As per the Centre for American Progress, between January 2021 and January 2023, American entrepreneurs filed 5.2 million “likely employer” business applications, slightly over a one-third increase compared with the number of applications filed between 2017 and 2019.

Also, entrepreneurs filed 450,000 likely employer applications in the fourth quarter of 2023, a 37% increase over the fourth quarter of 2019. The number of start-ups and businesses under one-year-old surged in 2022 and 2023, surpassing the pre-Great Recession levels for the first time.

Since we are talking about start-ups, we also need to remember that the former is different than businesses, as Joel Mier, Lecturer of Marketing, University of Richmond, states, “All start-ups are businesses, but not every business is a start-up.”

Why the term is so special?

The term start-up refers to a company in the first stages of operations. Start-up founders normally finance their ventures and may attempt to attract outside investment before they get off the ground. Some of the funding sources include family and friends, venture capitalists, crowdfunding, and loans. The initiative, despite the risk of starting with high costs and limited revenue, also brings unique opportunities to work with great minds, while focussing on innovations and learning things during the process.

Start-ups focus on a single product/service that is disruptive. These companies don’t possess a fully developed business model and undergo multiple rounds of capital raising to sustain and move into the net round of their operations.

Talking about start-ups and innovation, we have a great example in the form of OpenAI, whose artificial intelligence (AI)-powered chatbot called ChatGPT has disrupted both the tech sector and the broader economy.

Since ChatGPT’s market entry in 2023, more tech start-ups are undertaking research and development work in the field of generative AI (AI that can create new content and ideas, including conversations, stories, images, videos, and music) to make the latter a transformative force for the 21st century socio-economic order.

Despite the risk of failing to be higher in the start-up field, we have examples of Microsoft, Apple, and Meta (formerly Facebook) beginning as start-ups and ending up becoming publicly traded companies.

A business, on the other hand, refers to an organisation/enterprising entity engaged in commercial, industrial, or professional activities. The purpose of a business is to organise some sort of economic production of goods or services, while ranging in scale and scope from sole proprietorships to large, international corporations.

“On a high level, a start-up works like any other company. A group of employees work together to create a product that customers will buy. What distinguishes a start-up from other businesses, though, is the way a start-up goes about doing that. Regular companies duplicate what’s been done before. A prospective restaurant owner may franchise an existing restaurant. That is, they work from an existing template of how a business should work,” Forbes explained further.

While start-ups can chalk out their operational nitty-gritty during the fundraising round, businesses don’t enjoy this advantage as they have to file a formal document that outlines the company’s goals and objectives and lists the strategies and plans to achieve these goals and objectives. Only then, they can borrow capital from the market and begin their operations.

Also, businesses need to determine their legal structure before entering the operations, as they need to secure permits and licenses, apart from following other registration requirements. Corporations are also considered to be juridical persons in many countries, meaning that they can own property, take on debt, and be sued in court.

Talking about what differentiates a start-up from a full-fledged business, this article will break down things in a simplified manner.

Vision and funding

Let’s start with “Company Visions.” Start-ups are there to innovate stuff that will change the face of an industry vertical and the overall economy, in the best-case scenario. These ventures want to be the most innovative, creative and disruptive forces within an industrial set-up.

And talking about funding and start-ups, it’s a stage-by-stage process. First, there is a preliminary round known as bootstrapping, when the founders, their friends and family invest in the business. Then you have seed funding from so-called “angel investors,” high-net-worth individuals who invest in early-stage companies.

Following that, we have Series A, B, C and D funding rounds, primarily led by venture capital firms, which invest tens to hundreds of millions of dollars into companies. Finally, a start-up may decide to become a public company and open itself up to outside money via an IPO (Initial Public Offering), an acquisition by a special purpose acquisition company (SPAC) or a direct listing on a stock exchange.

Businesses, on the other hand, are more focused on being profitable within an industrial ecosystem. While they are scalable, they can serve either local or foreign markets (or both at the same point of time). Start-ups get most of their funding from venture capitalists (VCs), who make major investments in these businesses, in exchange for which they get equity in the business. If the venture tastes market success, the VCs profit along with the start-up owner.

Businesses usually take out loans from traditional banks/online lenders (fintech companies) to begin their operations. The business owner (call the person CEO as well) only needs to pay the interest amount over time, while he/she gets to keep all the equities in the company.

Growth

Start-ups want to grow as quickly as they can, increasing the top-line revenue (sales or the revenues of a company which is the total income generated during a particular period) through a business model that can be easily replicated and scaled. When we say replicable, it means the start-up founder can play the game safe by opting for a business model which has already found market success with another industry peer. For example, after OpenAI’s ChatGPT success, there are tech start-ups who are trying to introduce generative AI-powered chatbots into the market, realising the tool’s potential to change the 21st century socio-economic order.

“There’s another key factor that distinguishes start-ups from other companies: speed and growth. Start-ups aim to build on ideas very quickly. They often do this through a process called iteration in which they continuously improve products through feedback and usage data. Oftentimes, a start-up will begin with a basic skeleton of a product called a minimal viable product (MVP) that it will test and revise until it’s ready to go to market,” Forbes continued.

“While they’re enhancing their products, start-ups are also generally looking to rapidly expand their customer bases. This helps them establish increasingly larger market shares, which in turn lets them raise more money that then lets them grow their products and audience even more. All of this rapid growth and innovation is typically, implicitly or explicitly, in the service of an ultimate goal: going public. When a company opens itself up to public investment, it creates an opportunity for early investors to cash out and reap their rewards, a concept in start-up parlance that is known as an exit,” it added further.

On the other hand, businesses use a slower and cautious growth strategy focused on building profits before expanding. Since they envision themselves to stay in the market for a prolonged period, they opt for a stable growth route. In this way, the risk tolerance (the amount of loss an investor is prepared to handle while making an investment decision) remains lower.

Profits

Since start-ups are not built as profit-generating machines, they run with the risk of venture capitalists pulling the plug upon their investment flow, in case their investments are not getting converted into profits. Start-up founders, however, have the option of taking their businesses to the public and profit from there.

“Successful start-ups eventually receive additional funding from lenders or other sources like venture capitalists and angel investors. The start-up can offer investors (and employees) something the small business might not be able to: equity in the company. Typically, founders offer equity to investors in rounds (seed funding, then Series A, B, C, etc.)—each with specific goals, terms, and pricing. Each round of funding erodes the start-up founder’s equity and diversifies the company’s ownership. Notably, shareholders and board members generally have voting rights,” online HR (Human Resources) platform Gusto commented.

Talking about raising money from the public, the start-up founder can opt for the initial public offering (IPO) route. He/she can also sell the business, or merge it with another company to scale growth and capital.

Businesses don’t possess that above risk, as they don’t get their capital from investors and venture capitalists. By following an already successful business model, they end up generating profit from the very first year of their operations.

Risk Factor

While there’s some degree of risk with any new venture, a start-up faces it more than a small business. Start-ups are formed by creative minds who want to disrupt the market with a new product/concept. However, the uncertainty here is how the consumers will respond to the product/concept. And then add the headache of undergoing several funding rounds and testing several product iterations before finding what works and even then, success is never guaranteed.

On the other hand, businesses tend to use profit-generating business models, which can’t be tinkered/refined further. In that way, the risk factor remains low, thus providing entrepreneurs with the assurance called “longevity.”

Can start-ups become full-fledged businesses?

Yes, but after a lot of hardships. While we have inspiring examples like Amazon, Netflix, Uber and Airbnb, industry data suggest that 90% of start-ups fail. And even after a start-up becomes an established market player, they face the challenge of staying efficient and profitable.

“Start-ups may be able to rely on funding from different kinds of outside investors while they gain their footing. But an established business needs to run smoothly to make a profit from what it’s selling,” said Joel Mier, Lecturer of Marketing, University of Richmond, thereby giving a reminder that once the start-up transitions into a big business, it faces challenges like how to manage workers better and run the operations in a way that solves the customers’ problems while enabling the company to meet all of its business goals.

The post Why start-ups & businesses are not the same? appeared first on International Finance.

The memorandum of understanding was signed between the Australia Saudi Business Council & Forum and the Export Council of Australia, according to a press statement.

The agreement will focus on cooperation in industry, mining, food, agriculture, technology, and artificial intelligence.

This deal will expand opportunities for Australian exporters to collaborate with Saudi entities, thereby enhancing bilateral cooperation.

The President of the Australia Saudi Business Council & Forum, Sam Jamsheedi, and Arnold Jorge, CEO of the Export Council of Australia, signed an agreement during Arnold Jorge’s visit to the Kingdom with a delegation.

Sam Jamsheedi said, “Under this strategic partnership, we will seek to work together closely in identifying initiatives that facilitate connections between Australia and Saudi Arabia.”

According to the UN Comtrade database, Australia’s exports to Saudi Arabia totalled $789.65 million in 2023. In the same period, the Kingdom’s exports to Australia amounted to $702.75 million.

“We will combine our resources and networks to boost the success of collaborations and partnerships between relevant organisations and individuals of our two countries,” Arnold Jorge noted.

In 2013, the Australia Saudi Business Council was established to promote ongoing and bilateral trade between the two nations.

In November, Saudi-based company Abdel Hadi Al-Qahtani and Sons Co. and Australia’s SSS Group signed a $27 million deal to collaborate in the production of scaffolding systems in Saudi Arabia using local resources.

Australian Ambassador Mark Donovan stated that the cooperation agreement strengthens the existing investment ties between both countries in various sectors, including education, health care, aviation, and services.

“A new and transformed Saudi Arabia is looking for business relationships around the world, and that’s what we’re very pleased to be a part of,” said Mark Donovan at that time.

In March, the University of Wollongong in Australia obtained licenses to establish branches in the Kingdom.

The post Saudi Arabia & Australia trade deal: All you need to know appeared first on International Finance.

The revenue from both the life insurance and non-life insurance sectors makes up the overall premium income.

According to FBNQuest analysts, the insurance industry has managed to remain resilient despite a number of macroeconomic headwinds, including high inflation, rising energy prices, and FX shortages.

The non-life industry maintained its market dominance in accordance with recent trends, with a 57% share of the overall premium income. Value-wise, the segment’s overall premium revenue rose 17% y-o-y and 34% q-o-q to N417 billion.

According to the data, the oil and gas industry contributed the most to the non-life business, with a share of 30%.

Fire insurance and motor insurance followed with shares of 22% and 15% respectively. Marine and aviation casualties, general casualties and others also contributed around 12%, 11% and 10% of total premium income, respectively.

The life insurance business, which accounted for 43% of the sector’s total premium income, grew by N48 billion (+18% y-o-y) to N309 billion in the fourth quarter of 2022.

On a cumulative basis, the insurance sector’s total premium income increased by 16% y-o-y to N1.9 trillion in FY22.

In terms of the sector’s market size, the data showed that total assets amounted to N2.3 trillion, an increase of 2% compared to the previous quarter and 4% compared to the previous year.

In terms of market size distribution of total assets, non-life business assets amounted to N1.1 trillion while life insurance assets amounted to N1.2 trillion. Based on the data, the sector’s insurance claims rose 31% sequentially to 318 billion naira in the quarter, accounting for 44% of total premium income.

Although the country’s insurance sector has continued to experience double-digit growth, there is a significant growth reason for the provision of insurance coverage to individuals, particularly those in the informal sector.

The post Insurance sector on the right growth track appeared first on International Finance.

Around less than 1% of the world’s emissions come from Thailand, and per-person emissions are lower than average, but recent years have seen an increase in air quality-related worries. Thailand’s carbon dioxide (CO2) emissions increased by 0.8% yearly from 2011–21, which is greater than the global average of 0.6% but still less than the Asia–Pacific average of 1.8%, according to statistics from the BP Statistical Review of World Energy 2022.

The International Energy Agency predicts that CO2 emissions will reach their peak before 2030. Thailand gains from having a large portion of the service sector, which produces less pollution than industry. Nevertheless, 36% of Thailand’s CO2 emissions were from power generation, followed by industry (30%) and transportation (28%). This highlights Thailand’s need to diversify the energy source of its manufacturing industry by moving away from fossil fuel-based power, as well as expanding the fleet of low carbon transport.

Thailand continues to be heavily dependent on fossil fuels. The country’s energy use was strongly skewed towards oil and natural gas, which together accounted for 77% of all energy consumption in 2021, according to data from the BP assessment. Overall energy consumption includes coal at 17%, which is low compared to the average for Asia-Pacific at 47%, which was mostly driven by high usage in China (55%), India (57%) and Indonesia (39%). Similar to regional peers, renewable energy consumption took up only 6.3% of the total, but between 2011 and 2021, it increased significantly, averaging 18% annually.

A sense of urgency is rising
Thailand does not have a good track record when it comes to committing to sustainability goals and combating climate change. The nation has a history of demonstrating insufficient commitment despite having strong intentions, according to the Climate Efforts Tracker, a research organisation that tracks government efforts to prevent climate change. The Thai government most recently established targets for carbon neutrality by 2050 and a net-zero GHG emission target in 2065 at the Glasgow UN Climate Change Conference in 2021, ranking Thailand among the laggards. It did not sign an agreement to end deforestation by 2030.

However, there are indications that the situation is becoming worse. The rise in gas and oil prices brought on by the conflict in Ukraine and the political unrest in Myanmar—Thailand’s main natural gas supplier—add the need to increase renewable energy in the mix, in addition to the concern for the environment.

A noticeable policy change towards a more ambitious goal and higher priority for the promotion of sustainable practice became apparent in 2022. Thailand’s second updated nationally determined contribution, which included a more aggressive goal to cut its greenhouse gas emissions by 30–40% from the predicted business-as-usual level by 2030, was revealed in November 2022. The Thailand government also announced a revised version of its Long-Term Low Greenhouse Gas Emissions Development Strategy, which proposed accelerated efforts to combat greenhouse emissions.

In response to worldwide criticism of Thailand’s lack of action, the BCG model, in place since 2021, attempts to demonstrate a better public commitment to climate change risk and sustainability. During the meeting of the Asia-Pacific Economic Cooperation in November 2022, it was given a more prominent position as a cornerstone of economic policy. The government’s initiatives actually concentrate on four economic sectors: food and agriculture, health care and wellness, energy, materials, and biochemicals, as well as tourism and the “creative” economy. In order to increase interest in the industries where Thailand currently has an edge, the BCG policy effort blends Thailand’s sustainable drive with an investment promotion policy. The Climate Change Act, which is now in draught form, is another measure that suggests that change-related actions have advanced.

Regulators are also developing finance industry policies to assist sustainable practices. The Securities Exchange Commission and the Bank of Thailand, the country’s central bank, are currently working on the Thailand Taxonomy, a set of standards that will serve as the foundation for a system of sustainable financial services and the development of related products.

Thailand’s solar energy market
The Thai solar energy market is anticipated to grow at a CAGR of 8.5%, between 2022 to 2027. The COVID-19 pandemic slightly affected the solar photovoltaic (PV) installations in the country during Q1 and Q2 2020, but due to lockdown limitations, supply chain disruptions, decreased solar PV output, and delayed project implementation. The 45 MW floating solar farm’s operation was delayed by the government-run Electricity Generating Authority of Thailand (EGAT). During the projection period, the solar energy market in Thailand is anticipated to be driven by elements such as significant government support for solar power development in the form of feed-in tariffs, the Alternative Energy Development Plan (AEDP), and falling prices for solar PV systems.

The ground-mounted solar PV category holds the largest proportion of the country’s solar energy market due to the installed capacity of ground-mounted solar PV and the huge number of forthcoming projects in Thailand. The region is anticipated to increase the chances for solar energy firms to develop solar PV facilities over the next few years because it has an aim of decreasing GHG emissions to 20.8% by 2030. Additionally, the area has ambitions to lessen its reliance on foreign fossil fuels like crude oil and use renewable energy sources like solar to cut costs associated with imported oil. The market is also driven by favourable government policies, particularly those developed by the Ministry of Thailand to promote the production of electricity based on renewable resources.

The solar PV segment is predicted to hold the greatest market share during the projection period due to the decreasing cost of solar modules and the ability of these systems to be used for a variety of purposes, including the production of electricity and water heating.

The installed solar PV capacity in Thailand increased from 1,420 MW in 2015 to around 2,983 MW in 2020, according to the International Renewable Energy Agency (IRENA), registering a growth of almost 11% over the course of the year. Large-scale solar PV installation deployments in India, notably for utility projects, are to blame for the growth. The Indian government intends to boost installed solar PV capacity as well.

Meanwhile, a 12 MW solar rooftop PV project was launched by BCPG Public Company Limited (BCPG) in 2020 and is situated on the roof of Chiang Mai University in Thailand. In December 2021, Dezhou Dingzhuang floating solar photovoltaic park’s second phase (120 MW) was connected by Huaneng Power International Inc. The plant has a 320 MW installed capacity overall, and the project can produce about 550 million kWh of power annually.

New opportunities in renewable energy sectors
The pathway to carbon neutrality and net zero will be challenging and will require a strong political will to see it through. According to a report by Economist Intelligence, Thailand should create an energy transition plan for the transport and energy sectors in particular. The country’s power sector, which accounts for the majority of its emissions, has to shift away from natural gas (coal’s role has already diminished over time) and towards renewables, particularly solar and wind in the long term. The transformation requires new infrastructure, including grid management, energy storage, and efficiency enhancement. If fossil fuels are used for direct consumption, Thailand’s heavy industries and manufacturing sectors that are export-oriented will also need to increase their energy efficiency.

Thailand will need to increase the effectiveness of its public transport system and encourage electrification through infrastructure, such as charging stations, as well as financial incentives for consumers. Thailand will eventually need to reduce emissions from the agricultural sector through compensatory measures including carbon sinks (like reforestation) and carbon capture and storage. In the near to medium term, Economist Intelligence anticipates additional opportunities to focus on renewable energy and electric vehicles (EVs), which are now drawing a lot of investment and garnering more government support.

The post Is Thailand environmentally sustainable? appeared first on International Finance.

And now, the most recent figures point to another economic knock but in surprising ways, as the authorities finally start gauging Brexit’s impact on the British economy. Automobiles, which is one of the UK’s number-one export, has taken a serious hit, if developments in the first few months of 2023 are to be believed.

The Auto Market

Brexit has significantly impacted the UK’s trade policy and economic conditions, including the automobile market. While the full effects of Brexit are still unfolding, it is evident that changes in trade policies and market dynamics have led to a decline in investments in the UK automobile market.

One of the primary reasons for the decrease in investments is the uncertainty surrounding the post-Brexit trade relationship between the UK and the European Union. Before Brexit, the UK was part of the EU’s single market and customs union, allowing the free movement of goods, services, and capital. However, with Brexit, the UK has left these arrangements, introducing new trade barriers and regulatory complexities.

The UK and the EU have negotiated a trade agreement known as the Trade and Cooperation Agreement (TCA), which came into effect on January 1, 2021. While the TCA provides tariff-free and quota-free trade for most goods between the United Kingdom and the EU, it still introduces new non-tariff barriers and additional administrative burdens, particularly in the automotive sector.

Three of the biggest automakers in the world have urged the British government to renegotiate its Brexit agreement with the EU and intend rules that they believe endanger the manufacturing of electric vehicles in the UK.

Ford referred to the revisions as a “pointless cost.” At the same time, Stellantis, the manufacturer of Vauxhall, warned that it would only be able to fulfil its goal of producing electric vehicles in Britain with them. The largest automotive employer in the UK, Jaguar Land Rover, also referred to the timing of the new regulations as “unrealistic.”

What’s The Issue?

One critical aspect impacting the automobile market is the rules of origin requirements under the TCA. To benefit from tariff-free trade, automakers must meet specific rules of origin, which require a certain percentage of the vehicle’s value to originate from the UK or the EU. Meeting these requirements can be challenging, considering the integrated supply chains in the automotive industry, where components often cross borders multiple times during production.

The uncertainty and increased bureaucracy associated with Brexit has caused concerns for automakers. Many companies in the automobile industry rely on just-in-time production methods, where components are delivered as needed to minimize inventory costs. Introducing customs checks and delays at the border disrupts this efficient production process and adds costs to the supply chain.

Stellantis claims it is having difficulty complying with the TCA’s “rules of origin,” which mandate that 40% of an electric vehicle’s value-added parts must originate in the UK or EU for it to be eligible for tariff-free trade.

In 2024, this bar will grow to 45%; in 2027, it will rise to 55%, and the battery pack will then be required to originate in the UK or the EU.

Automobile manufacturers who do not comply risk incurring 10% tariffs when they sell their final products on the other side of the English Channel, making it more challenging to compete with less expensive rival models from Asia.

Stellantis claims that these requirements make UK production unfeasible and urges the government to reach a new agreement with the EU to maintain current regulations until 2027. Stellantis employs more than 5,000 people in the UK, including 1,000 at its electric van factory in Ellesmere Port, Cheshire, and 1,200 at its Luton plant.

Ford, which has spent £380 million expanding its e-motor capacity at its Halewood, Merseyside, facility, also released a statement supporting the regulation change’s three-year postponement. At the same time, the UK and EU increase their capacity for battery manufacture.

Moreover, Brexit has affected the free movement of skilled labour. The automobile industry heavily relies on talent from the EU, both for manufacturing and research and development activities. The end of the freedom of movement has created additional challenges in recruiting and retaining skilled workers, which can impact the competitiveness of the UK automotive sector.

These factors, combined with the uncertainty surrounding the future trade relationship between the UK and the EU, have contributed to a decline in investments in the UK automobile market.

According to industry data, investment in the UK automotive sector has decreased since the Brexit referendum. The Society of Motor Manufacturers and Traders (SMMT) reported that preliminary data showed a 2% decline in British new car registrations to 1.61 million units last year, or around 700,000 units less than the amount before the COVID.

Professor of business economics at the Birmingham Business School David Bailey describes the issue as an “existential threat to the UK auto industry” and claims that the present Brexit agreement’s provisions “place the UK at a competitive disadvantage.”

According to Andy Palmer, the chair of European battery maker InoBat, 800,000 jobs in the UK related to the auto industry were in danger. The automakers would relocate to continental Europe, he said, if they can’t comply with the local content requirements or lack the necessary battery capacity in the UK.

Conclusion

Overall, the changes in trade policies and market dynamics resulting from Brexit, including introducing new trade barriers and increased uncertainty, have played a role in the decline of investments in the UK automobile market. However, whether the situation will improve or degrade further, will depend on how swiftly the Rishi Sunak government assesses the ground situation and performs the course correction, as the sector is trying its best to adapt to the new trading environment.

The post IF Insights: Will Brexit bring doom for the UK automobile sector? appeared first on International Finance.

A belt-tightening effort in the United Kingdom has already led to people choosing to terminate discretionary insurance coverage to cut costs.

For example, only one in ten travel and pet insurance consumers completed their policy. Another 10.2% were considering doing the same in 2023, according to GlobalData’s 2022 UK Insurance Consumer Survey of over 4,000 insured individuals. Home and life insurance, as well as other optional products, are also under attack.

Insurers will see a decline in revenues, apart from experiencing problems with their resilience as operations and claims costs surge. The most suffering will be seen by carriers specializing in non-compulsory lines. Financial adequacy problems will likely hurt monoline carriers because some of their business models will no longer work.

According to Ecclesiastical research, inflation is now a greater danger for high-net-worth insured individuals. Around 75% of UK brokers think underinsurance is a result of irregular valuations rather than inflation. Supply-related problems have increased commodity costs.

Over 93% of brokers consider underinsurance as a substantial risk to United Kingdom businesses during the current economic slump, which has produced a significant shift in how insurance is marketed and purchased. Over 30% of brokers consider personal accident insurance the most reduced or adjusted form of protection, according to RSA. Legal protection, product liability, and lone proprietor insurance follow at 25%.

Over 40% of company claims to have some underinsurance, which will only grow worse as inflation soars in 2023.

As the prospects for the hospitality industry look better, businesses in the field have been told to think about building reinstatement values. Lockton’s analysis shows that global shortages of shipping containers, metals, plastics, steel, and timber affect property damage claims when labor prices grow. Since both the operational environment and risk are always changing, building reinstatement values must be carefully reviewed.

As 2023 approaches, high inflation will reduce insurers’ profit margins. In July 2022, Europe’s inflation rate reached 8.9%, a 25-year high. GlobalData expects this would diminish general insurers’ profits through 2024 as average cost-per-claim rises and premium growth slows. Again, property, motor, and specialty lines will be most affected.

Premiums will rise by 5.6% in 2022, but property insurance claims will increase by 6.4%. In the automotive industry, claims growth is expected to grow from 1.6% in 2021 to 4% in 2022, while premium growth will fall from 6.4% to 4.3%.

Due to rising replacement, third-party, litigation, and wage costs, auto insurance claims may increase in 2022. GlobalData warns that rising claim costs will affect insurers’ claim reserves, which cover unpaid claims from previous years.

Insurers will have to consider their risks and raise prices, apart from balancing profitability, premium growth, and client retention.

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Power International Holding has transformed itself as a second-generation business organisation expanding horizontally and vertically into diversified sectors and regions of the world. By practice, the conglomerate uses its vertically integrated business units to create sophisticated products and services. In an interview with International Finance, Chairman of Power International Holding Moutaz Al-Khayyat, tells us about what unites the group of companies and their collective work in enhancing the nation’s economic attractiveness in line with Qatar National Vision 2030.

How diverse is Power International Holding’s portfolio and what are its efforts in promoting sustainable growth for business enterprises?
Power International Holding is a Qatari conglomerate comprising six main subsidiaries. We challenge all these businesses to run a continued programme of becoming more efficient, responsive, and agile. We believe that these principles will best serve the needs of our customers, whether they are prominent real estate developers or individuals consuming our cartons of milk.

First: UCC Holding is one of the world’s top 250 contractors, according to Engineering News-Record. Focused on four main areas of activities, such as infrastructure and heavy construction; buildings; marine works; and oil and gas, UCC Holding is currently constructing what is essentially a new city in Al-Wakrah, with two vast residential projects, as well as mosques, public spaces and hypermarkets.

Second: Elegancia Group is a conglomerate of excellence, comprising companies working in their individual industry of specialization. The group spans four major divisions in sectors such as services, industries, healthcare and contracting. A subsidiary of Elegancia Group, Elegancia Healthcare, has recently signed an agreement with Cedars-Sinai Los Angeles for The View Hospital. The 250-bed facility is located in Al Qutaifiya, in the vicinity of Lusail, Katara and The Pearl, Qatar, and will open in August 2022.

Third: Baladna QPSC is Qatar’s agri-food industries champion. Established three and a half years ago, Baladna spans 2.5 million square metres of land on which over 20,000 cows graze. Within a year of launch, Baladna had helped Qatar to achieve 100 percent milk self-sufficiency and since then it has diversified into fruit juices, UHT long-life milk, laban, and a vast range of other dairy products. The group was successfully listed on the Qatar Stock Exchange last year.

Fourth: Assets Real Estate works in hospitality, commercial, residential and mixed-use developments across Qatar, Lebanon and Oman. This includes THE e18hteen tower in the Qatari coastal city of Lusail, a project that was recognised to be the nation’s best commercial high-rise development. The 23-storey residential Baywalk Tower on The Pearl is a luxurious artificial island off Doha that was completed this year.

Fifth: AURA Group is Qatar’s leading lifestyle business, with particular strengths in food and beverage and entertainment. This includes Megapolis, an unrivalled entertainment centre that has top quality arcade games, escape rooms, bowling and karaoke. Despite the pandemic, AURA has secured international brands for the Mall of Qatar and The Pearl by early 2021, including a burger joint to the stars, Black Tap, and French restaurant Beefbar.

Sixth: Power International Holding General Services include Joury Travel and Tours and Printshop. Established in 2012, Joury offers personalised travel tours, including inland expeditions and stays at some of the Middle East’s finest hotels. Printshop uses advanced technologies that can fulfil our clients requirements, be it in UV printing, offset printing, 3D printing, solvent printing, sublimation, die cutting, laser cutting or engraving.

How are those business enterprises performing in their respective sectors amid the coronavirus pandemic?
Baladna, for example, is used to thriving even in the case of crisis as it was born under the shadow of the diplomatic crisis that led to the blockade. The company continues to thrive, supplying more than eight out of every 10 glasses of milk consumed in Qatar. It has recently partnered with Veolia Water Technologies to upgrade the wastewater treatment facilities at its farm in Al Khor. The treated water will be used for irrigation throughout the farm, and during hot summer months, it will be used to spray and cool the cows, saving thousands of gallons of water every month as part of the group’s ongoing sustainability initiatives.

However, construction business has obviously been difficult across the world, but we have only faced challenges in terms of slight slowing of projects. Safety and sustainability continue to be the core pillars of Power International Holding’s growth story, with UCC recognised as the Country Winner – Qatar 2020 by the British Safety Council. UCC was felicitated based on the safety record of our workers and the Qatari government has signaled greenlight for a number of our projects. The FIFA World Cup is set to be hosted in Qatar in 2022 and the pandemic won’t stop the nation from preparing for the sporting jamboree. Our affiliated company Elegancia Facilities Management has assisted us in many ways. It has invested heavily since the beginning of the year and is furnished with state-of-the-art disinfection vehicles and equipment.

What is the role played by Power International Holding in realising Qatar National Vision 2030?
As you can see based on our range of sectors, from food self-sufficiency to laser cutting to building infrastructure to providing world-class entertainment, Power International Holding embodies Qatar National Vision 2030. The ambition is to diversify the economy away from oil and gas and our subsidiaries are leading that charge.

UCC subsidiary has been awarded a contract for developing two residential projects worth over £1 billion in Al-Wakrah, a historic fishing village that lies on the shoreline of Qatar’s coast. How will the new development contribute to Qatar’s construction sector and cement UCC’s global reputation?
UCC recently signed a deal to develop Qatar’s second biggest city, building two residential projects in Al-Wakrah. Once completed, the projects will house more than 60,000 people, along with new schools, leisure spaces, and green transport connections for visitors and residents. The city will be home to tens of thousands of people, transforming UCC from a national champion in the Middle East and North Africa (MENA) to the builder of the region’s most modern cities. The contract points to the fact that Qatar’s construction sector is thriving and will continue to be a prime focus for the economy in the future.

A report has taken into account Qatar’s work in following sustainability principles in the construction of various World Cup projects. What opportunities will they bring to build resilience in the construction sector and how will Power International Holding assist in building that resilience?
All World Cup stadiums need to obtain the Gulf Organisation for Research and Development’s green building standard Global Sustainability Assessment System certification. The Global Sustainability Assessment System is designed specifically for the MENA region and drives sustainability endeavours and climate actions by addressing global challenges in a regional context. UCC Holding is an affiliate member of Gulf Organisation for Research and Development and is also a sponsor of Lean Construction Institute-Qatar.

Despite the recent talk of change, there are many aspects that remain the same and will continue to offer us tremendous growth opportunities. People want a home they can be proud of and visit restaurants or entertainment venues with their families. For our colleagues, they should feel proud that they are part of delivering projects that not only seek to make the World Cup a success, but also for people to enjoy and value the moment for generations to come.

What is your outlook for the domestic real estate sector over the next two to five years considering that the nation has loosened restrictions on foreign property ownership?
We believe that investments in tourism, infrastructure and real estate projects will increase after the pandemic. The Foreign Property Ownership Law, which was introduced in October this year, is particularly beneficial as it encourages competitiveness among non-domestic buyers and businesses. For example, this law increases the number of places where non-Qataris can buy properties outright and permanent residents will be able to run commercial operations without a local partner.

How has Qatar’s status translated into economic gains after it won the 2022 bid to host the FIFA World Cup?
Statistics show that there were a number of boom years as Qatar built the infrastructure needed to deliver a fantastic sporting spectacle. In 2013, the real estate price index soared 16.45 percent when adjusted for inflation, followed by 31.81 percent and 10.75 percent in the next two years. Moreover, this has helped Qatar to diversify the economy away from its previous reliance on oil and gas, especially with the construction sector adding value to hospitality, retail and leisure industries, through development of new restaurants, shopping malls and hotels. With all eyes on the 2022 FIFA World Cup, I look forward to highlighting the best of Qatar and hope to leave a legacy long after the iconic golden trophy is presented in Doha.

The conglomerate has profound knowledge and industry expertise through developing complex projects over time. How do you see its collective experience contributing to economic sectors in Qatar and regions of the world?
The Al-Wakrah project is a significant part of our growth in Qatar. As a mature business, we can now build new modern ideas for the development of a smart city. Beyond Qatar, our companies are already exporting to and developing several MENA countries. Perhaps the most exciting work coming up for us is in Malaysia, where Baladna will support another nation in its drive to dairy self-reliance.

What will be the impact of the recent cooperation agreement with Dar Al Sharq on enhancing public relations in the Arab world?
Dar Al Sharq is a leading institution in providing distinguished services in the field of media, advertising, and public relations. We will work together to take public relations to new heights for employees in the Gulf and the Arab world. Supported by Power International Holding, Dar Al Sharq has started work on establishing the first Arab website that specialises in integrated services for public relations experts in the Gulf and neighbouring countries. This database will be a reference point for the public relations industry, modernising it throughout the region.

How does Power International Holding see Qatar’s strength in terms of its economic diversification away from oil and what sectors need to be in sharp focus to achieve that diversification?
Construction and manufacturing are clearly the key beneficiaries of Qatar’s diversification away from oil and gas. We know that the economic multiplier of those sectors is significant, creating growth in other sectors. If you take the construction sector, it has flourished, backed by four years of budget surpluses to fund public spending. We have a fast-expanding airport, new metro lines and billions of dollars allocated for new highways. All of this points to better connectivity—and further diversification will seamlessly follow.

Will Qatar’s economic readjustments be on point, given that the value of its construction sector is estimated to reach £57.04 billion by 2025?
We are confident that the economy will rally significantly, putting the Qatari construction sector back on track. The development of the nation’s transport infrastructure, creation of world-class sporting venues and building modern residential and hospitality projects are key drivers in catering to the growing population.

The pandemic is notoriously affecting businesses worldwide. How has it disrupted the work so far and how is the conglomerate coping with the crisis?
Of course, there were disruptions, but we have kept our workforce safe and use the best disinfection equipment available. My absolute priority as the chairman has been to look after our people throughout the pandemic. By ensuring that we have the right measures and equipment in place, we have been able to keep people safe and minimise disruption, meaning that most of our projects have remained on track. I’m incredibly grateful and proud of my teams’ efforts, and I believe that we are well positioned for continued growth.

We are ready to go when pent-up demand is unleashed as the economy recovers. What the pandemic has shown us is how important the digital world has become—and how technology builds resilience. For example, we created a comprehensive digital shopping experience for the Mall of Qatar. This includes a customer data platform that allows engagement with customers, a generous loyalty programme to encourage frequent visits and an innovative ecommerce platform to complement the experience.

Another example is AURA Hospitality’s adoption of digital solutions. Scannable QR codes are used to replace physical menus. The group has also introduced Wajbati, the one-stop-shop for shoppers, combining food delivery, ingredient delivery and food subscription service—all in one app. We are working with some of the top players in digital transformation, such as Google and SAP, to future proof our business frameworks and processes.

Innovation and digitisation remain our priorities. We want Power International Holding to become agile, data-driven and flexible. While hard work and collaborative approach has earned the conglomerate years of success, we must always consider what comes next and be ambitious about our investments.

How is the pandemic influencing the key sectors of Power International Holding?
Arguably, this year has shown us that the most effective business leaders must be ready to adapt now more than ever. The pandemic has obviously slowed down most of the economic sectors. Businesses have had to prove their resilience and Power International Holding’s model has demonstrated significant strength. We are looking forward to bounce back not only in Qatar, but also in the MENA region and the rest of the world. Having overcome short-term challenges, we certainly seem to have prepared Power International Holding for more years of impressive growth and achievements.

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UK finance minister Philip Hammond has approved $128.5 mn to explore a post-Brexit satellite system. The official announcement will be made this week, according to the Sunday Telegraph.

A spokeswoman for Britain’s Department for Business, Energy and Industrial Strategy declined to comment on the matter.

The European Commission has started to exclude Britain and its companies from sensitive future work on Galileo ahead of the country’s exit from the EU in seven months time.

Galileo was commissioned in 2003 and is due for completion by 2020. According to one expert, it could cost Britain about $3.85 bn build a system to rival it.

The EU has stated that Britain will be able to continue using Galileo’s open signal. However, Britain’s military could be denied access to the encrypted version when the satellite becomes operational.

Britain has said it plans to press ahead with the development of its own satellite navigation system if the EU continues to insist that it will be barred from the secure elements of the project.

It will demand a repayment of up to $1.28 bn for the work it has carried out on the project.

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The fully networked factory is set to have a major impact on future production, according to industry experts. A powerful network architecture that can react in real time is vital for this development.

Frank Lloyd, Chief Information Officer of Audi AG, stated: “As part of the Ericsson project, we are testing the opportunities offered by 5G technology for industrial applications in the smart factory,”. In addition, whether 5G can also be used in other factories within the Audi Group will also be explored.

Ericsson has claimed that it already runs 5G industrial programs around the world. According to the Swedish company, this is intended to help manufacturers increase productivity and create innovative business models.

5G technology has numerous network characteristics that are essential in modern production with increasingly flexible and complex production processes. For example, 5G allows higher data throughput rates and more network capacities and promises highly secure availability. In addition, low latencies promise faster reaction times between different elements within the factory system.

In their test field, the two companies will focus on a particularly latency-critical application: The team tests the wireless interaction between an industrial robot and an adhesive application – an automated process that is the order of the day in automotive production. Ericsson’s proof-of-concept (PoC) network used for this purpose is designed to integrate alternative or complementary technologies to those currently in use – such as WiFi or cable-based connections of production components.

The two companies have signed a Memorandum of Understanding at Audi’s headquarters in Ingolstadt in Germany.

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The RBI lends short-term money to commercial banks at the Repo rate, while reverse repo rate is one at which the central bank borrows money from commercial ones. The repo rate was hiked by 25 basis points in June and further increased to 6.50% by the banking regulator – while the reverse repo rate was also hiked in a similar capacity to 6.25% on Wednesday.

Niranjan Hiranandani, national president, National Real Estate Development Council (NAREDCO)said: “From a real estate perspective, this hike will negatively impact buyer sentiment with the logical result on quantum of sales,” adding that the rate hike had come on the heels of a meeting with Union Housing and Urban Affairs Minister Hardeep Puri, in order to discuss measures to put the real estate sector “back on track”. Developers had discussed lowering GST and setting up a ‘Stressed Assets Fund’ to finish stalled projects by providing last mile funding.  He said that the government should take decisions to enhance buyer sentiment.

Jaxay Shah, the National president of Confederation of Real Estate Developers Associations of India’(CREDA), who was also part of the meeting, said: “Two consecutive hikes in the repo rate partially undo the policies for promoting affordable housing. We urge the government to expedite lowering effective GST on all housing to 8 per cent so as to preserve the growth impulses in real estate.”

The criticism was also echoed by Dhaval Ajmera, director of Ajmera Group, who said: “On one hand where the government is gunning big for ‘Housing for All’ and affordable housing, such moves are totally out of sync with the vision at the Centre.”

On the other hand, Rohit Poddar, managing director of Poddar Housing and Development Ltd on the other hand was less intimidated. “, “I personally believe that the home buyers should not worry as it will be difficult for many banks to increase the interest rate.” he said.

Similarly, Anuj Puri, chairman of Anarock Property Consultants, stated that the march-June quarter had recorded a 24 per cent increase in housing sales and 50 per cent increase in new launches. Puri said: “These numbers clearly indicate that the markets are now recovering from the shocks of structural changes and policy reforms. Serious end-user demand is back on the market and marginal hikes in home loan rates are unlikely to deter buyers.”

Conclusively, Ashwin Sheth, chairman and managing director, Ashwin Sheth Group said: “While this decision was taken to contain inflation, a rate cut at this stage would have offered some respite. We hope the RBI addresses this concern in the next announcement scheduled for October.’’

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