forces. People have died. But life in the U.A.E. has carried on as usual – at least from the vantage of the expat.

The U.A.E. government announced this week that it will spend $1.6 billion on projects to improve infrastructure in less developed emrirates. State media said that the funding came about when Sheikh Khalifa bin Zayed al Nahayan, the U.A.E.’s president and ruler, went on a tour of the northern emirates last month to get a sense of living conditions. (This took place at the height of the instability in Bahrain.)

Unrest in the U.A.E. is highly unlikely. The relatively small local population has one of the world’s highest wealth per capita at more than $47,000. Locals’ basic needs – and then some – are taken care of by the government.

If there is any unrest, it would come from the less-populated emirates located north of Dubai, which more resemble the U.A.E. of old and less Dubai’s glitzy financial center or Abu Dhabi’s booming global oil hub. There have been small protests in Ras al Khaimah, one of the northern emirates, but security forces quickly quashed those. RAK is important strategically because it sits on  the Strait of Hormuz, through which 40 percent of the world’s oil passes.

The U.A.E. government has also persuaded retailers to lower food prices by as much as 40 percent for the month of March on essentials like tea, sugar, rice, oil, flour and others.

In the meantime, Bloomberg reported something interesting: “States of the Gulf Cooperation Council are working on starting a Marshall-style plan to support Bahrain and Oman, which are facing instability, Al-Qabas reported, without saying where it got the information.

The six members of the GCC are currently holding diplomatic talks on the matter, which may lead to a summit, the newspaper said. The plan aims to raise Omanis’ and Bahrainis’ living conditions, improve their economic and social conditions, create job opportunities for the unemployed and provide homes for the homeless, according to Al-Qabas.”

“Sultanate Sublime”

Next door to all the glitz of Dubai is Oman, a two-hour drive away but an entirely different world on the Arabian peninsula. Here is a travel story I wrote for the magazine Prestige Hong Kong. The photos by Graham Uden are amazing and really capture the Old Arabia you so rarely find in the U.A.E. anymore.

Musandam peninsula (Graham Uden)

Oman offers a more traditional take on Arabia than its Gulf neighbours, as ANGELA SHAH discovers

THE WOODEN DHOW glides silently through the Gulf of Oman, hugging the coast just close enough for a full screen view of the Hajar Mountains, some of which soar to nearly 2,000 metres, rising straight out of the sea.

We lounge lazily on the rectangular red-white-and-black embroidered cushions arranged Majlis-style along the boat’s exposed flatbed and gaze at these fjords of the Arabian Peninsula.

The silence is broken only by a startled exclamation: Did you see that? A dolphin has shot out of the water, forming a graceful curve in the air, power and grace in a flash. But before we can hold up our cameras and focus the lenses, it’s gone, gliding just under the water’s surface, off to jolt other boats’ passengers out of their morning reverie.

The protective cover of the landscape is enjoyed not only by visitors. From time to time, smugglers can be seen darting in and out of the rocky outcrops, their boats loaded with electronics, jewellery and other items bound for Iran.

On shore, goats scramble along the stony landscape, their yellow eyes glinting in the sun. Tightly clustered fishing villages are the only break from the isolation of the austere landscape. At a time when you can get anything anywhere, these villages are rare solitary outposts, largely untouched by modern migration.


The close connection between Oman and its past is due largely to the fact that until 40 years ago, the sultanate was cut off from the world until Sultan Qaboos bin Sa’id al Sa’id overthrew his father, a leader who had the large wooden gates on the walls of Muscat closed each evening, and who banned radios and other modern devices.


Take the village of Kumzar at the Musandam Peninsula’s northernmost point. Accessible only by boat, it was connected to the electric grid just 20 years ago (a weekly helicopter service to the provincial capital is now available on Mondays.) Its isolation has helped protect the local dialect, a mixture of Arabic and Farsi that’s inflected with the Portuguese brought in by sailors nearly 500 years ago.

On the mountainous back roads, abandoned stone houses with terraced gardens dating back to the 14th and 15th centuries are not uncommon, a tangible example of Oman’s 5,000 years of history.

Indeed, Musandam’s high cliffs are dotted with thousands of medieval stone forts, their tiny windows and turrets serving as vantage points for generations of tribesman who battled invaders. At its closest point, the peninsula is just 38 kilometres from Iran, across the Straits of Hormuz.

Musadam’s strategic position also led to the establishment of Telegraph Island in 1864, which lies on the route of an undersea cable laid by the British to speed communications between London and India. There’s not much to see on the island itself, but it’s interesting to note that this patch of rock once played such an important role in world communications.

The close connection between Oman and its past is due largely to the fact that until 40 years ago, the sultanate was cut off from the world until Sultan Qaboos bin Sa’id al Sa’id overthrew his father, a leader who had the large wooden gates on the walls of Muscat closed each evening, and who banned radios and other modern devices.

Under the direction of the son, Oman has blossomed into a more traditional version of Arabia. While Dubai razes older neighbourhoods to erect sail-shaped hotels, and Abu Dhabi’s Emirates Palace hotel boasts an ATM machine that dispenses gold, Oman issues decrees that forbid the construction of buildings higher than nine stories and employs a greater percentage of its nationals in industry than any other Gulf nation. When you visit Oman, you visit Omanis.

Continue reading ““Sultanate Sublime””

‘Catching’ the mist

Not all of the Arabian peninsula is a barren desert. Oman, which runs south along the eastern border, has mountains along the coastline and the northern part of them forms striking fjords in the Musandam area. Further south, the area around Salalah is also green and lush and I recently found out it has a rainy season. The monsoons that wash over the Indian subcontinent make their way through Oman as well. And those two months of rain give the region a valuable opportunity to collect water.

The initiative is called “fog collecting” and is used in a few parts of the world where there is heavy fog to produce water. This is largely an effort in smaller communities in developing areas so you won’t be finding these nets scattered around San Francisco. But with simple and cheap plastic nets, communities can trap the fog which then drips into a reservoir below. Salalah hopes to plant thousands of trees to reverse the desertification of the last 40 years. And eventually Omani officials want to encourage farmers to use this method to collect this water for livestock.

Mitsubishi is supplying funding and manpower on the project as part of its corporate sustainability program and its executive in charge of the project had a more poetic name: “Mist Catchers.”

Continue reading “‘Catching’ the mist”