The Reuters Middle East Investment Summit in Dubai was hit by the whirlwind visit of British Prime Minister Gordon Brown across the Gulf as he looked to drum up support for ailing British firms and convince Gulf investors the IMF’s bailout fund was a safe place to put their cash. After courting Saudi Arabia and Abu Dhabi, it was a fleeting visit to the region’s commercial hub Dubai. As his motorcade flew passed the world’s tallest tower But hark…we have seen this before. President George Bush headed to the United Arab Emirates more than a year ago. But that’s where the similarities stop. For Mr Bush, Dubai ground to a halt. Chaos ensued. Streets were closed. Workers sent home. The President was in town, so that was that. Fast forward November 4, 2008. Mr Brown is here. Dubai is business as usual, although The Prime Minister’s motorcade did delay a speaker for the Reuters summit. Perhaps the credit crunch has meant random days off are no longer on the Dubai agenda……. unless you’re the President of course.

An eight-week strike by machinist workers at commercial aircraft maker Boeing delayed production and may cut profit by hundreds of millions of dollars.
But a major aircraft leasing company in the Gulf Arab state of Kuwait – and a Boeing client – sees one possible benefit to the company.
A global industry downturn is forcing manufacturers to slow down growth plans and control capacity, Ahmad A. Alzabin, chairman of Kuwait-based Alafco Aviation Lease and Finance Co. told a Reuters summit.
“Probably with Boeing they’ve been somehow more fortunate with the strike that was going on for two months. This absorbed some of the excess capacity that had happened.”

Healthcare and education offer a new frontier for Middle
East private equity firms as they take advantage of dramatic
demographic changes in the region.

At least that’s the view held by Dubai-based private equity
player Abraaj Capital.

“With 60 percent of the population, give or take, that’s
younger than 30 years old, you’ve got the need for massive
investment in infrastructure in order to be able to create
employment and cater to this growing population,” Abraaj
executive director Fred Sicre said at the Reuters Middle East
Investment Summit.

In a report this week, Ernst & Young said the Middle East
and North Africa region needs more than $100 billion of joint
investment from the public and private sector over the next five
years to keep up with population growth.

“As well as having the youngest populations on the planet,
we’ve got an increasing number of people going into the 65-plus
age range which is where health becomes a really big issue,”
said Tom Speechley, also an Abraaj executive director.

“You’ve got chronic under-investment historically in the region so governments have opened up the sector to private investment.”

In the past year, the firm, which operates in the Middle East, North Africa and Asia, has invested in a Turkish private
hospital group in Turkey, an Egyptian medical laboratory as well as
retail pharmacies and Speechley sees more to come.

U.S. companies who think they can command the prices of a
bygone era from Middle East investors need to think again, says
Zabeel Investment’s executive chairman.

Because of the hype surrounding sovereign wealth funds from
oil-rich Gulf Arab states, in particular, U.S. corporate players
seem to have visions of “oil wells with taps” when they see an
Arab investor, Mohammed Ali al-Hashimi said at the Reuters
Middle East Investment Summit.

Zabeel has stakes in Sony, planemaker EADS and bought
a Las Vegas-based nightclub and restaurant developer last February.

“They think that because I look the way I look and I wear
this thing here (traditional head cover), I’m going to pay them
a lot more than their company is worth. It doesn’t work that
way, we’re not stupid.

“Corporates in the U.S. haven’t woken up to reality I think.
They’re living in a dream world.

Reality is that rich Middle Eastern investors need to focus
closer to home and protect their own backyards amid the global
financial crisis.

“I think the priority is here, it’s our bread and butter,
the reason for our success. I’m not trying to be patriotic but
in times like this, that’s where people should be focused I
think.”

So tough luck, troubled U.S. firms. But don’t despair just
yet:

“I still think opportunities in the U.S. are there and I’m
interested but until people get their heads out of the clouds
and become realistic, we’ll wait,” the Zabeel executive added.

If there is a silver lining to the impact of the credit crisis in Kuwait, it could be highlighting the poor transparency – even by Gulf Arab standards – in the desert country.
Other Gulf countries such as the United Arab Emirates or Saudi Arabia have taken steps to crack down on corruption or boost transparency in a region where stock prices often move sharply before major company announcements. Most – but not Kuwait — have independent stock market regulators.
Once a regional leader in developing financial markets, Kuwait has fallen behind its neighbours. It would have been almost impossible for investors to discern problems at Kuwait’s Gulf Bank before its rescue last month, economists say.
Lack of transparency can often hide corruption, said Amani Bouresli, finance professor at Kuwait University.
“In terms of corruption, there is the perception of corruption index and every year we have a worse location than the year before,” she said.
The global crisis may add pressure on Kuwait to act, Bouresli said.
“When the index is red you see the government acting,” she said. “I hope if the index goes up again the government won’t stop acting.”
But more decisive measures on disclosure might be too bold a step to expect from Kuwait’s current government. Some have suggested that battles between the government and parliament in Kuwait, perhaps the most democratic of the Gulf Arab states, could hinder the type of action that would be necessary.
“The government knows there is a lot of corruption, but it is weak and unserious,” Kuwaiti economist Naser Alnafisi said.

A pair of speakers at the Reuters Middle East Investment Summit are less than impressed with the West’s requests that oil-rich Gulf Arab state’s pony up cash to help combat the effects of the global financial crisis. British Prime Minister Gordon Brown is the latest to do the rounds in Gulf capitals, after the French trade minister and U.S. Deputy Treasury Secretary Robert Kimmitt, who declared the U.S. open to sovereign fund investment last month.

Not so fast, say Gulf players.

“We are not happy with the demands of other states to help them when they cause problems,” Naser al-Nafisi, general manager at Al-Joman-Center for Economic Consultancy, said at the Reuters summit in Kuwait.

But he wouldn’t want Kuwait to be completely ungenerous: “We have our own problem to solve but of course if there is room, why not.”

The take-care-of-your-own sentiment is not unique to Nafisi or Shuaa Securities Chief Executive Mohammed Yasin who spoke at the Summit in Dubai. Probably it is a feeling held by many across the region, who recall that just two years wealth funds from Muslim states were considered a potential security risk. Payback, anyone?

Still, the Gulf has not turned a completely cold shoulder to pleas for help. Both Saudi Arabia and Qatar have indicated they will contribute to a touted IMF stabilisation fund and other Gulf Arab states will probably follow suit. As Thomas Leaver, chief executive of Dubai Mercantile Exchange, said at the summit:

“Don’t delude yourself into thinking we’re an island and won’t be impacted by what’s happening in the rest of the world.”

The Reuters Middle East Investment Summit team asks Majid Jafar, executive director of UAE’s Crescent Petroleum and board member of Dana Gas, what he thinks of the idea of an OPEC-style gas cartel? He says that it would definitely benefit the whole industry as OPEC does to its members.

But he warns the cost of transporting gas would be one of the challenges as opposed to oil, which is traded with ease as many tankers wander the waters of the world.

The cartel will help member states have a constant dialogue t arrive at a shared learning and coordination of action, Jafar says.

Last night, Russia, Iran and Qatar, which control 60 percent of the world’s gas reserves, said they were forming an OPEC-style gas cartel. Western concerns mounted after this move, that is seen as a step that could drive up prices.

Natural gas, the cleanest of the fossil fuels, now makes up about 20 percent the energy used in the United States, the world’s top consumer.

As airlines around the world cut capacity and ground planes, the tiny Gulf state of Kuwait is stepping boldly into the global aviation crisis with the launch of a third carrier.
Kuwait National Airways hasn’t even taken delivery of its first plane yet, but when it does, it will be fitted with Recaro luxury leather seats.
Kuwaiti executives will be offered the lowest seat density Airbus A320 in the world, enjoy in-seat entertainment, and be able to use their mobiles phones and Blackberrys on board – at least for data — the airline’s CEO George Cooper told a Reuters summit.
Cooper is betting that the world’s seventh-largest oil exporter will remain an island of prosperity in the midst of a global financial crisis.
“Creating this airline is something that will work in Kuwait,” he said. “I can’t think of many other places in the world where it would.”
With only a business plan, the airline raised nearly $200 million in a 2006 initial public offering. Cooper, a former pilot who worked for many years at British Airways, said it will focus on ferrying businessmen around the region, with the first flight expected sometime in January.
The carrier, which will operate under the brand name Wataniya, is benefiting from the plight of airlines around the world as fears of a global recession loom.
It can now snap up pilots from around the world and capitalise on a glut of fuel as planes are grounded in the United States and Europe, Cooper said.
And high fuel costs that have plagued the industry are finally coming down – but that may not be entirely good news for Wataniya.
“Kuwait is a petrodollar economy, so there is a minimal oil price we want to see,” Cooper said.
But as the fate of recently-rescued Kuwaiti lender Gulf Bank shows, the country of 3.2 million isn’t entirely immune from the global crisis.
But even as its economy slows next year and prices for its main export drop, flying around the Gulf in plush leather seats may be too much for some Kuwaitis to resist.

The Reuters Middle East Investment Summit kicks off on Monday 3 November. With the world facing its worst economic downturn since the 1930s, the summit is set to provide a view from the world’s largest oil producing nation. Events organisation is never easy and in such turbulent times, the region is proving just as difficult. Five speaker cancellations just 12 hours before the summit highlighted just how diifficult keeping appointments is in the region. Emergency board meetings, sudden trips overseas or in one case “yes we confirm in the morning” to “we are not sure by lunch time” to “no, no the chairman has other engagements by the evening.” Anybody doing business in the region is acutely aware that appointments are never rigid, but when the world needs stability and not chaos it might be time to keep to those appointments to reassure the investment community. As one public relations executive noted “As they say in these parts In Sha’ Allah (God Willing) next time.”

 Lim Boh Soon, chief executive officer of Kuwait Finance House in Singapore said at the Reuters Wealth Management Summit that he sees the period of downturn in the global economy lasting 18-24 months.

However, he thinks the market sell-off over the past two weeks has thrown up good value and said the Middle Eastern bank will look to raise up to $600 million for three Asia-focused funds next year.  Kuwait Finance House is the Gulf third-largest lender.

What do you make of Lim’s assessment on the global economy? Do you think it is a good idea to start buying into the market?

Click here and hear to listen on Lim’s assessment of the global economy.