Wheat flour negotiation: Federal govt rebuffs K-P’s discount request

The economic decision-making body directed the National Food Security and Research ministry to ask the K-P govt to immediately lift the remaining quantity of wheat from Passco. PHOTO: FILE

ISLAMABAD: 

The federal government has turned down a seemingly unreasonable request made by the Khyber-Pakhtunkhwa (K-P) government to provide them wheat flour at a discount after the rate had been finalised earlier.

Sources told The Express Tribune that the K-P government requested a supply of 400,000 tons of wheat, which was agreed at an upfront payment of procurement cost from the Pakistan Agriculture Storage and Services Corporation (Passco), at Rs37,125 per ton that included incidental charges.

After obtaining only 161,789 tons, K-P officials have shown their disinterest in further procurement from Passco at the same rate and, instead, want a lower price.

Sources said that the Economic Coordination Committee (ECC), in its meeting held on November 21, was informed that the total wheat stock held by the provincial governments and Passco were around 5.58 million tons as on November 19, 2013 which should prove sufficient for domestic needs till the arrival of new crop in April 2014.

The ECC was informed that more than 2,000 metric tons of wheat and wheat flour were being supplied from Punjab to K-P by dealers, putting additional burden on Punjab wheat stocks, which could be available if stocks were released by the federal government.

The meeting was further informed that the Pakistan Flour Mills Association had requested for at least 400,000 metric tons of wheat for K-P to avoid an additional increase in the price.

However, the K-P government has shown no interest unless it was provided to them on a discounted rate. The flour mills were, however, ready to make an upfront payment.

The meeting observed that it would be desirable to ask the K-P to immediately lift the remaining quantity of wheat from Passco for which it had had already made a payment. It was further informed that prices of wheat flour have increased in K-P by Rs50-55 per 40 kilogram during the first half of November and might move upwards if the supply was not improved.

“This would not only ease the pressure on the wheat supply from Punjab to K-P but would also have a beneficial effect on the price of wheat in K-P,” observed ECC members. “Moreover, the National Food Security and Research ministry needs to periodically review the wheat stock in the country.”

The economic decision-making body directed the National Food Security and Research ministry to ask the K-P government to immediately lift the remaining quantity of wheat from Passco for which they had already made an advance payment so as to address the deficiency in the province.

It said that K-P should also be informed that the federal government would consider releasing wheat to the Flour Mills Association of the province as per their required demand in case they did not lift the wheat, already been purchased, from Passco.

Exclusive: Dubai's Jumeirah signs its first hotel in Oman

Dubai’s Jumeirah Group, operator of the iconic Burj al Arab hotel, has signed a management agreement with Saraya Bandar Jissah SAOH to operate a luxury resort in Muscat, marking the hotelier’s first property in the Sultanate, the resort’s CEO told Arabian Business in an exclusive interview.

Saraya Bandar Jissah is a joint project between Omran, Oman’s tourism development and investment arm and Saraya Oman, a subsidiary of Saraya Holdings. It is currently under development and is expected to open in 2017.

Located between the Hajjar Mountains and the Gulf of Oman, 15 minutes south of Muscat city centre and 40 minutes from Seeb International Airport, the resort is the largest single residential and tourism development to break ground in Oman since 2007 and developers are confident it will generate up to 1,000 new jobs when complete.

“Jumeirah Group is a name well-known across the globe for its hotels and resorts. It brings with it a certain expectation – of luxury and world-class service – and this is a perfect fit for Saraya Bandar Jissah. We’re building a new resort community which will create a new, relaxing haven for all who live there and visit,” Sheikh Hamood bin Sultan Al Hosni, CEO of Saraya Bandar Jissah, said in an interview.

“We chose to partner with Jumeirah Group as we share the same belief in world-class service and unrivalled luxury. As the first Jumeirah hotels in the Sultanate, they will provide a new and exciting option for tourists to Oman,” he added.

Jumeirah will operate both the 206-room and 106-room hotels at the two million square metre site, which will include 400 residential properties, a 1,200 sqm Talise spa, a dive centre, a range of sports and leisure facilities and a selection of restaurants, bars and cafes and a kids club.

“We are delighted to have been selected by Saraya Bandar Jissah to operate this resort in one of the most beautiful parts of Oman. As we continue to expand the Jumeirah brand across the Middle East, we bring our exceptional quality of service to loyal guests in new markets, helping them to discover the very best in luxury hospitality and the beauty of emerging destinations like the Omani coastline,” said Gerald Lawless, president and CEO of Jumeirah Group.

The Dubai hotelier currently operates 22 luxury hotels and serviced apartments, including 11 in the Gulf region, six in Europe and five in Asia. A further 15 hotels are now under development.

Saraya Bandar Jissah is part of Oman’s plans to spend more than $50bn on infrastructure in transport, oil and gas and manufacturing in the next few years in an unprecedented spend on big-ticket projects.

Ahmed bin Hassan Al Dheeb, the sultanate’s undersecretary, said the next few years were likely to see some of the biggest investments in mega projects in Oman’s history, the Times of Oman reported.

The full exclusive interview with Sheikh Hamood bin Sultan Al Hosni will be published by Arabian Business later this month.

Ford to recall 3,305 vehicles in the UAE

Ford Middle East has confirmed an estimated 3,305 vehicles in the UAE are to be recalled for servicing as part of a global move to check certain 2013 models for fuel tank leaks that could result in a fire.

The UAE-based dealers for the US carmaker said the models included in the service campaign include the 2013 Ford Fusion, Flex, Explorer, Taurus, Interceptor Sedan and Interceptor Utility, as well as the 2013 Lincoln MKZ, MKS and MKT.

The move is part of concerns over the fuel delivery module that may leak and around 465,000 have been recalled worldwide.

“The condition could result in customers detecting an odour of fuel, or in some cases, observe evidence of a fuel leak on the ground. There have been no reports of fires, accidents or injuries attributed to this condition,” Ford Middle East said in a statement.

There are 3,305 vehicles estimated to be affected in the UAE and dealers will replace the fuel delivery module according to the approved repair procedure for each vehicle, at no cost to the customer, the statement added.

The global recall involves 420,000 vehicles in the US, Canada and Mexico and the rest will be overseas, Reuters said. It represents another blow for the midsize Fusion sedan, which was redesigned last fall and is one of Ford's best-selling models, but has been the subject of several recalls since its launch.

About 80,000 2013 Fusions were recalled in December to check for engine leaks that could result in a fire. Another 19,000 Fusions were recalled in November to correct problems with the lighting system.

Ford's announcement on Monday said a small number of 2013 Fusions also was being recalled to fix steering gears that lack an internal retaining clip, thus increasing the risk of a crash.

A separate recall was announced for about 500 Lincoln MKZ 2013 sedans with engine block heaters. The cords on the heaters could crack and expose the wiring. The MKZ is a companion model to the Fusion.

While engine block heater cords on the MKZ and steering gears on the Fusion are being replaced free at dealers this month, Ford’s global HQ said it has only a limited supply of new fuel delivery modules, so some owners won't be notified about replacement parts until September.

Marriott International’s man

Planning Kyriakidis’ strategy has been to separate the 70 countries he overlooks into three categories: super growth, moderate growth and lower growth.

Alex Kyriakidis has some pretty ambitious plans. Marriott International’s man in the region may already be overseeing some 20,000 rooms in the Middle East and Africa, but he’s planning to more than triple those numbers to 70,000 in the next seven years.

Are those plans realistic? Kyriakidis certainly seems to think so. His strategy has been to separate the 70 countries he overlooks into three categories: ‘super growth’, which includes the UAE, Saudi Arabia, Egypt and Nigeria, and which will see the most investment; ‘moderate growth’, where Marriott will be investing through a programme of regular visits and conferences; and ‘lower growth’, where the firm will invest reactively, i.e. when approached by property owners in one of the 55 countries in that bracket.

Last month, Marriott International added an extra dimension to those plans by announcing a plan to buy Protea Hotels, a South African family of three brands that operates or franchises 116 hotels in seven African nations. At one fell swoop, Marriott will jump from being the eighth-largest operator on the continent, in terms of the number of rooms it runs, to the largest.

It will now have 80 hotels in South Africa, a fast-developing market, up from precisely none before the deal was announced. Another 16,000 people have been added to its payroll in sub-Saharan Africa. Kyriakidis sees the deal as a game-changer, especially in light of research that projects Africa’s population will double to 2 billion people by 2050, and the tripling of the continent’s middle class to 1 billion people over the same period.

And, in line with better transport connections and more foreign direct investment from the Gulf into Africa, he’s also making a clear pitch for some of that regional wealth to be allocated to the hospitality sector too.

“There are lots of [Gulf] sovereign wealth funds that want to get into the hotel business in Africa, but until now the question was, is there a trusted name I could work with?” Kyriakidis says. “Well, now we’ll be able to give those investors a real platform.”

Marriott already has experience in dealing with the Abu Dhabi Investment Authority (ADIA), the world’s third-biggest sovereign wealth fund with $627bn of assets under management, according to the SWF Institute. Last year, ADIA bought 42 Marriott hotels controlled by the UK’s Royal Bank of Scotland, as well as purchasing three Edition-branded hotels in London, New York and Miami for $800m.

Kyriakidis is also refusing to rule out the prospect of any further acquisitions, though he won’t specify where.

“The analyst community was very positive on the Protea acquisition as being highly strategic, value generative and exactly the right thing to do at this point in time of Africa’s growth trajectory,” he says. “Does that mean it’s the end and we pack up shop? The short answer is absolutely not. We are very committed to growth and will look at any or all opportunities in the future, whether organic or acquisition.”

But it seems that most of the growth will come organically. Marriott’s plans for the UAE market are extensive; it has 2,700 rooms in the country right now, and will push that up to 5,500 rooms by the end of 2015. By 2020, Kyriakidis thinks he can get that figure to around the 10,000 mark.

Much of that expansion will take place in Dubai, a city that now lies third globally in terms of revenue per available room (RevPAR, a key industry metric) at $185, placing it just behind New York and Paris. Barely a month seems to go past without a new glitzy hotel opening up in the UAE’s commercial capital, but Kyriakidis says he has no concerns about Dubai’s capacity to suck up new supply.

“I look back to my files in 2007 — the year before the global crash — and at that time in Dubai there were 34,000 rooms,” he says. “Today there are 60,000 and another 20,000 in the pipeline. What’s extraordinary is that Dubai has been able to absorb the global crisis and the growth in rooms, and still have 79 percent occupancy in the year to date today.”

The Marriott executive points towards recent investment infrastructure by the government in the travel and tourism industry, especially with regard to new hotels and the full launch of Al Maktoum International, the emirate’s second airport, in October.

“Another key fundamental is the focus on expanding the market beyond business and couple leisure into family,” he adds. “Family is clearly the sector that is being focused on when making these kind of announcements — the theme parks that are being built, the kind of investment that Abu Dhabi is making in culture tourism and so on.

Interview: Ford's MidEast chief Stephen Odell

For many growing up in Essex, England during the 1960s, working for the Ford Motor Company was a rite of passage. Home to one of the country’s most famous car manufacturing facilities, Ford Dagenham, the sprawling plant employed over 40,000 workers at its peak and produced over 10 million cars and 37 million engines during its 82-year history. It was here that Stephen Odell started his career in the automotive industry as a graduate trainee.

The last two decades have seen Odell work for some of the world’s leading car manufacturers from Mazda in Japan to Jaguar in North America. But Essex has never been too far from his mind.

“I’m still a Spurs fan,” he grins.

And as he sits talking to Arabian Business on the Ford Middle East stand at the Dubai International Motor Show, surrounded by several shiny new vehicles Ford is showcasing in the region for the first time, it’s probably fair to say America’s second-largest automaker still remains a big part of his life.

Odell is in town to officially announce the launch of Ford’s new Middle East and Africa business unit. The new division, which he will oversee as president, will see Ford merge 47 countries across North Africa, Sub-Saharan Africa, South Africa and the Middle East into a single business unit from 1 January 2014.

The new unit will be managed in two sub-regions — South Africa and Sub-Saharan Africa and Africa and North Africa — with both reporting into a new Dubai headquarters.

“We have traditionally been represented in the Middle East and Africa… in a somewhat disparate fashion but this will allow us to unify the Middle East and Africa,” explains Odell.

“I realise that the Middle East is different to Africa but it enables us to bundle it together and see that as a business unit,” he adds. “The Middle East and Africa region comprises very diverse markets with different political, cultural and economic environments. Building a robust and profitable operation in this region requires a dedicated focus and clear understanding of how to support the unique conditions and customer needs in those markets.”

From a financial perspective, it will mean Ford reporting sales, share and financials in the region for the first time. “Previously, the Middle East was embedded in Euro Asia Pacific and the product that was sold in the Middle East would be principally sourced out of North America. Now we will report where sold opposed to where sourced so you’ll have financial and sales data,” explains Odell.

More crucially, the reshuffle means Ford will be able to better leverage the growth potential across the region.  The firm, which has been operating in Middle East for more than six decades, expects sales for its Ford and Lincoln brands to increase 40 percent to around 5.5 million units by 2020.

“The Middle East and Africa are poised to become one of the next big automotive growth markets and we want to be there for these customers with great new cars and trucks,” says Odell.

“Each country is growing at different speeds across the territory,” he adds. “The Middle East is clearly a growing region. North Africa, as it comes through the environmental, cultural, political issues it’s going through now and it will, is always going to have a fairly strong footprint. But the piece in the middle, where there is a huge availability of raw materials, which is set to boost wealth and spread amongst the population — though not before 2020 — also provides great opportunity.”

After several difficult years in the wake of the economic crisis, the automotive industry is finally starting to show signs of a recovery. Competitors Chrysler and General Motors both reported strong profit growth for their US operations in October while Ford announced it would aim for global margins of as much as 9 percent by mid-decade, up from 6.2 percent during the first nine months of 2013. Across the pond in Europe things are also starting to look brighter with a 1.7 percent rise in third-quarter sales. The renewed confidence has seen the Detroit-based company’s stock rise around 30 percent this year.

The launch of the new regional business unit means the Middle East will play a more significant role in Ford’s growth looking ahead. “I would say that we see continued growth in the automotive industry as a whole,” says Odell.

“I see increasing growth in certain segments. The luxury car market is doing incredibly well throughout the Middle East right now so we see growth there. I also see some of the stable segments such as the medium car segment where we have just launched Fusion — which has had great success in the United States — and we are hoping for the same kind of success elsewhere,” he adds.

Many of the 5.5 million units Ford aims to sell in the Middle East will include the 17 new or refurbished Ford and Lincoln models it plans to launch in the next 24 months. The carmaker’s new Ford Fusion sedan and its EcoSport small SUV, both of which were on display at the motor show and have already achieved huge success in other markets, will make up a significant portion of those sales.

Over the last few years, the SUV and crossover vehicle market has boomed amid a rise in the number of motorists looking to limit their fuel consumption without reducing the size of vehicle too significantly. Car sales in the SUV segment are expected to reach 13 million — or 18 percent of the global vehicle market — by the end of 2013, up from 8 million the previous year, according to IHS Automotive.

Sales of the Fusion reached 21,740 units — up 71 percent — in the third quarter, providing stiff competition for Toyota’s Camry, which has consistently performed well in the mid-size car market. Meanwhile its EcoSport, launched in Europe and emerging markets, is also gaining traction, with plans to expand it to as many as 63 countries by 2017.

“Quite simply, it’s a growing market and we want to grow our business in a growing market,” says Jim Benintende, president of Ford Middle East and Africa. “Today we are launching 17 vehicles in 24 months — you cannot do that unless you leverage the Ford portfolio and that’s probably just the beginning of our ability to do that.

“I am not saying the recession is over but there are certain signs in Europe that [the economy is] stabilising. Dubai is in a very different place to where it was four or five years ago. The government has continued to invest, expats are returning, people are buying property and the Expo 2020 will be huge for the region,” he adds.

Unlike Europe, the Gulf has continued to maintain steady car sales over the last few years helped by a surge in oil prices and a boost in regional government’s welfare payments to preserve social peace following the Arab Spring. Ford Middle East reported a 20 percent rise in sales during the first three quarters of 2013 compared to the same period the previous year.

Odell says he expects that momentum to continue looking ahead. “In the GCC countries we are seeing strong growth for a number of reasons. The economy in the GCC has been very strong over the past five years, primarily because of the price of oil, which has been a big impetus for growth in the car market. This has been substantial in the GCC and we see that continuing.”

Odell’s new role might be a far cry from his trainee days in Essex but it’s probably fair to say you can’t take the man out of Essex entirely.

Early gains: Government keeping it tight at the fiscal front

Cut in expenditure remains focused on reducing development spending. CREATIVE COMMONS

ISLAMABAD: 

The government seems to be building on early gains at the fiscal front, restricting the gap between national income and expenditure to Rs418 billion during the first four months of the fiscal year. However, the belt tightening remains focused on reducing development spending.

The consolidated budget deficit for the period of July-October of the current fiscal year remained at Rs418 billion or 1.6% of the Gross Domestic Product (GDP), which is well within the limit set by the International Monetary Fund (IMF). The IMF has asked Pakistan to implement steep cut on expenditures and restrict its budget deficit to Rs1.5 trillion or 5.8% of the GDP in the current fiscal year ending on June 30.

The total revenues stood at Rs1.02 trillion out of which the federal government transferred Rs410 billion to the four federating units on account of their share in federal taxes, according to officials. The net revenues were recorded at Rs610 billion, while the expenditures soared over Rs1.1 trillion, showing a gap of Rs490 billion or 1.9% of GDP.

However, out of their share of Rs410 billion, the provincial governments made Rs72 billion in savings, which helped bring the budget deficit down to Rs418 billion or 1.6% of the GDP.

The interest payments during first four months remained at Rs410 billion, which were about 38% of the total expenditures.

The disbursements of $322 million (Rs34 billion) by the US on account of Coalition Support Fund in the first week of October and massive reduction in development expenditures helped the government to keep the budget deficit within manageable limits.

The actual federal development spending in four months remained at Rs68 billion, which was just 6.1% of the total expenditures incurred in four months and only 12.6% of the annual Public Sector Development Programme of Rs540 billion. The low development spending will result in slow economic growth this year.

In order to keep the overall budget deficit at 5.8% of the GDP, the IMF has asked Pakistan to show restraint on development spending and to keep it at Rs410 billion, which is Rs130 billion less than parliament’s approved development budget.

The reduction in the development budget is equal to the anticipated shortfall in tax collection against the Rs2.475 trillion annual target. The IMF lowered its tax projection and included Rs2.345 trillion revenue collection in its fiscal framework.

Out of Rs1.02 trillion total revenues, the FBR’s tax collection was Rs620 billion, according to the ministry of finance. Contrary to this figure, the FBR has claimed that its collection was Rs637 billion. The Ministry of Finance takes the tax collection figure, which is reconciled by both the Accountant General of Pakistan Revenue and State Bank of Pakistan, which suggest that the FBR is overstating its collection.

While talking to The Express Tribune, FBR chairman Tariq Bajwa said that the Rs637 billion collection figure was correct. He said the FBR already explained its position to Finance Minister Ishaq Dar.

Bajwa said the difference was due to a lag in reporting time.

To bridge the gap between national income and expenditures, the entire financing of Rs 418 billion was arranged from the domestic market, as contrary to hopes the net external budget financing remained nil.

Domestic financing was arranged by printing notes by the SBP. In four months, the SBP borrowings stood at Rs597 billion as the government also returned some of the commercial banks, borrowings by printing more notes.

The budget support borrowing from the SBP has increased to an unprecedented level of Rs842 billion till November 22. The massive borrowing is expected to keep inflation in double digits, as its initial impact has started appearing. Economists say the full impact of printing notes usually appears after five to six months.

Robben: "I'll get a second chance to beat Iker Casillas"

He went on to describe Spain as the "strongest rival", and Chile as "the one to worry about most", before saying Brazil is "the favourite to win the title"

If there is one memory the Spanish football fans hold the most from the last World Cup it would be the save Iker Casillas made to deny Arjen Robben his goal. The Bayern Munich player must think the same and is already planning revenge: "I’ll get a second chance to beat Casillas", he told Dutch television after the draw.

He went on to describe Spain as the "strongest rival", and Chile as "the one to worry about most", before saying Brazil is "the favourite to win the title".