Bahrain economy expected to rebound in 2021 but fiscal pressure persists: S&P

Bahrain economy expected to rebound in 2021 but fiscal pressure persists: S&P
Over 60 percent of the eligible population in Bahrain have already been inoculated. (Shutterstock)
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Updated 29 May 2021

Bahrain economy expected to rebound in 2021 but fiscal pressure persists: S&P

Bahrain economy expected to rebound in 2021 but fiscal pressure persists: S&P
  • Bahrain’s economy contracted by 5.4 percent last year, according to the International Monetary Fund
  • Bahrain’s COVID-19 vaccination program could also support its recovery

DUBAI: Despite its expectation that Bahrain’s economy will return to growth this year, rating agency S&P revised its outlook for the Gulf country to “negative,” mainly due to its pace of fiscal reform.

Bahrain’s economy contracted by 5.4 percent last year, according to the International Monetary Fund, as the COVID-19 pandemic battered key sectors such as energy and tourism.

This will change in 2021, S&P said, with the oil-producing country’s real gross domestic product rising by 2.7 percent due to rising oil prices and the recovery of regional economic activity.

Bahrain’s COVID-19 vaccination program could also support its recovery, S&P added, as over 60 percent of the eligible population have already been inoculated.

“The government’s vaccination campaign has been successful and the King Fahd Causeway to Saudi Arabia re-opened in May, providing additional impetus to growth,” S&P said, adding that Bahrain benefits from its close proximity to Saudi Arabia.

But there are continued risks to public finance and external and monetary stability, S&P said.

“The negative outlook reflects the increasing risks to the government’s ability to service external debt and maintain confidence in the exchange rate peg,” it added.


Amazon, Circle K warming up to idea of crypto payments

Amazon, Circle K warming up to idea of crypto payments
Updated 26 July 2021

Amazon, Circle K warming up to idea of crypto payments

Amazon, Circle K warming up to idea of crypto payments
  • UK financial watchdog warns consumers over CoinBurp crypto launch

RIYADH: Bitcoin traded higher on Sunday, rising by 0.26 percent to $34,057.90 at 6:30 p.m. Riyadh time. Ether, the second most-traded cryptocurrency, traded at $2,121.16, down 2.21 percent, according to data from the CoinDesk website.

Meanwhile, Amazon posted a job opening for a digital currency and blockchain product lead. The posting explained that the online giant is seeking an experienced product leader to develop Amazon’s digital currency and blockchain strategy and product roadmap. 

“We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible,” a spokesperson said. 

Amazon Web Services currently offers a service called managed blockchain but does not currently accept Bitcoin or other cryptocurrencies as payment for its products, the Bitcoin News reported.

During the first week of July, a survey conducted by Disruptiva polled 1,233 people residing in El Salvador, with the majority of respondents saying they were skeptical of Bitcoin. 

Following the implementation of the country’s new Bitcoin tender law, leaked reports claimed President Nayib Bukele’s government cohorts were planning to launch a stablecoin. Furthermore, a regional report from the news outlet El Mundo showed a number of Salvadorans have taken to the streets to protest against the Bitcoin law, claiming the crypto asset was too volatile.

We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments.

Amazon spokesperson

The changes have sparked the introduction of a resistance group, which has written a letter to Bukele’s government to argue that the law is unconstitutional. The campaigners added that the lawmakers did not consult the citizenry before the reform was implemented. 

The world’s largest Bitcoin ATM operator, Bitcoin Depot, announced last week an exclusive international partnership with Circle K that spans across both the US and Canada with over 700 Bitcoin ATMs in 30 states already installed. 

“As one of the world’s leading convenience and fuel retailers, Circle K is the first major retail chain to deploy Bitcoin ATMs within its stores,” the company was reported as saying by Bitcoin News. Britain’s Financial Conduct Authority said on Sunday that crypto broker CoinBurp has no authorization for a planned launch of its $BURP token and exchange offering on July 26. CoinBurp said last week it had raised $6 million to build a platform for trading non-fungible tokens.


Big tech firms retake market reins with earnings on tap

Big tech firms retake market reins with earnings on tap
Updated 26 July 2021

Big tech firms retake market reins with earnings on tap

Big tech firms retake market reins with earnings on tap
  • More than one third of the S&P 500 is set to report quarterly results this week

NEW YORK: The rally on Wall Street faces a fresh test this week with a flood of earnings reports from major US companies, including the tech and internet behemoths that have recently retaken leadership of the market.

More than one-third of the S&P 500 is set to report quarterly results this week, headlined by Apple, Microsoft, Amazon and Google-parent Alphabet , the four largest US companies by market value. Those stocks have gained between 5-7 percent so far this month, as of Thursday’s close, while the S&P 500 had climbed just 1.6 percent. The S&P 500 equal-weight index, a barometer of the average stock, had fallen 0.2 percent.

“The expectation level for these names is quite a bit higher than it was a month ago given the stock performance, so I think they are going to have to deliver,” said Walter Todd, chief investment officer with Greenwood Capital in South Carolina. “It’s a question of looking forward: Can they live up to the expectations that the stock prices reflect?”

The strength in those large stocks has come amid concerns about a slowing US economic recovery that have helped pushed down benchmark Treasury yields this week to their lowest levels since February, before
rebounding some.

As the delta variant of COVID-19 sweeps through the US, the economic outlook will be in sharp focus at the Federal Reserve’s meeting on Tuesday and Wednesday.

Though the S&P 500 stands at record levels after rallying more than 95 percent from its March 2020 lows, stocks have endured more volatility in recent days as investors seek to reconcile bond market signals about the economic outlook.

Indeed, below the surface, stock performance indicates some doubts about economic strength. Growth stocks have outperformed economically sensitive value stocks in July, while smaller stocks, which tend to have more exposure to the US economy, have also lagged, with the small-cap Russell 2000 down over 4 percent so far this month.

“Investors have sought safety in those megacaps, particularly the megacap tech companies, which are expected to continue to deliver very strong growth,” said Tim Skiendzielewski, investment director at Aberdeen Standard Investments in Philadelphia.


Amazon eyes partnerships with Saudi SMEs, tech startups

Amazon eyes partnerships with Saudi SMEs, tech startups
Updated 26 July 2021

Amazon eyes partnerships with Saudi SMEs, tech startups

Amazon eyes partnerships with Saudi SMEs, tech startups
  • Retail conglomerate launched a dedicated Saudi platform in June last year, and has seen double-digit growth

DUBAI: Global conglomerate Amazon is looking to partner with more entrepreneurs and technology startups in Saudi Arabia, as it aims to boost the dedicated Saudi retail site it launched a year ago and interact more with the local ecosystem.

The Global Entrepreneurship Monitor (GEM) annual report released this year found that entrepreneurial activity in the Kingdom increased by 24 percent year-on-year in 2020, while a third of Saudis surveyed said they were keen on launching a business within the next three years.

At the same time, research platform Magnitt reported that the value of investment deals in the technology startup sector in Saudi Arabia last year soared by 55 percent year-on-year to $152 million.

Amazon is aiming to capitalize on this fast-growing entrepreneurial ecosystem. “We’re working with the local entrepreneurs and we see a lot of those in the Kingdom. I think the space has changed drastically,” Ronaldo Mouchawar, vice president of Amazon Middle East and North Africa, told Arab News.

“You see a lot more venture capital, family offices investing in tech. So, we want to work with these companies and content developers and content owners,” he added.

The Syrian entrepreneur co-founded online retail platform Souq.com in 2005, which was then sold to Amazon in 2017. While direct acquisitions on that scale may not be on the cards, Mouchawar said the global giant was interested in working more closely with Saudi partners.

“If not totally invest, definitely a lot of partnerships, working to make sure that whatever innovation that’s working locally is available for our customers in the Kingdom,” he said.

On June 17 last year, Amazon launched its dedicated Saudi website Amazon.sa, rebranding the old Souq.com website. 

Ronaldo Mouchawar, Vice President of Amazon MENA. (Supplied)

“This was kind of the first Amazon Arabic site. We had to put the infrastructure in Saudi Arabia — 14, 15 stations. We had about 2,000 people and trained them on the systems,” Mouchawar said, adding that the site has performed well.

“We’re seeing high double-digit growth obviously in most of our locales. Very good growth. We don’t report growth by region, but overall the industry is growing and Amazon being newly launched is attracting a lot of customers.”

In its annual report for 2020, Amazon reported a 38 percent growth in net sales in North America and a 40 percent spike in sales internationally. While individual sales figures are not available for individual countries or regions, a review of Google search term trends shows that searches for the term Amazon in Saudi Arabia over the last five years peaked in mid-June last year and the volume of searches for the company has increased by 38 percent in the last 12 months.

A clear indication of the success of the site is the fact that Amazon announced plans in March to hire 1,500 new employees in Saudi Arabia and add 11 buildings to its network. The expansion will boost storage capacity in the Kingdom by 89 percent and its geographical delivery network by 58 percent.

FASTFACTS

• Amazon currently operates three warehouses — known as fulfillment centers — in Riyadh and Jeddah.

• It has 11 delivery stations and two sorting centers in the Kingdom.

• By the end of the year, Amazon will boost the numbers to six warehouses and 13 delivery stations.

• Eleven brand new buildings will be added to the network, while some older facilities will be closed or upgraded.

The global conglomerate currently operates three warehouses — known as fulfillment centers — in Riyadh and Jeddah, as well as 11 delivery stations and two sorting centers. By the end of the year, this will be increased to six warehouses and 13 delivery stations. Eleven brand new buildings will be added to the network, while some older facilities will be closed or upgraded.

By the end of 2021, Amazon’s fulfillment network will reach across a total floor area of over 867,000 square feet. The Seattle-based company is also partnering with Saudi Post and a network of 10 service partners.

According to figures by research firm Statista, e-commerce revenue in Saudi Arabia is set to reach $7.051 billion this year and grow at an annual rate of 5.38 percent to reach $8.697 billion by 2025. The largest segment for consumers is fashion and the average revenue per user is estimated at about $248.69.

Mouchawar said there are three main differences with the Saudi market, which they have adapted into their strategy in the Kingdom. “Obviously the language is one — we had to take care of the language to suit. It’s a very mobile-heavy user base: 80 percent of our customers are on mobile phones. So, as you market to these customers, we have to be aware of that.  “The Saudi customer is fairly younger in demographic,” he added. “We had to make sure also the selection — the product offering — is catering to a younger audience and larger families. Consumables and groceries, for example, are important to us because of the family sizes and the consumption nature,” he said.

A lot of retailers, such as Carrefour, have been setting up their own fulfillment centers in the Kingdom, to cater to the demand in online sales. While some have been adopting artificial intelligence and robotics into their warehouses and are looking at driverless vehicles and drones for transport, Mouchawar believed manpower will still be the core focus of the workforce for some time to come.

“I know there are technologies such as drones and robotics — some help in improving the service and the quality, but also some things are still far away, like a drone delivery in the region requires a lot of different changes to different things,” he said.

As a result, he believes the continued growth of the site will present employment opportunities for young Saudis. “I think there’s a huge opportunity to add people from the region to the team. We’ve been doing that consistently in Saudi Arabia, Jordan and Egypt. I’m very excited about the opportunities that we are able to provide to young people, especially in this sector of content and tech,” he said.


Saudi fuel service station provider plans Egypt expansion

Saudi fuel service station provider plans Egypt expansion
Updated 26 July 2021

Saudi fuel service station provider plans Egypt expansion

Saudi fuel service station provider plans Egypt expansion
  • It is the first time the country is capping prices since it first liberalized them in 2018

RIYADH: The Riyadh-headquartered Aldrees Petroleum and Transport Services Co. (Aldrees) has submitted a request to acquire service stations in Egypt, as part of a wider plan to expand into the North African country.

Argaam reported that Aldrees had not yet received a response to its acquisition query but it is planning to open 60 fuel stations in Egypt during the second half of 2021, bringing its total number of outlets to 644.

At the end of last year, the company owned 584 stations. Earlier this month, Vice Chairman Abdulmohsen Aldrees told Argaam that it is aiming to have a total of 1,000 stations within the next five years.

The Kingdom has around 11,000 fuel stations and the company said it currently holds around a 5.3 percent stake, with 90 percent of the facilities in the Kingdom owned by individual owners and only the remaining 10 percent in the hands of larger companies.

Aldrees reported a net profit after Zakat and tax of SR75.3 million ($20.08 million) for the first half of 2021, a year-on-year increase of 69 percent.

Saudi Arabia announced on July 10 it was putting a price cap on gasoline, to support local consumption and economy growth, as oil prices hit multiyear highs this year.

It is the first time the country is capping prices since it first liberalized them in 2018 and linked them to international price movement.

The Kingdom issued a royal directive to keep gasoline prices at SR2.18 for octane 91 and SR2.33 for octane 95, the Saudi Press Agency reported, citing the Energy and Water Price Reforms Executive Committee.


Tabuk companies go green in search of business with NEOM

Tabuk companies go green in search of business with NEOM
Updated 25 July 2021

Tabuk companies go green in search of business with NEOM

Tabuk companies go green in search of business with NEOM
  • The iONTRON will reduce both carbon dioxide emissions and noise pollution, and electricity will be used instead of liquid fuel to power a concrete pump, which results in less direct emissions

DUBAI: Saudi Arabia in recent years has made major shifts to transform its economy into one focused on green energy. The government itself is leading the charge, setting a goal to generate 50 percent of the Kingdom’s power needs using renewable energy by 2030.

NEOM, a sustainable region under development in the northwestern part of the Kingdom, has set a precedent that all its suppliers must adhere to the highest sustainable processes possible in order to secure contracts.

Companies in Tabuk close to NEOM are following suit and looking for ways to go green. One of these is the Tabuk Concrete Co., which is supplying concrete to contractors operating in the futuristic city of NEOM. It is sourcing new equipment to make sure its construction methods are as green as possible.

Tarek Abdullah Abdin, CEO of the company, told Arab News that he had teamed up with Putzmeister Truck Mounted Concrete Pumps, a European company, to purchase one of the company’s recent products, the iONTRON, in order to comply with guidelines set by NEOM.

The iONTRON will reduce both carbon dioxide emissions and noise pollution, and electricity will be used instead of liquid fuel to power a concrete pump, which results in less direct emissions. Most concrete pumps powered by diesel produce about 26.53 kilograms of carbon dioxide per hour and require 10.2 liters of diesel. Conversely, pumps powered by electricity release zero kilograms of carbon dioxide and require zero liters of diesel.

The first iONTRON concrete pump will be brought to the Middle East by Tabuk Concrete, representing a new generation of sustainable design in the manufacturing of building materials in the region. In 2022, concrete pumps will be delivered to Saudi Arabia and the factories of Tabuk Concrete will be outfitted with greener technology.

NEOM announced The Line earlier this year, an infrastructure megaproject that will develop urban areas to accommodate up to 1 million people. The Line and other regions to be developed in NEOM will provide huge opportunities to the companies in the Tabuk region.

Saudi Commerce Minister Dr. Majid Al-Qasabi recently visited Tabuk to meet with the business community and local suppliers — including the Tabuk Concrete Co. — to understand how his ministry can help them gain from the huge opportunities that NEOM and other projects nearby can provide.

As NEOM is pushing ahead, more companies in Tabuk that were operating through traditional means will instead resort to more advanced techniques to protect the environment, and the business landscape over the next five years will witness sizeable changes.