Its more religious holidays, and yes folks, the turkey flowed as deep and wide as the champagne. The Dragon being therefore in a semi-permanent triptophane haze, no posts of late. No news either to speak of, as the swirling clouds of the GCC conference gather like something out of a Harry Potter movie, and real life is put on hold.
For those who still haven't heard via Kishor's blog, motorways are closed:
Monday 10am - 3pm
Tuesday 3pm - 8pm
With additional major jams, gridlock and hold-ups as additionally experienced.
[details, maps. etc, go to Kishore's post)
Good luck Muscat!!! I'm mainly on leave, so see you in the New Year. Best wishes 2009, etc etc.
Saturday, December 27, 2008
Tuesday, December 23, 2008
Move to Muscat - advice for a political journalist
Another letter seeking advice from my readers (the last one went well...) for a proposed move to Muscat.
Dear Dragon,
I'd like to move there next year, for few months, longer if possible.
I am familiar with Lebanon, Egypt and Syria, but I have never been to Oman.
The idea is to do research and be actively involved in media. As a foreign political analyst, and senior reporter, it will be intellectually challenging, to discover the local socio-political arena, first hand.
I sent an email to Times of Oman, and I was wondering if you have other suggestions.
Journo
Well Journo,
I'd say go for it. Oman needs as muc of this as it can get.
You may not be able to publish anything of note while here, but a book later might work out for you.
And try to work for Apex or The Tribune. Or The National (out of Abu Dhabi - be a local correspondent). Oh, and start a blog once you're here!!!
There's so much more I could say about the local socio-political arena that I get weary just thinking about it... You certainly don't see much of it directly in the Newspapers here.
Readers - any advice? Descriptions of the local socio-political arena? Help!
Democracy in action in Oman - weekend move or not?
On the usually quiescent Oman Community blog, there's a post from Mohammed about the proposed move of the Omani weekend to Fri-Sat [from Thu-Fri], and how the pseudo-intellectually heavyweight Omani bloggo-fora commentators were opposed to the move by the elected Majlis Al Shura to recommend such a shift, (The Majlis are an advisory body to the Council of Ministers [who run things]).
The Majlis Al Shura
To a certain extent, the argument depends on whether a majority of Majlis Al Shura members were elected with a stated policy of switching the weekend.
If 'Yes', well, that's democracy for you. And the fora should maybe try to be positive in their criticism - highlighting real problems the move would cause, and proposing solutions to mitigate the side-effects. Or just bitching, that's OK too.
If 'No', it gets a bit trickier. This is one of the downsides of an absence of political parties (and their publicly stated platform of policies and priorities).
In the end, even without parties, you can have an agreed constitutional body making decisions, and at the same time still have valid debate, disagreement and challenge. Where such decisions are made, they will fall within the constitution and powers delegated under the rule of law. In the British system, there would be a separation between those parties in charge of governance, and those who form the so-called Honourable Opposition, whose constitional duty is to oppose the Government's proposals through suggestions of alternative solutions and force of argument.
This is why Freedom of speech is also a big part of the democratic process - it's not just about elections. And usually there is a commitment to protection of minority rights, to avoid a 'dictatorship of the majority'.
How the issue progresses in Oman may be a cute experiment on the decision making system. But it also shows how the Majlis has been successfully directed into worrying about such minutiae as this, reading long-term coal studies, and the moon sighting issue. IMHO, the Majlis has a long way to go. And perhaps the fora could be finding better things to focus public debate onto...
The Majlis Al Shura
To a certain extent, the argument depends on whether a majority of Majlis Al Shura members were elected with a stated policy of switching the weekend.
If 'Yes', well, that's democracy for you. And the fora should maybe try to be positive in their criticism - highlighting real problems the move would cause, and proposing solutions to mitigate the side-effects. Or just bitching, that's OK too.
If 'No', it gets a bit trickier. This is one of the downsides of an absence of political parties (and their publicly stated platform of policies and priorities).
In the end, even without parties, you can have an agreed constitutional body making decisions, and at the same time still have valid debate, disagreement and challenge. Where such decisions are made, they will fall within the constitution and powers delegated under the rule of law. In the British system, there would be a separation between those parties in charge of governance, and those who form the so-called Honourable Opposition, whose constitional duty is to oppose the Government's proposals through suggestions of alternative solutions and force of argument.
This is why Freedom of speech is also a big part of the democratic process - it's not just about elections. And usually there is a commitment to protection of minority rights, to avoid a 'dictatorship of the majority'.
How the issue progresses in Oman may be a cute experiment on the decision making system. But it also shows how the Majlis has been successfully directed into worrying about such minutiae as this, reading long-term coal studies, and the moon sighting issue. IMHO, the Majlis has a long way to go. And perhaps the fora could be finding better things to focus public debate onto...
Finally!!!
This morning I was able to log in to blogger. Yippee!
Sorry about the format thing, but posting by email screwed up the formatting somehow.
OK. Rumours around town right now of there already having been multiple terrorist threats made against the GCC conference and the hotels. No details about who.
But you can see why security will be tight, especially after Mumbai. Many friends are leaving the country for the week, just to avoid the total chaos everyone expects.
We'll see...
Sorry about the format thing, but posting by email screwed up the formatting somehow.
OK. Rumours around town right now of there already having been multiple terrorist threats made against the GCC conference and the hotels. No details about who.
But you can see why security will be tight, especially after Mumbai. Many friends are leaving the country for the week, just to avoid the total chaos everyone expects.
We'll see...
Sunday, December 21, 2008
Muscat starts GCC Security lock down. Internet affected until New Year
Further on the big internet problem that started Friday, affecting not just Oman but, as in the story in yesterday’s Times of Oman, taking out pretty much the whole Middle East.
It seems at least 3 and maybe 5 submarine cables between Africa and Europe were severely damaged by geological activity or a fishing boat near Sicily. According to the latest update issued by OmanHel, the time to repair all the damaged cables and therefore to bring internet service to normal operation is estimated to be approximately 10 days. Meanwhile, internet speed will increase gradually as the repair effort progresses and as re-routing is performed.
So, it seems not only will we soon be trapped in our houses for a few days as visiting GCC dignitaries (and their associated posse) all move around the coast for the GCC Conference, we also won’t have much in the way of fast internet to help keep us entertained either!
The greater Muscat area is already on ‘lock down’. All cars and trucks entering the Muscat Municipality area from outside are being stopped and checked by major ROP/Army road blocks since Thursday. Security will be THE priority over the next 1 ½ weeks. Surveillance at the airport and border crossings has been increased significantly too. During the conference, roads will be closed; check points and road blocks the norm. You may see a few tanks and APCs stationed at critical points. Boats have been banned from the coastal area too, from the Hyatt Hotel all the way to Sur.
Xmas to New Year will not a good time to be going into surprise labor or to be struck by a heart attack folks!
Rather embarrassingly for the local cops given the focus on high levels of security, I’ve heard reports that last week several Yemeni prisoners who were being held at the ROP’s Qurm detention center escaped from custody, breaking out of prison complete with bright orange jump suits and still chained together. Hmmm. Perhaps not the best time to have escaped convicts from Yemen running around? No wonder the ROP were searching the area house to house. Nothing I could find on this story in the local press funnily enough, and no reports on whether or not they found the jail birds in the end… You would have though telling people they’d lost a few prisoners would be a good idea if you wanted the public to help find them, wouldn’t you? But I guess that would make it look too much like someone in Government screwed up.
It seems at least 3 and maybe 5 submarine cables between Africa and Europe were severely damaged by geological activity or a fishing boat near Sicily. According to the latest update issued by OmanHel, the time to repair all the damaged cables and therefore to bring internet service to normal operation is estimated to be approximately 10 days. Meanwhile, internet speed will increase gradually as the repair effort progresses and as re-routing is performed.
So, it seems not only will we soon be trapped in our houses for a few days as visiting GCC dignitaries (and their associated posse) all move around the coast for the GCC Conference, we also won’t have much in the way of fast internet to help keep us entertained either!
The greater Muscat area is already on ‘lock down’. All cars and trucks entering the Muscat Municipality area from outside are being stopped and checked by major ROP/Army road blocks since Thursday. Security will be THE priority over the next 1 ½ weeks. Surveillance at the airport and border crossings has been increased significantly too. During the conference, roads will be closed; check points and road blocks the norm. You may see a few tanks and APCs stationed at critical points. Boats have been banned from the coastal area too, from the Hyatt Hotel all the way to Sur.
Xmas to New Year will not a good time to be going into surprise labor or to be struck by a heart attack folks!
Rather embarrassingly for the local cops given the focus on high levels of security, I’ve heard reports that last week several Yemeni prisoners who were being held at the ROP’s Qurm detention center escaped from custody, breaking out of prison complete with bright orange jump suits and still chained together. Hmmm. Perhaps not the best time to have escaped convicts from Yemen running around? No wonder the ROP were searching the area house to house. Nothing I could find on this story in the local press funnily enough, and no reports on whether or not they found the jail birds in the end… You would have though telling people they’d lost a few prisoners would be a good idea if you wanted the public to help find them, wouldn’t you? But I guess that would make it look too much like someone in Government screwed up.
Internet service badly disrupted
Times News Service
Saturday, December 20, 2008 10:58:30 AM Oman Time
MUSCAT: Internet service in Oman and other Gulf countries was badly disrupted yesterday and Omantel officials attributed failure of undersea cables in the Mediterranean Sea for the fault. Residents said Internet service was either non-existent or very slow. The gravity of the outage varied from area to area and according to the service provider.
Three cables linking Italy and Egypt failed for as yet unknown reasons, a senior Reliance GlobalCom official in Dubai said yesterday. Internet service between Europe and the Middle East was also disrupted yesterday. France Telecom said break in three undersea cables had disrupted telephone traffic between Europe and the Asia-Middle East region. The situation may not improve before Christmas Day and communications may not be back to normal until New Year’s Eve, the French company said in a statement. Shaheed Al Sateeh, Middle East sales director for Reliance GlobalCom, said: “We know three cables have been cut. We still don’t know why or where. They cover all the Middle East and India and other countries.”
“We have no more information. A ship has been sent out to locate the place where the cables were cut,” he said.
Egypt’s state news agency Mena reported that the cuts happened off the coast of Sicily at 10am (0800GMT) yesterday. Reliance GlobalCom has directed a submarine cable repair company to head to the region to fix the cables, Mena reported. The agency reported that services were being rerouted to backup cables and satellite to compensate for the failures.
The services are expected to improve by around 0330GMT today, Mena added. France Telecom said the breach happened “between Italy and Tunisia on sections linking Sicily to Egypt.”
“Traffic from Europe towards Algeria and Tunisia was not affected but from Europe towards the Middle East and Asia is more or less interrupted,” the French national telecoms operator said.
The company said it had alerted the Raymond Croze, one of its two maintenance ships present in the Mediterranean zone. France Telecom said the situation is likely to improve from December 25 and return to normal on December 31.
Saturday, December 20, 2008
Oman Internet down Friday night - cable cut
Folks,
Those of you in Oman may have noticed that the internet is effectively out of action here today. Why?
Well, last night, Omantel’s main internet cable was cut. As a result, internet access for the whole country is very, very slow, and at the moment it’s impossible to even log in to gmail, blogger, and US based servers in general.
No word on how long it’ll take to repair the cable… but right now it is a real pain.
Thursday, December 18, 2008
Red light runners - beware of quick jumps at green traffic lights!!
People, please be extra careful pulling away from traffic lights in Muscat.
Today I swore I was about to see, at a distance of a few metres, a HUGE accident at the lights between Al Khuwair flyover and Ministries road, when a big Nissan Patrol, after the lights had been red for at least 2 whole seconds, instead of breaking just planted boot and roared through the intersection at what must have been over 80km an hour. Scary stuff. And I see it at least twice a day. Count it out. It's a long time. And Omani lights go green the other way as soon as the other side goes red.
Luckily, the other traffic stream were micro-seconds slower than usual tearing away, and he got away with it.
Wanker.
If I'd been a cop, I'd have pulled you over, dragged you out of the car, and pistol whipped you before shooting you in the knees, planting a knife in your hand, and seeing to it you did a long time in prison.
I hope you die a horrible, slow, burning death in a single car accident, really soon, and before you kill someone. I sincerely hope this
is how you and your SUV will end up, with your dishdasha coating the front windscreen and steering wheel of a car you are incapable of being allowed to be responsible for, after crashing into some huge inanimate object at extremely high speed.
You worthless, selfish piece of trash.
Today I swore I was about to see, at a distance of a few metres, a HUGE accident at the lights between Al Khuwair flyover and Ministries road, when a big Nissan Patrol, after the lights had been red for at least 2 whole seconds, instead of breaking just planted boot and roared through the intersection at what must have been over 80km an hour. Scary stuff. And I see it at least twice a day. Count it out. It's a long time. And Omani lights go green the other way as soon as the other side goes red.
Luckily, the other traffic stream were micro-seconds slower than usual tearing away, and he got away with it.
Wanker.
If I'd been a cop, I'd have pulled you over, dragged you out of the car, and pistol whipped you before shooting you in the knees, planting a knife in your hand, and seeing to it you did a long time in prison.
I hope you die a horrible, slow, burning death in a single car accident, really soon, and before you kill someone. I sincerely hope this
is how you and your SUV will end up, with your dishdasha coating the front windscreen and steering wheel of a car you are incapable of being allowed to be responsible for, after crashing into some huge inanimate object at extremely high speed.
You worthless, selfish piece of trash.
American Taxpayers bail out Blue City - Project will continue
Sources in BCC1 tell me that Blue City’s Al Madina A’Zarqa project has just been given assurances of 100% underwriting on the credit lines needed to complete the project by Bank of New York,
the appointed representative (Trustees) of the original Bond Holders. This is of course in some part because the bond holders are in pretty deep already, at ~40% of the investment cost sunk. So going ahead is the only chance of getting any money back.
There are also proposals to scale some of the project scope down, especially those communal bits they can't they can't sell like the Golf Course, and slowing down the development, but you're still talking a huge investment effort over the next few years.
I wonder if the money is - indirectly - effectively coming from the US Government's good ol' American taxpayers, at low rates of interest too, via the massive bail-outs over there? Wouldn't that be ironic headline for an incisive 'ViewPoint' piece for the Times of Oman - "Here comes the Cavalry!! Blue City project on track thanks to the Americans"...
Even better, it means the loans won't appear on the Government's books, and there will be some continued fiscal stimulus. Plus it will unlock significant Government spending on infrastructure.
Meanwhile, the boys at Blue City are being rewarded for hiring the big executive guns (mainly... American) at vast expense, and the party can continue for the management and the shareholders.
Monday, December 15, 2008
GCC to ban unskilled labourers after 5 years?!?
It seems the half-baked idea of GCC Labour Ministers to restrict expat unskilled labour in the GCC to no more than 5 years will be raised in a couple of weeks at the Muscat Conference. While the Bahraini minister who proposed the ban thinks the chance of endorsement is 70%, I'm not so sure.
For a start, 5 years is pretty impractical. It takes time to pay back the costs of travelling to Oman, and most labourers have a longer term plan of working for 15-20 years. Plus, the description of 'unskilled' is not really accurate. These guys do learn a lot in the first few years and as a result are more productive than someone fresh from the slums of India or Pakistan.
And of course, there are many, many jobs that Omanis simply will not (yet) do - digging holes or lugging bricks in summer, for example. Making them go home after 5 years will just lead to a pointless and expensive churn of labour. And many of the big businesses depend on this foreign labour. I'll be amazed if it passes.
For a start, 5 years is pretty impractical. It takes time to pay back the costs of travelling to Oman, and most labourers have a longer term plan of working for 15-20 years. Plus, the description of 'unskilled' is not really accurate. These guys do learn a lot in the first few years and as a result are more productive than someone fresh from the slums of India or Pakistan.
And of course, there are many, many jobs that Omanis simply will not (yet) do - digging holes or lugging bricks in summer, for example. Making them go home after 5 years will just lead to a pointless and expensive churn of labour. And many of the big businesses depend on this foreign labour. I'll be amazed if it passes.
Five-year cap rule for expatriates in the Gulf could be endorsed, says Bahraini official
By Habib Toumi, Bureau Chief
Published: December 14, 2008, 13:51
Manama: A proposal by the GCC labour ministers to impose a cap on expatriate workers has a "good chance" of being endorsed at the forthcoming GCC summit, a Bahraini official has said.
"The suggestion to limit the stay of foreigners in a GCC country to five years has a 70 per cent chance of being approved by the GCC states at the Muscat summit this month," Majeed Al Alawi, Bahrain's Labour Minister, told Gulf News. "The chance for the proposal endorsement was only around 40 per cent when it was first made," he said.
The ban will be imposed only on unskilled workers who make up around 85 per cent of the around 13 million foreigners living in the six Gulf states.
Al Alawi has spearheaded the call to introduce the cap on unskilled expatriate labourers to help preserve the cultural, social and political identity of the region.
"With the massive presence of foreigners on their soil, the Arabian Gulf countries have a unique feature in the world. This could lead to a total alienation of the native population and the loss of the local identity," said Al Alawi, a former opposition figure who was given the labour portfolio in 2002.
Millions of foreigners, mainly unskilled workers from India, Pakistan, and Bangladesh, have flocked to the Gulf states since the 1970s, seeking lucrative salaries.
Sunday, December 14, 2008
Blue City - Dragon Consulting offers a solution... How about Pink City?
Great Article in this weeks Economist about the way Argentina are grabbing the so-called pink tourist dollar.
I have a business suggestion in these tough times for local real estate developments. Pick one, just one, of the many beach developments going up in Oman right now, and unofficially/officially we make it, shall we say, european-metro-sexual friendly. IE Gay. Put it in Mussandam if you prefer.
Don't talk about it, ever. Heck, we control the media anyway! There'll be no need for anyone who doesn't want to know about it, to know about it, so just do it. Really, take this great opportunity to establish the best 'San Fransisco of the whole Middle East' this side of Cairo.
These guys (and gals) spend like crazy, are very well behaved generally, and usually don't have kids! They work. They're creative. They paaaarty. And, the best bit, is that the whole 'base load' can come from the GCC. Think New Orleans, think Amsterdam, think Sydney. All the great cities of the world have a vibrant gay section. The pink GCC dhiram is a very significant market. Go for it Oman. Its your country. Why the hell not?
Call it, Artistic City, if you must. Get a Cirque du Soleil (sp?) franchise, do art, design, architecture, ... come on, you get the idea!
Attract the brightest, the smartest, the richest, the most fun and dynamic people in the whole region who happen to be gay, and create something awesome. Get work done. Be tolerant. Be open minded. Be smart. Grasp the future before the rest of this region and the wealth and influence you will wield will astonish you.
Perhaps other contributors would be willing to contribute design and advertising ideas.
I have a business suggestion in these tough times for local real estate developments. Pick one, just one, of the many beach developments going up in Oman right now, and unofficially/officially we make it, shall we say, european-metro-sexual friendly. IE Gay. Put it in Mussandam if you prefer.
Don't talk about it, ever. Heck, we control the media anyway! There'll be no need for anyone who doesn't want to know about it, to know about it, so just do it. Really, take this great opportunity to establish the best 'San Fransisco of the whole Middle East' this side of Cairo.
These guys (and gals) spend like crazy, are very well behaved generally, and usually don't have kids! They work. They're creative. They paaaarty. And, the best bit, is that the whole 'base load' can come from the GCC. Think New Orleans, think Amsterdam, think Sydney. All the great cities of the world have a vibrant gay section. The pink GCC dhiram is a very significant market. Go for it Oman. Its your country. Why the hell not?
Call it, Artistic City, if you must. Get a Cirque du Soleil (sp?) franchise, do art, design, architecture, ... come on, you get the idea!
Attract the brightest, the smartest, the richest, the most fun and dynamic people in the whole region who happen to be gay, and create something awesome. Get work done. Be tolerant. Be open minded. Be smart. Grasp the future before the rest of this region and the wealth and influence you will wield will astonish you.
Perhaps other contributors would be willing to contribute design and advertising ideas.
Argentina
Going pinker on the Plata
A new destination for gay tourists
Dec 4th 2008 | BUENOS AIRES The Economist print edition
AFP
It takes two men to tango
“FIRST you step, then you change direction. Don’t try to do both at the same time!” implores the instructor at La Marshall, a tango school in a sparsely decorated apartment in the centre of Buenos Aires. But one couple is having trouble taking any steps at all. A paunchy, middle-aged man with a shaved head awkwardly holds his partner—a much younger, thin, dark-skinned man from Australia—while attempting to shepherd him across the floor. Finally, after a few missteps, they decide to switch roles, with the slimmer man taking charge and deftly piloting his partner.
La Marshall, a predominantly same-sex venue, is one of many specialised attractions Buenos Aires offers gay tourists, who have flocked there since Argentina’s 2002 currency devaluation made it one of the world’s most affordable destinations. Tourism officials reckon that at least a fifth of foreign visitors to the city are homosexuals.
In recent years, Buenos Aires has hosted a gay tourism symposium, a gay football tournament, a gay film festival and the first gay cruise in South American waters; it is now home to a gay hotel, a gay bookstore, and a network of stores providing discounts to customers wielding a “gay-friendly Buenos Aires” card. The influx of so-called “pink money” has become a pillar of the city’s economy. Gay tourists, most of whom are affluent and childless, spend on average around $250 a day on top of their hotel bill.
The city’s combination of European architectural elegance and Latin American flair at knock-down prices has attracted tourists of all sexual orientations. But unlike many other Latin American cities, Buenos Aires has established a reputation as being open and tolerant in a region where homophobia remains prevalent. It has been a regional leader in expanding gay rights.
The city council has approved a law authorising same-sex civil unions, and taken other measures that provide for benefits to pass to surviving partners in such unions and to require hospitals to refer to transgender patients by their chosen rather than legal names. And its array of gay-themed or gay-friendly venues comfortably eclipses the offerings in other Latin American capitals. “How many gay discos are there in Ecuador?” asks Alfredo Ferreyra of Buegay, a tour company. “Here, we speak the same language as our clients.”
Some complain that the gay scene in Buenos Aires has become too mainstream. They question how deep the tolerance goes. “I don’t know how people would react if you walk too close together with your partner or hold hands on the street,” says Urs Jenni, a Swiss guest at the Axel, a “heterofriendly” gay hotel where rooms cost up to $500 a night. The only notably gay element in its futuristic lobby is the silhouette of a man’s torso imprinted on a glass barrier.
Others worry that homosexual tourists are no better shielded from the world financial crisis than anyone else. “At this time of year, we had 120 to 150 people a night,” says Roxana Gargano, the organiser of La Marshall. “Now we’re down to around 80. It’s hit us pretty hard.”
Saturday, December 13, 2008
Real Estate Mega-Development of Yeti to go ahead
In a rather confusing press release yesterday, Dubai based property developer Sama Dubai has said that their Salaam Yeti project will go ahead [as posted on Muscat Confidential on Thursday], while admiting that the company was forced to review its plans. He also states that things "cannot work in the same manner in the light of the aftermaths of the international financial crisis" and that banks are not financing such projects at the moment, whatever that means.
I would expect that he means early receipts from off-plan sales will no longer be considered as crucial a part of the project finance, and perhaps big discounts will be on offer for those still looking to spend their cash on something not yet built and finished. But seeing as how so much money had been spent already on earth works and breakwaters, it seems the project needed to keep going, and presumeably Dubai Holdings, Sama's mother company, can still get access to credit.
Time of Oman
Global financial crisis will not hit Salam-Yetti Project: Sama CEO
Times News Service
Friday, December 12, 2008 11:24:03 PM Oman Time
MUSCAT — Farhan Faraidooni, CEO of Sama Dubai Company, the arm for international development and real estate investment of Dubai Holding, has denied rumours about suspension of works of Salam-Yetti Project, executed by the company in the Sultanate, saying that “work on the project is on and will not be affected by the international financial crisis and will continue as scheduled”.
“We will offer the residential units for sale during the second quarter of the next year as per a pricing policy that will cope with the developments in the real estate market,” he added.
“What applies for the Salam-Yetti Project applies for the other projects executed by the company in Dubai, Qatar, Bahrain, Morocco and Tunisia,” he said, adding that Sama Dubai was keen on proceeding with its plans as scheduled for completion of its projects and fulfilment of its obligations toward its clients and the community.
“But, at the same time, we do not ignore the financial crisis witnessed worldwide which made the company review its project plans,” he said.
The international financial crisis has cast a shadow on the various sectors, including the banking and real estate, he said.
“Sama Dubai and the other companies operating in the field of real estate development cannot work in the same manner in the light of the aftermaths of the international financial crisis and impacts of the same on the states of the region,” he said, pointing out that the world was “witnessing a new stage, which will necessitate the companies operating in the field of real estate development to re-programme their plans and mechanisms as per the new economic outcomes”.
The states of the region would not escape the impacts of the international crisis as they operate within an integrated international financial and economic system, he said, stressing the need for transparency in disclosure of the facts of concern to the public.
Speaking on the banks’ reluctance to finance real estate projects in the present time, he said: “I hope the banking sector will begin to finance the same during the second quarter of next year in the light of the 2008 disclosed profits of the companies.”
...
The project, worth $1.7b, is carried out in two phases: the first phase will be complete in 2011 and the second is expected to be completed by 2013.
I would expect that he means early receipts from off-plan sales will no longer be considered as crucial a part of the project finance, and perhaps big discounts will be on offer for those still looking to spend their cash on something not yet built and finished. But seeing as how so much money had been spent already on earth works and breakwaters, it seems the project needed to keep going, and presumeably Dubai Holdings, Sama's mother company, can still get access to credit.
Time of Oman
Global financial crisis will not hit Salam-Yetti Project: Sama CEO
Times News Service
Friday, December 12, 2008 11:24:03 PM Oman Time
MUSCAT — Farhan Faraidooni, CEO of Sama Dubai Company, the arm for international development and real estate investment of Dubai Holding, has denied rumours about suspension of works of Salam-Yetti Project, executed by the company in the Sultanate, saying that “work on the project is on and will not be affected by the international financial crisis and will continue as scheduled”.
“We will offer the residential units for sale during the second quarter of the next year as per a pricing policy that will cope with the developments in the real estate market,” he added.
“What applies for the Salam-Yetti Project applies for the other projects executed by the company in Dubai, Qatar, Bahrain, Morocco and Tunisia,” he said, adding that Sama Dubai was keen on proceeding with its plans as scheduled for completion of its projects and fulfilment of its obligations toward its clients and the community.
“But, at the same time, we do not ignore the financial crisis witnessed worldwide which made the company review its project plans,” he said.
The international financial crisis has cast a shadow on the various sectors, including the banking and real estate, he said.
“Sama Dubai and the other companies operating in the field of real estate development cannot work in the same manner in the light of the aftermaths of the international financial crisis and impacts of the same on the states of the region,” he said, pointing out that the world was “witnessing a new stage, which will necessitate the companies operating in the field of real estate development to re-programme their plans and mechanisms as per the new economic outcomes”.
The states of the region would not escape the impacts of the international crisis as they operate within an integrated international financial and economic system, he said, stressing the need for transparency in disclosure of the facts of concern to the public.
Speaking on the banks’ reluctance to finance real estate projects in the present time, he said: “I hope the banking sector will begin to finance the same during the second quarter of next year in the light of the 2008 disclosed profits of the companies.”
...
The project, worth $1.7b, is carried out in two phases: the first phase will be complete in 2011 and the second is expected to be completed by 2013.
Rumours persist of arrests in Oman over timing of Eid prayers
While I still have no hard evidence, rumours continue to circulate in Oman that people here were actually arrested by the ROP over the Eid prayer timing issue.
The Ministry of Interior issued an official circular telling the Wali's to instruct people, under the authority of HM Sultan Qaboos, to perform Eid prayers only on Tuesday 9th December. Apparently another circular was issued to specific towns telling them to make sure not to pray on Monday. The memo warns that if people celebrate on the 8th despite this Royal instruction, the police would be forced to 'take legal action'.
here's the scan of the circular.
It seems that this pretty clear instruction by the Government was not followed in some places, and the ROP then intervened, citing the early prayers as detrimental to national unity and public order.
The significance of the issue is highlighted when people are arrested simply for praying a day early. It indicates how seriously Oman's Ministry of the Interior consider the undue influence of Saudi Wahabism in Oman, and how maintaining control on Islamic religious practice is considered a key part of ensuring the Sultanate's internal security. It also explains why the press was filled with the articles (previously mentioned here) from the Majlis and Council of Ministers, about how Eid in Oman really was officially on the 9th.
To get around the instruction, there are reports many Omani crossed into the UAE to pray there on the 8th. It seems this date thing was a special issue for many people for this particular Eid, as it is associated with the Haj, and of course Saudi called Eid on the Monday 8th December. The day preceding Eid El Adh'ha is often a day of fasting too, with special prayers for those attending the Haj (I'm no expert here - Leo?), so again, the date difference was important to many. It seems ironic that this Eid is all about sacrifice and obedience...
I am no fan of the insanity that is Saudi Wahabism, and Oman has definitely suffered from creeping fundamentalism coming across from the Kingdom, with more and more black burkas and Saudi's misogynistic and dark age attitudes to Islamic practice. I fully support the Government of Oman and their appointed religious authorities in insisting that it is The Government of Oman who decide what happens with the practice of its own State religion.
But I also think it's big news when people are actually arrested by the police for not obeying instructions and praying on the wrong day.
Yet I somehow doubt that this will be reported in the local press, except in the most indirect ways... Again, anyone with any facts or first-hand knowledge, I'd appreciate an email.
The Ministry of Interior issued an official circular telling the Wali's to instruct people, under the authority of HM Sultan Qaboos, to perform Eid prayers only on Tuesday 9th December. Apparently another circular was issued to specific towns telling them to make sure not to pray on Monday. The memo warns that if people celebrate on the 8th despite this Royal instruction, the police would be forced to 'take legal action'.
here's the scan of the circular.
It seems that this pretty clear instruction by the Government was not followed in some places, and the ROP then intervened, citing the early prayers as detrimental to national unity and public order.
The significance of the issue is highlighted when people are arrested simply for praying a day early. It indicates how seriously Oman's Ministry of the Interior consider the undue influence of Saudi Wahabism in Oman, and how maintaining control on Islamic religious practice is considered a key part of ensuring the Sultanate's internal security. It also explains why the press was filled with the articles (previously mentioned here) from the Majlis and Council of Ministers, about how Eid in Oman really was officially on the 9th.
To get around the instruction, there are reports many Omani crossed into the UAE to pray there on the 8th. It seems this date thing was a special issue for many people for this particular Eid, as it is associated with the Haj, and of course Saudi called Eid on the Monday 8th December. The day preceding Eid El Adh'ha is often a day of fasting too, with special prayers for those attending the Haj (I'm no expert here - Leo?), so again, the date difference was important to many. It seems ironic that this Eid is all about sacrifice and obedience...
I am no fan of the insanity that is Saudi Wahabism, and Oman has definitely suffered from creeping fundamentalism coming across from the Kingdom, with more and more black burkas and Saudi's misogynistic and dark age attitudes to Islamic practice. I fully support the Government of Oman and their appointed religious authorities in insisting that it is The Government of Oman who decide what happens with the practice of its own State religion.
But I also think it's big news when people are actually arrested by the police for not obeying instructions and praying on the wrong day.
Yet I somehow doubt that this will be reported in the local press, except in the most indirect ways... Again, anyone with any facts or first-hand knowledge, I'd appreciate an email.
Friday, December 12, 2008
Holidays in Oman - why do people leave?
What a totally awesomely relaxed holiday this Eid is proving. No traffic, fantastic weather, and the red tide is abating. Beach, BBQ, beer, and outdoors living is the theme. I went swimming this morning, and it was wonderful. Ms. Dragon looked stunning, the breeze was blowing, and the world felt in its rightful place.
A beach in Oman at this time of year is possibly the best place in the world to watch a global recession happen from.
No other news, except the comments section in the previous post about alleged arrests of people for the crime of practicing Eid prayers a day earlier than officially announced, and as it happens, at the same date as in Saudi. Apparently a letter was sent out insisting Eid prayers only be conducted on the Tuesday, not the Monday, or there would be consequences. Amjad and Muscati think such arrests would be totally OK, as they had been warned, and if they went ahead and prayed is effectively political dissent.
V interesting. Though I still have not received any evidence of such arrests yet, which I'd prefer. Can anyone assist? email undercover(dot)dragon(at)gmail(dot)com
A beach in Oman at this time of year is possibly the best place in the world to watch a global recession happen from.
No other news, except the comments section in the previous post about alleged arrests of people for the crime of practicing Eid prayers a day earlier than officially announced, and as it happens, at the same date as in Saudi. Apparently a letter was sent out insisting Eid prayers only be conducted on the Tuesday, not the Monday, or there would be consequences. Amjad and Muscati think such arrests would be totally OK, as they had been warned, and if they went ahead and prayed is effectively political dissent.
V interesting. Though I still have not received any evidence of such arrests yet, which I'd prefer. Can anyone assist? email undercover(dot)dragon(at)gmail(dot)com
Wednesday, December 10, 2008
Still Eid. Shine on you crazy moon... Very Important People confirm lack of moon sighting in Oman
Well, thankfully it's still Eid Holidays. On the International scale, Oman kicks butt on Public Holidays. I loose count of how many we get - although last year's unusual royal berevement count helped recently to give even more. (Can someone do the math and tell us? How many free holidays this year?)
Does everyone out there know we still use (except for banks) the Thursday-Friday as a weekend. So for second Eid, the Public Sector got Sunday through Saturday off, a whole week pretty much, in addition to annual leave quota (if you have such a thing).
It also means the town is pretty dead. Everyone who can is off, either camping or out of town. Most of the traffic consists of idiots from the UAE or GCC. Yippee. Is it any wonder we escape? The Dragon too succumbed to the lull of beaches, boats, bikini babes and booze. (In fact, I find most religious holidays are best celebrated in this time honoured way. Look at Christmas!) Hence the lack of posts past 2 days. Can you blame me?
Picture: How the Dragon spends his religious holidays.
The consternation of the masses over the timing of the holidays are the only thing of note. Ibadhi religious holidays are based on the observing the appearance and disappearance of the moon.
Picture: David Ryle at http://www.rylesprocket.com
There is an Official Moon Sighting Committee, tasked with receiving reports from across the land through notarised observers (not just someone stumbling out of the Ruwi Novotel). This is why we never know exactly when the holiday will be until the last minute.
But although one might think modern astronomy could easily determine the timing precisely for everyone, but no:
Ah hah. Makes planning holidays hard.
But it also meant that if the moon might have been theoretically visible (under ideal conditions) in parts of the Sultanate last week, because it was cloudy the moon went unsighted, and so Oman's Eid (and Islamic calendar date) is on a different day to Saudi's. Saudi you see, did see the moon. Saudi even send planes up to see it if necessary, which is why they can announce earlier with accuracy and religious consistency in their eyes [but then they have a Haj to run, and try having more than 2 million guests arrive on your doorstep at a few days notice].
Not Oman. Also, there can be astronomical differences between the observability of the moon between someone in Oman and in Saudi.
So when the Omani committee confirmed the moon was not seen (when it had been expected), a lot of people were a little miffed, having booked holidays in advance, made plans, Haj, etc etc. I mean, aircraft don't schedule themselves, and modern enterprises also operate on a slightly longer operational timescale.
So the mighty Majlis had to weigh in and check that there hadn't been a cock-up with the whole moon thing. Which they did, and confirmed it was OK (no actual explanation though, your typical 'Because I said So, Trust Me' Omani Government public answer) and announced it in the papers. Oh, and they were careful to point out that other countries in the region agreed that Oman's call on the whole moon-thing was spot on.
'So all you peoples gossiping out there, just shut up! You're so annoying' [Said in accent of King Julian, Ruler of the Lemurs in Madagascar the movie, BTW]
But clearly they didn't quite shut up, so subsequently the ruling Council of Ministers weighed in too, with there own investigation of the investigation of the observation, and their own press release from the official news agency, saying that no, it really really was OK that Oman's Eid was different.
Which is great, as coming from the Council of Ministers it is also a very overtly political statement. It emphasises that in such things, Oman does its own thing, and doesn't look to Saudi or Iran to control their religion. Damn right. You go Oman!
I would have preferred if they printed some maps showing the degree of difficulty seeing a new moon (which can be done, see this example for a lunar eclipse) that night, wrt nearby countries, to explain to people why it can be different and sort of bolster their case on the 'no cock-up' part. But even if it was a screw up, it was 100% Oman's right to do so, so take that Saudi! Eid is Tuesday, so there.
Map showing degree of eclipse visibility
Does everyone out there know we still use (except for banks) the Thursday-Friday as a weekend. So for second Eid, the Public Sector got Sunday through Saturday off, a whole week pretty much, in addition to annual leave quota (if you have such a thing).
It also means the town is pretty dead. Everyone who can is off, either camping or out of town. Most of the traffic consists of idiots from the UAE or GCC. Yippee. Is it any wonder we escape? The Dragon too succumbed to the lull of beaches, boats, bikini babes and booze. (In fact, I find most religious holidays are best celebrated in this time honoured way. Look at Christmas!) Hence the lack of posts past 2 days. Can you blame me?
Picture: How the Dragon spends his religious holidays. The consternation of the masses over the timing of the holidays are the only thing of note. Ibadhi religious holidays are based on the observing the appearance and disappearance of the moon.
Picture: David Ryle at http://www.rylesprocket.comThere is an Official Moon Sighting Committee, tasked with receiving reports from across the land through notarised observers (not just someone stumbling out of the Ruwi Novotel). This is why we never know exactly when the holiday will be until the last minute.
But although one might think modern astronomy could easily determine the timing precisely for everyone, but no:
New Moon is often considered to occur at the time of the appearance of the first visible crescent of the Moon, after conjunction with the Sun. This takes place over the western horizon in a brief period between sunset and moonset, and therefore the precise time and even the date of the appearance of the New Moon by this definition will be influenced by the geographical location of the observer.
Ah hah. Makes planning holidays hard.
But it also meant that if the moon might have been theoretically visible (under ideal conditions) in parts of the Sultanate last week, because it was cloudy the moon went unsighted, and so Oman's Eid (and Islamic calendar date) is on a different day to Saudi's. Saudi you see, did see the moon. Saudi even send planes up to see it if necessary, which is why they can announce earlier with accuracy and religious consistency in their eyes [but then they have a Haj to run, and try having more than 2 million guests arrive on your doorstep at a few days notice].
Not Oman. Also, there can be astronomical differences between the observability of the moon between someone in Oman and in Saudi.
The Islamic calendar has retained an observational definition of the New Moon, marking the new month when the first Crescent Moon is actually seen, and making it impossible to be certain in advance of when a specific month will begin (in particular, the exact date on which Ramadan will begin is not known in advance). In Saudi Arabia, if the weather is cloudy when the New Moon is expected, observers are sent up in airplanes. In Iran a special committee receives observations of every new moon to determine the beginning of each month. This committee uses one hundred groups of observers.
So when the Omani committee confirmed the moon was not seen (when it had been expected), a lot of people were a little miffed, having booked holidays in advance, made plans, Haj, etc etc. I mean, aircraft don't schedule themselves, and modern enterprises also operate on a slightly longer operational timescale.
So the mighty Majlis had to weigh in and check that there hadn't been a cock-up with the whole moon thing. Which they did, and confirmed it was OK (no actual explanation though, your typical 'Because I said So, Trust Me' Omani Government public answer) and announced it in the papers. Oh, and they were careful to point out that other countries in the region agreed that Oman's call on the whole moon-thing was spot on.
Majlis clarifies doubts on Al Hijja moon-sighting
ONA
Saturday, December 06, 2008 11:34:49 PM Oman Time
MUSCAT — The Majlis Al Shura has confirmed that the justifications upon which the specialised committee has made its decision on sighting the moon of the month of Al Hijja 1429 were accurate. The Majlis, in a statement issued yesterday, said it has followed up the issue of sighting the moon announced by the specialised committee and pointed out that it has studied the issue with the Council of Ministers, and submitted its views, stressing the importance that moon-sighting should be based on agreement of Shariah and jurisprudence evidences among Islamic nations as well as the advancements made in moon-sighting by using new technologies. The Majlis confirmed the correctness of justification given by the specialised committee in sighting the moon and affirmed that differences in moon-sighting among the Islamic countries and difference in calculating timings is a normal thing. A number of Islamic nations have agreed with the Sultanate’s views on sighting the moon this year as confirmed by renowned observatories, the statement concluded.
'So all you peoples gossiping out there, just shut up! You're so annoying' [Said in accent of King Julian, Ruler of the Lemurs in Madagascar the movie, BTW]
But clearly they didn't quite shut up, so subsequently the ruling Council of Ministers weighed in too, with there own investigation of the investigation of the observation, and their own press release from the official news agency, saying that no, it really really was OK that Oman's Eid was different.
Which is great, as coming from the Council of Ministers it is also a very overtly political statement. It emphasises that in such things, Oman does its own thing, and doesn't look to Saudi or Iran to control their religion. Damn right. You go Oman!
Moon-sighting decision is ‘accurate’, says Council of Ministers
ONA
Monday, December 08, 2008 12:08:54 AM Oman Time
MUSCAT — The Council of Ministers affirmed that the decision taken by the Moon-Sighting Committee for the month of Dhul Hijja was accurate.
Celebrating Eid Al Adha by the Sultanate tomorrow was based on the committee’s decision and on what have been studied previously in coordination with the Majlis Al Shura and other state departments for moon-sighting in the Sultanate after resorting to astronomy and hearing of different opinions.
The council affirmed the accuracy of the decision as it was based on scientific facts as confirmed by astronomers in the Sultanate and abroad. The decisions was also based on the Shariah evidences that set the beginnings of the lunar months based on place and region of the moon sighting, it said.
The council appreciated the efforts made by different authorities including the Ministry of Awqaf and Religious Affairs, the main committee for sighting the moon, the sub-committees in the various parts of the Sultanate, and the Oman Astronomy Association for Sighting the Moon and the evidence provided by them for fixing tomorrow, December 9, as the day of Eid. Saudi Arabia and several other nations celebrate Eid today.
The council extended its Eid greetings to His Majesty Sultan Qaboos bin Said, the citizens and residents of Oman and Muslims all over the world.
I would have preferred if they printed some maps showing the degree of difficulty seeing a new moon (which can be done, see this example for a lunar eclipse) that night, wrt nearby countries, to explain to people why it can be different and sort of bolster their case on the 'no cock-up' part. But even if it was a screw up, it was 100% Oman's right to do so, so take that Saudi! Eid is Tuesday, so there.
Map showing degree of eclipse visibility
Sunday, December 7, 2008
Oman - stop killing your children. You don't have the right.
Jet Driver blogged about the lack of child restraints used in cars here. While the comments drifted somewhat off topic, the issue of Oman's road deaths - adults and children - continues to become a national issue.
I just saw a Top Gear episode where a train collides with a car at a level crossing, in slow motion.
Omani kids need to be shown in school what happens to them in an accident, in slow motion, and what save driving means. They could use examples in Physics classes as problems in velocity and momentum.
This is your standard Omani Mum or Dad, holding a baby in the front seat without seat belts, naturally. When, surprise! That minibus is pulling out!!! OMG!!!
Maybe we can get at the adults behaviour through the children. I'd start there, coupled with more traffic cops and on the spot fines for no seat belts or child restraints.
And, some Omani engineering company needs to invent a way to reasonably safely restrain 4 or 5 kids in the back seat ... 7 or 8 kids a family is a cultural problem.
This is with a car seat.
Although, its far better to have small kids in a rear facing position until 4 or 5 yrs old. But remember to NEVER place a rear-facing car seat in a seat with an airbag. Back seat is best (rear facing), or you can have the dealer deactivate the front passenger airbag.
But can you imagine what the kids would do without seat restraints? This video of with/without belts is with adults.
I just saw a Top Gear episode where a train collides with a car at a level crossing, in slow motion.
Omani kids need to be shown in school what happens to them in an accident, in slow motion, and what save driving means. They could use examples in Physics classes as problems in velocity and momentum.
This is your standard Omani Mum or Dad, holding a baby in the front seat without seat belts, naturally. When, surprise! That minibus is pulling out!!! OMG!!!
Maybe we can get at the adults behaviour through the children. I'd start there, coupled with more traffic cops and on the spot fines for no seat belts or child restraints.
And, some Omani engineering company needs to invent a way to reasonably safely restrain 4 or 5 kids in the back seat ... 7 or 8 kids a family is a cultural problem.
This is with a car seat.
Although, its far better to have small kids in a rear facing position until 4 or 5 yrs old. But remember to NEVER place a rear-facing car seat in a seat with an airbag. Back seat is best (rear facing), or you can have the dealer deactivate the front passenger airbag.
But can you imagine what the kids would do without seat restraints? This video of with/without belts is with adults.
Oil price continues to plummet - Omani crude $36. Central Bank injects $700 mln of liquidity into Omani banks
As the world recession hits, oil demand falls, speculative cash goes bear, and OPEC fails to act decisively to cut production, the usual is happening - a crash in oil prices, now at their lowest since 2004. And it seems to keep getting worse; see a great (but depressing) article in The Market Oracle.
As I have said all along, Oman was fine as long as oil stayed above $60. But that ain't happening. As it goes now, next month could see $25/bbl or less, albeit only temporarily. Oman already cut their 2009 budget assumption to $45. So, expect some serious belt tightening from HE Mr Macki in 2009, at least on the Government Fiscal spending front, if oil stays this low or lower for the next 60 days. Government budgets are being reduced as we speak, but there will be a big battle within the Cabinet to claw back Ministry budget already approved. The big money made over the past few years has been channeled into repaying debt and recapitalising the Sovereign wealth fund, along with allowing a huge increase in Government spending - some of it good infrastructure stuff, some of it pretty optional if real spending is to now be slashed - did we really need an Opera House, for example?
Meanwhile, Hamood Sangour Al Zadjali announced that the Oman Central Bank has relaxed the reserve requirements for Oman's banking system, now allowing them to count cash on hand and short-term certificates of deposit held with the central bank towards their 8% reserve, thereby allowing a significant boost in their ability to lend into the domestic market by making $700 million extra available.
The bank had previously reigned in the banks earlier this year as credit soared by over 50% and inflation hit over 15%. This will help ensure project financing can be kept up for the Galfars and Renaissance type companies. Oman has already posted a (rather small) promise of a fund with 150 mln rials to underpin shares in the stock market, which perhaps fortuitously seems to have been announced when the world markets paused on their downward trend.
Oman always has a problem during lower oil price times: how to maintain adequate Government cash flow from the oil and gas sector vs taking counter-cyclical opportunities to make sound longer term investments as costs drop? Steel and cement, for example, are now expected to be a lot cheaper next year as world demand drops and before inflation appears.
How much can and should the Government borrow in 2009? It seems strange that the Government seems to allow off-balance sheet project borrowing for the Sohar projects, but keeps funding their domestic oil and gas investments from day to day production cash flows. One way out for Mr Macki would be to ring-fence, at least in part, the Government's shareholdings in the upstream oil and gas business, and allow some of the significant long-term production investments currently underway and planned (such as the massive multi-billion dollar Harweel project, which won't start to flow any extra crude until at the earliest 2010) to be financed by borrowing.
HE Rumhy, Minister of Oil and Gas, has done well recently to leverage high oil prices and get big spending commitments from new entrant IOCs - they spend their money now, take most of the risk, and are rewarded by higher returns later (the Government is essentially borrowing this investment against future payments from their oil and gas production). The deal he did with BP was excellent in that regard, getting British Petroleum to commit $600 mln without a commercial deal for production. But with a few others subsequent the Ministry was too slow, and so recent deals are not as good, nor are they getting anything like the number of bids they did just 12 months ago.
Time for a garage sale?
The Government will also need to look at asset sales, even in the current climate, there may be deals to be done. The State's shares in Omantel, for a start, are a long term strategic liability due to technology risk. The electricity and water infrastructure too should be substantially sold off - control can be mmaintained by smart regulation. And the older hotels the Government still owns, such as the Intercon and Crown Plaza, that are soon in need a major overhaul. The land they occupy could just be leased long term if selling that is politically impossible.
As I have said all along, Oman was fine as long as oil stayed above $60. But that ain't happening. As it goes now, next month could see $25/bbl or less, albeit only temporarily. Oman already cut their 2009 budget assumption to $45. So, expect some serious belt tightening from HE Mr Macki in 2009, at least on the Government Fiscal spending front, if oil stays this low or lower for the next 60 days. Government budgets are being reduced as we speak, but there will be a big battle within the Cabinet to claw back Ministry budget already approved. The big money made over the past few years has been channeled into repaying debt and recapitalising the Sovereign wealth fund, along with allowing a huge increase in Government spending - some of it good infrastructure stuff, some of it pretty optional if real spending is to now be slashed - did we really need an Opera House, for example?
Meanwhile, Hamood Sangour Al Zadjali announced that the Oman Central Bank has relaxed the reserve requirements for Oman's banking system, now allowing them to count cash on hand and short-term certificates of deposit held with the central bank towards their 8% reserve, thereby allowing a significant boost in their ability to lend into the domestic market by making $700 million extra available.
The bank had previously reigned in the banks earlier this year as credit soared by over 50% and inflation hit over 15%. This will help ensure project financing can be kept up for the Galfars and Renaissance type companies. Oman has already posted a (rather small) promise of a fund with 150 mln rials to underpin shares in the stock market, which perhaps fortuitously seems to have been announced when the world markets paused on their downward trend. Oman always has a problem during lower oil price times: how to maintain adequate Government cash flow from the oil and gas sector vs taking counter-cyclical opportunities to make sound longer term investments as costs drop? Steel and cement, for example, are now expected to be a lot cheaper next year as world demand drops and before inflation appears.
How much can and should the Government borrow in 2009? It seems strange that the Government seems to allow off-balance sheet project borrowing for the Sohar projects, but keeps funding their domestic oil and gas investments from day to day production cash flows. One way out for Mr Macki would be to ring-fence, at least in part, the Government's shareholdings in the upstream oil and gas business, and allow some of the significant long-term production investments currently underway and planned (such as the massive multi-billion dollar Harweel project, which won't start to flow any extra crude until at the earliest 2010) to be financed by borrowing.
HE Rumhy, Minister of Oil and Gas, has done well recently to leverage high oil prices and get big spending commitments from new entrant IOCs - they spend their money now, take most of the risk, and are rewarded by higher returns later (the Government is essentially borrowing this investment against future payments from their oil and gas production). The deal he did with BP was excellent in that regard, getting British Petroleum to commit $600 mln without a commercial deal for production. But with a few others subsequent the Ministry was too slow, and so recent deals are not as good, nor are they getting anything like the number of bids they did just 12 months ago.
Time for a garage sale?
The Government will also need to look at asset sales, even in the current climate, there may be deals to be done. The State's shares in Omantel, for a start, are a long term strategic liability due to technology risk. The electricity and water infrastructure too should be substantially sold off - control can be mmaintained by smart regulation. And the older hotels the Government still owns, such as the Intercon and Crown Plaza, that are soon in need a major overhaul. The land they occupy could just be leased long term if selling that is politically impossible.
Crude prices collapse 25% in the last week
By Dalton Garis, Special to Gulf News
Published: December 06, 2008, 23:53
Abu Dhabi: The New York Mercantile Exchanges benchmark West Texas Intermediate light sweet crude contract finished last week at $40.81 per barrel, a 25 per cent decline from the previous week's $54.43. Now, no back month price is above $81 per barrel, even for delivery in December 2015.
Brent, against which 60 per cent of the world's crude is priced, closed the week at $39.74, down from the previous week's $54.41. The local Dubai Mercantile Exchange's Oman heavy sour nearby future closed the week at $36.60, a 28 per cent fall from the previous week's $50.88.
Adding to the gloom, the basket of the Organisation of Petroleum Exporting Countries (Opec) hit $40.75, further pressuring Middle East and North African (Mena) economies that rely heavily on crude exports.
Last week's broad-based market sentiment that a local bottom at $50 per barrel had been reached failed to support prices after the worst jobs report in 34 years in the US was released on Friday.
...
The crude market supply price insensitivity is exacerbated by Opec's seeming inability to discipline its members to cut production. Possibly, that was the reason last week's quasi-meeting announced no new cuts. It needed to assure enforcement of its last announced production cuts before imposing new cuts. So any cut announcements were pushed back to mid-Dec-ember.
...
Oman to pump 270m riyals into banking system
Reuters
Published: December 04, 2008, 23:35
Dubai: The Central Bank of Oman on Thursady said it had amended bank reserve requirement rules to release 270 million riyals (Dh2.57 billion) into the banking system to help lenders cope with the financial crisis.
...The Omani central bank, tackling record inflation rates above 13 per cent this year, had raised reserve requirements in August to eight per cent from five per cent in an effort to curtail credit growth. ...Oman has since "effectively" reduced the reserve requirement back to five per cent to prevent any indirect effects on liquidity from the global credit squeeze, Central Bank Executive President Hamood Sangour Al Zadjali said.
"The central bank decided to effectively reduce the reserve requirement, which as a result injected about 270 million riyals back into the banking system," Zadjali said.
Under new rules, banks are allowed to hold up to three per cent of deposits "in the form of currency held in banks vaults and or investments in certificates of deposit issued by the central bank", he said. The eight per cent official reserve requirement remained intact, he said.
"Since all banks would have cash on hand and almost all banks have interest-bearing central bank CDs as part of their portfolio, it is considered an effective reduction in the reserve ratio," Al Zadjali said. The central bank chief said there was "no evidence of any major liquidity problem" in Oman, where credit growth hit 52.7 per cent in October.
Still, the central bank allocated about $2 billion to local banks to provide them with dollar liquidity, while the government set up a 150 million riyal market-maker fund with the private sector to help stabilise the country's bourse.
Interbank rates have moderated to less than one per cent from 2.6 per cent in the first week of October, Al Zadjali said.
"The year 2008 as a whole... could end up with very high growth in credit, even if one presumes some moderation in November and December," he said.
Inflation - which has almost doubled in the last year - could "moderate significantly" in 2009 as price pressures decline in developed countries, food and non-oil commodity prices ease and the US dollar appreciates, he added.
"These favourable effects could be imported to Oman, and thereby create sobering influence on the inflation," Al Zadjali said. "Because of the fall in oil prices, despite fiscal stabilisation, there could be some moderation in domestic demand, which may ease pressure on supply constraints, helping thereby to improve the inflation situation."
Saturday, December 6, 2008
Omani papers continue to print any PR crap they are sent
MSM trading flat, everyone off for the Eid holidays, yawn... Stinking Red tide still everywhere (more than 3 weeks now) from Mussandam to Sur.
But, a piece printed in the Times of Oman today shows how the press here will print any old crap sent to them as a PR piece. It's essentially an advertorial filled with total bullshit, pumping some dodgy minor UAE real estate developer 'Sweet Homes', who are trying to sell to the Omani market a planned development called Ajman Uptown in the middle of no-where in Ajman, UAE. You can compare the total PR drivel and hype, mixed with out-dated non-sequitors on the Oman economy, below with comments made over the past few days from people actually trapped in the ‘Ajman Uptown’ development already...
Basic story: Sweet Homes apparently advertise a deal based on a 10% deposit, regular payments until 50% paid, followed by 25% on completion and a further 25% after that. It seems Sweet Homes asks for post-dated cheques from 'investors' who purchase, and then proceed to cash them, because the contract is in reality based on a pre-defined project time schedule and is not related to actual physical construction milestones, simply against a promise to finalise contruction. And all they've done so far at Ajman Uptown is level and compact the land, even though prepayments on some previously sold units are already at 40%.
Here's what it looks like in the brochure (I do love the way the artists foresee the current barren desert miraculously turning into a tropical lush jungle during the coming few years)
and here's what it looked like a few days ago.
Its rather sad. Reading a lot of the comments, many of these development companies have taken large amounts of money from the life savings and personal borrowings of Non-Resident Expats who believed they could buy their dream and secure a UAE residence visa as well. And in the specific case of Ajman Uptown, real construction has still not even started. These so-called developers can take lots of money up front, proceed to pay themselves a fortune in salaries, dubious fees, expenses and generally live the good life, all with no need to progress actual construction according to promises at the time of sale; and in the end the only losers will be those who have paid good money for a patch of sand and a promise.
So Muscat, be very wary. As the UAE real estate bubble springs more leaks and the river of borrowed cash dries up, these UAE guys will be doing a lot to try and pull other GCC investors into their sinking mire of debt, with tactics of aggressive hard sell time-share style, performed by some very talented professional sales people chasing big commissions, with contracts that don't align with verbal assurances, and of course pre-payments. Assurances based upon escrow accounts, contractual penalties, etc, don't seem to be worth anything. Resist the tales of discounts, guaranteed rental income, penalties for non-completion, easy payment schedules, etc etc. Once they have your money up front, they have you by the short and curly's.
And when you see the hundreds and hundreds of multi-tower skyscrapers being built or planned right now, its clear (to me at least) that the best strategy, if for some bizarre reason you do want a property in the UAE, is to wait and pick them up post-completion at much cheaper prices than now, with a standard mortgage from a real bank.
Meanwhile, expect more and more media bullshit about how everything is totally fine and there has never been a better time to buy than right now.
STOP Press Oman Developments: A source tells me the decision was made on Wednesday to continue the Salaam Yeti development in Oman, BTW. But I'll be curious if this will be predicated on the off-plan sales business funding model, which I think is now effectively bankrupt.
From the Times of Oman's Irresponsible PR dept:
But, a piece printed in the Times of Oman today shows how the press here will print any old crap sent to them as a PR piece. It's essentially an advertorial filled with total bullshit, pumping some dodgy minor UAE real estate developer 'Sweet Homes', who are trying to sell to the Omani market a planned development called Ajman Uptown in the middle of no-where in Ajman, UAE. You can compare the total PR drivel and hype, mixed with out-dated non-sequitors on the Oman economy, below with comments made over the past few days from people actually trapped in the ‘Ajman Uptown’ development already...
Basic story: Sweet Homes apparently advertise a deal based on a 10% deposit, regular payments until 50% paid, followed by 25% on completion and a further 25% after that. It seems Sweet Homes asks for post-dated cheques from 'investors' who purchase, and then proceed to cash them, because the contract is in reality based on a pre-defined project time schedule and is not related to actual physical construction milestones, simply against a promise to finalise contruction. And all they've done so far at Ajman Uptown is level and compact the land, even though prepayments on some previously sold units are already at 40%.
Here's what it looks like in the brochure (I do love the way the artists foresee the current barren desert miraculously turning into a tropical lush jungle during the coming few years)
and here's what it looked like a few days ago.
Its rather sad. Reading a lot of the comments, many of these development companies have taken large amounts of money from the life savings and personal borrowings of Non-Resident Expats who believed they could buy their dream and secure a UAE residence visa as well. And in the specific case of Ajman Uptown, real construction has still not even started. These so-called developers can take lots of money up front, proceed to pay themselves a fortune in salaries, dubious fees, expenses and generally live the good life, all with no need to progress actual construction according to promises at the time of sale; and in the end the only losers will be those who have paid good money for a patch of sand and a promise.
So Muscat, be very wary. As the UAE real estate bubble springs more leaks and the river of borrowed cash dries up, these UAE guys will be doing a lot to try and pull other GCC investors into their sinking mire of debt, with tactics of aggressive hard sell time-share style, performed by some very talented professional sales people chasing big commissions, with contracts that don't align with verbal assurances, and of course pre-payments. Assurances based upon escrow accounts, contractual penalties, etc, don't seem to be worth anything. Resist the tales of discounts, guaranteed rental income, penalties for non-completion, easy payment schedules, etc etc. Once they have your money up front, they have you by the short and curly's.
And when you see the hundreds and hundreds of multi-tower skyscrapers being built or planned right now, its clear (to me at least) that the best strategy, if for some bizarre reason you do want a property in the UAE, is to wait and pick them up post-completion at much cheaper prices than now, with a standard mortgage from a real bank.
Meanwhile, expect more and more media bullshit about how everything is totally fine and there has never been a better time to buy than right now.
STOP Press Oman Developments: A source tells me the decision was made on Wednesday to continue the Salaam Yeti development in Oman, BTW. But I'll be curious if this will be predicated on the off-plan sales business funding model, which I think is now effectively bankrupt.
From the Times of Oman's Irresponsible PR dept:
Sweet Homes generates large investor interest for its Dh3b ‘Ajman Uptown’ project in Oman
Times
Friday, December 05, 2008 11:47:25 PM Oman Time
MUSCAT — Sweet Homes, a leading UAE-based developer and multi-service provider to the real estate sector, has announced that it has generated huge investor interest in Oman for its Dh3 billion ‘Ajman Uptown’ project following the completion of roadshow organised in Oman.
The developer has a state-of-the-art sales office in Muscat and has attributed the success to growing interest from Omani investors towards villas and townhouse communities.
Sweet Homes had previously opened its offices in Oman to market ‘Ajman Uptown’, a community development that is set to offer a total of 1,504 G+2 villas and townhouses and 7 G+4 buildings spread over 4 million square feet of land in Ajman, UAE.
Recent studies show that real estate investments in Oman totalled $4.2 billion in 2007, up from the $0.75 million figure posted in 2005, and this is expected to further consolidate and reach $20.8 billion by 2010.
As part of a programme to reduce the oil sector’s contribution to GDP to nine per cent by 2020, Oman has been actively pursuing a development plan that focuses on industrialisation, privatisation and diversification, particularly in high-potential investment platforms such as real estate developments.
In addition, investors are also actively looking at investment opportunities in the UAE real estate market, with many having set their eyes on ‘Ajman Uptown’, which offers the benefits of community living within the commercial and residential towers, hotel and hotel apartment complex, and villas and townhouses comprising the development project.
“The growing interest for ‘Ajman Uptown’ shows that our intensified marketing campaigns in Oman are paying off. With a growing number of Omani players looking to invest in residential communities outside of Oman, we are confident that ‘Ajman Uptown’, which offers 8 different types of two, three and four-bedroom townhouses and exclusively designed five-bedroom VIP villas, will be met with overwhelming response. Our project has generated positive ROI’s for our investors and we’re aiming to do the same with investors in Oman,” said Fahad Sattar Dero, CEO, Sweet Homes Group.
The opening of Sweet Homes’ Oman operations coincides with the country’s growing boom in economic growth.
In 2007, Oman’s GDP posted a 12.9 per cent growth attained through a notable rise in non-oil activities and an 18.3 per cent increase in non-petroleum activities.
Despite the fact that its real estate sector is considered to be in its infancy and only posts 3.8 per cent of Oman’s GDP, developer’s such as Sweet Homes are strategically positioning themselves in a sector that is forecasted to grow exponentially in the coming years.
“We are definitely expecting to generate more market response for our projects from these intensified campaigns as there is a huge pool of potential investors and property buyers who are very interested in our unique real estate offerings.
“Further, the success of our expansion initiatives in Oman and also in Qatar have further emboldened us to reach out to more areas in the region, providing international customers an exclusive and convenient platform to facilitate the acquisition of their dream properties and real estate investments in the UAE,” concluded Dero.
With a current project portfolio valued at Dh4.7 billion, including its two primary projects in Ajman, ‘Rainbow Towers’ and ‘Ajman Uptown’, Sweet Homes has earmarked exclusive projects in Dubai and Abu Dhabi as part of its extensive expansion plans.
The developer is positive that its future projects within the UAE will set new records for the company, strengthening the solid reputation it has built in Ajman and building a significant presence in the entire UAE real estate market.
With offices in the UAE, Qatar, and Oman, Sweet Homes continues with its vision of providing more residential developments in the region and to further expand operations to cater to the growing interest across the region.
Friday, December 5, 2008
Need a job? Call for Omani Mystery Shoppers looks fishy
Yes, its a job even you can do, Muscat Princesses!
This ad for Mystery Shoppers caught my eye while pondering the implications of job opportunities in the Sultanate:
The link takes you to their website.
Hmmm. This sort of operation is often a scam designed to get cash out of you, not to actually employ you. If anyone can be bothered trying to see what happens, here's the link, but on no account use real names or send them any money or bank details! You've been warned.
This ad for Mystery Shoppers caught my eye while pondering the implications of job opportunities in the Sultanate:
Service Checkers / Mystery Shoppers for Oman
Job Location
Oman
Job Description
Being in business since 1996 has made INTERNATIONAL SERVICE CHECK one of the industry leaders in Mystery Shopping. Our strategic focus and dedication is to provide innovative, technology - driven Mystery Shopping programs, custom designed to exceed our clients' expectations in quality, performance and expert support. But at the same time, delivering accurate measurable data in a timely, efficient manner. Mystery Shopper – Service Checker INTERNATIONAL SERVICE CHECK is a well known global company focused on checking the quality of customer service, by using the method of Mystery Shopping. ISC is currently looking for people of all ages who are thoughtful, have an eye for detail and with good reporting skills, who reside in Oman, to analyze the service provided by various commercial outlets: restaurants, clothing or shoe shops, jewellery boutiques etc.
The link takes you to their website.
Hmmm. This sort of operation is often a scam designed to get cash out of you, not to actually employ you. If anyone can be bothered trying to see what happens, here's the link, but on no account use real names or send them any money or bank details! You've been warned.
Oman gets into the Bulgarian bridge building business
A strange little article in the oft over-looked on-line periodical: News Bulgaria about how the Sultanate of Oman has tendered to build them a new bridge over the river Danube, providing another connection between Bulgaria and Romania.
Who'd have thought we were in the bridge building business?
Oman interested in the construction of Danube bridge 3
Updated on: 05.12.2008, 11:55
The government of Oman has decided to participate in a competition for the concession of the construction of a bridge over the Danube near Silistra. This was announced by the mayor of the municipality Ivo Andonov, cited by Radio Shumen.
He has received a letter from State investment fund of Oman.
It announces that a team of international consultants, hired by Oman team, has presented extremely good data for the strategic location of the bridge.
The concession procedure should become active as soon as possible. Silistra mayor Ivo Andonov said that he will seek cooperation from the Bulgarian government in the next days.
Thursday, December 4, 2008
Actual Local Investigative Journalism - Legal limits on Car loans avoided.
I stumbled across this rather hidden actual Omani Media Investigative Journalism piece in.... Times of Oman. Yes. A story on car loans.
Read between the lines, and the story is that while the Central Bank have decreed that all car loans are to be for a maximum of 80% of the car value and the remaining 20% paid by the customer, dealers are getting around it by simply 'over invoicing' on the value of the car, enabling customers to effectively borrow 90% or more from their banks and flaunt the intent of the CBO's law.
Loopholes are a common problem in Omani law, especially as the lack of either personal income tax or VAT means a lot of the economy is uncontrolled and not easy to police. But it isn't hard to make this sort of transaction even more legal.
For example, I could actually charge you full price, but then offer an instant cash rebate, free gifts (that can be exchanged for cash), and include insurance, 'free' servicing, etc.
It is an example of how these simple 'micro-managing type' laws are often by-passed almost immediately. People are just too damn clever to easily be made to do something they don't want to do, especially when there's a buck in it.
Excellent work, Aftab H. Kola. This is good to see. More please!!!!!! [Essa, Bonus?]
Naughty naughty...
Read between the lines, and the story is that while the Central Bank have decreed that all car loans are to be for a maximum of 80% of the car value and the remaining 20% paid by the customer, dealers are getting around it by simply 'over invoicing' on the value of the car, enabling customers to effectively borrow 90% or more from their banks and flaunt the intent of the CBO's law.
Loopholes are a common problem in Omani law, especially as the lack of either personal income tax or VAT means a lot of the economy is uncontrolled and not easy to police. But it isn't hard to make this sort of transaction even more legal.
For example, I could actually charge you full price, but then offer an instant cash rebate, free gifts (that can be exchanged for cash), and include insurance, 'free' servicing, etc.It is an example of how these simple 'micro-managing type' laws are often by-passed almost immediately. People are just too damn clever to easily be made to do something they don't want to do, especially when there's a buck in it.
Excellent work, Aftab H. Kola. This is good to see. More please!!!!!! [Essa, Bonus?]
Is CBO regulation putting a spoke in car sales through finance?
Aftab H. Kola
Times of Oman, Wednesday, December 03, 2008
MUSCAT — One of the key sectors in Oman — the auto finance industry — faced fluctuations in fortune this year following a new regulation from the Central Bank of Oman (CBO).
It may be recalled that the CBO in the beginning of the year had issued circulars to all financial companies that a borrower who wants to buy a car through loans should pay a minimum of 20 per cent down payment of the cost of the vehicle.
CBO instructed that personal loans for purchasing of vehicles have been mounting significantly and with a view to improve prudence and moderation the step was necessitated.
Cars in Oman have been within the close reach of consumers due to easy instalment schemes offered by auto finance companies. In fact, industry sources attribute this success of auto companies to the effectiveness of their alliances with financing institutions. The increased preference for financing car purchases through loans, thus, seemed justified.
According to reliable industry sources, out of 30,000-odd cars sold in Oman every year, 65 per cent are through finance. Says Aftab Patel, CEO, Al Omaniya Financial Services, “The down payment rule is applicable to individuals and not for corporate or business buying. There has not been a significant demand reduction in car sales through finance as the consumers have taken it in a positive spirit. If you look at the other way, instalments will come down.”
Another official from a car finance company said: “Smart money managers who make a 20 per cent down payment have more freedom to make a change in the car they drive. During the second year, when the car depreciates at a much slower rate, they would begin to build equity in their car. During a trade-in, they would actually get a positive credit towards the new car.”
Major players in retail car financing refused to comment on how the CBO rule has affected the car finance market. However, Mohammed Nazim, deputy general manager credit and collection, Suhail Bahwan Automobiles is candid: “The down payment rule has affected the car market marginally, but people are just crazy about cars here.”
Another official from one of the leading finance companies frankly admits that the car sales have been affected to a fairly good extent. He observed: “It is extremely difficult for new employees to pay 20 per cent down payment.”
But reports suggest that some car dealers who have in-house finance schemes are offering car loans without sticking to 20 per cent down payment. They charge less than 10 per cent down payment.
Consumers like Mohammed Hisham, a government employee find it extremely difficult to shell out a big initial amount to buy a car on finance.
He says: “The down payment component is important to a low-salaried man like me. I just got a licence and I’m keen to buy a car. But I don’t think I can buy one if they insist on 20 per cent.”
There are many like Hisham who echoed similar views. Then there are some smart agencies who know how not to send away a potential buyer either by ‘over-invoicing’ or ‘trade-in’ tricks. Industry experts now feel that the future of the automobile sector is now directly linked to the ever-increasing youth population, which is the prime target segment for most of the dealers.
And so they are devising some new schemes so that down payment does not deter them from buying cars.
Naughty naughty...
Wednesday, December 3, 2008
Oman reduces oil price assuption for 2009 budget from $55 to $45
Oman is cutting the assumed 2009 oil price from $55 a bbl to $45 - a cut of 18%.
The Government was already forecasting a deficit based on $55, so indeed there will either have to be some budget cuts, or a big slice of money transferred from the reserve fund(s), or a bit of both.
Oman's economy, despite the efforts of diversification, still effectively runs Government spending of one form or another, and Government spending runs on oil and gas. The drops in oil price to less than $60, if sustained, will have a nasty effect on the local economy, which will reduce tax revenues too. OK, it won't be as bad as the recession in most of the world, but a chill wind will still be blowing.
Most Omanis don't know what 'lay-offs' or 'redundancy' mean. The only example I know of was the closure of the Gulf Air call centre back-office last year when the Oman Government pulled out of Gulf Air, and the papers were full of stories of shell-shocked Omanis worried about the fact they were in debt to the eyeballs and were about to be ... OMG!!! out of work. There was a strong expactation that it was up to the Government to 'do something!'.
If the sub $50 oil stays for a while, some of the local employees might start to find out what happens in most other countries when there is a big slowdown: unemployment.
But, as there is no system of unemployment benefit in the Sultanate, this would indeed be potentially devastating, what with school fees to pay, and debt payments to make.
As anyone who works here knows, sacking Omani employees is far from easy, if not effectively impossible without a clear case of fraud. Because of family connections somewhere, or if lacking wasta they will complain to the Ministries, who will then put pressure on the company to keep them on the payrole. This situation may come under some pressure in 2009, and that may turn out to be a good thing. I think the system should be radically updated to both provide some form of compulsory unemployment insurance and to make it as easy to hire and fire local staff as Expat staff.
Of course, under-employment is nothing new in Oman, but this sort of thing has been common for some time in the real world...
The National
The Government was already forecasting a deficit based on $55, so indeed there will either have to be some budget cuts, or a big slice of money transferred from the reserve fund(s), or a bit of both.
Oman's economy, despite the efforts of diversification, still effectively runs Government spending of one form or another, and Government spending runs on oil and gas. The drops in oil price to less than $60, if sustained, will have a nasty effect on the local economy, which will reduce tax revenues too. OK, it won't be as bad as the recession in most of the world, but a chill wind will still be blowing.
Most Omanis don't know what 'lay-offs' or 'redundancy' mean. The only example I know of was the closure of the Gulf Air call centre back-office last year when the Oman Government pulled out of Gulf Air, and the papers were full of stories of shell-shocked Omanis worried about the fact they were in debt to the eyeballs and were about to be ... OMG!!! out of work. There was a strong expactation that it was up to the Government to 'do something!'.
If the sub $50 oil stays for a while, some of the local employees might start to find out what happens in most other countries when there is a big slowdown: unemployment.
But, as there is no system of unemployment benefit in the Sultanate, this would indeed be potentially devastating, what with school fees to pay, and debt payments to make.
As anyone who works here knows, sacking Omani employees is far from easy, if not effectively impossible without a clear case of fraud. Because of family connections somewhere, or if lacking wasta they will complain to the Ministries, who will then put pressure on the company to keep them on the payrole. This situation may come under some pressure in 2009, and that may turn out to be a good thing. I think the system should be radically updated to both provide some form of compulsory unemployment insurance and to make it as easy to hire and fire local staff as Expat staff.
Of course, under-employment is nothing new in Oman, but this sort of thing has been common for some time in the real world...
The National
Oman, Iran, budget on $45 a barrel oil
Tamsin Carlisle
December 03. 2008 3:35PM UAE
Oman and Iran are planning 2009 budgets based on $45 a barrel oil, following a record decline in crude prices by about $100 a barrel since July.
The Omani council for financial affairs and energy resources agreed this week to amend the average oil price assumed in the sultanate’s budget to $45 from $55, while Iran’s government and a parliamentary committee have an initial accord to base next year’s budget on $45-a-barrel crude, in place of a previous price assumption of $55 to $60 a barrel.
The revisions are likely to mean that both Gulf states will either run deficits next year or will have to slash government spending to balance their budgets.
The International Monetary Fund has estimated Oman’s break-even oil price at $77 for the current fiscal year, and Iran’s at $90, significantly higher than for most other Gulf states.
Record oil revenues earlier this year helped Oman post a large budget surplus of 912 million rials (Dh8.7 billion) for the first quarter of its current fiscal year, instead of a forecast deficit. However, sharply lower oil prices later in recent months will have eroded the state’s chances of avoiding a deficit for the full year.
...
Tuesday, December 2, 2008
Oman's Real Estate - what's the status?
No real news at all yesterday, at least not in Oman, apart from the visit with HM and the Omani Military of General Petreaus, now US Military head of the Middle East theatre. Totally dulls-ville.
Meanwhile, the impact of the 'global liquidity crisis' continues to reach inexorably towards Oman. The problems:
- Low oil prices lately (and most importantly lower than budgeted by Government for next year),
- Falling demand & low global prices for exports such as copper and aggregate, Aluminium and refined oil products, shipping, LNG, methanol,
- Likely reduced demand from high paying tourists (although that is yet to be confirmed, I think it's likely that intense competition will take place between classical tourist destinations, like Far East, Mediterranean, Caribbean, and ME, lowering profit margins and growth).
- The acknowledged significant reduction in expected future growth, which effects lower NPV for businesses
- Low share prices
On the upside, import prices are plummeting, helped by the stronger dollar, for steel, cement, food, cars, heavy machinery, and oil field services. International contractors will be searching for deals, and skilled expats for jobs. The Free Trade Agreement with the US might help too. Bulk shipping charges have collapsed, making transportation of imports and exports much cheaper (~80% cheaper).
One big question at present is:
what is the status and implications for real estate developments in Oman, especially given the continuing and surprisingly rapid meltdown of the Dubai property bubble?
Obviously, the news is going to be biased to the downside in the short to medium term for all real estate in Oman, but especially the high-end, away from industry, semi-tourism mega-projects.
In fact, the whole "buy off-plan" business model is probably busted. The idea was that by buying off-plan (ie not yet built), purchasers took on some of the development's risk, significantly lowering financing costs and developer risk, enabling them to - in exchange - get a lower than market purchasing price, locked in, and effectively buying a cheaper call option on the future real estate market, which had been so buoyant for so long as to seem a one-way bet. At the Wave recently, people were even fighting for the right just to make a deposit. The greed was palpable.
If I had a house being built right now, I'd be very careful to make sure original specifications are being adhered to. The temptation to cut costs on these pre-partially paid deals must be hard to resist. Contractual minimum will be the rule, and any variations sharply priced, so make sure you have regular independent inspections during construction. I wouldn't rely on the local building inspector to make sure you got the right tiles, kitchen, wall thickness, fittings, water system, etc etc.
And if you haven't yet bought an off plan Middle East house, ...... why, pat your self on the back for a fantastic investment decision successfully completed!! Your foresight has saved you 100,000s of thousands of dollars!
Of course, the bottom line for Oman will mean in the short term, less investment spending (and the total being put on hold right now must be at least 6 billion rials worth, over several years mind you). That's a big hit on the economy, especially when then taking account of the multiplier effect on all the money invested, plus the jobs for people, especially Omanis, that will at best be delayed... Not good. No wonder Galfar shares are down.
As for the specific developments, what's the latest?
The Wave.
Always the most organised and professional of the lot, The Wave has had the advantage of getting in early and having thus completed many houses that are paid for (phase 1), and probably getting reasonable contracts for construction. Secondary sales have collapsed, but perhaps mainly because the prices being asked are still overinflated compared to what they originally cost just a few years ago, and this is exposing those who bought only to sell on. The Wave have probably locked in decent project finance too from Bank Muscat.
I don't have any detailed intel yet on their inner-financing status, but as the Wave is owned primarily by the Government of Oman and so much cost is sunk, they will survive. A problem in the short-term would be if houses already sold/constructed come onto the market at lower prices than are profitable for subsequent new phases. They may take this opportunity to renegotiate contracts for construction & fitting, and share the pain a little. Long term I think the Wave will be fine, if you want to live in an expensive house on the Muscat Airport flight path surrounded by construction for several years to come with little upside in investment value. At least you can commute to Muscat to work.
Muscat Hills
The villa/golf course project near Boucher that is already well underway. Recently relaunched, and allegedly refinanced by HM himself, it seems to be progressing too. (Only after purchasers threatened legal action over an attempt by developers to extract more cash from them post-contract, allegedly after someone embezzeled a load of the project cash). As long as they have now locked down construction and financing (which they should have done ages ago) this project should complete OK, although the market prices will might mean a short-term loss on paper for the purchasers and not much profit for the developers. Again, at least you can commute easily.
OHI Qurm/Burhan Heights/Shanfari villas redevelopment
Announced just before the shit hit the fan, and with demolition started of the old houses, this project seems to be in trouble. The sales office is substandard and amateurish, no deal has been concluded on the proposed 4**** hotel, and talk is that the project will be suspended. If you have shit-loads of cash right now, and perhaps own a construction company, this would make a killer purchase right now, BTW. Galfar Developments anyone?
Blue City
Ah, Blue City. If you don't know the history, you've got some reading to do. IMHO, this project was in big trouble even before the crisis. Right now, Blue City is in the worst position for a real estate development to find themselves when cash is tight, with a lot of their seed capital sunk or committed, and the likelihood of further off-plan sales (needed to finance construction) now much lower, if not zero.
The borrowed money (via $925 million in bonds) has been substantially spent on a complete re-design, salaries, commissions to the financiers, marketing junkets around the world, advertising, plus building the construction camp and bulldozing some roads. The planned 27 hole golf course had already been pared back to 18 holes, and sales are well below target and apparently in breach of bond covenants. The construction managing company Bovis has quit, claiming non-payment. Lots of churn in other contractors and in senior management. The shareholders [AAJH and Cyclone LLC] continue to battle in the courts for ownership, and as a result of that dispute I'm not aware of an official Board meeting being held lately, thus allowing the development company executive to run independently of formal company Governance. The mega-hospital/medical village sponsers have pulled out. There has always been a lot of silly gossip alleging fishy dealings with money being siphoned off and even reports of a $1 miilion hush payment made to the ex-CEO, all of which I have no evidence for and is almost certainly not true. Not at all.
There has been a long and rather tedious exchange of essentially fact free opinions over the past few days on Sue Hutton's News Briefs Oman site, Blue City Comments, with someone calling themselves 'stakeholder' trying to say everything is fine, despite all the available facts, insider comments and common sense showing is it far from fine. He/She has been commenting on an earlier post here too.
I expect this project will be significantly scaled back to cut losses and rescue what they can. Bonds will be renegotiated, and the project will in the immediate short term turn into a smaller villa-style luxury hotel development combined with a few villas, golf course and an apartment block or two. I predict the principals will now use the crisis as an excuse for the greater project's collapse and seek Government support to fill all the holes. They will claim if it wasn't for the crisis that everything was fine and certainly nothing wrong with the original concept or management. Which I guess if you snort enough PCP-laced Andean marching powder and/or have your own money invested in the project might seem believable.
Salaam Yeti
Now that the village is moved, land reclaimed, mountains leveled and the breakwater built, those in the know say the project is on indefinite hold for now as things continue to develop in Dubai. Developer Sama Dubai have apparently placed all their projects on hold while they reevaluate, but I would expect, given the early stage of the development, that Dubai may have priority in the short-term. However, in the medium term, who knows, perhaps Oman will become a safer bet. Yeti was tipped by some Senior real estate contacts of mine some time ago as 'the one to buy' because of its proximity to Muscat, Shangri La type setting, and the significantly higher total area/number of houses ratio compared to the Wave.
Sama Dubai, which is part of the Dubai Holding conglomerate owned by Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler, has had a few problems of late, with 4 senior executives arrested in the UAE Real Estate corruption probes.
A'Sifa
Unknown.
Omagine
The development company recently claimed (see prev post) "...There is at any rate no shortage of qualified and willing investors in Oman and its surrounding countries (the "Gulf Region") who are ready, willing and able to invest in the Project Company ...money simply isn't an issue..."
I guess we'll see! They claim to have $110 mln in the kitty, less than 10% of the projected project cost, but as no significant capital has been sunk in the ground, and they seem to be using a recycled design, they should have enough cash to wait a few years.
PDO Camp Redevelopment by MoT
The timing of the crisis, and the contraints of both project financing, real estate market, hotel demand and Government budgets, will almost certainly mean this project will be deferred indefinitely until conditions improve. PDO's residents have gotten a stay of execution for quite some time.
Other small retail/residence developments in Muscat: Qurm Wadi, Ghubra, ...
Construction is so far along that if local bank support continues to be available, these should be completed OK, as they are relatively small developments, aimed at the local market which is still significant. Whether they will sell, and at what price, is a different matter. But cashed up local big boys may well be in for a few bargains.
Meanwhile, the impact of the 'global liquidity crisis' continues to reach inexorably towards Oman. The problems:
- Low oil prices lately (and most importantly lower than budgeted by Government for next year),
- Falling demand & low global prices for exports such as copper and aggregate, Aluminium and refined oil products, shipping, LNG, methanol,
- Likely reduced demand from high paying tourists (although that is yet to be confirmed, I think it's likely that intense competition will take place between classical tourist destinations, like Far East, Mediterranean, Caribbean, and ME, lowering profit margins and growth).
- The acknowledged significant reduction in expected future growth, which effects lower NPV for businesses
- Low share prices
On the upside, import prices are plummeting, helped by the stronger dollar, for steel, cement, food, cars, heavy machinery, and oil field services. International contractors will be searching for deals, and skilled expats for jobs. The Free Trade Agreement with the US might help too. Bulk shipping charges have collapsed, making transportation of imports and exports much cheaper (~80% cheaper).
One big question at present is:
what is the status and implications for real estate developments in Oman, especially given the continuing and surprisingly rapid meltdown of the Dubai property bubble?
Obviously, the news is going to be biased to the downside in the short to medium term for all real estate in Oman, but especially the high-end, away from industry, semi-tourism mega-projects.
In fact, the whole "buy off-plan" business model is probably busted. The idea was that by buying off-plan (ie not yet built), purchasers took on some of the development's risk, significantly lowering financing costs and developer risk, enabling them to - in exchange - get a lower than market purchasing price, locked in, and effectively buying a cheaper call option on the future real estate market, which had been so buoyant for so long as to seem a one-way bet. At the Wave recently, people were even fighting for the right just to make a deposit. The greed was palpable.
If I had a house being built right now, I'd be very careful to make sure original specifications are being adhered to. The temptation to cut costs on these pre-partially paid deals must be hard to resist. Contractual minimum will be the rule, and any variations sharply priced, so make sure you have regular independent inspections during construction. I wouldn't rely on the local building inspector to make sure you got the right tiles, kitchen, wall thickness, fittings, water system, etc etc.
And if you haven't yet bought an off plan Middle East house, ...... why, pat your self on the back for a fantastic investment decision successfully completed!! Your foresight has saved you 100,000s of thousands of dollars!
Of course, the bottom line for Oman will mean in the short term, less investment spending (and the total being put on hold right now must be at least 6 billion rials worth, over several years mind you). That's a big hit on the economy, especially when then taking account of the multiplier effect on all the money invested, plus the jobs for people, especially Omanis, that will at best be delayed... Not good. No wonder Galfar shares are down.
As for the specific developments, what's the latest?
The Wave.
Always the most organised and professional of the lot, The Wave has had the advantage of getting in early and having thus completed many houses that are paid for (phase 1), and probably getting reasonable contracts for construction. Secondary sales have collapsed, but perhaps mainly because the prices being asked are still overinflated compared to what they originally cost just a few years ago, and this is exposing those who bought only to sell on. The Wave have probably locked in decent project finance too from Bank Muscat.
I don't have any detailed intel yet on their inner-financing status, but as the Wave is owned primarily by the Government of Oman and so much cost is sunk, they will survive. A problem in the short-term would be if houses already sold/constructed come onto the market at lower prices than are profitable for subsequent new phases. They may take this opportunity to renegotiate contracts for construction & fitting, and share the pain a little. Long term I think the Wave will be fine, if you want to live in an expensive house on the Muscat Airport flight path surrounded by construction for several years to come with little upside in investment value. At least you can commute to Muscat to work.Muscat Hills
The villa/golf course project near Boucher that is already well underway. Recently relaunched, and allegedly refinanced by HM himself, it seems to be progressing too. (Only after purchasers threatened legal action over an attempt by developers to extract more cash from them post-contract, allegedly after someone embezzeled a load of the project cash). As long as they have now locked down construction and financing (which they should have done ages ago) this project should complete OK, although the market prices will might mean a short-term loss on paper for the purchasers and not much profit for the developers. Again, at least you can commute easily.
OHI Qurm/Burhan Heights/Shanfari villas redevelopment
Announced just before the shit hit the fan, and with demolition started of the old houses, this project seems to be in trouble. The sales office is substandard and amateurish, no deal has been concluded on the proposed 4**** hotel, and talk is that the project will be suspended. If you have shit-loads of cash right now, and perhaps own a construction company, this would make a killer purchase right now, BTW. Galfar Developments anyone?
Blue City
Ah, Blue City. If you don't know the history, you've got some reading to do. IMHO, this project was in big trouble even before the crisis. Right now, Blue City is in the worst position for a real estate development to find themselves when cash is tight, with a lot of their seed capital sunk or committed, and the likelihood of further off-plan sales (needed to finance construction) now much lower, if not zero.
The borrowed money (via $925 million in bonds) has been substantially spent on a complete re-design, salaries, commissions to the financiers, marketing junkets around the world, advertising, plus building the construction camp and bulldozing some roads. The planned 27 hole golf course had already been pared back to 18 holes, and sales are well below target and apparently in breach of bond covenants. The construction managing company Bovis has quit, claiming non-payment. Lots of churn in other contractors and in senior management. The shareholders [AAJH and Cyclone LLC] continue to battle in the courts for ownership, and as a result of that dispute I'm not aware of an official Board meeting being held lately, thus allowing the development company executive to run independently of formal company Governance. The mega-hospital/medical village sponsers have pulled out. There has always been a lot of silly gossip alleging fishy dealings with money being siphoned off and even reports of a $1 miilion hush payment made to the ex-CEO, all of which I have no evidence for and is almost certainly not true. Not at all.
There has been a long and rather tedious exchange of essentially fact free opinions over the past few days on Sue Hutton's News Briefs Oman site, Blue City Comments, with someone calling themselves 'stakeholder' trying to say everything is fine, despite all the available facts, insider comments and common sense showing is it far from fine. He/She has been commenting on an earlier post here too.
I expect this project will be significantly scaled back to cut losses and rescue what they can. Bonds will be renegotiated, and the project will in the immediate short term turn into a smaller villa-style luxury hotel development combined with a few villas, golf course and an apartment block or two. I predict the principals will now use the crisis as an excuse for the greater project's collapse and seek Government support to fill all the holes. They will claim if it wasn't for the crisis that everything was fine and certainly nothing wrong with the original concept or management. Which I guess if you snort enough PCP-laced Andean marching powder and/or have your own money invested in the project might seem believable.
Salaam Yeti
Now that the village is moved, land reclaimed, mountains leveled and the breakwater built, those in the know say the project is on indefinite hold for now as things continue to develop in Dubai. Developer Sama Dubai have apparently placed all their projects on hold while they reevaluate, but I would expect, given the early stage of the development, that Dubai may have priority in the short-term. However, in the medium term, who knows, perhaps Oman will become a safer bet. Yeti was tipped by some Senior real estate contacts of mine some time ago as 'the one to buy' because of its proximity to Muscat, Shangri La type setting, and the significantly higher total area/number of houses ratio compared to the Wave.
Sama Dubai, which is part of the Dubai Holding conglomerate owned by Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler, has had a few problems of late, with 4 senior executives arrested in the UAE Real Estate corruption probes.
A'Sifa
Unknown.
Omagine
The development company recently claimed (see prev post) "...There is at any rate no shortage of qualified and willing investors in Oman and its surrounding countries (the "Gulf Region") who are ready, willing and able to invest in the Project Company ...money simply isn't an issue..."
I guess we'll see! They claim to have $110 mln in the kitty, less than 10% of the projected project cost, but as no significant capital has been sunk in the ground, and they seem to be using a recycled design, they should have enough cash to wait a few years.
PDO Camp Redevelopment by MoT
The timing of the crisis, and the contraints of both project financing, real estate market, hotel demand and Government budgets, will almost certainly mean this project will be deferred indefinitely until conditions improve. PDO's residents have gotten a stay of execution for quite some time.
Other small retail/residence developments in Muscat: Qurm Wadi, Ghubra, ...
Construction is so far along that if local bank support continues to be available, these should be completed OK, as they are relatively small developments, aimed at the local market which is still significant. Whether they will sell, and at what price, is a different matter. But cashed up local big boys may well be in for a few bargains.
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