
Economic Outlook
Proposed law puts 20 year limit on expat residency in Kuwait as the residency
should have a maximum of ten years that can be
renewed only once, according to the strict
conditions. The law also stated that no foreigner
in unskilled and semi-skilled occupations should
be allowed to stay in Kuwait when he reaches
the age of 50 while those who have skilled jobs,
such as doctors, advisers and university
professors, should be able to stay until they are 70. The suggestions are part of a
draft law the lawmaker is presenting to parliament to address what he called
demographic imbalances and the presence of a massive marginalized labor force
in the country. It’s worth mentioning that Kuwait is home to around 2.8 MM
foreigners, mainly unskilled Asian laborers in the construction sector and
domestic helpers, who make up more than two-thirds of the total population.
Egypt's central bank kept its main interest rates unchanged but said it was keeping
an eye on the risks to recovery posed by increasing concerns about the global
economy. The central bank raised benchmark interest rates at its meeting in midJuly to keep inflation in check after the cuts to electricity and fuel subsidies, while
it kept rates on hold as well as overnight deposit and lending rates unchanged at
9.25% and 10.25% respectively at its last meeting in September. On the other
hand, inflationary pressure has begun to ease after a spike following cuts to energy
subsidies in July while the economy is showing signs of strengthening recovery as
urban consumer inflation eased to 11.1% in September after surging to 11.5% in
August in the wake of cuts to fuel and electricity subsidies. Core inflation eased to
9.15% in September from 10.07% the previous month.
Experts in energy and environment sectors have called for removing government
subsidies for water and energy for environmental and financial reasons which may
pave the way for higher utility prices in the UAE. It’s known that the cost of fossil
fuels is much lower than its real cost and the external costs of fossil fuels such as
carbon costs, health and environmental costs (for example seven million global
deaths annually due to air pollution) are not included in its price. Sooner or later,
Abu Dhabi has to move away from the subsidized regime, because residents do
not consume water and electricity wisely with low-tariffs. As Abu Dhabi has the
highest per capita consumption in the world (around 550 liters) whereas in Dubai,
the consumption was reduced when subsidies were reduced.
The partners in Israel's offshore Tamar gas field said that they are negotiating the
sale of at least 5 BN cubic meters (bcm) of gas over three years to private
customers in Egypt via an old pipeline built to send gas in the other direction. The
supplies would pass through an underwater pipeline constructed nearly a decade
ago by East Mediterranean Gas (EMG). Egypt had been selling gas to Israel in a
20-year agreement, but the deal collapsed in 2012 after months of attacks on the
pipeline by radicals in Egypt's Sinai Peninsula. It has since been out of
commission and EMG is suing the government of Egypt for damages. Recent
offshore discoveries such as Tamar, with an estimated 280 bcm of gas, and
Leviathan, which is more than twice as big, have turned previously importdependent Israel into a potential energy exporter.
GCC countries plan to start their peddled joint tourist visa system by first
targeting expatriates as beneficiaries. This will be done on an experimental basis
for security reasons and later, nationals of some 35 countries, many from the Arab
bloc, will be able to enjoy the privilege. The idea behind a joint entry visa scheme
for the six member states is to boost tourism in a big way. However, the interior
ministries will look into security issues and see how they could possibly allow the
issuance of such visas. Rules for issuing joint visa would likely be framed by the
GCC tourism committee and all recommendations are being forwarded to the
GCC Secretariat-General for approval. It is likely the secretariat would make
slight amendments before ratifying them, which is expected by October 22.
Investments in Saudi travel and tourism will reach 150 BN SR in 2014. In KSA,
the inbound tourism is a major contributor to commercial and economic
dynamism. Industry observers project investments in Saudi travel and tourism to
stand at 150 BN SR in 2014 wherein 50 BN SR would come from domestic
tourism and 100 BN SR from inbound tourism. Saudi domestic tourism has grown
significantly lately, whereby spending soared from 59 BN SR in 2010 to 103 BN
SR in 2014 thereby becoming an economic generator that can be included in the
list of sustainable investment opportunities. Investments in the hotel and hotel
apartment sectors are also projected to reach more than 95 BN SR over the next
ten years.
In a milestone development for Sultanate Oman pivotal hydrocarbon sector, Oman
Oil Company Exploration and Production LLC (OOCEP), the upstream subsidiary
of the Sultanate's energy investment arm, Oman Oil Company, is preparing to
bring its Abu Butabul tight gas field in Block 60 into commercial production,
thereby becoming the first Omani operator to add unconventional tight gas to the
nation's expanding gas base. The company began commissioning its newly built
Gas Processing Plant at the start of a long exercise that will culminate in the
production, processing and export of unconventional tight gas into the
Government Gas System for the first time in the country's modern history.