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GulfNews Business

Carmakers cry foul as EU's climate plan takes aim at industry

Automakers balked at the European Union's plan to set stricter emissions limits for the next decade, saying they lack the government support needed to achieve the targets. The industry is among the sectors most under fire in the 2030 Climate Target Plan, which calls for the bloc to reduce carbon-dioxide emissions by 55% from 1990 levels rather than the previously planned 40%. To achieve this, the European Commission sees carmakers needing to gradually phase out combustion engines and roughly halve CO2 emissions from 2021 targets. A dense, EU-wide network of charging stations must be built and governments will have to offer bigger incentives to make zero-emission vehicles affordable, the European Automobile Manufacturers Association said. Germany's car lobbying group warned the targets would be a burden on already-struggling suppliers and hurt employment and economic growth. The European Commission's policy paper, which Bloomberg News reported on in draft form earlier this week, was made public as Europe's automakers released disappointing monthly sales results that dashed hopes the industry was starting to recover from the pandemic. Registrations are on track for at least a 20% drop this year. "Policy makers need to put in place not only targets but also the required supportive policies for all vehicle types, without which these targets will simply not be achievable," Eric-Mark Huitema, the head of the ACEA, said in a statement. The world's top auto manufacturers have been lapped by Tesla Inc. from a market-value perspective as the electric-car maker led by Elon Musk has built its own charging network to support its growth. While the Model 3 maker is a small player in Europe, it's aiming to start production at a plant under construction near Berlin next year. BMW AG is open to dialogue with the EU commission and member states, though it said this is short notice for further tightening of 2030 targets. The existing plan to reduce CO2 car-fleet emissions by 37.5% over the next decade was adopted after a multi-year process in 2019. Labour Unrest The rise of electric vehicles will hinder demand for the many components needed for internal-combustion engines and take less labor to build, stoking dread among auto workers around the globe. Germany's VDA was warning before the coronavirus pandemic that the technology shift could lead to the loss of 70,000 jobs over the next decade. Supplier Continental AG announced plans earlier this month to dismiss or transfer as many as 30,000 workers. The emissions-cutting plan puts Europe's ability to compete on the global stage at risk, Hildegard Mueller, the head of the VDA, said in a statement. "Given the backdrop of the coronavirus, it'll lead to serious financial burdens and endanger Europe's competitiveness," he said. Chancellor Angela Merkel's ruling coalition is divided over the need for more state aid for the auto industry, with some favoring support for combustion cars and others seeking incentives for EVs. Germany already introduced purchase subsidies of as much as 9,000 euros ($10,600) per electric vehicle to stimulate demand after virus-related lockdowns were lifted. Testing Patience Carmakers are testing the patience of authorities with continued diesel-emissions issues five years after regulators exposed Volkswagen AG's cheating scandal. The U.S. Justice Department said earlier this week that Daimler AG installed devices in Mercedes-Benz vans that circumvented emissions tests for years. Fiat Chrysler Automobiles NV also recently disclosed it started discussions with the Justice Department's criminal division to resolve a similar investigation. As the companies look to put those issues behind them, they're pressing policy makers to help put zero-emission vehicles on equal footing with those that run on combustion engines. "The customer who drives CO2-free must not be punished," Martin Daum, the chief executive officer of Daimler's truck unit, said this week at the unveiling of a concept big rig that runs on hydrogen. "The fuel cell didn't prevail 10 years ago because it was uneconomical for the customers. That will be the same in 10 years' time if the framework doesn't change."

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Ford builds its most advanced factory to make electric truck

Ford Motor Co., facing an onslaught of competition for its new battery-powered F-150 pickup, unveiled the high-tech factory that will produce the electric truck using self-driving transport sleds and robots collaborating with human workers. The plant is going up inside Ford's 92-year-old Rouge complex in Dearborn, Michigan, and will be the "most advanced facility we've got in the world,” manufacturing chief Gary Johnson told reporters in a briefing Wednesday. The autonomous sleds will transport truck bodies from one station to the next, while robots help assemble the vehicles. The factory is scheduled to be completed next summer and begin building prototype electric F-150s. Ford is spending $700 million to overhaul its Rouge complex as it wages a pitched battle to maintain decades of dominance in the pickup segment. Today it began building a redesigned version of its gasoline-fuelled F-150, the company's biggest money maker. Though it sold almost 900,000 F-Series trucks last year, Ford is playing catch-up with more recently revamped versions of its primary rivals: Fiat Chrysler Automobiles NV's Ram and General Motors Co.'s Chevrolet Silverado. The second-largest U.S. automaker also is seeking to stake a substantial claim to the emerging market for electric trucks, which has seen a rash of new entrants, including Tesla Inc.'s Cybertruck, Rivian Automotive Inc.'s R1T and Nikola Corp.'s Badger. Ford said its electric truck, set to go on sale in 2022, will be the fastest and most powerful pickup it has ever produced. The automaker cast its competitors as "lifestyle trucks,” saying the electric F-150 will double as a mobile generator capable of powering a job site or the driver's home. Jim Farley, COO and CEO designate, speaking at the opening of the plant. Image Credit: Reuters "This isn't a gimmick,” Chief Operating Officer and future CEO Jim Farley was scheduled to say during a ceremony at the Rouge on Thursday. "It's a workhorse, not a show horse destined for a shiny garage filled with four other luxury cars." Ford has invested more than a half-billion dollars in one of those new rivals: Rivian. The automaker is jointly developing an electric vehicle with the startup founded by R.J. Scaringe. "We really like R.J. and what he's doing because he's standing up product, great product, commercial and retail,” Farley told reporters after introducing the new F-150 on Thursday. "But our relationship is much broader. Don't think of it as a transactional relationship for a vehicle. It's a strategic investment." The automaker's research found "very substantial demand” that "focused on the work customer,” Kumar Galhotra, Ford's president of the Americas and international markets, told reporters on Wednesday. "It was enough for us to make this investment both in the product as well as the factory." The new 500,000 square-foot Rouge Electric Vehicle center will create 300 new jobs and also produce a gasoline-electric hybrid version of the F-150 that will go on sale sooner than the electric truck. The two electrified models represent the future of the F-Series, according to the automaker. "It sets the Rouge up with a long-term vision with new technology and battery-electric products with our most important vehicle,” Johnson said.

GulfNews Business

ADNOC to partner with Mubadala, ENEC on ICV programme

Energy|: Dubai: Abu Dhabi National Oil Company (ADNOC) on Sunday signed framework agreements with UAE’s sovereign wealth fund Mubadala and Emirates Nuclear Energy Corporation (ENEC) to partner on the energy giant’s In-Country Value (ICV) programme. Under the terms of the agreements, ADNOC, Mubadala, and ENEC will explore potential opportunities for collaboration in creating additional skilled employment opportunities for Emiratis in the private sector and sourcing goods and services within the UAE, the companies said in a statement. See more Midas touch: Singapore exchange touts gold to the masses Photos: Dubai cruise industry ready to set sail again Assembling a solar powered future in China Why Dubai is a ‘rising giant’ of global hotel industry Mexico holds symbolic raffle for unwanted presidential jet “The agreements will enable ADNOC and both companies collaborate to further drive the localization of goods and services across our value chains and we look forward to swiftly progressing the agreements as they offer significant potential to maximize value for the UAE,” said Rashed Saud Al Shamsi, Director, Commercial Directorate at ADNOC. “The signing of this agreement underlines the continued commitment of the Emirates Nuclear Energy Corporation, through the UAE Peaceful Nuclear Energy Program and its cornerstone Barakah Nuclear Energy Plant, to stimulating strategic sectors of the economy, supporting local companies and providing valuable jobs,” said Ali Al Zaabi, Chief Operating Officer at ENEC. The deal expands the number of entities that ADNOC has partnered with to adopt its ICV program. It has similar agreements with Abu Dhabi Department for Economic Development (ADDED), Abu Dhabi Ports, and Aldar Properties. ICV drives growth The initiative has driven more than AED 44 billion ($12 billion) back into the United Arab Emirates’ (UAE) economy and created over 1,500 private-sector jobs for Emiratis since it was launched in 2018. The agreements will see ADNOC and both companies explore the potential for further localizing strategically critical parts of their value chain as they respond to COVID-19.

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Global markets: Selling pressure seen easing in the days to come

Markets|: Dubai: Global stock markets may have ended the last few weeks in the red and although this gave reason for further caution among investors, analysts sounded upbeat about the sell-off being mostly over. Wall Street stocks closed lower for a third consecutive week, with the key S&P 500 benchmark having lost nearly 9 per cent since touching a record high earlier this month, with losses mainly driven by the technology sector. See more Photos: Egypt's blossoming trade in fragrant jasmine flowers COVID-19 lockdown sparks entrepreneurial spirit in Venezuela Billionaire car-part supplier aims to triple sales in five years Vanishing jobs and empty offices plague Britain's retailers Photos: Czech guitar maker born of necessity woos stars But senior market analysts at lending giants Goldman Sachs, Wells Fargo and Deutsche Bank were upbeat the sell-off is past its worst. Goldman Sachs kept its end-of year S&P 500 target to a 3,600-point level by year end. The index, viewed widely as a global benchmark, currently stood at 3,300 points. In the last few weeks, a wave of bearishness swept through markets worldwide, but with this shift in stance taken on by analysts, markets could be facing brighter days ahead. Selling pressure to ease With three weeks of decline, like other indices, the S&P 500 has been under pressure from technology stocks, many of which have seen their value hugely inflated this year, as cheap cash and a faster shift to online working and shopping during the pandemic fuelled a near-unprecedented buying spree. As economic data points to an economy that is gradually recovering from the worst effects of the coronavirus crisis, investors are increasingly sensitive to anything that suggests this improvement could be derailed, or that a vaccine may not be forthcoming as quickly as they hope. However, the Federal Reserve has indicated that, while it currently has no plans to inject any fresh cash into the financial system and that it will also be able to keep US interest rates near zero until at least 2023, it is confident that economic growth will continue to improve. Fed move to play out more “Going forward, the rising concern surrounding US Fed’s monetary policy becoming less effective as the pace of recovery is slowing down will continue to play out within the global equity markets,” said Iyad Abu Hweij, managing director at Allied Investment Partners. Alongside its peer S&P 500 benchmark, the Nasdaq is around 12 per cent below record highs touched earlier this month. But there is reason for hope as both the indices are still up by 20 per cent and 3 per cent, respectively so far this year, regardless of the turbulence in the month so far. Goldman Sachs saw the S&P 500 to be at 3,800 points by mid-2021, based on hopes that a vaccine will be widely distributed by the first quarter of 2021. Market watchers at Wells Fargo, while echoing the same optimism and flagging that the worst may have passed, warned of possibly more volatility ahead. Meanwhile, Deutsche Bank said the put-call ratio, which measures the number of bearish contracts compared to bullish contracts, had normalized somewhat with the correction, after having fallen to the lower end of its 10-year range in recent weeks, reflecting extreme investor optimism. UAE bourses begin week on shaky footing Both the Dubai and Abu Dhabi benchmarks started the week on a shaky footing, even as investor sentiment in the energy-dependant region got a boost from soaring oil prices. Dubai’s main index ended marginally lower at 0.02 per cent, after trading largely in the negative through the day – briefly dropping as much as 0.8 per cent. Both the Dubai and Abu Dhabi benchmarks started the week on a shaky footing, even as investor sentiment in the energy-dependant region got a boost from soaring oil prices. Image Credit: Gulf News Declines from lenders Emirates NBD Bank and Dubai Islamic Bank were cushioned by gains from Emaar Development and Emaar Properties. However, the Abu Dhabi bourse edged up 0.8 per cent, with the country’s largest lender First Abu Dhabi Bank edging up 0.2 per cent. In the Middle East region, sentiments continued to remain broadly positive during the week as four out of the seven regional indexes closed in green, supported by strong gains in oil prices and improving business activity. Oil prices recorded a gain of 8.34 per cent during the week, supported by an unexpected drawdown in US oil inventories and Saudi Arabia’s efforts to push OPEC and its allies to comply with output quotas. “For the MENA region, investors will continue to follow the trend in global markets and the developments in oil prices to accordingly position themselves in the markets,” Iyad Abu Hweij added. Elsewhere, the Saudi Arabia stock market rose, helped by gains in National Petrochemical Company and Saudi Industrial Investment Group (SIIG) after the duo said they were in merger talks, while other Gulf markets were subdued in early trade.

GulfNews Business

Expo to revive UAE hotels in fourth quarter of 2020

Tourism|: Dubai: Hotels in UAE and Saudi Arabia will lead the recovery in Middle-East’s hospitality industry in the fourth quarter of 2020, Colliers International said in a report on Sunday. UAE will get a boost from the Expo, which will start in October, 2021 and go on till March, 2022. The event was originally expected to pull more than 25 million visitors from around the globe. See more Photos: Egypt's blossoming trade in fragrant jasmine flowers Billionaire car-part supplier aims to triple sales in five years COVID-19 lockdown sparks entrepreneurial spirit in Venezuela Photos: Czech guitar maker born of necessity woos stars Vanishing jobs and empty offices plague Britain's retailers Meanwhile, Saudi Arabia will continue to benefit from on-going tourism initiatives, upcoming mega projects, and domestic tourism. The oil-rich country plans to invest $810 billion (Dh2.97 trillion) to boost its tourism sector over the next decade. “There is a lot of uncertainty in the market regarding the expected performance of hotels,” the consultancy said. Based on the company’s Hotel Mark Survey results, the recovery in the Middle East and North Africa region will start in the fourth quarter of this year and continue in 2021. Colliers predicts hotel occupancy rates For 2020, hotels in the UAE will have occupancy rates of about 44 per cent on an average. The highest occupancy rates will be seen in Ras Al Khaimah City market (57%), and the lowest in Palm Jumeirah (39%). In 2021, however, hotel stay demand in the country is expected to considerably recover. Hotels will recover to around 62 per cent occupancy on an average. The highest rates will be seen among hotels in the Dubai Marina/JBR market (69%), and the lowest in Fujairah (49%).

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38 Saudi agencies set for privatisation

Saudi|Business|: Cairo: Thirty-eight government agencies will be prepared for privatisation within two years, a Saudi newspaper reported Saturday. Those agencies are linked to ministries of the environment, water and agriculture; transportك energy; industry and mineral wealth; housing; education, health; rural and village affairs; the Haj and Umrah; communications and information technology; media and sports, Okaz added, saying it had seen rules of committees overseeing sectors targeted with privatization. SEE ALSO Race to rescue animals as Brazilian wetlands burn Photos: Slimy snail facials not for the faint-hearted Why Dubai a ‘rising giant’ of global hotel industry From the editors: Global Village to boost consumer confidence Other government bodies covered by privaisation plans, according to Okaz, include the Saline Water Conversion Corporation; the Irrigation Corporation; the Grains Organisation; the Centre for Waste Management; the National Centre for Meteorology; the Centre for Vegetation Development and Combating Desertification; the Wildlife Development Centre; the Environmental Compliance Control centre; the National Water Company; the General Authority of Civil Aviation; Transport Authority; Ports Authority, the Airlines Corporation; the Railways Corporation, the King Abdullah City for Atomic and Renewable Energy; the Royal Commission for Jubail and Yanbu; and the Authority for Industrial Cities and Technology Zones. The report list, moreover, comprises the Technical and Vocational Training Corporation; the Health Council; Saudi Post; E-Government Programme (Yesser); the Radio and Television Authority; the Audiovisual and Media Authority and the Saudi Press Agency (SPA) as well as science universities and specialized hospitals. According to the report, the ministry or the government institution concerned with the sector will coordinate with the National Centre for Privatisation within two years at most to draw up a privatization plan featuring the sought-after objectives, the proposed privatisation projects, implementation priorities, proposed timetables, a review of the sector regulatory environment and proposed development in a manner motivating investment from the private sector. In recent years, Saudi Arabia has sought to diversify its oil-reliant economy as part of dramatic reforms championed by Crown Prince Mohammed bin Salman.

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UAE's Al Habtoor Group plans to open representative office in Israel

Retail|: Dubai: Khalaf Ahmad Al Habtoor – Founding Chairman of the Al Habtoor Group (AHG) – welcomed Shlomi Fogel – Ampa Group, Co-owner, Chairman and CEO – at the AHG headquarters in Dubai. The meeting coincided with the signing of the Abraham Accords Peace Agreement signed in Washington DC between the United Arab Emirates (UAE) and Israel on the 15th of September 2020, marking a new era of normalized relations between the two nations. See more More residential options added at Dubai south residential district Trees, birds, ponds: Mexico City's ancient lake reclaims scrapped airport Abu Dhabi: 9 places where rents have dropped in the capital Meet the Vietnamese billionaire who helps the world beat COVID-19 Photos: Thai airways opens aircraft themed restaurant Al Habtoor and Fogel, both heads of leading diversified business conglomerates in the UAE and Israel respectively, expressed their celebration of what this new historical milestone represents. “I have been looking forward to this day for a very long time. I have always believed that Emiratis and Israelis have a lot in common. Both peoples are business-oriented and have relied on human talent and ambition more than their countries’ natural resources to build robust, innovative economies, said Al Habtoor. “The opportunities that this deal will present are great for both sides. I am confident this will open up new doors and lead to stronger economies, and closer cultural ties between the peoples,” he added. Fogel was accompanied in the meeting by Erez Katz – CEO of Ciment, Or Eyal – Fogel’s Executive Advisor, Saar Bracha – CEO of the agricultural arm, and several other executives from the Ampa Group. “Through successful business collaboration and trade, peace will be cemented. Together with our Emirati counterparts, we will show the way to live in peace to the rest of the world,” said Fogel. From AHG side, present in the meeting were Mohammed Al Habtoor – Vice Chairman & CEO, Ahmad Al Habtoor – CEO of Al Habtoor Motors, Maan Halabi – Managing Director, Sanjeev Agarwala – Assistant Managing Director, and other members of the senior management. Following the meeting with Fogel, AHG Chairman revealed his plans to open a representative office in Israel, a further confirmation of his belief in the prospects this new agreement presents. “Since the announcement of the normalization of relationships between the UAE and Israel, we have received a large number of inquiries for collaboration in several fields, ranging from AI and technology, to agriculture, hospitality and trading. The possibilities are endless for both sides in our diversified fields and new ones, and we want to be present to grasp them,” said Al Habtoor. Al Habtoor had previously disclosed that the Group had launched talks with Israir Airlines Ltd., a domestic Israeli carrier, to open direct commercial flights, “and we are preparing to reveal a few collaborations in the coming days,” he concluded

GulfNews Business

EU seeks new powers to penalise tech giants

Business|: London: The European Union wants to arm itself with new powers to penalise big technology companies, the Financial Times reported on Sunday. The proposed plan includes forcing tech giants to break up or sell some of their European operations if their market dominance is deemed to threaten the interests of customers and smaller rivals, the newspaper said. See more Midas touch: Singapore exchange touts gold to the masses Photos: New products, services rolled out by Apple Photos: Dubai cruise industry ready to set sail again Assembling a solar powered future in China Mexico holds symbolic raffle for unwanted presidential jet Chinese firms bet on plant-based meat as COVID-19 fuels healthy eating trend The commission is set to propose new rules called the Digital Services Act by the end of the year, which will increase social media’s responsibilities and liability for content on their platforms. EU Internal Market Commissioner Thierry Breton, in an interview with the FT, said the proposed remedies, which would only be used in extreme circumstances, also include the ability to exclude large tech groups from the single market altogether. Brussels is also considering a rating system that would allow the public and shareholders to assess companies’ behaviour in areas such as tax compliance and the speed with which they take down illegal content, the FT said. Breton was quoted as saying activities such as companies preventing users from switching platforms or forcing customers to use only one service could lead to tougher sanctions.

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Abu Dhabi Airport starts fast track flight connections to speed up passenger movement

Aviation|: Dubai: Abu Dhabi Airport’s new ‘Fast Track Flight Connections’ initiative for international transfer passengers will increase the speed of transiting through the airport by 27 per cent. The programme will also reduce missed connections and enable a “seamless” passenger experience, the airport said. See more Midas touch: Singapore exchange touts gold to the masses Photos: New products, services rolled out by Apple Photos: Dubai cruise industry ready to set sail again Assembling a solar powered future in China Mexico holds symbolic raffle for unwanted presidential jet It will also allow transfer passengers travelling aboard flights originating from partner airports in Europe, US and Canada to take advantage of a new and more efficient security screening process within the airport. The initiative will be rolled out in two phases, starting with Etihad flights origination from select destinations in Europe and North America. The second phase, which is expected to start in 2021, involves more airlines and points of origin as well as new procedure for transfer cargo and passengers. Abu Dhabi International Airport is the second largest airport in the UAE and one of the fastest growing aviation hubs in the world. Passenger numbers at the airport reached over 23 million in 2015, and that figure is expected to rise to over 45 million in the coming decade. Following the suspension of all commercial passenger flights to and from the UAE in March due to COVID-19, the airport facilitated a number of repatriation and humanitarian flights for UAE nationals returning to the country as well as expatriates and foreign nationals departing from their countries of origin.

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Financial services must think open source

Analysis|: Open source software is highly valuable to the financial services industry, and 93 per cent of the sector’s IT leaders agree enterprise open source is crucial to their organisations. Adoption rates bear out this perspective, with enterprise open source currently making up 40 per cent of software used in the sector, and projected to rise to 46 per cent in two years. While banks have long been consuming enterprise open source products, many are yet to embrace open source ‘upstream’ community projects. Here’s why working in upstream communities is a smart tactic for firms looking to innovate more quickly: * Benefits of working with upstream Upstream engagement offers FSI firms many benefits, the first being scale. It allows banks to capitalize on ideas and resources from thousands of developers worldwide, providing a magnification effect. The company contributes developer time, resources, and funding to support projects – and benefits are apparent from the output. See more Midas touch: Singapore exchange touts gold to the masses Photos: New products, services rolled out by Apple Photos: Dubai cruise industry ready to set sail again Assembling a solar powered future in China Mexico holds symbolic raffle for unwanted presidential jet Besides productivity gain and wider talent pool ideas, companies that provide community leadership can influence product roadmap. Banks have done this by having IT team members participate in an existing open source middleware project, and contribute in steering business process management capabilities upstream. This they would then use in a product form once the software is secured by a trusted vendor. Upstream collaboration doesn’t just scale up a company’s own development efforts - it provides access to a diverse pool of programming and business problem perspectives. Community contributors can have a broad range of backgrounds, which enables financial services to benefit from insights gained in other industries. Engaging in these projects helps banks recruit new talent from passionate people communities and help retain their own developers. They encourage them to build up their expertise by participating in the open source community innovation engine. Exert influence There are three ways banks can strengthen their influence and contribution to the upstream community through valuable resources many of them possess. * First is by providing funding, which can involve paying for a full-time community manager to oversee the project, or sponsoring an event or other value-added expenditure. Companies have struggled to hire talent, sponsored an open source project, and have subsequently been flooded with enquiries from potential new hires. It’s a tried and tested method for success. * Second is providing human resources through internal developers to broaden the talent pool. *Third, banks can offer valuable technical level leadership, using their expertise to verify code quality by helping to keep developers motivated or arranging community get-togethers. Banks shouldn’t simply expect to open source their code and suddenly reap the benefits. As with any community-driven initiative, participants must be active contributors, and open source is most successful when organisations look beyond their own needs to help drive benefits for the entire community. Initiatives like FINOS (Fintech Open Source Foundation) have done this, providing open collaboration financial services industry forums such as Symphony, which has benefited from contributions by multiple organizations and individuals. Still there’s reluctance Banks often risk losing control or exclusivity of their ideas. Product features could take years to develop internally, whereas in open source, those ideas can be built and improved in much shorter timeframes. The customer-facing layer is where companies can drive the most competitive differentiation, and underlying platform technologies such as Kubernetes or Linux are a common foundation for many companies. This is why they attract contributors and where the greatest opportunity lies. There are also structural barriers that many banks need to overcome before engaging in upstream participation. Not all banks have the tech or legal mechanisms required to send their code outside of a company’s corporate firewall and transitioning from legacy organisational structures is not always easy. Rigid company policy on what employees can and can’t do is non-trivial when a business wants to be technologically agile. This cultural challenge is readily acknowledged by banks, and one that many are working to address. In a heavily regulated industry, it takes time for companies to introduce the policy and organisational changes needed to participate in open source communities. However, as software ecosystems expand further, financial services innovation will be increasingly driven in open source. Given the benefits to be gained, it is an opportunity worth seizing. - Tim Hooley is the EMEA Chief Technologist for Financial Services Industry, Red Hat.

GulfNews Business

UAE’s hotels can do with some tax relief

Analysis|: In the UAE, staycations have been the main alternative to travel as the lockdown was eased. With a few remaining restrictions on mobility, one can get into a car and drive to a remote resort in the middle of the desert, or to a beach resort that may even boast of exclusive water villas. While this is the only travel alternative for those who are willing to take the risk of moving, with face masks and social distancing, it also is a way to partially make up for tourism-generated revenues. Aviation and tourism are after all responsible for more than 13 per cent of the UAE’s GDP, according to the International Air Transport Association (IATA). See more Midas touch: Singapore exchange touts gold to the masses Photos: New products, services rolled out by Apple Photos: Dubai cruise industry ready to set sail again Assembling a solar powered future in China Mexico holds symbolic raffle for unwanted presidential jet What’s important to note here is that no matter how many individuals opt for staycations within the UAE, these are not there to bring occupancy levels at hotels to their average levels during the summer reason. Dubai alone received more than 16 million visitors in 2019, which is impressive compared to a UAE’s 9-10 million population. Rates didn’t budget as much As things started to go back to normal, the expectation was that hotel rates would be competitively and reasonably priced to attract as many guests as possible, especially since supply far outstrips demand. Rather, hotel rates were more or less at the same levels that would have been expected in a busy summer season in the UAE. Furthermore, resorts with an edge - i.e., remote location, private villas, beachfront and so on - had even more reason to keep their rates at their usual levels, if not higher. Why’s that? First, this has to do with supply and demand. Since supply significantly exceeds demand, then higher room rates multiplied by lower occupancy rates, compared to a year ago, may generate better revenues for hotels than if room rates were lowered and occupancy rates fail to make up for the revenue shortfall. Also, as individuals would logically prefer hotels and resorts with premium locations and a more exclusive feel compared to a normal room, such destinations can subsequently ask for higher nightly rates. Having been in lockdown and with very limited travel options, individuals have got the cash to spend on whatever exotic staycations that they can get. Need to balance Secondly, there has been no policy driven encouragement to offer better deals by relieving hotels and resorts from tourism-related taxes. Given that those taxes have always been passed on to individuals in normal times, it would only make sense to have them passed on to individuals now as hotels and resorts struggle financially. Put differently, hotels and resorts need to be paid enough to sustain their operations. Meanwhile, tourism regulators need to generate enough revenues to balance their budgets. The situation is even more financially pressing, with aviation and tourism activities being much lower than their pre-COVID-19 levels. Now, what if tourism-related taxes have been experimentally waived off for a month or two during the summer season? This could have encouraged more individuals to go for staycations and to spend more in hotels and resorts by staying for longer durations. More so as many were working from home, which could be done from anywhere. Not only would this have been more beneficial for hotels and resorts, but the forgone revenues, from tourism-related taxes, could be marked as part of the fiscal stimulus aimed at reigniting economic activity in the UAE. In conclusion, staycations have been the choice of necessity in the UAE. Generally, hotel rates did not drop to levels lower than those observed last year. This is due to an anticipated low occupancy rate and the inclusion of tourism-related taxes in hotel rates. Removal of the latter, even if only experimentally during the summer period, may have shown the way to better support the sector. The last thought that I want to leave you with: What could replace tourism-related taxes? - Abdulnasser Alshaali is a UAE based economist.

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3 bold moves CFOs can make today to outperform the market

Business|: For years, finance leaders have been seeking ways to leverage technology to make their organisations future-ready. The current pandemic exposed the shortcomings of outdated platforms and accelerated the pace of innovation, even as some organisations battle for their very lives. The bold moves are drawn from research conducted by McKinsey & Co. on the financial performance of 1,500 companies following the global financial crisis of 2007-2009 to understand how the top 25 per cent in terms of total returns to shareholders were able to outperform their competitors after the downturn. These “resilients”, the research found, shared key characteristics, including an aggressive approach to reallocating resources and investing in productivity initiatives within the organisation. Bold move #1 Adopt a transformation mindset when reallocating resources The upside to any economic crisis is that it presents a logical and necessary opportunity to rethink every aspect of the business. Contrary to what one might think, now is not the time to invest resources in small, incremental adjustments; rather, it’s the time to focus on bold, transformational moves that can deliver outsize productivity gains and returns on investment. Bold moves during a crisis also require powerful tools, yet many companies found themselves ill-equipped to maintain the business, let alone accelerate innovation. Many Oracle customers were running on-premises systems from the early 2000s, which lack crucial capabilities that are integrated into Oracle’s current Cloud ERP. The current generation of Cloud ERP software is giving companies outsize productivity gains now — when they are desperately needed — as well as the flexibility to adopt new business models that support subscription-based revenue streams or digital sales channels. Getting on the cloud today also provides access to continuous innovations being architected now into the software’s road map, from digital assistants and chatbots to AI-driven predictive and prescriptive analytics. Bold move #2 Pursue pragmatic M&A and divestitures to improve the company’s portfolio Based on McKinsey’s research of the past and assessment of current conditions, the economic downturn is an ideal opportunity to embark on a programmatic approach to mergers, acquisitions and divestitures that can increase your business’ competitive advantage. Organisations using outdated technologies will be challenged to gain visibility into the profitability of their current business models, assess the potential of new M&A activities or spin-offs, and operationally support the choices they make. Oracle uses its own Cloud ERP to support its M&A strategy and realise expected synergies. Oracle is very acquisitive, and we have been buying a number of companies over the years, over 100-plus in the past 20 years — many of them large-sized organisations. More than 25 of those acquisitions were completed during the great recession of 2007-2009, to support Oracle’s pivot into enterprise applications and hardware. The true cloud financial management systems are continuously updated with the latest capabilities to provide scalability and flexibility, rapidly integrate new entities, and provide the ability to model the impact of individual acquisitions or divestitures on both the bottom and top lines. Bold move #3 Boost productivity through digitisation Innovation in finance has been a priority for years but has now become urgent as a result of the pandemic. More digitisation and automation of finance processes have long been on the to-do list of finance leaders. According to the McKinsey report Get in front of digital finance, more than 75 per cent of tasks can be automated in areas such as cash disbursement, revenue management, and general accounting operations. As organisations move towards digitisation and high levels of automation, the importance of advanced data and analytics to drive visibility and collaboration across an organisation has never been higher. At Oracle, our strategy has always been to provide a single integrated service: connected enterprise, connected data, connected view of the business processes to help you actually drive these big transformations. The view from the front office to the back office is critical, not just to operationalise all these new business models, but to also help manage ongoing changes. Through a single unified platform that facilitates more automation and better collaboration, CFOs and finance teams can more easily adopt modern practices such as continuous forecasting and planning, and predictive capabilities to better respond to the next crisis. Plus, they gain the ability to execute more work remotely — such as the critical task of closing the books. Oracle was able to increase productivity during the pandemic, shortening the monthly close by an additional 20 per cent while working from home. In fact, Oracle is reaping the benefits of its own cloud solutions across hundreds of processes, every day. Next steps for reimagining finance Finance teams in every organisation must move towards resiliency and finance reimagination at their own pace. There is no cookie-cutter approach. Covid-19 won’t be the last of the disruptions businesses must contend with. It’s important for them to re-evaluate and rebuild their business models to be more resilient. Yet resilience is no longer about having the cash reserves and resources to weather disruption right now – it’s about building an infrastructure that is flexible, cloud-based and automated to deal with constant, unrelenting change. Here’s how you can start building business resilience with Oracle Cloud Applications The writer is Executive Director, ERP and EPM Product Marketing at Oracle

GulfNews Business

UAE among top eight countries globally to show strong recovery in private aviation

Business|: Since the first weeks in March, when the number of flights worldwide plummeted, the recovery for the private aviation industry has been bumpy. Some of the largest markets, such as the United States, are still hovering around 60 per cent of their flight activity in 2019. Conversely, the markets with the strongest recovery for the private jet industry may surprise you. The good news is that the United Arab Emirates is among the strongest. UAE recovery is strong According to data on departures, only eight countries made gains in July compared to July 2019. Among them, the UAE saw a 19 per cent increase in activity compared to last year. The UAE is also on the list of countries to have made the biggest gain in activity this year from June to July with a 45 per cent jump in activity. Some of the biggest markets, the United States for instance, are only seeing marginal growth. The country recorded a 21 per cent decline in July and August flights are tracking 19 per cent year-on-year levels. What is driving the faster recovery in countries such as the UAE? Consumer habits are changing With commercial flight options limited and crowded airports seen as a risk, private jet travel is no longer viewed as a luxury, but rather as a necessity. “Passengers want to limit their exposure to crowds. They want more peace of mind when they travel,” said Adel Mardini, Founder and CEO of Jetex, a global private aviation company based in Dubai. Only a small portion of the new demand in the industry is coming from corporate travel, which is still slow as business conferences are cancelled, and meetings have been moved online. The surge is mostly coming from leisure travellers, from friends and families who, right now, don’t see commercial travel an option. Prior to the pandemic, McKinsey reported that only 10 per cent of those who can afford to fly privately were doing so. Now we are seeing more of those passengers switch from first and business class to private aviation. In this new era of air travel, Jetex is happy to be part of the solution. The company has helped relocate families who needed to get home. It reunited a mother who had been separated from her daughter when countries began to close. As the world and travel industry recover from the crisis, people are still, albeit cautiously, going on holiday. Among the most popular destinations for leisure passengers flying through the Jetex VIP terminal in Dubai are Turkey, Greece, and the Maldives. There are still many travel opportunities for families in the Gulf region. Adel Mardini, Founder and CEO of Jetex Image Credit: Supplied Government support is paramount Jetex attributes the UAE’s success to the support the government has shown the industry. In Dubai, the company has the ability to test passengers for COVID-19 as they come through the private terminal, making their travel experience as easy and seamless as possible. Although countries are beginning to open their borders, more travellers are avoiding commercial airlines by booking private jets to reduce the chance of them catching coronavirus. This trend will continue over the coming months as the UAE is now approaching high season as more travellers experience the benefits of private terminals and convenience of flying private, regardless of the destination. To learn more, visit here.

GulfNews Business

Potential subzero rates adds to woeful 2020 for British banks

Banking|: London: The possibility of negative interest rates is adding to the cocktail of headwinds facing UK lenders. Britain’s consumer-facing banks including Lloyds Banking Group Plc, Natwest Group Plc and Barclays Plc face seeing their earnings from mortgages and other loan products dwindle even further after policy makers at the Bank of England gave their strongest signal yet that they’re considering using subzero interest rates. Shares in the lenders fell Friday, adding to steep declines this year. See more Midas touch: Singapore exchange touts gold to the masses Photos: New products, services rolled out by Apple Photos: Dubai cruise industry ready to set sail again Assembling a solar powered future in China Mexico holds symbolic raffle for unwanted presidential jet The firms are already being hit by a pandemic at the same time as their home market is negotiating its exit from the European Union, its biggest trading partner. There’s also the risk of a jump in unemployment that could hit loan repayments and push up defaults. “Its a big risk for the banks in terms of lower revenues,” Colin Jackson, an analyst at Goodbody, said “The outlook for revenue is already bleak under lower for longer rates exacerbated by Covid.” Drag on interest margins A foray into negative rates in the U.K. would drag net interest margins lower still at lenders and further squeeze the supply of the riskiest mortgages, said Bloomberg Intelligence’s Jonathan Tyce. That would dent house prices and consumer confidence, he added. The banks didn’t respond to requests for comment. Europe’s half a decade experiment with negative interest rates has put pressure on lending revenue and burdened banks with billions of euros in penalties for parking cash with the central bank. There are concerns that the traditional dynamics of borrowing and lending are being distorted, with some wealth managers charging for deposits. “In the long run, negative rates ruin the financial system,” Deutsche Bank AG Chief Executive Officer Christian Sewing said in 2019. But with the threat of negative rates looming, banks are bracing themselves. Bank Lending Sterling Libor - the rate that banks can theoretically borrow from each other - is near record lows across most tenors. But there are signs that financial institutions are worried about exposure and pricing themselves out of some lending. Fixed mortgage rates on the riskiest loans jumped in August by the most in at least seven years, according to Bank of England data compiled by Bloomberg. It’s probably driven by banks wanting to reduce or slow the growth of their lending books to improve their capital ratios and offset the cost of risk or default in other parts of their loan book, said Antoine Bouvet, a senior rates strategist at ING Groep NV. The result is that the gap between the loan rates and the yield on two-year government bonds is the widest since 2017, suggesting that the ultra-low borrowing costs among financial companies isn’t being filtered into the economy. “Negative rates haven’t generated much inflation in the eurozone so as a policy tool there are questions marks over its effectiveness,” said Goodbody’s Jackson. “It does do a lot of harm to banks and weakens confidence so you need to be sure that you get an economic benefit from it.”