Arab states work with the world but not with each other, Davos hears

Alain Bejjani said, ‘This region (MENAP) doesn’t work together. It works with the world but not with each other.’ (Courtesy WEF)
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Updated 21 January 2020

Arab states work with the world but not with each other, Davos hears

  • Majid Al Futtaim CEO Alain Bejjani: I think you’ll be surprised when I tell you that only 16 percent of the trade in the MENAP region is within the region
  • Alain Bejjani: We forget sometimes employment is a result of economic growth — you can’t create jobs without economic growth

LONDON: Arab economies need to break down barriers and start to work together if they are to stand any chance of creating the millions of jobs they need to grow, the World Economic Forum in Davos heard.
Regional economies are estimated to have grown by just 1 percent for 2019 as a weaker oil price, geopolitical threats and the impact of global trade wars have hurt output.
But a panel of Middle East business leaders and ministers called for more efforts to break down barriers and slash red tape in order to create the sort of economic growth needed for meaningful job creation.
“We forget sometimes employment is a result of economic growth — you can’t create jobs without economic growth,” said Alain Bejjani, the CEO of Majid Al Futtaim Holding, the Dubai-based retail conglomerate that operates malls across the Middle East.
He said that most global growth was creates through regional trading blocs but that this model had not yet worked successfully in the Middle East.
“If you look at the ASEAN region as an example — it has 56 percent of its trade happening within the region. I think you’ll be surprised when I tell you that only 16 percent of the trade in the MENAP region is within the region. If you take oil out it is less than 5 percent. So in reality this region doesn’t work together. It works with the world but not with each other.”
Bureaucratic processes have also stymied growth according to Majid Jafar, the CEO of UAE-based Crescent Petroleum.
“Registering a company can take more than a year in some countries,” he said. “So how can we make that quicker? Look at what is standing in the way and how can we improve it.”
The Middle East and Central Asia is expected to record 2.8 percent growth in 2020, the IMF said on Monday. That was slightly lower than its October outlook and reflecting the latest move by the OPEC+ group of oil producers to extend supply cuts. It expects the region to pick up speed in 2021 with growth of 3.2 percent.


Saudi insurers surge as vehicle checks enforced

Updated 09 July 2020

Saudi insurers surge as vehicle checks enforced

  • Move comes as relief to industry still reeling from pandemic fallout

RIYADH: Saudi insurance stocks surged on Wednesday after the traffic department said that it would enforce vehicle checks to ensure drivers had appropriate cover.

The move sent the share prices of several insurers soaring as investors bet they would benefit, as more people would subsequently be forced to buy policies.

Under the current rules, if a vehicle is involved in any traffic violation in the Kingdom, its record is automatically checked to see if there is an insurance policy linked to it.

The top five gainers on the Tadawul were all insurance firms, led by Axa, Walaa and Malath, all up by almost 10 percent on the day.

The insurance sector is one of the most represented on the Tadawul with 32 companies listed. It is also heavily exposed to the fallout from the coronavirus pandemic.

The pandemic has heaped pressure on regional insurers with S&P warning in April that a spike in claims and a decline in equity markets could hurt their balance sheets.

Aljazira Capital CEO Walid bin Ghaith told Al Araibya that the new decision would be a major boost for the car insurance market in the Kingdom.

“As it is known, the insurance (of cars) is mandatory legally, but there is no mechanism to mandate all people to insure their cars,” he said. “This damaged the insurance companies, since a lot of cars are not insured, so disputes emerge when identifying the liable side in the incident. This will result in two things: First, improving the rate of claims on the insurance companies, and the second, and the more important, is opening a big market or doubling the market for the car insurance companies.”

The move will be welcome news for the auto insurance sector in Saudi Arabia, as car sales worldwide come under increased pressure as people, fearful for their job security, delay major purchasing decisions.