Agility eyes opportunities from Kuwait privatisation – Company targets entering Iran market, challenges remain in Egypt

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KUWAIT CITY, March 16: Kuwait’s Agility, the Gulf’s largest logistics company, will be interested in bidding for the management of Kuwait’s airport and ports if plans to privatise them go ahead, the chief executive Tarek Sultan said on Wednesday.

Kuwait’s Finance Minister Anas Al-Saleh said on Monday that the government would seek to privatise assets including airports, ports and some facilities of national oil giant Kuwait Petroleum Corp.

The government is looking at ways to free up state finances and reform the economy in order to help narrow a budget deficit caused by low oil prices.

Among the required reforms were “real rationalising of spending and real privatisation,” Sultan told reporters at a news conference.

Kuwait’s cabinet has approved economic reforms including the introduction of a 10 percent tax on corporate profits, Saleh said on Monday.

Sultan said Kuwait’s private sector had no problem with the introduction of taxes if the government pushed ahead with reforms.

Agility is already present in around 100 countries and plans further expansion within the Association of South East Asian Nations (ASEAN), the Gulf and Africa.

Sultan said Agility would be one of the first companies to enter the Iranian market after international sanctions imposed on the country were partially lifted earlier this year. He didn’t elaborate.

He also said Egypt was a promising market if difficulties surrounding foreign investors’ ability to transfer money abroad could be overcome.

Egypt has faced an acute foreign currency shortage since a 2011 uprising drove away tourists and foreign investors, key earners of hard currency. On Monday it devalued the Egyptian pound and said it would shift to a more flexible exchange rate, in a bid to stabilise the currency.

Agility operates a major distribution and logistics centre in Egypt, according to the company’s website.

Sultan also said Agility was in the final stages of securing $800 million in financing from regional and foreign banks, but he did not provide names.

The funds would go towards investing in a shopping mall in Abu Dhabi being developed in partnership with Kuwait’s National Real Estate Company, he said.

United Projects for Aviation Services Company, a subsidiary of Agility, last year signed an agreement to invest up to $225 million in the Reem Mall project.

In its seventh year, the Agility Emerging Markets Logistics Index assesses and ranks 45 emerging markets based on three key metrics. These metrics measure the countries’ size and growth attractiveness, its compatibility and connectedness.

The index which has three main components includes Index Country rankings, major trade lanes, survey of 1,118 logistics and supply chain executives. In the executive summary after the survey, supply chain executives expect an increase in emerging market growth in the year 2016. 59.4% of respondents said the International Monetary Fund forecast of 4.7% growth in the emerging markets is “about right”. India, rather than China, is seen as the emerging market with the most growth potential.

In the overall Index rankings, India climbed two notches to number 3, behind only China and United Arab Emirates (UAE). Nigeria and Egypt were the fastest climbers in the Index, rising 10 notches.

The Index leaders include China, UAE and India, but China needs consumer spending to pick up as exports and investment growth slow. But the UAE has the best business conditions, infrastructure and transport connections of any emerging market. And India has the market with the most potential according to logistics executives.

The biggest movers in the emerging markets include Nigeria and Egypt with 10 notches rise from a year ago, followed by UAE, Malaysia and Algeria who moved 4 notches up with Paraguay and Bolivia following behind with 3 notches rise. India, Pakistan and Sri Lanka also saw a 2 point rise from a year ago.

The 10- spot jump by Nigeria and Egypt was the largest by any country since the index was first published in 2010. UAE, India and Malaysia leapfrogged the commodity dependent economies.

Several Latin countries dropped sharply in the index. In addition to Brazil which fell three spots, Uruguay dropped 4 spots to 24th, Colombia slipped three spots, Peru plunged five to 28th and Argentina also dropped five spots.

Talking about Agility’s planned Investment over the next five years, Tarek Sultan indicated that, combined, the top investment locations in 2016 have a total 2,621 planned investments, which is an increment from the 2,225 figure for last year.

In the Middle East regional outlook, UAE, home to the powerhouse economies of Dubai and Abu Dhabi, is ranked number two in the EMI this year, up four spots. UAE leads all 45 countries in “connectedness”, which means it has the best combination of infrastructure, transport connections, as well as customs and border administration.

Kuwait scores highest- 9th in areas of the index that measure a country’s business climate. However, it ranks number 29 in “connectivity”, a gauge of infrastructure, transport links and customs efficiency.

Gulf States offer some of the most attractive business opportunities, market compatibility among emerging markets, including the UAE, Qatar and Oman. Supply Chain professionals have signaled their interest in the idea that Iran could emerge from international isolation.

The 10-point rise of Egypt to 22nd, the single biggest jump since the EMI began, signifies the restored confidence in the market as security has been restored following the Arab Spring.

China, the world’s second largest economy is the leading investor in sub-Saharan Africa and other emerging markets. With its largest appetite for many key commodities, China also buys lots of components from other Asian producers.

While macroeconomic indicators were important, individual markets need to be properly assessed on a micro level if opportunities and risks are to be fully understood. Major risk factors were found to be terrorism in the Middle East and North Africa, corruption in Latin America, economic shocks in the Asia Pacific and poor infrastructure in Sub-Saharan Africa.

By Iddris Seidu – Arab Times Staff and Agencies

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