DinarStandard Editors

May/ June Edition: Intra-OIC Trade Up, Abdul Latif Jameel & CSR, The 99 Comic, Harvard Islamic Finance, Borusan Six Sigma...

In our May edition we present an update of the 2005 Research Brief titled "Is Intra-OIC Trade on the Rise?" (OIC = Organization of Islamic Conference.)  With many of the Muslim world economies growing in global prominence, one question often asked is how much of the trade is being done between these economies. 

Our latest research brief looks at the current Intra-OIC trade trends by evaluating the four leading Muslim majority country economies of Malaysia, Turkey, Saudi Arabia and Indonesia and their trade with the rest of the 57 OIC member countries compared to the rest of the world.  Even as the Islamic Development Bank Annual Report (2006-07) revealed that OIC member countries’ overall share of trade with other OIC member countries was a mere 14%, our Brief certainly shows a strong rise in Intra-OIC trade between the years 2003-07.

One story we are proud to have finally covered is the exemplary corporate social services program of the Saudi Arabia based conglomerate Abdul Latif Jameel Group.  We have also included a photo journal showcasing ALJ's impressive array of community programs.   

For our Muslim Lifestyle Market section we have an inspiring entrepreneurship story of Kuwait based Dr. Naif Al-Mutawa's The 99 comic series gaining regional prominence including licensing deals such as a newly announced 99 Village theme park being initiated in the GCC.

Finally, guest contributor Dr Athar Osama provides an outsiders perspective on the recent Harvard Islamic Finance Forum while Ms. Nawal Ouzren, herself a former six-sigma black belt for General Electric (GE), looks at a large successful six-sigma implementation in Turkey (at a major conglomerate Borusan Holding.)

I look forward to your comments on this update.  Also, we would like your recommendations on innovative and inspiring products, companies and business leaders from the Muslim world for us to consider profiling.

    

Apr Edition: Naseeb.com, Gulf Venture Capital, AlWaleed, Masdar City, ARAMCO, and more

Innovation and entrepreneurship have been the corner stone of all developed economies.  In the past few years, we have been withnessing an encouraging level of focus within the Muslim world emerging economies on such efforts. 

DinarStandard's April 2008 issue looks at some recent nuggets of this blooming innovative, entrepreneurial business environment. 

Our lead feature is on Naseeb.com, a Pakistan based Muslim social networking venture tapping into the growing online Muslim population and has secured funding from prominent Silicon Valley VC's (also included is a list of top Muslim social//matrimonial websites).  Given the termendous potential of the global Muslim market - we are introducing a dedicated section - the Muslim Lifestyle Market (SM)  - to provide you with regular trends analysis/ stories on various products and services targeting the muslim lifestyle.

Given the potential role of cash rich Oil producing Gulf countries in supporting new venture and entrepreneurship, we summarize key insights from this years Gulf Venture Capital Association meeting in Riyadh.  What stands out is given a boom in Private Equity investments, the risk appetite for investors funding startups is still limited.  According to the GVCA, of the $4.8 billion private equity raised in 2006, only 9% went to venture capital.

However, many impressive world leading innovation initiatives are being undertaken in the region.  Guest controbutor, Mr. Bilal Zuberi, PhD writes about Abu Dhabi's ambitious Masdar City project which aims to be the World's First Zero-Carbon, Zero-Waste, Car-Free City. 

In profiling personalities, we review international journalist Riz Khan's biography of one of the most successful international investors today - Prince Alwaleed bin Talal. We have also introduced a new series on Women in Management.  Keeping with the entrepreneuship theme, we profile Iman Kouvalis, President and Owner of Optimize It. and Na'ima B. Roberts, Managing Director and Editor of SISTERS Magazine.

In the issue, we also look at how Saudi Aramco and ADNOC fared in a recent global benchmarking Sustainable Oil Companies report.  Finally, key strategic aspects of one of the most prominent Indonesian conglomerate Astra International are also reviewed.

This is Alhamdulillah our largest edition thus far.  We hope this Issue has given you some new insights and ideas on innovating and being entrepreneurial in your own business environments. 

    

Malaysia's Private Sector Faces Uncertainty Amidst Political Changes

Malaysia's governing party's poor performance in the recent General Elections held on March 8, 2008, introduces unchartered waters to the private sector with the national coalition losing 5 key states (instead of the usual one) to the keen opposition, Barisan Rakyat.

Barisan Nasional, the governing party, has been criticised to have continuously bred business interest in many different industries in the economy, including the automotive industry, oil & gas, construction and property sectors.

Petroliam Nasional Berhad (Petronas) is seen to have caused distress amongst Malaysians due to the continuous price-hikes over the past 4 years, twinned with a continuous boosts in profit figures. As a company fully owned by the government, the opposition coalition has stated in their election manifesto that they would request for transparent financial statements relating to Petronas' financial activities to be sucritinised in Parliament. There has been an irksome worry pertaining the transparency of Petronas' expenditure / allocation of funds. Petronas ranks at number 121 under Fortune Global 500.

Other companies have experienced project delays due to the changes in state governments. The construction sector, in particular, relies on government based projects and due to changes in government personnel and glitches in the handing-over of contracts and related documents, some projects have had to be put on hold.

Norma Kassim, a Business Development Manager for a specialist civil construction company, says her company is still "looking forward to their Letter of Approval [of a project] amidst the changes in state governmental fronts." Her company's project is affected by the change in Kedah's state government; with the main contractor belonging to the state's administrative body.

"Economic activity has slowed down for the time being," she adds, relaying the sensitivity of the current political changes. "I hope it will pick up by the end of the month."

Her concerns are justified. The Australian Business reported a market plunge in Bursa Malaysia due to panic selling and stock-dumping, which led to a temporarily closure of the Bourse on March 10. Prices continued to fall when trading resumed. The index closed at a 9.5% drop. To-date, the market remains bearish over concerns of the political adjustments.

Malaysia's 12th General Elections caused a stir in its political realm as nearly half of the votes favoured the coallition opposition party, denying the government their benchmark two-thirds majority for the first time in Malaysian history. In addition to losing 5 key states to the opposition front, Barisan Nasional suffered a 28% drop in Parliamentary seats and displacement of long-term members of the governing cabinet.

--- Views by Staff Writer Maria Zain

Mar 08 Edition: Emerging markets of Pakistan, Bangladesh, GCC; Islamic Banking Comparison; Mydin Marketing; M&A

In a global economy challenged by the prospect of a US recession, many emerging markets are gaining prominence in the eyes of investors and marketers.  DinarStandard's March 2008 issue is dedicated to a select group of such markets.  Our lead feature profiles Pakistan's resilient economy and its strong fundamentals - which amid a regular spate of terrorist attacks has also been attracting major  investments. With recent elections passing peacefully, hopes are renewed on Pakistan's continuing economic boom.

Another emerging destination profiled is Bangladesh.  From Nobel prize winning Dr. Muhammad Yunus's Grameen Bank to Solar energy supplier  - Rahimafrooz, a new brand Bangladesh is emerging and surprising investors all over the world.

Similarly, two stories cover the growing prominence of the GCC (Gulf Cooperation Council).  We review a newly published book by global strategist Mr. Aamir Rehman called "Dubai & Co.: Global Strategies for Doing Business in the Gulf States."  Meanwhile, guest contributor Mr. Ayman Mansi writes about Saudi Arabia's ambitious 10x10 program for economic development which aims to make the Kingdom one of the 10 most competitive nations in the world by 2010.

Tying the importance of Mergers and Acquisition within emerging market investments, we look at the rationale and benefits of M&A.

WIth Islamic finance increasing as a choice of investment financing and a growing interest of Islamic Finance beyond the GCC - Attorney Paul Wouters does a comparison of Islamic Banking in Turkey, Indonesia, Pakistan and Malaysia.

Finally, for a marketing case study, we look at the 4 P's of marketing being applied by Malaysia's indigineous hypermarket Mydin.

We hope this issue becomes another important contribution in assessing effective strategies for marketers focussing on the Muslim world markets.

Muslim World Business Sector continues to grow...

Today we release our Jan 2008 issue of DinarStandard and unveil the 2007 DS100.  This is an exciting issue for the DinarStandard team.  For the fourth consecutive year DinarStandard's DS100 ranking of the top 100 businesses in the Muslim World provides a reliable benchmark to understand the progress and overall state of businesses in Muslim World economies.  This year's ranking is noteworthy not only for the continuing effect of oil price driven revenue windfall for the Oil & Gas companies on the list, but also how these have impacted an even greater rise for infrastructure and service sector companies.  The 2007 DS100 had a combined US $1.08 trillion in total revenues (based on EOY 2006 data) and grew 14.5% over the year before.  As part of our efforts to highlight success stories in the corporate sector of the Muslim World this issue also includes profiles of Ulker Group of Turkey, Zain of Kuwait, and the leadership of Muhammad Alabbar of Emaar.  Readers will find with the DS100 Key Facts, brief profiles of some of the most exciting companies on the ranking and an industry breakdown.

This month DinarStandard also features an engaging question-answer with Shaikh Yusuf Talal DeLorenzo, a recognized Shariah Advisor, who recently seperated himself from the pack by questioning recent financial engineering efforts which effectively circumvent the standards of the Shariah rather than serving them. In an industry that labels itself Islamic - DeLorenzo takes up issues that will help to keep the industry on track.  To round out the finance side of things Guest Contributor, Rupert Neil Bumfrey, Principal at RNB Associates, writes about the rise of Sovereign Wealth Funds and their place in the globalized economic system. 

As always we look for our readers to write with their comments.  We are hopeful for a great 2008. 

World Economic Forum releases report of Islam-West Dialogue

The gathering of world leaders at the World Economic Forum’s annual meeting in Davos routinely generates discussion on business and economic issues.  But in recent times, the forum has taken up social issues as well.  A few years ago, the WEF formed the Council of 100 (C-100) to discuss the relationship between the Western and Muslim Worlds.  This year, the C-100 released its first annual report titled, Islam and the West: Annual Report on the State of Dialogue. 

The report aims at benchmarking the state of the dialogue by focusing on five main areas which are: international politics; citizenship and integration; religion, ethics, and ideology; education and intercultural understanding; economic and social development.  It was authored mainly by John DeGioia, President of Georgetown University in Washington, DC.  It also includes contributions from leading authorities and personalities such as John Esposito, Karen Armstrong, Ingrid Mattson, Mustafa Ceric, Anwar Ibrahim, Rabbi David Rosen, Akbar Ahmed, Mary Robinson, and Lord Carey of Clifton.  Each of the contributors is intimately involved in the policy debates on local and global platforms. 

In the report’s foreword Klaus Schwab, Executive Chairman of the World Economic forum, writes that “the remarkable feeling of proximity between people and nations is the unmistakable reality of our globalized world.”  In his view this proximity allows people to see other cultures more clearly and also see ours more clearly.  This may practically be the case but the real question whether people are willing to see others clearly.  Clearly, the C-100 is trying to facilitate this. 

We strongly urge our readers to download and read this important first work.  The report highlights the many global challenges which humanity faces and tries to highlight the need for unified responses through well organized social collaboration.  Unified responses are certainly in order for global challenges but local challenges need local responses as well.  In effect while gatherings like the WEF and intitiatives such as the C-100 will continue to facilitate dialogue and debate about global issues it is also increasingly necessary for such efforts to recognize and nurture local responses by understanding local contexts and their specific challenges. 

OIC Economies in the 2008 Doing Business Rankings

The World Bank’s recently released 2008 Doing Business Rankings were no surprise when it came to who was in the top positions.  Just as in 2007 the economies where it’s easiest to do business included Singapore, the United States, Hong Kong, Denmark, New Zealand, and Canada among others.  Interestingly, there as been some movement among the top OIC economies.  The table below showcases the top 10 OIC economies on the Doing Business ranking in 2008 and their rankings in 2007.    

Among the top 10 OIC economies on the 2008 ranking we see three which have improved from 2007 (Saudi Arabia, Turkey, and UAE) with an average improvement of 6 notches.  Five economies (Malaysia, Oman, Maldives, Pakistan, and Brunei) declined with an average fall of 5 notches.  Finally, two economies (Kuwait and Kazakhstan) remained unchanged. 

The World Bank’s Doing Business rankings are released annually and rank economies on the following criteria:

•     Starting a Business
•     Dealing with Licenses
•     Employing Workers
•     Registering Property
•     Getting Credit
•     Protecting Investors
•     Paying Taxes
•     Trading Across Borders
•     Enforcing Contracts
•     Closing a Business

Malaysia's Top 50 Brands

Brand Finance Plc, a brand valuation and strategy advisory firm, has published the first index of Malaysia's top 50 brands based on the attributed dollar value of their brand assets.

At number 1, Petronas - the Oil & Gas conglomerates brand, is the most valuable Malaysian brand and is worth USD 2.15bn (MYR 7.51bn) out of the total brand value of Malaysia's top fifty brands which is USD 17.26bn (MYR 60.19bn).  The top 10 Malaysian brands command more than 60% of the overall Top 50 brand value and overall the brands.  These top 10 are as follows:

For more, click here to download the full report in PDF.

The methodology used by Brand Finance Plc to calculate brand value is the 'royalty relief’ approach. It assumes a company does not own its own brand and calculates how much it would need to pay to license it from a third party. The present value of that stream of (hypothetical) royalty payments represents the value of the brand.

In a highly competitive local, regional and global marketplace there is a premium on brand's ability to differentiate and communicate their unique ability to satisfy customer needs. The report highlights that in such an environment sources of value creation have moved increasingly from tangible assets (such as plant and machinery) to intangible ones (such as brands,patents, customer databases and skilled workforce). This is an environment in which the scarce resources are not factories and goods, but rather talented people, good ideas and differentiated brands.

Reflecting this shift in the sources of value creation, the Brand Finance Global Intangible Study 2007 for globally listed companies shows that the percentage of value of intangible assetts has risen from 64% in 2001 to 66% in 2007.

However, in Malaysia, the recognition of intangible value is low compared to other countries. The report shows how ony 40% of Malaysia’s market value is derived from intangible assets, as compared to the US where 70% of US market value is derived from intangible assets.

However, there does seem to be an increased emphasis on improving these intangible assetts.  Reflecting this growing trend, the Association of Accredited Advertising Agents of Malaysia (4As) and Interbrand (global brand consulting firm) are collaborating for the first time to come up with another ranking of Top Malaysian brands.

This effort also highlighted the value of branding with the Interbrand strategy director Andrew Martschenko saying that two-thirds of the world’s wealth were attached to the top corporate brands in the West.  The 4As and Interbrand ranking would be announced on Nov 16.

    

Muslim Executives Can Raise the Bar of Global Business Leadership

The Annual ISNA (Islamic Society of North America) convention is a huge affair.  With an estimated 40,000 attendees this year in Chicago, the event was a professionally organized gathering with 100's of lectures and discussions on all sorts of contemporary and religious topics as well as a huge Bazaar of products and services that cater to the Muslim market (more on that later.)

DinarStandard was invited to speak at one of the sessions, titled 'Muslim Executives in the West - Their Next Steps...".  I am attaching the slides from that presentation which focussed on the opportunity that Muslim Executives have in not only becoming the best global business leaders of today but also in contributing and raising the bar of business leadership standards. 

The discussion was moderated by CAMP (Council for the Advancement of Muslim Professionals) President Ms. Urz Heer and the other speakers included Mr. Rushdi Siddiqui, Global Director of Dow Jones Islamic Index, Mr. Mohammed Gaber of PepsiCo, and Mr. S. Jafer Hasnain of Alliance Capital Management.

            

    

BHP’s Goodyear singles out Muslim World

Charles "Chip" Goodyear, outgoing CEO of BHP Billiton Limited,  the giant diversified resources group recently, singled out the Muslim World as the next big growth area.  In a recent interview with the Herald Sun of Australia Goodyear responded to a question about the “next emerging market” by saying that the Muslim World shares characteristics with other recent growth markets – India and China.  Namely, Goodyear said that the size of these markets and the fact that the youth are underemployed are traits shared with India and China.  Among OIC countries, BHP Billiton currently has operations in Suriname, Indonesia, Iraq, Algeria, and Pakistan.  Goodyear’s comments are important as he is responsible for BHP Billiton’s rise from the doldrums of the late 1990s to its dominant position in the market today.