Turkey must win trust ‘to secure foreign funds’, says says former economy czar

Turkey must win trust ‘to secure foreign funds’, says says former economy czar
President Tayyip Erdogan’s former economy czar Ali Babacan said it was unlikely Erdogan’s government would last until 2023. (AFP file photo)
Short Url
Updated 13 June 2020

Turkey must win trust ‘to secure foreign funds’, says says former economy czar

Turkey must win trust ‘to secure foreign funds’, says says former economy czar
  • Ali Babacan resigned from Erdogan’s AK Party last July over “deep differences” about the direction of the party he helped to found
  • Erdogan sacked Babacan as central bank chief last year for not cutting interest rates

ANKARA: Turkey must restore its economic credibility if it hopes to secure needed foreign funding and return to growth, said President Tayyip Erdogan’s former economy czar who recently broke away and founded his own party.

Ali Babacan, a 53-year-old former deputy prime minister, resigned from Erdogan’s AK Party last July over “deep differences” about the direction of the party he helped to found. In March he formed the Deva (Remedy) Party.

Babacan said that Turkey risks another slump in the lira unless it can access fresh sources of foreign exchange, after the currency fell to a record low last month, but that trust in its economic institutions had eroded.

Erdogan last year sacked the central bank’s chief for not cutting interest rates. The bank has since slashed rates well below inflation, stoking concerns over its independence. It has also used billions in foreign exchange reserves to defend the lira, prompting Ankara to seek foreign funding.

“Turkey must find that forex soon” but it needs to “reinstate the reputation and confidence in its economy management first,” Babacan said.

“The institutions had already lost their credibility,” he said. “You can dictate onion prices . . . but you cannot dictate the foreign exchange price, that’s not how the international markets work.”

Babacan, well regarded by foreign investors, served as economy and then foreign minister before becoming deputy prime minister from 2009 to 2015.

Opinion polls currently show his party with just 1 percent or 2 percent support. Yet even incremental gains for Deva could spell trouble for Erdogan, who faces another election by 2023 at the latest. Babacan said it was unlikely Erdogan’s government would last until 2023, adding he expected an election next year or in 2022.

The lira has been hit by fallout from the pandemic and investor concerns over depleted net FX reserves and the country’s relatively high foreign debt obligations. Ankara won some support when Qatar tripled an existing currency swap line to $15 billion last month.

Investors and bankers say Turkey would adopt capital controls, such as limits on transfers or withdrawals, only in a worst-case scenario. But Babacan said Ankara was already heading in that direction. “Capital controls is not a black and white area, it consists of shades of grey. Turkey is going toward a darker grey,” he said.

The European Central Bank could extend a swap line in order to protect a key trade partner, he said. “If the Turkish economy collapses today, this would harm the economies of Europe. The ECB must be seeing this, and they must play an active role.” 


RAK Ceramics Saudi business booms on anti-dumping move

RAK Ceramics Saudi business booms on anti-dumping move
Updated 46 min 36 sec ago

RAK Ceramics Saudi business booms on anti-dumping move

RAK Ceramics Saudi business booms on anti-dumping move
  • Net profit rose to 60.6 million dirhams compared to 25.7 million dirhams in the year earlier period

DUBAI: RAK Ceramics, one of the world’s largest tile makers, reported a jump in Saudi sales as it benefited from anti-dumping measures on imports from China and India in the Kingdom.
The company’s wider business surpassed pre-pandemic levels in the first quarter, as it recorded its strongest start to a year since 2016.
“Looking ahead for the remainder of 2021, our priority will be to invest in brand equity, grow our business in Saudi Arabia and protect our market share in the UAE and Bangladesh,” said CEO Abdallah Massaad.
Net profit rose to 60.6 million dirhams compared to 25.7 million dirhams in the year earlier period.
Total gross profit margin also reached an all-time high of 35 percent driven by an increase in revenue, an improvement in efficiencies and the optimization of production lines. Total revenues were also at a five-year high, rising almost 22 percent to reach 722.8 million dirhams.
Revenue growth was strongest in Saudi Arabia where sales jumped by 78.5 percent, followed by India with sales growth of 67 percent.
“In Saudi Arabia, the Company’s strategy continues to yield results,” the company said in a statement. “The imposition of anti-dumping duties on tiles from India and China in the Kingdom initially led to an increase in demand for RAK Ceramics’ products. Capitalizing on this demand, the company invested in differentiated tiles and new showrooms, developing significant brand equity in the market,” it said.
In the UAE, despite the impact of COVID-19, workforce was not reduced, and production reached the highest level in five years due to increased demand from Saudi Arabia, it said.


Emaar Malls Q1 profit falls 16% but sees retail on recovery path

Emaar Malls Q1 profit falls 16% but sees retail on recovery path
Updated 54 min 39 sec ago

Emaar Malls Q1 profit falls 16% but sees retail on recovery path

Emaar Malls Q1 profit falls 16% but sees retail on recovery path
  • Profits improved on a quarter-on-quarter basis as net income gained 169 percent from the previous three month period

DUBAI: Dubai operator Emaar Malls said first quarter profit fell 16 percent from a year earlier to 318 million dirhams ($86.6 million).

However the company behind the world's most visited shopping mall highlighted a recovery in the retail sector.
Profits improved on a quarter-on-quarter basis as net income gained 169 percent from the previous three month period.
The retail group said that its e-commerce subsidiary Namshi recorded sales of 258 million dirhams, as it continues to grow in other Gulf markets such Saudi Arabia, Kuwait, and Qatar
The operator has also focused on expansions and new developments to buffer the blow of the pandemic, Emaar boss Mohamed Alabbar said in a statement.
“We are committed to delivering transformational retail and entertainment experiences that exceed expectations of constantly evolving customer demands,” he said.
The retail and entertainment sector in Dubai has been seeing positive signs of recovery as the emirate embarks on a massive vaccine program which has helped to buoy consumer confidence.
Emaar expanded its Dubai Mall Village in February, bringing in 21 new sports and lifestyle stores with an additional gross leasable area of 79,000 square feet.
It also partnered with Time Out Group to open the region’s first Time Out Market in the emirate’s downtown area.
A new mall – Dubai Hills Mall – is in the works, the Dubai Financial Market filing said. It will have a gross leasable area of 2 million square feet that will feature about 600 shops. It will open in the second half of the year.
Tenant rental performance improved over the period with overall occupancy at 91 percent.


Saudi property liquidity higher ahead of Eid

Saudi property liquidity higher ahead of Eid
Updated 10 May 2021

Saudi property liquidity higher ahead of Eid

Saudi property liquidity higher ahead of Eid
  • The market primarily benefited from a 15.6 percent weekly increase in the value of the commercial sector deals

RIYADH: The Saudi real estate market recorded a 6.2 percent rise in weekly activity to reach SR4.1 billion ($1 billion) after earlier declines.
The market primarily benefited from a 15.6 percent weekly increase in the value of the commercial sector deals, to just under SR1.2 billion by the end of last week, Al Eqtisadiah reported.
Housing sector deals recorded a 2.8 percent weekly increase to nearly SR2.6 billion.
Agricultural and industrial deals also increased by 2.3 percent to SR344 million.
The number of real estate transactions gained 1.4 percent to 5,600, the newspaper reported.



 


Riyadh to get ten BinDawood superstores over five years

Riyadh to get ten BinDawood superstores over five years
Updated 10 May 2021

Riyadh to get ten BinDawood superstores over five years

Riyadh to get ten BinDawood superstores over five years
  • The company said it would open the branches over five years from 2022 to 2027

DUBAI: BinDawood Superstores said it would open ten new branches in Riyadh as the retailer expands its footprint in the Kingdom.
The company, a unit of BinDawood Holding, said in a stock exchange statement that it would open the branches over five years from 2022 to 2027.
BinDawood Holding on Monday said first-quarter profit fell by more than half to SR62.1 million ($16.5 million) compared to a year earlier.

Revenues declined by a fifth to SR1.12 billion because of “non-recurring pantry buying” at the start of the pandemic when consumers stocked up on purchases.

That rush was not repeated in the first quarter of this year.

“It has been a tough start to the year as the local Saudi grocery retail market continues to remain subdued.It is heartening to see some green shoots of recovery but overall, we see a return to pre-COVID sales only in the second half of 2021,” said Ahmad AR. BinDawood, CEO of BinDawood Holding.
However the group remains cautiously optimistic as its sales in Makkah and Madinah pick up and are expected to benefit from the gradual return of pilgrims to the Kingdom.
At the same time it has been able to reduce its costs associated with COVID-19, it said.
BinDawood said the company’s store opening program would result in more jobs for Saudis in the supermarket sector.


Oil gains after cyberattack forces closure of US fuel ‘jugular’ pipeline

Oil gains after cyberattack forces closure of US fuel ‘jugular’ pipeline
Updated 10 May 2021

Oil gains after cyberattack forces closure of US fuel ‘jugular’ pipeline

Oil gains after cyberattack forces closure of US fuel ‘jugular’ pipeline
  • Pipeline moves 2.5 million bpd of gasoline and other fuels
  • Network is source of nearly half of the US East Coast’s fuel

TOKYO: Crude prices rose on Monday after a major cyberattack forced the shutdown of critical fuel supply pipelines in the United States and highlighted the fragility of its oil infrastructure.
Brent crude was up by 38 cents, or 0.6 percent, at $68.66 a barrel by 0443 GMT, having risen by l.5 percent last week. US West Texas Intermediate futures rose by 34 cents, or 0.5 percent, at $65.24 a barrel, after gaining more than 2 percent last week.
Signaling the seriousness of the situation, the White House was working closely with Colonial Pipeline to help it recover from the ransomware attack, which forced the biggest US fuel pipeline operator to shut a network supplying populous eastern states.
“The major takeaway is the bad guys are very adept at finding new ways to penetrate infrastructure,” Andrew Lipow, president of Lipow Oil Associates told Reuters. “Infrastructure has not developed defenses that can offset all the different ways that malware can infect one’s system.”
Colonial’s network is the source of nearly half of the US East Coast’s fuel supply, transporting 2.5 million barrels per day of gasoline and other fuels, and the company had to shut all its pipelines after the cyberattack on Friday, which involved ransomware.
US gasoline prices jumped nearly 2 percent on Monday, while heating oil was up by more than 1 percent.
It was not clear who carried out the attack, but sources told Reuters the hackers were likely a professional cybercriminal group.
Colonial said on Sunday its main fuel lines remain offline but some smaller lines between terminals and delivery points are now operational. It didn’t say when the network might return to full operational capacity.
A prolonged shutdown of the line, described as the “jugular of infrastructure” in the United States by one analyst, would cause retail prices to spike at gasoline pumps ahead of peak summer driving season, a potential blow to US consumers and the economy.
“The big unknown is how long the shutdown will last, but clearly the longer it goes on, the more bullish it will be for refined product prices,” ING Economics said in a note.
The attack has prompted calls from American lawmakers to strengthen protections for critical US energy infrastructure from hacking attacks.
The Department of Energy said it was monitoring potential impacts to the nation’s energy supply, while the US Cybersecurity and Infrastructure Security Agency and the Transportation Security Administration told Reuters they were working on the situation.