Saudi to invest $20 billion in AI by 2030 -Pakistan & Gulf Economist
Saudi Arabia announced Thursday it will invest $20 billion in artificial intelligence projects by 2030, as the oil-rich country seeks to diversify its economy amid slumping crude prices.
Arab world’s top economy introduces AI strategy in Vision 2030, led by Crown Prince, to reduce oil dependency.
“Saudi Arabia will invest $20 billion from now until 2030,” said Abdullah A Ghamdi, head of the Data and Artificial Intelligence Authority, which was established in 2019.
“We aspire to have artificial intelligence as a component of an alternative economy through startups and innovation companies… and view artificial intelligence as a source of savings and additional income,” he said during a G20 media briefing.
Ghamdi added that shares will be open to both foreign and local investors, as the country seeks to establish more than 300 start-ups in artificial intelligence by 2030.
Like most countries in the energy-rich Gulf, Saudi Arabia has been trying to diversify its economy which has been hit by the double whammy of low oil prices and the coronavirus pandemic.
Riyadh is struggling to fund Prince Mohammed’s ambitious diversification plan, as it seeks to repair its image after the 2018 murder of journalist Jamal Khashoggi inside the Saudi consulate in Istanbul.
The G20 summit in Riyadh at the weekend is set to bring together the leaders of the world’s 20 richest nations but has been overshadowed by human rights group calls for the kingdom to release jailed activists.
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UAE banks’ assets surge 7.6pc to dh3.25 trillion
Total assets of banks operating in the UAE increased by 7.6 percent year-on-year at the end of September 2020, and two percent quarter-on-quarter to Dh3.253 trillion, the Central Bank of the UAE (CBUAE) said.
The CBUAE report said combined gross credit of the banks rose by 4.9 percent year-on-year and 0.8 percent q-o-q, reaching Dh1.805 trillion at the end of September 2020. The report, which has examined the monetary and banking activities as well as developments in the UAE financial markets during the third quarter of 2020, also reviewed ratios of annual change over the period from September 2019 to September 2020.
The apex bank said total deposits of resident and non-resident customers with the banks operating in the UAE rose by 2.2 percent quarter-on-quarter basis, reaching Dh1.907 trillion at the end of the third quarter of 2020.
Resident deposits increased by 6.4 percent to Dh1.716 trillion and non-resident deposits increased by 0.8 percent year on year at the end of the third quarter of 2020.
Quarter on quarter, non-resident deposits fell by 4.5 percent, reaching Dh191.3 billion by the end of September 2020.
Global ratings agency S&P said higher cost of risk and lower margins would reduce profitability of banks in the UAE for 2020-2021, but most of them are expected to remain profitable.
“We believe UAE banks’ reduced profitability will last longer due to the high proportion of non-interest-bearing deposits in their funding structures and lower revenue on the asset side. Margins have tightened by 30-40 basis points (bps) due to lower interest rates. Lower margins and higher,” the ratings agency said in a recent report.
According to a recent report by Kamco, the UAE continues to boast the biggest share of total listed bank assets in the GCC at $682 billion or 31.3 percent of the total GCC banking assets.
Money Supply M1, which comprises currency in circulation outside banks (currency issued — cash at banks) plus monetary deposits, increased by 1.9 percent quarter-on-quarter basis during the third quarter of 2020.
On an annual basis, there was an 11 percent climb on year-on-year basis in the monetary aggregate M1, reaching Dh568 billion at the end of September 2020. Money Supply M2 (M1 plus quasi monetary deposits also increased by 0.7 percent quarter-on-quarter basis during the third quarter of 2020. On an annual basis, there was a 7.9 percent year-on-year basis increase in money supply M2, reaching Dh1.469 billion at the end of third quarter of 2020.
Meanwhile, the value of gold reserves held with the CBUAE rose by 121 percent in September 2020 to Dh8.961 billion when compared to December 2019. Month-over-month, they dropped from Dh8.987 billion in August.
The first quarter saw a significant growth in the value of the precious metal reserves, which surged by 47 percent to Dh5.951 as compared to the end of 2019. In the second quarter, the reserves further increased to Dh6.58 billion before soaring to Dh8.462 in July.
The statistics previously issued by the UAE’s financial regulator showed that its reserves of gold grew exponentially since 2015, which is the year when it decided to resume its reserves of gold and foreign currencies, most notably the dollar and other major currencies.
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DCT Abu Dhabi reports positive signs of recovery for tourism sector
Abu Dhabi has announced a significant increase in revenues from tourism activity in the third quarter of 2020, including an increase of 46 percent in hotel revenues, with a 95 percent increase in the number of guests.
The Department of Culture and Tourism – Abu Dhabi (DCT Abu Dhabi) on Sunday announced that besides an increase in hotel revenues, the recovery of the sector was further demonstrated through an estimated 83 percent increase in footfall at malls across the emirate, and a 119 percent increase in airline bookings. Seating capacity for all airlines operating in Abu Dhabi was also increased by 364 percent during this period. This was attributed to the boost in domestic tourism activity led by DCT Abu Dhabi through campaigns and initiatives such as ‘Go Safe’, ‘Unbox Amazing’ and ‘Rediscover Abu Dhabi’.
‘Go Safe’, the region’s first comprehensive safety and hygiene certification programme, contributed to elevating consumer trust in levels of health and safety across hotels and public venues. The programme was launched across all the hotels in the emirate, with 93 of these hotels obtaining full certification in Q3.
(DCT Abu Dhabi) announced the figures after it held its quarterly industry development committee meeting this week with stakeholders and leading entities from across the tourism sector to share the latest updates on the status of tourism activity in the emirate.
The meeting offered promising signs of recovery for the sector, as well as a glimpse into future projects and plans to boost tourism in the emirate.
The meeting included an overview of the revenues and outcomes of tourism activity within the third quarter (Q3) of the year, demonstrating the sector’s recovery trajectory after an abrupt slowdown in the second quarter (Q2) caused by the COVID-19 pandemic. Within Q3, Abu Dhabi achieved the highest hotel occupancy rates and the third highest revenue per room in the region.
Saood Al Hosani, Acting Undersecretary of DCT Abu Dhabi, said: “Despite the profound disruptions caused by restrictions to public mobility, the positive indicators we have seen in the third quarter of this year are a testament to the agility and adaptability of Abu Dhabi’s tourism industry in response to the evolving market landscape. Alongside the launch of Air Arabia and WizzAir this year, which represents a significant vote of confidence in Abu Dhabi’s ongoing role as a travel hub, pioneering initiatives such as our Go Safe certification programme and our Rediscover Abu Dhabi campaign, have successfully resulted in the initial signs of a strong recovery. Looking ahead, tourism continues to be one of Abu Dhabi’s most important drivers to economic growth, and we greatly look forward to continuing our work with the Abu Dhabi government, health authorities, our partners and wider community to build on these achievements for many years to come.”
During the meeting, DCT Abu Dhabi also shared future plans and projects with the attending partners, including the implementation of a cashless payment system across all consumer touchpoints within the sector, and the development of a dedicated bus route for tourism sites, which will make transport across the emirate more accessible, convenient and affordable for visitors.
Ali Hassan Al Shaiba, executive director of Tourism and Marketing at DCT Abu Dhabi, said: “Even during challenging periods, our vision to position Abu Dhabi as a leading tourism destination remains front of mind. We are constantly researching and developing new ways to make the destination more accessible, enjoyable, and extraordinary, and we want our partners to be a part of this ongoing evolution. This year has highlighted, more than ever before, the importance of innovation and collaboration in overcoming the challenges of the future, and DCT Abu Dhabi is committed to ensuring the creative cycle continues during all stages of our work.”
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Top UAE banks face ‘sizeable’ surge in NPLs
Net income of the top 10 UAE listed banks declined by 3.0 percent in the third quarter of 2020 after a rebound in the preceding quarter due to lower interest and other challenging conditions which continued to impact profitability, a leading global professional services firm said on Sunday.
The total interest income of these banks continued to decline for the third consecutive quarter reporting, 7.7 percent q-o-q, as lower interest rate environment continued to pressure banks’ asset yield, Alvarez & Marsal said in its latest “UAE Banking Pulse for Q3 2020.”
“Challenging macroeconomic conditions, low oil prices and effects of Covid-19 have severely impacted overall asset quality and resulted in higher non-performing loan reporting, at 3.6 percent QoQ increase,” said the report.
The top ten banks also reported that loans and advances remained broadly flat during the third quarter, which was the slowest growth in the last six quarters, while deposit growth improved to 4.2 percent QoQ. Furthermore, cost to income ratio increased after improving in the last two quarters to reach 34.3 percent in Q3’20 as decline in operating income outplayed cost optimization, the report co-authored by Dr. Saeeda Jaffar, A&M managing director and head of Middle East, and Asad Ahmed, A&M managing director and head of Middle East Financial Services.
The banks reviewed in the report included First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank, Abu Dhabi Islamic Bank, Commercial Bank of Dubai, National Bank of Fujairah, National Bank of Ras Al Khaimah and Sharjah Islamic Bank.
“After a rebound in performance in in the second quarter, profitability of the top 10 UAE banks showed signs of vulnerability with declining interest income and increased provisioning weighing on the net profit in the third quarter. We expect the economic conditions in the UAE and the region generally to remain challenging in the near term, which would likely limit credit and earnings growth and also result in higher NPLs,” said Ahmed.
He warned that when the Central Bank’s TESS program expires in June 2021, there could be a sizeable increase in NPLs for the banks, should the economy fail to recover. “However, we remain confident that this initiative will allow the economy to gradually recover from the effects of the pandemic.”
Top 10 banks have provided borrowers access to Dh51.1billion at the end of Q3’20 under the TESS programme.
Ahmed said it is likely that dirham interest rates would continue to track US dollar rates. These are not expected to show a major increase in the near future, and hence NIMs will continue to be compressed. “We note that Return on equity (ROE) and return on assets (ROA) within the banking sector continue their downward trend. This may provide an opportunity for banks to look into further consolidation, and focus on integrating new technologies to rationalize costs.”
Global rating agency S&P in its recent forecast that higher cost of risk and lower margins will reduce the profitability of banks in the UAE for 2020-2021, but most of them are expected to remain profitable.
“We believe UAE banks’ reduced profitability will last longer due to the high proportion of non-interest-bearing deposits in their funding structures and lower revenue on the asset side,” said S&P said. “Margins have tightened by 30-40 basis points (bps) due to lower interest rates. Lower margins and higher,” S&P said.
A&M’s report said loans & advances remained flat, while deposits increased by 4.0 percent. “The challenging economic environment impacted credit uptake as L&A remained flat in Q3’20 compared to Q2’20. On the other hand, deposits increased 4.2 percent QoQ, largely on the back of 16 percent increase in First Abu Dhabi Bank’s deposits. Consequently, loans to deposit ratio decreased to 84.1 percent compared to 87.7 percent in Q2’20. —
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9th Middle East retail forum set to attract key players
The 9th edition of the Middle East Retail Forum, which will take place at the Conrad Dubai Hotel on November 25, will focus on the digital transformation of the region’s retail sector. The theme of the conference, ‘The Masterplan of Retail Transformation’, points towards the crucial importance of digital transformation, an area where global spending is expected to increase by 10.4 percent in 2020 to touch $1.3 trillion, according to Statista, and e-commerce sales set to jump to $48.6 billion in 2022, up from $26.9 billion in 2018, according to recent research.
Key industry officials including Renuka Jagtiani, Chairwoman and CEO of Landmark Group, Patrick Chalhoub, CEO of Chalhoub Group; Ashish Panjabi, COO of Jacky’s Group of Companies and Jacky’s Retail LLC; Piyush Kumar Chowhan, Group CIO of Lulu Group International; Hisham Al Amoudi, Group CEO of Kamal Osman Jamjoom Group; Hozefa Saylawala, Director of Sales at Zebra Technologies; Mark Tesseyman, CEO of LIWA Trading Enterprises; Marwan Moukarzel, CEO of Fawaz Alhokair Fashion Retail; Tapan Vaidya, CEO of PJP Investments Group; Phillip Smith, Group Head of Digital at Kamal Osman Jamjoom Group; Ryan den Rooijen, Group Head of Data and Analytics of Chalhoub Group will join Amitabh Taneja, Chairman of Images Group at the inaugural sessions.
Both Patrick Chalhoub and Renuka Jagtiani will deliver keynote speeches on ‘Unprecedented Opportunities of an Unparalleled Crisis’ in their respective fireside chats.
The morning sessions – Tech-ing it Forward and Purpose-fitted Digital Transformation – will see retail leaders share inside stories of how they rejigged operations through enhanced digitalisation initiatives. The sessions will point towards technology being ‘the’ enabler for retail transformation.
In the afternoon session, Cameron Mitchell, CEO, Majid Al Futtaim Leisure & Entertainment and Cinemas will join Halima Jumani, Director, Kibsons; Ian Ohan, Founder, KRUSH Brands; Isobel Abulhoul, Co-founder, Magrudy’s; Kiran Karanki, CEO, Semnox Solutions; and Raed Hafez, CEO, elGrocer at the panel discussion on Engagement & Loyalty: How Data and Service Upped the Ante.
E-commerce has been one of the main focus areas within the retail industry in 2020. The session titled Growing in Power: The E-commerce Surge will see subject matter experts Heba Al Fazari, Founder, Coveti; Majed M. Al Tahan, Founder and CEO, AYM and Co-founder and Managing Director, Danube Online; Neelam Keswani, Director, Glamazle; and Jeremy Denisty, Customer Director – Operational Lead Mena, Scopernia discuss the future of online retail.
The 9th edition of the Middle East Retail Forum runs concurrently at the same venue with the 10th RetailME Awards that will honour the region’s best performing retailers across 21 categories. This will be one of the first such physical events taking place in the UAE after the Covid-19 pandemic halted events since March this year.
Aptly titled The Masterplan of Retail Transformation, the Middle East Retail Forum will host more than 200 delegates – restricted to 40 percent of the ballroom capacity – to ensure social distancing. This will be the first such event to take place maintaining social distance protocol and all health and safety regulations stipulated by the Department of Tourism and Commerce Marketing (DTCM) – and reflect the organiser’s strong determination to defy the odds. This also reflects the resilience of the region’s retail sector that has been dominating the economic landscape of the Middle East.
In the GCC, mass internet adoption has resulted from a combination of digital infrastructure and eager consumer adoption of technology-driven solutions, such as social media and smartphones. The wider Middle East and North Africa (Mena) region has taken its own route to digital adoption, leap-frogging traditional channels of evolution, according to a research by Visa International.
“Today, Middle East nations are ahead of more mature e-commerce markets such as the United States and China in terms of internet penetration, which stood at 64.5 percent, above the global average of 54.5 percent,” it said.
“Delayed adoption, followed by high digital and social penetration, has meant that GCC consumers have jumped straight to mobile commerce, or m-commerce, and operate across digital platforms with ease. The total market size, including all categories, has been estimated to be worth $48.6 billion in 2022, up from $26.9 billion in 2018.”
The Covid-19 pandemic has disrupted the retail sector and transformed consumers as it is rapidly changing the $25 trillion global retail landscape, so much so that the global e-commerce sales are set to grow from $4.13 trillion in 2020 to $4.8 trillion in 2021.
Justina Eitzinger, chief operating officer of Images Group Middle East, organiser of the Middle East Retail Forum and RetailME Awards, said, “The COVID-19 pandemic has defined and accelerated transformation of the retail landscape, bringing with it, several new opportunities!
“Organising the 9th Middle East Retail Forum and the 10th RetailME Awards under this extremely challenging environment reflects our resolve, conviction and commitment to our industry that is so resilient. The pandemic has reminded us that only change is constant, and we must be agile, responsive and future fit to perform and thrive in the constantly changing environment.
“We are very excited to organise both the conference and the RetailME Awards 2020 on the same day. We will recognise the incredible retailers that have championed transformation, innovation and customer experience.”
“As the retail sector faces challenges and embraces change, we expect a number of developments taking place in the retail industry in the next years. The region’s retailers will benefit from the insights and best practices that will be shared through the keynote addresses, presentations, fireside chats and panel discussions. We urge both retailers and the enablers and solution providers to the retail industry to join this knowledge sharing initiative.”
The 9th Middle East Retail Forum, the region’s most prestigious and the only such event for the retail sector, will host a number of keynote speakers, presenters and five panel discussions in which 35+ retail industry leaders will share their insights on the changing retail landscape.
The panel discussion Looking ahead: Retail churn or opportunity? will bring together Ahmed Ragab, Group CEO, Baraka Retail Group; Bart Denolf, CEO – Franchise, Sacoor Brothers Group, Mohamed Attia, CEO, SALA Entertainment; and Naim Maadad, Chief Executive & Founder, Gates Hospitality to discuss the exciting opportunities that lie ahead.
An Insights session on Solving store experience for 2021 & beyond, will offer futuristic design innovation by Nathan Watts, Creative Director, Interstore I Schweitzer, while in another session Susan Ayton, Founder & Managing Director, Ayton Global Research will speak about regulatory structures around advertising claims, thereby helping brands to make profitable decisions.
Finally, the Start-up Conclave – Survival of the fittest will focus on home-grown start-ups; and through presentations to a jury panel, entrepreneurs that survived the COVID-19 storm will share how they pivoted to stay in business. The discussion will be participated by Farah Emara, Co-founder and CEO, FreshSource; Grace Karim and Somia Anwar, Co-founders, Bookends; Kristian Stinson, Co-founder and CEO, Hopi; Meenaxy Vashishtha, Founder, GoOrganic; Nawal El Masri, Founder and Storyteller, exhale; and Shamim Kassibawi, Founder, Play:Date. At the end of the Conclave, the jury panel will nominate the ‘Most Admired Start-up of the Year’ that will receive the coveted RetailME Awards trophy.
RetailME Awards is also the only such international awards programme for the retailers. In its 10th year, it is the most sought-after awards programme in the Middle East.
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Dubai and Abu Dhabi become more affordable
Dubai and Abu Dhabi became more affordable this year, as the cost of living declined due to a drop in oil prices and deflationary pressure, says a new report.
Abu Dhabi moved 10 places down from the 43rd to 53rd position in The Economist Intelligence Unit’s latest Worldwide Cost of Living Index 2020, while Dubai slipped from the 58th to 66th position.
“The key reason behind the reduced cost of living in the UAE was the decline in oil prices. Due to the plunge in global crude prices, the UAE has been facing deflationary pressures. This has affected the shopping basket of the consumer and the clothing sector,” said Upasana Dutt, head of Worldwide Cost of Living and Liveability Index at The Economist Intelligence Unit.
She said that the price trends in the UAE are not likely to see a further downward trend as oil prices recover moderately, though she expects a still subdued consumer sentiment in 2021.
Tel Aviv is the most expensive city in the Middle East and North Africa (Mena), as the cost of living in the Israeli capital jumped in 2020. Tel Aviv rose two positions to the fifth ranking in the list of most expensive cities. Ranked 27th, Amman was rated the second costliest city in the Mena region, rising 10 positions in EIU’s cost of living index.
Anurag Chaturvedi, CEO at Chartered House, said that Dubai and Abu Dhabi have seen prices fall because foreign workers left the country due to job losses after the pandemic.
“With the overall population contracting during the last six months, especially the Asians who make up the majority of the country’s population, this sent the demand downward. Also, the reason in decline in rating is mostly because consumer spending fell sharply in the fashion and luxury segments,” added Chaturvedi.
James Swanston, economist for the Mena region at Capital Economics, said that headline inflation in the UAE was already in negative territory before the turn of the year, having slowed sharply in recent months.
“There are a couple of key factors driving deflation. The first is downturns in real estate sectors. Property prices and rents in both the UAE have been declining since the middle of 2016 and the further hit to demand from the current crisis, combined with more supply coming on stream, has caused rents to fall even more sharply. As a result, housing inflation in these countries has slumped,” said Swanston.
“The second is the effects of virus containment measures, which have hit domestic demand hard and depressed price pressures. Sectors most vulnerable to containment measures have been those where inflation has fallen the most. For example, inflation of ‘recreational goods and services’ has plummeted in several Gulf economies as demand slumped,” he added.
Globally, Zurich, Paris, and Hong Kong are the three most expensive cities in 2020. The other cities in the top 10 ranking are Singapore, Tel Aviv, Osaka, Geneva, New York, Copenhagen and Los Angeles.
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Dubai customs handles Dh4.6b worth of refunds in 9 months
Dubai Customs has reported 688,201 duty refund transactions with a value of Dh4.6 billion in the first nine months of 2020.
The smart refund system helped reduce customers’ time and cost, through simpler and more precise calculations. The system also substantially reduced the time required to refund duty deposits to traders and customers.
“Dubai Customs is moving steadily toward the UAE’s 50th Anniversary fulfilling all Fourth Industrial Revolution requirements and expectations through adoption of the latest cutting-edge AI customs systems and projects,” said Ahmed Mahboob Musabih, Director General of Dubai Custom.
“This places Dubai in its right position toward being the smartest city in the world, and fulfilling Dubai Customs’ vision of becoming the leading customs administration in the world supporting legitimate trade. The outstanding economic performance and figures indicate the quick recovery from the repercussions of the coronavirus pandemic. The wise directives of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister of UAE and Ruler of Dubai which included generous stimulus packages have pushed the economic wheel forward and supported businesses in what has been a challenging time. This is reflected by the excellent Dubai external trade activity in the first half of 2020 which touched on Dh551 billion, with more than 7.2 customs transactions processed,” he added.
Refunded duty deposits from January to September amounted to Dh3.5 billion, and there were 76,391 Makasa automated transfer claims with a value of Dh382 million during the same period.
“Despite the spread of the pandemic which wreaked havoc on economy around the world, the Claim and Refund Department performed very well in the 1st nine months of 2020 thanks to the use of advanced technology. Our Smart Refund System is the first of its kind in the world. This is very beneficial to Dubai Customs and to the clients alike. We are the first customs department at the GCC level to provide electronic refund of duty deposits,” said Mohammed Al Hashmi, Director of Claim and Refund Department.
Dubai Customs said claims can be applied around the clock, documents can be verified digitally, and all applications can be tracked using the mobile phone. Thanks to this facility, productivity in clearing non-hazardous shipments increased 98 percent.