Friday, September 30, 2005

Designer of 160 floor Dubai skyscraper questions whether Chicago has enough buyers for space in a 115 story tower.
Indonesia cuts fuel subsidy :: Bloomberg

Indonesia will almost triple kerosene prices from today to cap energy subsidies that have eroded confidence in the country's finances and caused the currency to plunge. Diesel price will more then double, while gasoline prices will rise by 87.5 percent, Energy Minister Purnomo Yusgiantoro told reporters in Jakarta. The nation's parliament on Sept. 27 endorsed President Susilo Bambang Yudhoyono's government's plan to raise fuel prices and cap subsidies this year at 89.2 trillion rupiah ($8.7 billion). Yudhoyono raised the price of fuel, which is being sold at less than half of the cost of imports, to reassure investors who last month sold the nation's currency and stocks as the subsidy bill surged. He faces opposition from consumers in the world's fourth-most populous nation after promising that a 29 percent price increase in March would be the last this year.
Emirates: al-Qaida Threat to Gulf Nations :: ABC

"The report, published by the government-run Emirates Center for Strategic Studies and Research, said Osama bin Laden's terror network is busy recruiting and sinking roots in the region."
Take it or leave it :: Khaleej Times

What happens when your landlord refuses to carry out maintenance works in your apartment and, while renewing your contract, also tells you accept the flat as it is or leave?
. . .
several tenants of Al Sweihidi Building near the Geco Roundabout in Sharjah have been allegedly asked by Reemak Real Estate — that manages the building — to accept their apartment as it is or better still, leave. The tenants say that, literally, no maintenance works are carried out at the building even though they are paying for it.
. . .
“There is no one to clean the building from inside due to which a horrible stench always lingers in the staircase,” he said. “The garbage bags are pulled open by stray cats and litter is spread everywhere, while sewerage is overflowing outside the building. The state of the apartments, too, is sad because no one takes responsibility.”
. . .
Said Mohammed Irfan, the Manager of Reemak Real Estate: “Whenever we plan to increase the rents, the tenants complain about maintenance. But it does not make a difference to us even if they speak to the Press.”
The legal minimum term of rental contracts in Sharjah is three years. Market rents have increased substantially over the last few years. Thus at renewal landlords can raise the rent - or reduce spending on maintenance - knowing that the apartment will be rented in either case. By accepting the contract, knowing the current condition of the building and knowing the rental rates of apartments of various qualities in the market, the tenant is making a voluntary choice to economize on housing by staying. Would the tenant wish that the government require that apartments meet a certain minimum quality? - no, because the price would be higher.

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Visa fees for maids, drivers may double :: Khaleej Times

If you've never lived in the UAE, here some of the key facts to know in order to begin to imagine life here.

1. 80% of the population are not citizens and never will be.

2. 90% of the working population are noncitizens.

3. And, as the Khaleej Times reports today, an "official said domestic servants and others falling in this job category constituted 8.2 per cent of the labour force in the country."

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Pay them what they are owed :: GN

Gulf News editorial, closing sentence:

The workers receive little enough pay anyway for the ultramodern buildings they contribute the labour to; surely it is not too much to ensure they receive their just dues on time, as required by law?

Same editorial, opening sentence:

Protesting workers are damaging the reputation of the UAE; action is needed now.


Isn't this like saying a witness is to blame for damaging the reputation of a hit-and-run driver?

Rewrite: Protesting workers Weak enforcement and scofflaw employers are damaging the reputation of the UAE; action is needed now.

Question for discussion: Why should the UAE be concerned with its reputation?
Life in the land where filling up an SUV costs $3 :: CSM

"It's good for us, and it's good for the people so they can buy luxury cars with big engines," Mr. Caicedo said.

But critics say Venezuela's highly subsidized gasoline, which retails for between 10 and 15 cents per gallon, and 7 cents for a gallon of diesel, is bad for the country.

Besides feeding perpetual traffic jams and worsening air pollution, they say the subsidy is a multibillion-dollar drain on the national budget, sapping money that could help schools, hospitals, or public transit, and transferring it to the wealthier classes, who own the cars. And they wonder how long leftist President Hugo Chavez can defy economic gravity.

But few public policies here are as popular as is almost-free gasoline. Wealthy Venezuelans, who generally despise Mr. Chavez, say that if the government stopped subsidizing gas it would only waste the money on corruption. The poor fear a bus-fare hike.

Caracas pollster Luis Vicente Leon said Venezuelans consider almost-free gasoline a birthright. "Venezuelans believe that they live in an oil field," he said. "They feel they own the oil, and therefore should not pay for it."
Consider the substitution possibilities. Quoting:

"Here, gasoline is cheaper than water," Felix Mancilla, who sells pirated CDs and DVDs, says happily. He uses his generator to run a television and speakers, which customers use to test his products. Running the generator all day long costs him only $2 per week.
And consider the arbitrage possibilities. Quoting:

Along Venezuela's borders the subsidy also fuels a huge smuggling industry, which multiplies government losses and finances Colombia's outlawed right-wing paramilitaries, who tax the trade. In border areas of Colombia, where gas retails for 20 times the Venezuelan price, hawkers line highways offering jugs of cheap Venezuelan gas. Venezuelan authorities have tried to staunch losses by rationing deliveries to gas stations and requiring drivers to show proof of Venezuelan residence in order to fill up.
And the benefits of the subsidy to the wealthy. Quoting:

the gasoline subsidy also contradicts Chavez's philosophy of spending the nation's great petroleum wealth on the poor. [A 2002] National Assembly study found that the richest 20 percent of Venezuelans received 6.5 times as much of the gasoline subsidy as did the poorest 20 percent, who rarely own cars.
Emphasis added. Thanks to The Eclectic Econoclast who sent along this tip from a former student.
Attack on Darfur Camp Leaves 29 Dead :: ABC News

The U.N. High Commissioner for Refugees said Thursday an unprecedented attack on a displaced persons' camp in Sudan's embattled Darfur region reportedly has killed 29 people.

Antonio Guterres, chief of the U.N. agency, cited aid workers' reports of the attack Wednesday at Aro Sharow camp which also left 10 seriously injured. These reports said up to 300 armed Arab men on horses and camels attacked the camp in northwest Darfur and burned about 80 makeshift shelters.

Between 4,000-5,000 Sudanese were believed to be living in the camp and most reportedly fled into surrounding countryside, UNHCR said. The nearby village of Gosmeina was also reportedly attacked and burned.

"The government of Sudan has a responsibility to ensure security for all of its citizens," Guterres said.

"As long as this insecurity continues, the international community cannot provide the assistance that is so desperately needed by hundreds of thousands of people."
Isn't it time the countries of the region sent in troops and put at end to this? Sudan is not getting the message.

Thursday, September 29, 2005

Did a cement bubble burst in Iran recently or could the 43 percent decline in share prices be explained by a delay in cement export agreements to satisfy domestic consumption?


Enoc Eyes Oil Storage Growth Beyond Mideast :: Dow Jones

Quote (emphasis added):

"We (should be) going international in a big way. We can't stay still - we're different from the others," said Hussain Sultan, chief executive of the United Arab Emirate company also known as Enoc.

"Although we're a national oil company, we do not control any of the hydrocarbon resources of our state," he told Dow Jones Newswires in an interview Wednesday. "We get no financial support from the government of Dubai. We have to raise our own we have to work harder, I think."

Dubai-based Enoc took its first steps into oil storage outside the Middle East only two-and-a-half years ago, when it set up Horizon Terminals Ltd. The wholly owned unit is now pouring money into a major storage facility in Singapore, scheduled to be commissioned in the third quarter of next year.
Some readers may be surprised to learn that Enoc has no oil resources of its own. It's something else that surprises me.

Question of the Day: What does it mean to be a national oil company if you receive no support from the government? Without it, how do you sell petrol at retail in the UAE for less than the world price of petrol and stay financially solvent?

I need some help on this one. I'm missing some key part of the story.

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The Grip of Gas - Why you'll pay through the nose to keep driving :: Slate

Nice article by Austan Goolsbee, economics professor at the University of Chicago Graduate School of Business. Extract:

Practically speaking, the only hope of changing America's driving habits is a hefty price increase that lasts. For, oh, five years. The data show that after that long, even the response of American drivers to higher prices can be pretty sizable. Five years gives people the time to come up with substitutes. Higher commuting costs over that many years could induce you to buy a smaller car, move closer to work, find a car pool for your kids. Of course, that's why Hurricane Katrina is not likely to have a lasting impact on gasoline use. It's a big blip, but only a transitory one. Which means it's exactly what consumers don't change their behavior for.
Is Etisilat getting cold feet about the deal to purchase state-run Pakistan Telecommunication Company? Khaleej Times reports.
Global Competitiveness Report :: World Economic Forum

The 2005 Global Competitiveness Report is out (link in headline above). The UAE ranks #18 worldwide, the highest of any majority Muslim country (Qatar is #19) and the highest of any country in the Middle East.
Oil shale retort :: Econbrowser

Econbrowser's analysis is always superb and well documented (link rich). Take a look (link in headline above) at his recent post on oil shale. Read it in conjunction with his earlier analysis of future oil supplies.
Will Dubya wear a sweater in the Oval Office when oil prices reach $100? :: RGE

The author is refering to the possibility of a spike in the oil price in the next three years. But a spike is a spike. Where will prices be 10 years from now?

Thanks to The Electic Econoclast for the pointer.

Wednesday, September 28, 2005

Oman petrol stations shut taps for Al Ain taxis :: GN

OmanOil has tired of the cross border arbitrage brought about by the substantial difference in petrol prices in the UAE and Oman. Pegging its price below the UAE price was draining its coffers. UAE taxis will no longer be allowed to buy in Oman.

Ironically, the lucrative illegal export of incredibly cheap petrol from Iran into the northern Omani province of Musandam continues.

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Unverified: Dh2.06 billion Dana Gas IPO subscriptions worth over Dh500 billion :: Gulf News
Can you say "perfectly elastic demand"?


The Dh2.06 billion IPO for Dana Gas has attracted investors from a record 50 countries, led by UAE and other GCC investors, a company official said yesterday. . . . The IPO, the largest ever in the UAE and the first for a natural gas resource company closes on Monday. . . . Reports of the IPO having attracted subscriptions worth more than Dh500 billion could not be independently verified.
. . .
Varouj Nerguizian, general manager of Bank of Sharjah and a member of the Founders Committee of Dana Gas [said] ". . . Our goal is not to have a high over-subscription for the IPO, but to achieve a wide and solid base of long-term shareholders for the company across the region."
Saudis 'thirsting for any shares they can get' :: GN


"I can tell you the appetite for investing in stocks is unbelievable among Saudi nationals. The stock market is currently the best investment avenue for small and medium investors and they are greedy for more," said Khalid Mohammad Al Shwuil, a businessman from Dammam. "Saudis want to invest in any IPO and if it relates to energy like Dana Gas, you can expect a mad rush. So why can't the authorities allow us to apply for shares from our own country?" he asked, as he stepped out of the HSBC branch in Abu Dhabi after a three-hour wait. We couldn't find a single room in any hotel, we had a trying time to get an airline ticket and now we waited from 7am until 10.30am to get the share application."
. . .
Angered by the difficulties in getting an airline ticket and accommodation in the UAE, Saud Al Ali, a Riyadh-based businessman, said thousands of Saudis will descend on the UAE this weekend to apply for shares despite the problems they face. "There's a huge rush for tickets and many Saudis don't mind roughing it out as long as they can apply for the shares. Men and women are anxiously looking to invest in shares."
. . .
Meanwhile, security personnel at some banks continued to face irate investors, mostly from Saudi Arabia, clamouring for shares in Dana Gas. Thousands of Saudis are expected to arrive this weekend to snap up shares in Dana Gas before it closes date on Monday. HSBC's Airport Road branch in Abu Dhabi saw the
queues of investors double every hour yesterday as security men had a tough time controlling the crowd. Emirates Bank International Ltd's Abu Dhabi branch manager Ali Mohammad Ali said the crowds were "manageable" yesterday. "But we expect a big rush on Thursday and early next week."

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Tuesday, September 27, 2005

Read RConversation on smartmobbing and its control. (via the Insta guy)


The word on the Dana Gas IPO :: The Muscatis

See The Muscatis' post on the IPO.

At the bottom of the post is pasted material from citing a "disagreement that erupted between Crescent Petroleum Company, one of the major investors in Dana Gas, and the Iranian gas supplier, Iranian National Gas Company."
UAE to have telecom duopoly :: Gulf News

We're going from monopoly to duopoly. That's not much competition. Now, mind you, they will be regulated. But, to protect the consumer? No, to protect the competitors.

Quoting (emphasis added):

The UAE's telecom regulator will not allow open competition until 2015. Consumers are expected to be sandwiched between two government-owned operators for services in a planned duopoly, according to officials.

Mohammad N. Al Ghanim, director-general and board member of UAE's Telecommunications Regulatory Authority (TRA), yesterday told Gulf News, licencing of a second telecom operator is currently in progress, without competitive bidding.
. . .
The TRA is working out a price-control mechanism to eliminate the possibility of a price war.

"The new guidelines will dictate how both operators compete with each other in the market and it will address pricing mechanisms and other issues.

"We do not want a price war in the market. The two companies can compete on technology and service superiority," he said, without elaborating.
Still, competition limited to service quality is better than no competition at all.

UPDATE. Actually, not so much an update as providing this link to the Gulf News article on Etisilat's competitor. A few quotes:

The authority's resolution to grant a licence to the new Dh4 billion telecom provider follows a federal government intention to set up a new company in which the General Pensions and Social Security Authority and other private sector shareholders hold a 40 per cent stake.

Remaining stakes will be earmarked for private sector shareholders including a public offering component.

News that the UAE will get a new telecommunications company was widely welcomed yesterday, with industry captains expecting the move to yield better services at more competitive rates.
. . .
Stock market circles felt the company would be based in Dubai with operations throughout the UAE.
. . .
"It will be modelled along the lines of Etisalat," a regulatory agency spokesman said.
A section of the market also observed the second UAE telecom licence is being awarded directly, without having been put through a competitive bidding process.

At the time Adventures in Dubai wrote "Etisalat-2 seems to be owned by various Gubmnt agencies, and is likely therefore to be no more than a palliative to the WTO rather than a genuine competitor who would drive down prices."


Why is the Dana Gas IPO so oversubscribed?

To put it another way, investors appear to believe that the IPO is substantially underpriced. Why would the founders of Dana Gas underprice the IPO? Don't they want to realize the greatest gain possible for themselves from going public?

I asked this question to a colleague in finance. He had a ready suggestion. Could it be that the founders of Dana Gas are intentionally giving away wealth to GCC citizens? Could it be that the founders are part of the ruling class that controls the oil resources, but also distribute some of the wealth back to citizens in order to retain their support? Other ways of sharing the wealth include obvious ways such as increased social support for citizens on low incomes, and less obvious ways like paying citizens above market salaries in government jobs, or subsidizing the price of petrol at the pump.

Note that an underpriced IPO that places limits on participation by noncitizens - like Dana Gas - is similar to the idea of making each citizen a stockholder in the country's oil wealth. See my recent post here for links that elaborate on this idea.

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Monday, September 26, 2005

TimeSelect is TimesDelete :: Mickey Kaus

The New York Times is silencing its own, mostly liberal, columnists. Who woulda thunk?

Heh. I'm lovin' it. Paul Krugman denied to millions of adoring fans. Karl Rove must planted this idea in the mind of the NYT masterminds.
Sri Lanka audits disbursements of Tsunami relief :: KT

Some misappropriation was found, but it doesn't seem major to me. The link to the auditor's report is:

More disturbing is that only a third of the $3 billion pledged by international donors has been "firmly commited."

Some good news: the tsunami enhanced the fertility of some crop land.
DIFX: Dubai International Financial Exchange :: AP

A sensible launch of an ambitious plan. Quoting, emphasis added:
The Dubai International Financial Exchange, or DIFX, kicks off trading Monday with a modest listing of five stock index certificates tracking major European, Japanese and U.S. stock markets.

By the flashy standards of this wealthy sheikdom, it's a subdued beginning.

"There will be no financial or real fireworks here on day one," admitted DIFX Chairman Lynton Jones, a veteran executive of the Nasdaq Stock Market and former chief of the International Petroleum Exchange.
. . .
"If we launch the market with an exciting IPO on day one, we'd be inviting the sort of frenzied activity that takes place in this part of the world during those events," he said. "We don't want that. We want to behave responsibly and make sure the whole thing works."

But Jones and Dubai's ruling sheiks hope the market will lure small and medium-sized foreign companies from the Emirates and beyond to list shares in Dubai, with the promise of strict market regulation and oil-rich Gulf Arab investors.

DIFX has opened listing talks with some 200 companies in the Middle East, India, South Africa and China, Jones said.

By the end of the year, Jones hopes to have close to 20 firms listed, through initial public offerings. Previous reports have valued those offerings at between $50 million and $1 billion.
. . .
The DIFX borrows characteristics from Nasdaq, quoting shares in U.S. dollars and existing solely as a computer network without a trading floor. For now, the DIFX will buy and sell shares for only three hours a day, between 2 p.m. and 5 p.m. local time.

And, like the world's biggest exchanges, the DIFX promises transparency and strict regulation, in contrast to freewheeling local stock markets with scant disclosure requirements. Jones reckons rigid DIFX rules will help raise corporate governance standards across the Middle East, eventually making regional companies more attractive to international investors.

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Sunday, September 25, 2005

Alberta has oil reserves second only to Saudi Arabia :: Fortune

If you want to form an opinion on where oil prices are headed, be sure to factor this in: while it's expensive to get oil from tar sands ($20/barrel) it's still well below the current price of oil. And Alberta has got lots.

Read it all.

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The New York Times turns the eyes of the world on Dubai. And it's not in the travel and tourism section.

Quotes (emphasis and links added):
The men were among 6,000 foreign laborers, most of them Indians and Pakistanis, who live in a desert work camp several miles outside of the city. All 6,000 had languished without pay for more than five months.

The protest was by no means the first of its kind here, but it was unprecedented in its scale and high profile, laying bare a Dickensian underworld of poverty and exploitation in the shadow of a gleaming city of high-rise buildings and luxury hotels.
. . .
The marchers, in overalls and hard hats, were impossible to ignore on Monday. They first went to the Ministry of Labor, in the heart of Dubai, and blocked a main artery into the city, snarling traffic. The protest surprised many - but far more astonishing was the government's response. Within hours of meeting with representatives of the workers, the labor minister, Ali bin Abdullah al-Kaabi, issued an unexpectedly tough ruling that shook many companies here to their roots.
. . .
It was the first time that the minister had singled out a company involved in a labor dispute. That the company is led by a prominent sheik,
Khalid bin Ahmed al-Hamed, and the workers were builders on a major construction project, only heightened the significance of the ruling. By Friday the workers had been paid.
. . .
The United Arab Emirates has earned the dubious distinction of having some of the worst labor conditions. Human Rights Watch has cited the country for discrimination, exploitation and abuse. Many foreign workers, especially women, face intimidation and violence, including sexual assault, at the hands of employers, supervisors, and police and security forces, the rights group said, while children are especially vulnerable to labor and sexual exploitation and denial of basic rights.

Ultimately, the workers have few rights. Visa sponsors and employers usually confiscate their passports and residency permits when they sign on, restricting their freedom of movement and their ability to report abuse. Few can leave the country without the permission of their employers, leaving them in "situations that amount to forced labor," Human Rights Watch reported. Employers can block them from working elsewhere in the country for six months if they resign or are fired.
Economists are known for risking social unacceptability. So, for instance, my view is that - provided workers know what they are getting into - their working conditions are a matter of choice. Who are we to judge whether the poor should accept Dickensian working conditions in return for being paid for accepting them? (Not that it isn't a good question why Dubai would want to be in the same boat as economists in terms of social acceptability.)

While economists agree our realm of expertise is not ethics, we don't have any trouble agreeing that deceit and broken pledges are wrong, all the more so when it is the rich taking advantage of the poor. What is the remedy? One part of the remedy is for the government to continue what it started in its actions towards Al Hamed.

But another part of the solution is for the government to give workers the right to change jobs. Workers could still enter into long term contracts with firms, but it would up to the firm to pursue legal remedies if a worker walked out on such a contract. In order to enforce the contract, the firm would have to prove they had lived up to their half of the bargain. If the consequences of not paying your workers on time is that you lose them, you'll be more likely to keep your promises.

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33,000 Saudi investors entered the UAE in the past 4 days. "Pandemonium gripped" banks as the investors - many accompanied by their families - sought to apply for the Dana Gas IPO.

Picture here

UPDATE. Tigerhawk picks up the story from here and adds some commentary on the "IPO riot factor".

MORE. Here's the Khaleej Times coverage. A few choice quotes:

"Carrying loads of cash, these investors have done deals worth several millions of riyals yesterday in Abu Dhabi," said an official at an exchange company. " We had not seen anything like this ever before. Exchange houses ran out of dirhams and there was no back-up from the banking system," he said. The result was the UAE dirham-riyal parity, which had been stable since long at SR97.50 to a UAE dirham, slipped to 96.00-96.50," a currency dealer said.
. . .
A banker said that the current euphoria will continue to build up, but the total size of the IPO subscription can be known only after the big investors jump on the bandwagon. Till then it is all guess work whether, the IPO will cross 100-times or not.

But the UAE investors are not very happy over the emerging situation, whereby their chances of getting a reasonable number of shares are diminishing with each passing day, with the arrival of Saudis and Qataris and other GCC nationals, said Mohammed Ali Yasin, a leading share broker.Yasin said that many investors have a valid point when they don't feel very happy over the situation." They will be happy if they managed to secure 0.5-1 per cent of the applied shares, a situation in which nobody wants to be, after investing a huge sum together with the cost of leverage", Mr Yasin said.
26 September. MORE:
The Dh2.06 billion DANA Gas public issue, the largest initial public offering (IPO) ever in the UAE, is expected to collect more than Dh250 billion, according to sources in the receiving banks.
. . .
“The banking sector is expected to provide up to Dh150 billion in leverage finance while the investors from the region are expected to commit more than Dh100 billion of their money in subscription,” said a senior executive with a bank.
. . .
“Five days into the IPO, indications from the market suggest that the issue could be oversubscribed between 150 to 200 times,” said P Krishnamurthy, an investment analyst.

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Workers' Protest Spurs Arab Emirates to Act :: New York Times (reg. req.)

Read it all. I'll comment later.

Saturday, September 24, 2005

Resignation letters flood MoE on talk of 5 yrs extension in service :: KT

Khaleej Times reports:
A proposal hammered out by the General Pensions Authority to increase the retirement period from 15 years in service to 20 years is under study.

This had evoked a sharp reaction from a large number of national women teachers whose duration of service was nearing 15 years. They were on their way to retire entitling them to a pension (60 per cent of the salary), but the new proposal would compel them to remain in service for five more years.
Teachers are expecting that the rules on years of service will be increased, but that those who have earned 15 years or are nearing 15 years of service can act quickly and retire with benefits under the existing rules. How do they respond?

1. If a teacher had planned to work for 20 years or more there is no effect.

2. A teacher who has 15 years of service and who planned to retire at the first opportunity will retire as planned.

3. A teacher who has 15 years of service and who was planning to retire before reaching 20 years of service now faces a choice of entering retirement immediately (in advance of the rule change) or staying on until they have earned 20 years.

4. A teacher with less than 15 years of service who planned to retire before 20 years of service will now have less of an incentive to stay. Some will find better opportunities and leave.

5. The attractiveness of entering teaching is reduced. Fewer persons will be attracted into the profession.

At the present time the Ministry of Education has difficulty attracting and retaining sufficient numbers of qualified teachers in government schools. The solution to that problem is to increase the reward to teaching. Increasing the number of years to be eligible for retirement, and making no other change in compensation, decreases the reward to entering or remaining in the profession.

It could be that increasing the years-of-service before retirement combined with an increase in salary sufficient to attract the number of teachers required is good policy. Not only would the average experience of teachers be higher (in the steady state), but years-of-service may screen out less dedicated teachers.

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Friday, September 23, 2005

Capital forced to seal 840 wells as water level drops :: KT

Khaleej Times reports (my emphasis):

In view of the worsening water scarcity situation in the country, Abu Dhabi Municipality has sealed 840 water wells in the emirate to maintain water reserves. The wells, including 630 in the Western Region and 210 in Al Ashoush and Al Ajban, have been plugged on the directives of the President, His Highness Shaikh Khalifa bin Zayed Al Nahyan and is in line with a decision issued by the Abu Dhabi Executive Council regarding conservation of groundwater. Municipality sources said the move was part of a strategy to minimise consumption of water and streamline the use of groundwater to conserve resources.

"The Public Gardens Department of the Municipalities and Agriculture Department has sealed the Western Region's 630 wells in Bu Hasa and the 210 in Al Ashoush and Al Ajban, all farming areas, in view of the decline in groundwater levels. This was also because of a slight increase in salinity in water in these areas," the sources said.
. . .
In the past 25 years, the country's population has increased ten-fold and agricultural production has kept pace with this growth.

Studies have shown that much of the country's soil can be cultivated provided there is water, and as a result, there has been an extensive programme to drill water wells.
When no one owns the aquifer, everyone treats the water as free and overuses it - a classic common property problem. The government says it will provide alternative sources of water to make up for closed wells.

The strikingly rosy picture painted here stands in stark contrast.
Staggering. Indeed. Dh80 billion in 10 days.

Image hosted by Gulf News
Customers rush at bank:: Emirates Today

Image hosted by


Mass confusion surrounded the 8am opening of a branch of the Emirates Bank yesterday as about 500 Saudi Arabian men attempted to snap up subscriptions for one of the UAE’s largest initial public offering. “When I came to work this morning at 7.30am, there were as many as 500 men lined up,” said a senior employee from the head office of Emirates Bank who had been assigned to the Mankhool Road branch. The Arab employee, who requested anonymity, said about 95 per cent of the customers queuing up were from Saudi Arabia. This was confirmed by a senior branch employee and by Saudi customer Abdul Aziz Al Bakheet, who said he had been queuing up for a subscription application form since 7am.
Must be a great deal. I hope they get their money's worth.

UPDATE: The Muscatis has more.

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India blacklists Al Hamed Construction :: DAIJIWORLD

Quoting: (second story under above link)

The Indian government has blacklisted a UAE construction company after unpaid workers went on strike, according to an Indian newspaper report. Abu Dhabi-based Al Hamed will no longer be able to recruit Indians, and it will be refused consular services such as the attestation of workers’ documents, according to The Telegraph.
. . .
Al Hamed, and the company’s owners, has already been banned from recruiting new labour for the next six months after around 1,000 workers blocked Sheikh Zayed Road on Monday, saying they had not been paid for at least five months.
The argument that markets are good ways to organize economic activity assumes that buyers and sellers are well informed, and that contracts are enforceable. Neither condition holds when it comes to low wage-labor markets in the UAE. The irony is that Al Hamed's failure to honor its obligations hurts all construction companies seeking to recruit low-wage labor. It is appropriate for India to punish the company, and to steer workers to other companies.

The report continues:
After being given 24 hours to pay up or face legal action, the company agreed to pay most of the money, although it will still withhold two months’ wages to ‘prevent the workers absconding.’
The irony here is that it isn't workers who are breaking the contract, it is Al Hamed. It is the prohibition on changing jobs that is denying the workers a way of inducing Al Hamed to fulfill its contractual obligations. Workers should not have to resort to mass protest to gain the right to leave a employer who fails to pay them.

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Intelligent Traffic Systems

Over at the UAE community blog I've posted a collection of news articles on plans to use technology to manage traffic in Abu Dhabi and Dubai - both driving offences and road-use charges.

Thursday, September 22, 2005

This is an idea that can and should be applied in Iraq. And throughout the GCC as well. (Via

More here from Nobel Prize winning economist Vernon L. Smith.
I do this sometimes.

Wednesday, September 21, 2005

Malawi: facing huge shortfall, UN food agency appeals for funds for hungry

We're inundated with news of Katrina and Rita. Why not Malawi? WHY NOT MALAWI?
The Singularity is near? :: James D. Miller - TCS

The singularity is a future period in which technological progress becomes so rapid that it radically transforms humankind. To picture the singularity imagine computers trillions of times smarter than Newton, Einstein and Edison inventing new technologies while continually enhancing their own abilities. Ray Kurzweil argues that the Singularity will occur around 2045.
. . .
Kurzweil thinks that within 10 to 20 years biotechnologists will learn how to greatly slow down aging and eliminate most diseases. In the 2030s, Kurzweil writes, nanotechnology will "finish the job", allowing for the redesign of the human body into an almost immortal form.
Am I supposed to be looking forward to this?

Tyler Cowen says "It is no longer intellectually acceptable not to know his [Kurzweil's] major arguments." Okay, now I do.
Anti-slavery groups say about 3,000 underage boys still work as jockeys in UAE :: BBC NEWS

The United Arab Emirates is to issue identity cards to camel race jockeys to prevent underage boys taking part in the popular and lucrative sport. The interior ministry said jockeys would now have to show valid cards before they would be allowed to race.
. . .
Using children as jockeys has officially been banned in the UAE since 1980 but the law was openly flouted. Earlier this year it tightened the rules, banning under-16s and those lighter than 45kg (100lb) from racing.
I've often wondered why part of the solution isn't simply to make every camel carry the same weight. If your jockey is lighter than the minimum, then the difference is added in deadweights. Couldn't this be self enforcing: Why should it be a matter of pride that your camel bet mine by carrying less weight?


Gulf Countries Experience Dramatic Rise in Salaries :: Gulf Talent

The latest wage survey numbers are out from the recruitment agency Gulf Talent. Some may be surprised that salaries are not up by 25 per cent in the UAE over the last 12 months. Nationals working in government received 25 per cent, but the average in the UAE amongst professionals in the private sector was 6.5 percent.

Quoting Gulf Talent:

The report entitled "Gulf Compensation Trends 2005" reveals an average Gulf-wide salary increase of 7.0% over the one-year period to August 2005. Qatar leads the group with a 7.9% increase, followed by Saudi Arabia with a 7.4% increase, Kuwait with 6.9%, UAE with 6.5%, Bahrain with 6.3% and Oman with a 5.9% increase.
. . .
With higher income from oil exports, several GCC governments have taken the lead in increasing salary levels, which has put increased pressure on the private sector to follow suit.

In April of this year the UAE government announced a major salary increase of 15-25% for its employees. Similar moves followed from the governments of Kuwait, Bahrain and Saudi Arabia. The Saudi increase of 15% for its employees marked the Kingdom's first across-the-board shift in pay scale in more than two decades.

All these developments have sent HR managers across the region into what the report characterizes as 'a frenzy of activity' as human resource departments rush to calculate appropriate pay increase levels for their organisations.
. . .
While the overall trend in pay rises across the GCC reflects fundamental similarities between their economies, there were some differences. Rises in the overheated UAE economy have been fueled by high inflation resulting from a dramatic and sudden rise in rents and basic amenities. The same is true in Qatar and to some extent in Kuwait. On the other hand Saudi Arabia, Bahrain and Oman have had low inflation rates with pay rises in those markets driven primarily by increased competition for a limited supply of qualified talent.

According to's report, sectors enjoying the highest pay rise across the Gulf were banking & finance, construction and real estate. The lowest pay rises were reported in healthcare and education.

Within the UAE, Dubai had the highest average salary increase with 7.4%, followed by Abu Dhabi at 6.1% and Sharjah lagging behind with just 3.0%.

Just why increases in the government sector salaries should "put pressure on the private sector to follow suit" is not clear unless the UAE government employment is rising. There are no reports of any sizeable increase in government employment.

The construction boom in the country has increased the demand for labor. Even so, this would have little effect on salaries because the UAE labor supply is imported. Only those professions where local knowledge is an important job skill would you see sizeable demand driven increases in private sector wages.

It is true that the cost of living in the UAE has increased, eroding the attractiveness of UAE salaries for foreign professionals who have the alternative of going elsewhere for work. Thus, it is not surprising to see salary offers increase to keep pace with the cost of living.

The summary of the report from which I quoted is available here. You can enter a request for a free download of the full report here. See also 7DAYS' coverage of the report here.

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Demand for building materials up 3 fold :: KT

Judging by the amount materials they are forecast to be using, construction companies evidently will not be lacking for work in the foreseeable future.


Recently announced real estate projects in Abu Dhabi will trigger a threefold rise in demand for building materials.

The next five years will see unprecedented construction activity in the emirates, with mega offshore developments like Al Reem, Al Raha and Al Shams, as well as onshore projects comprising residential and commercial towers, shopping malls and villa complexes.
Residents, buckle your seatbelts.
6,000 labourers involuntarily loan employer Dh5 million

Quoting the Gulf News:

at a meeting between the company and officials from the Labour Ministry, Dubai Residency and Naturalisation Department and Dubai police, company representatives said they could not pay all workers in one day. A senior company official said more than 6,000 workers had not been paid.

"We have to pay more than Dh5 million in salaries. There's no way we could have done that in 24 hours. The officials understood and we've set a new agreement."

Under the terms of the new agreement, 1,000 workers will be paid their May and June salaries every day. The company expects these payments to end on September 26. Between September 27 to September 30, all workers will be paid their July salaries. The company official said the August salaries would be paid in late November.
Visit the Al Hamed Company for Development and Projects website for information on job opportunities, key management personnel and decision makers, and the many Al Hamed businesses.

From its mission statement: "Al Hamed Development and Construction L.L.C. will contine to emphasise the highest quality of management, financial strength and controls throughout its operation."

Tuesday, September 20, 2005

Dubai: Road Protest by Laborers - Authority Gives Ultimatum to Construction Company :: daijiworld

daijiworld advertises itself as a portal linking the West Coast of India with the World. It reports:

A construction company has been given until the end of today to pay its workers after around 1,000 men blocked Dubai’s Sheikh Zayed Road in protest yesterday morning.

The labourers, who are working on the Palm Jumeirah, say Al Hammed Company has not paid them for months. The UAE Ministry of Labour has given the company 24 hours to pay the men four months wages, and has issued unspecified fines.

If it doesn’t meet the deadline the men will be free to change sponsors without the company’s approval, and the company will face legal action. Al Hammed will still have to pay them their dues. The company and its owners have also been banned from recruiting new workers for six months.

The owners were named by the UAE’s official news agency WAM as Khalid Al Hammed, Mahmmoud Khali and Bassam Andulrahim Hammden Ardenyan.
The article also quotes a worker:

“We know that we are not supposed to go on protest in this country. But unless we resort to such means nobody would even know our problems,” he said, adding that the men earn around dhs700 a month.

Yesterday daijiworld reported the breaking news of the protest. The quotes below reveal the sort of thoughts that came to the surface at the time:
'This is very bad behaviour from the laborers as they are bringing the inconvience to the general public. Huge number of police cars are around and trying to bring the situation under control, ' said a close source to daijiworld who was heading towards Abu Dhabi

'This could cause serious problems for Asians in the local law. Such things are not allowed in this part of the world,' he said.

'Non-payment of long-pending salaries and other amenities might be the cause for this strike. But usually we have seen in the past that labourers used to take peaceful procession even with the support of local police. But this is terrible case. Hope they will not turn violent..'
The Daily Star (Beirut) covered the story this way:
Police dispersed the protesters, who were then ferried by bus back to their living quarters - a so-called "camp" where thousands of workers live in makeshift wooden lodgings in a desert area. No violence was reported.

Hundreds of thousands of Asians work on scores of mega projects across the wealthy emirate of Dubai, often living in dire conditions and toiling long hours in temperatures as high as 50 degrees Celsius.

One Indian protester said he and colleagues had not been paid for between five and six months, adding that their monthly wages did not exceed 600 dirhams (around $164).

An Arab engineer working on the man-made Palm Jumeirah island taking shape off Dubai's coast put the number of protesters at around 850. Their employer, Al-Hamed Construction, is a contractor on the Palm project, undertaken by
Nakheel, one of the emirate's two biggest real estate companies. An official at the Labor and Social Affairs Ministry who met management representatives told AFP that the row was over the salaries of 2,000 workers, unpaid for four months. "The firm says it has several construction [sites] and thousands of laborers, and that it pays their wages by rotation," the official said.

Reports of abuse and non-payment are widespread in the United Arab Emirates, which is home to just over four million people.


Monday, September 19, 2005

Striking workers block Shaikh Zayed Road :: Gulf News

Dubai: Hundreds of construction workers blocked Shaikh Zayed Road in Dubai early Monday morning demanding months of unpaid wages. Rush hour traffic between the Trade Centre and Jebel Ali was slowed to a virtual halt when striking workers lay on the road.
National health plan by year end? :: WAM

Is there some confusion? Just last week Abu Dhabi announced a plan of mandated health insurance for that emirate only.

Gulf News draws attention to the fate of foreign housemaids

It is good that a major UAE paper draws attention to the inhumane treatment many housemaids receive from some recruiting agencies. Newspapers play a necessary role in shining light on problems that society needs to address. The quote below points to another factor: many of those who employ housemaids from recruiting agencies are well aware what goes on -- and tolerate it.

A Gulf News reporter visited four recruitment agencies in Dubai, Sharjah and Ajman, posing as a potential employer. In one agency about 25 housemaids of different nationalities were crowded into a small room above the office. They crouched silently on the floor. “Take one,” the woman at the agency said.

Gulf News saw a lady at one agency slap one of the housemaids who had been returned by a dissatisfied client. The maid had neither done nor said anything before she was slapped in the face.
. . .
Maria, another housemaid at another agency in Sharjah, said she and 20 other housemaids were kept in a small attic above the agency. A woman who runs a labour recruitment agency in Sharjah told Gulf News she kept the housemaids in an attic at the agency while they were awaiting deportation or changes in their visas.
. . .
Asked by Gulf News about complaints from housemaids that agencies keep them in tiny attics, beat them and give them very little to eat before delivering them to their sponsor, an official from the Ministry of Labour and Social Affairs said he was aware of what was happening. “Yes, hundreds of housemaids are mistreated by the agencies, and we know that,” he said. “But we can’t inspect them and go inside to find out what is going on. Even the Interior Ministry cannot do that. The agencies are taking advantage of this.”
. . .
As for the Interior Ministry, he said its Immigration and Naturalisation Department issued visas for the housemaids. The official said: “Everything to do with these agencies should be placed under one ministry, and we have suggested that it should be the Interior Ministry.

“We want to explain this problem to the media. These agencies mistreat people and break the law because they are not under full control of anybody,” he said.
Note that employment of housemaids is extensive. Quoting the Gulf News article:
The number of foreign housemaids in the UAE is estimated at 300,000. They represent 20 per cent of the workforce. However, this number is expected to rise to 800,000 by 2010, according to figures released by Dubai Municipality two years ago.
ADNOC says no further increase in retail fuel prices :: WAM

At the time of the recent hike in retail petrol prices it was reported that this was step 1 of a two step hike. ADNOC says, rather emphatically, there will be no further increase in its prices:

Abu Dhabi 18 September, 2005 (WAM)--An official source at Abu Dhabi National Oil Distribution Company, ADNOC, stated today that the company has no intention at all to increase vehicles' petrol prices in the future.The source, in a statement to the Emirates News Agency, WAM, said that ADNOC announces to the public that it shall not increase fuel prices for vehicles in the future in any manner.


Saturday, September 17, 2005

Statistics Section study: Price rise much higher than expected :: Gulf News

The Ministry of Labour and Social Affairs carried out a study surveying prices of basic food items from 2001 to 2005. Rashid Al Falasi, head of the Statistics Section at the ministry, told reporters at a press conference that price rises were much steeper than the team undertaking the study expected.
. . .
Al Falasi said he expected prices to rise briefly after November 1, when social security recipients relieved their increased payments. President His Highness Shaikh Khalifa Bin Zayed Al Nahyan ordered a 75 per cent increase in the monthly payments on Monday. “I expect traders will do what they did when government salaries were increased. They spiked prices and then reduced them again when they realised they were losing customers.”
The large increase in government salaries increased demand for many products, but most of these products are imported goods with world markets. The UAE is small relative to the size of these markets. Economic theory predicts that for these goods any increase in price would be temporary, lasting as long as it takes to increase the flow of imports.
Call for price ceilings :: Khaleej Times

Quoting "The Monitor":
We believe that the economic bodies in the country should meet and chalk out a certain ceiling for prices of foodstuff and other essential consumer goods, and enforce its application by all those involved in the trade. It should be an exhaustive list, covering each and every item on that shelf that people buy for daily use. Only this will help preserve and safeguard the interests of both the consumer and the dealer.
Price ceilings would be very foolish - as any good student of economics would understand.

The Gulf News today reports:
The Department of Planning and Economy in Abu Dhabi, in conjunction with the Department of Municipalities and Agriculture, has decided to penalise traders who might choose to increase commodity prices on the pretext that petrol prices have been raised, according to official sources.
Petrol, however, is used in production and transportation. When petrol prices rise, costs rise. As sellers see their costs rise they reduce their supply to the market and final goods prices rise. If prices are not allowed to increase, then shortages arise.

Authorities should instead focus their attention on sellers who conspire together to raise prices, and on dissolving existing government-sanctioned producer unions that set prices. It is these actions that will promote the vigorous competition in the marketplace that is the consumer's best protection.

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Friday, September 16, 2005

Study: 46pc divorce rate in UAE :: KT

A few of the unanswered questions:

1. Divorce rate of what group?

2. What is the definition of divorce rate?

3. How long do marriages last on average?

4. What percentage of children have parents who are divorced?
Bottled water prices to rise :: Khaleej Times

A price hike is underway for all types of bottled waters from five gallon, 1-litre to 600ml manufactured by a number of companies in the UAE, following the recent 30 per cent hike in fuel price which companies claim has led to increased cost of transportation and hit business severely.

The percentage of price hike is yet to be determined, but, will hopefully be declared by next week following an upcoming meeting of 15 leading bottled water companies which are also members of the Emirates Union for Bottled Water.

Haji Al Hajiri, General Manager of Zulal Water, affiliated to
Sharjah Electricity and Water Authority, confirmed that within the next few days consumers will witness a hike in the price of various sizes of bottled water.

“Consumers must know that we have decided to introduce a further hike in the price of selling bottled water not for the sake of yielding more profit, but to offset the loss faced due to increase in price of raw materials and transportation costs, ” Hajiri told Khaleej Times.

He disclosed that 90 per cent of their profit is offset by the transportation expenses incurred by water bottled companies using a large fleet of vehicles for delivery to supermarkets, companies and homes. This is a common problem faced by all the bottled water companies and are, therefore, forced to increase the price to defray the losses and meet up with high production cost.”
Good fodder for a basic demand and supply example. Except for that bit about the upcoming meeting of producers to discuss price.
French PM announces 'post-petrol' era :: The Times

The French really are different if their Prime Minister is correct that they will heed his call for reduced consumption at the same time he offers a tax break to those with long commutes to work.

Next on his agenda: that nasty law of gravity which causes so much friction.

(Via Lynne Kiesling at Knowledge Problem.)

Thursday, September 15, 2005

Katrina-nomics :: Jane Galt

Jane Galt (aka Asymmetrical Information) produced a remarkable series of posts as the events of Katrina unfolded. Hard headed and soft hearted. I'm not capable of capturing the essence, but here is a mere listing of the posts:

Aug 31, 8:40 am - Initial impressions.

Sep 1, 8:03 am - The morning after.

Sep 1, 2:23 pm - In praise of price gouging.

Sep 2, 5:37 pm

Sep 8, 11:47 am - Thoughts on insurance companies and flood insurance.

Sep 9, 11:46 am - America and Europe: geography matters.

Sep 9, 1:18 pm - What makes America exceptional?

Sep 9, 1:57 pm - Why the catastrophe has a lot to do with poverty

Sep 9, 3:58 pm - The poor really are different
Megaprojects Galore

Coming, as I do, from Orkney Springs (pop. 70), the scale of construction here in the UAE is simply beyond my comprehension.

Consider the projects announced just this week:

Abu Dhabi - Shams Project: "Sarouh Real Estate has launched a estimated Dh20-25 billion flag-ship project-Shams Abu Dhabi to be constructed on the Al Reem Island in the backyard of Abu Dhabi Island, where 100-skycrappers (sic), along with luxury hotels, hospitals, schools, mosques, commercial and entertainment complexes would be built, by not only Sarouh but by the private developers. With residential, commercial, institutional and entertainment districts, Shams Abu Dhabi will be comprised of a series of themed neighbourhoods linked by waterways and the newest ideas in urban transportation networks. It will be the ideal environment in which to live, work and play and will provide yet another face of the capital. The project is being designed in accordance with the company slogan—"Life in Perfect Balance"."

Dubai - City of Arabia to be largest leisure resort on earth: "The City of Arabia will in due course be surrounded by over 45 sport, entertainment and tourist attractions grouped into the six themed worlds that comprise Dubailand and make it the largest leisure resort on earth. . . . [Visitors will] pass into the ride area of the Theme-Park, equipped with over 100 state of the art, life-size, animatronic dinosaurs which will be constructed by Kokoro of Japan, part of an international team led by the Natural History Museum of London. The City of Arabia development will also feature the Elite Towers, 34 residential and commercial tower blocks; the 'Wadi Apartments' a complex of five storey buildings in the Mediterranean style, fronting onto the 11km meandering waterway in the Wadi Walk; and three hotels."

Ras Al Khaimah - "Saraya Islands will spread over one million square meters, with a range of five star hotels, lavish residences, and cultural and commercial venues that will draw interested tourists from all over the world, and offer an alternative cosmopolitan environment for residents."

Sharjah - AED 18 billion Nujoom Islands project: "While the original coastal area of Hamriya covered three kilometers of beachfront, Nujoom Islands with its extensive waterway systems, will produce 33 kilometers of prime beach front land. . . . Engineering studies have been implemented by global consultants to develop an ecologically sound waterway system that draws in seawater through a state of the filtration and circulation system. The islands will include 40 high rises for residential and offices purposes, 145 apartment buildings, four hotels, two resorts, 1400 water front and park side villas, five marine clubs, a large commercial center including a hypermarket, and nine smaller commercial centers, two entertainment centers and six centers for light industries. With the huge amount being invested and the large area of the project, this will be the biggest tourist landmark in the GCC."
Dubai Excellence in stud mix-up :: Yahoo! News


In a case of mistaken equine identify, one of the world's top stallions earmarked for stud in Australia was sent from England to a farm in Ukraine, and a lesser known steed came to Australia in his place.

The thoroughbred ID mix-up lasted six months, with the unknown stallion booking about A$320,000 (US$250,000) worth of services for the upcoming breeding season. Dubai Excellence, a half-brother of world champion Dubai Millennium, was bought by the West Australian Turf Club chairman Ted van Heemst, who in turn sold about 80 services to mares at almost A$4,000 each.
There's an opportunity cost story in there somewhere.

Wednesday, September 14, 2005

Should the UAE subsidize fuel? :: GN

Khalaf Al Habtoor, member of the Dubai Economic Council and chairman of the Al Habtoor Group thinks it should:
"The UAE is an oil producing country and oil revenue is one of the largest sources of national income. I do not see any reason to pass it on to the consumer," he said at a news conference yesterday.

"If our neighbouring states, Saudi Arabia, Oman and Kuwait, can absorb the pressures of high oil prices, why can't the UAE do the same?"
He also spoke out against the idea of taxation:
"The UAE has always enjoyed a competitive advantage as a tax-free economy which is one of the reasons behind our massive growth. We do not need to tax people when there is no economic crisis," Al Hab-toor said

"By introducing taxes, we will lose our competitive edge that we have been enjoying so well."
The UAE and its seven member states have pursued a policy of diversifying the country's economy beyond the level of diversification that would arise in an unregulated environment. One of the central instruments of that policy has been to keep the price of fuel low, in effect subsidizing businesses across the board. Low fuel prices reduce the direct cost of fuel in the production process as well the price of other inputs to production that are produced locally using fuel. This includes labor: lower local fuel costs reduce the cost of living, thereby reducing the salaries firms must pay to attract foreign workers.

Underlying calls to subsidize fuel is the maintained hypothesis that diversification of the economy is good for the country. Notice that this hypothesis runs counter to the theory of free trade which concludes that countries gain from specialization and exchange.

UPDATE. I just noticed this related story:
RIYADH, 14 September 2005 — Before its entry into the World Trade Organization (WTO), Saudi Arabia must still finalize discussions on the pricing of natural gas for petrochemical companies, according to ambassador Bernard Savage, chief of the delegation of the European Commission in Saudi Arabia. In an exclusive interview, Savage said the European Union had signed an agreement with Saudi Arabia in August 2003 for the Kingdom’s accession. He explained, “There remains an outstanding issue which is the question of the pricing of natural gas supplies to petrochemical companies. There have been extensive discussions on both sides. As far as the commission is concerned, we are pushing ahead on those and we are hoping that we can continue discussions with Saudi Arabia in order to reach an agreement in time to allow for Saudi Arabia’s accession at the Hong Kong ministerial meeting of the WTO toward the end of the year.”

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The importance of property rights :: Eclectic Econoclast

Without enforcement of property rights what hope is there for the Gaza Strip? The Eclectic Econoclast has the answer.

Tuesday, September 13, 2005

Economy Rankings : Doing Business :: The World Bank Group

The UAE ranks 133 out of 155 countries in enforcing contracts.

Via Marginal Revolution.

UPDATE. In the comments Anonymous points out that the yesterday's Gulf News has a story on the UAE's "Doing Business" rankings under the headline "UAE business procedures 'highly streamlined'." Anonymous also links to Waterboy's analysis. Quoting Waterboy:
With a company start-up capital requirement that favours the rich - 416.9% of per cap. income (as opposed to 28.9% of per cap income in the OECD); with a credit information index of 2 out of 10; with a shareholder protection index of 4.7 out of 10; an average delay of 614 days to enforce contracts (232 in the OECD); and an average recovery rate of 5.5 cents on the dollar from bankrupts – yeah, it's incredibly 'streamlined.'
Fish prices soar in Abu Dhabi :: Gulf Today

THE fish prices in Abu Dhabi have hit the roof following the hike in petrol prices on Sept.1. Customers have to cough up Dhs105 instead of Dhs60 for the hamour fish while price for Al Sha'ari has risen to Dhs60 from Dhs25. Al Jash now costs Dhs75 instead of Dhs40 and for Naysar one has to pay Dhs30 which was selling for Dhs 10. Al Badh is priced at Dhs40, earlier it was available for Dhs15.

The Abu Dhabi residents were shocked by the abnormal increase in fish prices fixed by both Asian traders and the Abu Dhabi Fishermen Co-operative Society at the port fish market. General director of Abu Dhabi Fishermen Co-operative Society Humeid Bin Harmous Al Rumeithi said this increase is due to the greedy fish traders who decided to hike up the fish prices and in turn adding more financial burden on the customers. "As the fish traders are free to fix fish prices according to demand and supply, there is no mechanism to control the fish prices in the market," he pointed out.
Basic economics. Petrol fuels fishing boats, so the increase in petrol prices pushed up the cost of fishing. The result is a decrease in the supply of fish. If the price of fish were to remain unchanged the quantity demanded would exceed quantity supplied. The price of fish gets bid up, encouraging production and discouraging consumption. Price eventually settles at a new higher equilibrium price.

Fish traders aren't any greedier than the rest of us. Fish prices may have taken a jump up that is out of the ordinary, but that price increase can be explained by the increase in the price of petrol. If there was a "mechanism" - government regulation - to control prices the results would be far more unpleasant. Many consumers would not find fish available. Further, fish traders could let the freshness of fish slip and still find willing buyers - if you're concerned about freshness now, don't wish for price controls.

Update. The story's no different in the northern emirates:
Customers in RAK say the price has almost doubled. Obaid Bin Rokn, a senior fisherman, said the fuel price hike has triggered the rise in fish prices in Ras Al Khaimah.
. . .
Abdullah Mohammad Sulaiman, an auction announcer in Fujairah harbour, said: "We used to pay Dh100 for gas to cover 30km and back, now we need at least Dh250 to cover the same distance.

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Sharjah's USD 5 billion Nujoom Islands: details unveiled ::


Nujoom Islands will be an integrated modern tourist city and will include several residential districts built to accommodate 40,000 residents. Only 40% of the land area will contain structures while 60% will be landscaped with beaches, gardens, parks, and roads. Nujoom Islands with its extensive waterway systems will produce 33 kilometers of prime beach front land.
. . .
The islands will include 40 high rises for residential and offices purposes, 145 apartment buildings, four hotels, two resorts, 1400 water front and park side villas, five marine clubs, a large commercial center including a hypermarket, and nine smaller commercial centers, two entertainment centers and six centers for light industries.
. . .
The residential units will be offered for sale soon after completion of the infrastructure and service facilities.

Emirates Mail, daily dummies :: AMEinfo

Headline sighted. I wouldn't put it that way.
New rules on and fees for labour sponsorship transfer :: GN

Labor mobility in the U.A.E. has been and continues to be severally limited due to government regulation. Are the regulations appropriate? See Keefieboy's post today addressing that question.
National social security allowance raised by 75% :: GN


President His Highness Shaikh Khalifa Bin Zayed Al Nahyan has ordered a 75 per cent increase in the monthly social assistance for UAE nationals benefiting from the social security programme in the country. The order takes effect from October 1. "Shaikh Khalifa has instructed the Ministry of Labour and Social Affairs to rapidly take the necessary steps for the implementation of this increment for all categories benefiting from the social assistance in the country," said the order, according to WAM.

In all, 67,102 people benefit from the programme and they received Dh658 million last year. The categories benefiting from the programme include divorced women, widows, elderly people, disabled people, abandoned women, non-married women, married students, prisoners' families, low-income families, and families whose breadwinners have died, according to officials.
Plainly, 75% is a large increase and more than offsets the effect of inflation. The increase in oil revenues are, in part, being shared with those on social assistance.

UPDATE. There is also a considerable increase in the number of persons covered. From the Khaleej Times:
There is expected to be a 50 per cent jump in the number of beneficiaries under the social security scheme and a large number of them will be low salary earners following the 75 per cent increase in the social aid budget at the national level. There are an estimated 70,000 persons covered by social security at present. Abdullah Salem Al Shamsi, Head of the Social Aid Department at the Ministry of Labour and Social Affairs noted that after the increase more numbers of people are expected to be eligible to join the social security, especially among those who earn low salaries.
. . .
As per the regulations of the social security scheme, an individual who earns a salary lower than the highest amount paid through the scheme is eligible to benefit from the social aid, he elaborated. "With the increase of the social aid amount to Dh 2,187 from Dh 1,250 a significant numbers of people will be eligible to join the scheme . . . ," he further explained. . . .
. . .
The social aid has increased for the second member of the family to Dh 1312 from Dh 750, and for each following member to Dh 656 from Dh 375, he said.

Monday, September 12, 2005

No religious arbitration in Ontario :: Seattle Post-Intelligencer

The premier sensibly saw the choice as all or none. He chose none:

Ontario, the most populous province in Canada, has allowed Catholic and Jewish faith-based tribunals to settle family law matters on a voluntary basis since 1991. The practice got little attention until Muslim leaders demanded the same rights.
. . .

McGuinty said such courts "threaten our common ground," and promised his Liberal government would introduce legislation as soon as possible to outlaw them in Ontario.

"Ontarians will always have the right to seek advice from anyone in matters of family law, including religious advice," he said. "But no longer will religious arbitration be deciding matters of family law."

Data-starved Dubai to get new inflation index :: Reuters


The statisticians at the Dubai Chamber of Commerce told Reuters the business community had been pressing for a better measure of inflation in Dubai, the region's booming commercial hub where prices are skyrocketing.

The new index will reflect the different spending patterns of the various communities of Dubai, where most of the UAE's huge expatriate population lives, said Marietta Morada, who heads the project at the chamber, a quasi-government body.
. . .
Few analysts pay much attention to inflation measures in the UAE, a federation of seven emirates. They say the basket of goods used does not reflect the realities of life in the Gulf state, where over 80 percent of the population are foreigners.
. . .
Official figures show UAE consumer price inflation was 4.7 percent in 2004. But some analysts say that in Dubai the rising cost of rent, healthcare and schooling pushed it closer to 8 percent.
. . .
Morada said the index would be based on the Dubai household expenditure survey of 1998. "Unfortunately that is the latest and best starting point we have," she said.

The UAE has long counted on low taxes and an affordable standard of living to lure foreign firms and expatriates, who are driving its transformation from oil economy to financial centre. But the cost of everything from rents to school fees is surging. On top of that the UAE raised petrol prices by up to 32 percent from this month.

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Sunday, September 11, 2005

Tariff Regime to Solve Jeddah's Water Crisis :: Arab News
People respond to incentives. Really. They do.

Quoting from the article based on an interview with Mohammed Baghdadi, director general for water in the Makkah Region:
Although he cannot force conservation on the profligate consumers, “I can introduce a tariff,” he said.

He demonstrated his point with an example. One ten-ton tanker costs about SR60 to fill. To draw ten tons of water from the network, the consumer pays SR6. “Eighty eight percent of the consumers in Jeddah are on the network,” he said, “and they pay very little.”

For the equivalent of first five tankers full however, the consumer pays only SR5 or SR1 for one tanker-full; that is the price of one 330 ml can of soft drink for one tanker of water.

“The history of cheap water is that the government wanted to support people,” said Baghdadi. “So the subsidy was put in place. They also wanted certain groups of people to come and live in Jeddah — so they wanted water and services to be cheap. Now things have changed.”
. . .
“The introduction of a tariff will add an incentive to consumers to conserve and give a measurable value to water. Currently, the only real incentive to save is with those who take water by tanker.”
Emphasis added.

People are not profligate. People prudently respond to the price signals they receive. You send them the message that 10 tons of water is worth one to six 330 ml cans of soft drinks and they will find lots of uses for the water, including very low value uses for the water.

Baghdadi is correct that he cannot force conservation on people and that he can cause people to conserve by raising the price and sending people a truer indication of what it is costing society to provide water.

Full disclosure: I pay nothing for water.

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New information on the Cambridge Energy analysis of world oil supplies :: Econbrowser

Economist James D. Hamilton takes a careful look at recent analyses of oil supply prospects. Upshot: there are "good reasons for expecting significant oil production increases over the near term."
Abu Dhabi mandates health insurance :: WAM

The sweep of this law appears huge. Quoting:

President H.H. Sheikh Khalifa bin Zayed Al Nahyan, has issued law number 23 for 2005 in his capacity as Ruler of Abu Dhabi on the emirate's health insurance.
. . .
Unless otherwise stated in articles 2 and 3, all foreign residents and their family members must participate in the compulsory health insurance system. The system is, however, optional for UAE citizens.
. . .
The law obliges employers to participate in the health insurance system for all his/her employees. The employee shall secure health insurance to each employee, along with wife and three children under the age of 18. Employees are compelled to secure health insurance to the persons they sponsor, who are not covered by the employer.

The law links issuing of residence visas to foreigners and their families with their compliance to the provision of participating in the health insurance system.
. . .
Article 12 identifies medical treatment services covered in the health insurance system, including: 1. Check up and primary health care by general practitioners and specialist doctors at clinics and health centres 2. Laboratory tests and X-rays 3. In-patient treatment 4. Dental and gum treatment, excluding orthodontics and dentures 5. Medicines . . . .
It will interesting to see if other emirates do the same.
Residents back policy of blocking offensive sites, says watchdog :: GN

My sense is that the internet screening in the UAE is reasonable, that the exceptions to that rule are few and are almost always corrected in timely fashion. Emphasis on the almost.

Saturday, September 10, 2005

The New Economist explains the difference between GNP and GDP using Ireland for purposes of illustration.
Blocking of site bolsters bonds among bloggers :: GN

Welcome to readers discovering The Emirates Economist for the first time due to the mention in today's Gulf News.
Bemoaning floating teachers :: Khaleej Times

Labor mobility is a hallmark of healthy, dynamic economies. If workers are not free to change jobs to seek the opportunities (that is, employed with employers how place the highest value on their services), then the economy will suffer.

The UAE places restrictions on labor mobility. The result is a black market in the trade of labor. Like any black market, the trade it permits improves on the allocation of labor resources to their highest and best use. But it also fosters a culture of disrespect for the law. Firms who deal as sellers in this black market actually benefit from the legal restrictions on the freedom of workers to choose. It is these firms who capture the gains from matching the workers to firms who value their services.

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Does Ministry of Labour have resources it needs? :: KT


The Ministry of Labour and Social Affairs faces an intrinsic performance crisis that will even aggravate at a time when the labour market grows by 20 per cent annual rate if the concerned authorities fail to meet its financial and manpower needs, said Dr Khalid Al Khazraji, Under-Secretary for Labour Affairs at the ministry.
. . .
The ministry is suffering from "chronic" problems that had been accumulated during years of former systems, he said. Unfortunately, with the current shortages, the ministry is incapable of taking reform and development actions, he noted.

"Despite of the ministry's written requests and explanations to the concerned authorities, these needs are not being met," he said. "If the situation continues, the ministry, incapable to meet demands of the growing labour market, would crash," warned Al Khazraji. The ministry's labour manpower has reduced by 10 per cent this year against a 20 per cent growth rate in the labour market. Fifty employees have resigned in four months, he noted.

According to a recent Cabinet decision, appointments to vacant posts are not permissible; and any post falling vacant is automatically cancelled. New appointments require a decision from the concerned authority, first to initiate a post and then to process appointments," he said.

The problem lies in the bureaucracy of the system while implementing the decision "The ministry is put in a situation of begging for employees. We are supposed to manage the labour market, but we beg to get appointments of staff. We have to answer many times why and what for the ministry needs employees. If luckily the ministry gets the needed approval, it takes four to five months to get the appointments. Appointments are granted at a time when many changes would have been witnessed in the labour market," he lamented.

The ministry is also facing a severe shortage in the financial resources, and thus rendered unable to meet its operational needs and costs, he said.
I've highlighted the use of "concerned authority" above.

For the ministry to carry out its job it needs more managerial authority than is described in the quote. The question is, why isn't it delegated more authority?
Will the U.S. exploit separatist tensions for oil? :: TigerHawk

(Via Newmark's Door.)

Friday, September 09, 2005

Excuse us while we privatize :: Bloomberg

The Egyptian movie industry has been revitalized. How? Government subsidy and promotion of the arts? Not exactly. It was privatization and a tax cut:
The country's movie industry, which produced Omar Sharif, fell into decline during decades of state control, with just 13 releases in 1995 compared with about 80 in the 1960s, when Sharif starred in ``Dr. Zhivago.'' In the past five years, the sale of studios to private filmmakers and a tax cut on movie tickets has prompted a revival. Movie screens in Egypt have tripled to 428 in the period, according to the Chamber of Cinematic Industries.
. . .
``Excuse Us, We're Being Screwed Over,'' [Maalesh Ihna Bi Netbahdel (Alas, We're Being Mistreated) ] a mix of slapstick and satire that lampoons the U.S. and its allies, is among Egypt's most popular movies, according to the Egyptian Chamber of Cinematic Industries in Cairo. The film grossed 1.4 billion Egyptian pounds ($243 million) in its first week of release.