Dubai Properties makes money by not delivering

30 April 2012 - The National

This is the National newspaper's article published yesterday - where Dubai Properties excitedly reports making US$179 million from failing to deliver their projects on schedule. That the reporter simply publishes this as basically a press release without question is hugely irresponsible.

What Dubai Properties has done is delay the completion on their real estate projects; at Executive Towers that delay was two years; and then force completion on investors at a time that suited DP and was critical to their cash flow. They them handed over developments that bore only passing resemblance to their off-plan promotional literature. Developments that were also incomplete and lacked promised facilities.

As property prices collapsed from the bubble that DP had themselves helped to create DP ensured that penalty clauses for cancellation or late payment were enforced without any compensation being due on their part for late delivery or incomplete projects.

Cancellation clauses for delayed delivery were never unenforceable. DP would simply claim force majeure - acts beyond their control. And any litigation taken by individual investors would be both time consuming and expensive.

Pathetic.

The National's report:

One of Dubai's biggest developers earned more than Dh656 million (US$178.5m) from cancellation fees last year as people who bought at the market peak were unable to pay for their homes.
Dubai Holding Commercial Operations Group (DHCOG), which owns Dubai Properties Group (DPG), earned Dh656.4m from cancellation penalties and late-payment charges - an almost tenfold increase on 2010.

Dubai property developers are rushing to finish developments on which work was well advanced to raise desperately needed revenue while shelving projects that are less-than-halfway completed. At the same time, many investors who bought at the peak of the market are seeking to escape contracts binding them to properties that have lost as much as half of their value.

"The irony is that the last thing the market needs at the moment is all that extra stock," said Craig Plumb, the regional head of research at Jones Lang LaSalle in Dubai. "But the financial realities are that they will complete those properties, putting further downward pressure on prices."

Some 3,000 units were finished in Dubai in the first three months of this year, while 28,000 additional units are expected to be finished by the end of the year, according to research by Jones Lang LaSalle. That is an 8 per cent increase in the current stock of homes. Most of the handovers will take place in Dubailand, where DPG has already delivered thousands of new apartments and villas in the past year.

Cancellation fees and late-payment charges have become a thorny issue between developers and investors seeking to minimise their exposure to the downturn in property prices.

"Dubai law allows a developer to cancel an agreement and retain a portion of money paid depending on what stage construction is at on a development," said Brent Baldwin, a property lawyer at Hadef & Partners. "We get a lot of cases where the developer is not building or the purchaser is not paying."

But while some buyers have taken their cases to court, others have chosen to pay the fees demanded by developers so as to avoid potentially lengthy and costly litigation.

"For the smaller investor, the cost of going to court can be prohibitive," said Mr Baldwin. "A lot of developers are relying on the unwillingness of a purchaser to go the whole way." Like many developers in the emirate, DPG is moving away from generating income from property sales, focusing instead on steady lease revenue.

Emirates goes on the offensive

30 April 2012

Emirates Airline has produced a brochure addressing the vexed subject of "Airlines and Subsidy - our position." The 27 page document is online  here.

It is an odd document - undated. Authorship unknown. Was it prepared by Emirates internally or by Oxford Analytics who have done similar work before.

It is also both disjointed and repetitive. Maybe the work of a number of authors. There is no real explanation of the purpose of the document and no executive summary.

I will come back to this in May when I have read it in full.

Verdict delayed for Thai media site's webmaster

30 April 2012 - Associated Press

The AP report follows - there is a great deal of speculation on why the judge has delayed his decision. The suspicion is, and this may well be right, is that a guilty verdict was lined up, until someone in power realised the massive implications domestically and internationally, of a guilty verdict. The postponement is probably a good thing - and means that someone is trying to figure out a compromise solution

AP:

"A Thai judge postponed a verdict that had been expected Monday for a webmaster accused of failing to act quickly enough to remove Internet posts deemed insulting to Thailand's royalty.

Judge Nittaya Yaemsri said more time was need to process documents in the case, which has drawn global criticism because many see it as an assault on freedom of speech. A new court date was set for May 30.

Chiranuch Premchaiporn - widely known by her nickname, Jiew - is facing up to 20 years in jail for 10 comments posted on her paper's now-defunct web board by readers she says she does not know.

She is being tried under Thailand's computer-crime laws, which were enacted in 2007 under an interim, unelected government that came to power after a coup a year earlier. The laws address hacking and other online offenses, but also bar the circulation of material deemed detrimental to national security, which includes defaming the monarchy.

New York-based Human Rights Watch said last week that the prosecution of Chiranuch "sends a chilling message to webmasters and Internet companies."

Prachatai was founded by several respected journalists, senators and press freedom activists to serve as an independent, nonprofit, daily Internet newspaper. It has attracted an audience of critics of the status quo, especially on the web board where the comments at issue in the court case were posted between April and November 2008.

Most of the comments were removed within one or two days, but one remained online for 20 days and another for 11.

Prosecutors say Chiranuch was guilty of "intentionally supporting or consenting" to post unlawful content by failing to delete the offending comments quickly enough. Her lawyers point out, among other arguments, that there are no guidelines on the matter.

Chiranuch is the first webmaster prosecuted under the law and her case could set a precedent for other media companies here.

The prosecution of Chiranuch has become a cause celebre. Last year she was one of three winners of the Courage in Journalism award given by the International Women's Media Foundation, and also one of 48 global writers given grants under a Human Rights Watch program for their commitment to free expression."

More background reading here:

Thailand Awaits Pivotal Verdict on Liability for Internet Intermediaries
Chiranuch Premchaiporn

Golden Dubai - From the Economist Archive (6 June 1970)

1970: Dubai is in strange and welcome contrast to anywhere else on the Gulf (and this was only 42 years ago).

If the accident of oil had not brought such wealth to Abu Dhabi Sheikh Zayed, remarkable a man as he is, would not have been the unchallenged leader among the Trucial states' rulers. His neighbour, Sheikh Rashed bin Said al Maktum, a shrewd, cunning and hard-working merchant who has ruled Dubai since 1958, would have been as likely a candidate. And Dubai, which in effect is a town straddling a 6-mile long creek (although there are 1,500 square miles of desert too) has for centuries been the main port and trading post serving the Trucial states and the interior of Oman. Sheikh Rashed intends that it shall remain so.

With a thriving and well-established trading community of some 60,000 people, a frantically active waterway running through its heart, with lighters and dhows being loaded and unloaded 24 hours a day at its centre, Dubai is in strange and welcome contrast to anywhere else on the Gulf. The difference is not only physical. The tolerant and broadminded attitude of Sheikh Rashed (what other Arab ruler would lay the foundation stone of a Protestant church?) infects the life of his state. There are almost no restrictions on anyone opening businesses; the foreign community (Iranians alone number 11,000) is treated as equal to the indigenous, and no eyebrows are raised if young Arabs take to the dance-floor.

The tolerance extends to trade. It is no secret that a large proportion of the wealth accumulated by Dubai merchants comes from smuggling gold bullion (mostly from Britain), Swiss watches and Japanese cloth into Pakistan and India and tea into Iran. Between 15 and 20 tons of gold (at £600,000 a ton) arrive by air in Dubai each month. It is taken to India, often in fast, modern launches, and by the time the agents are paid off, and the rupees converted into hard currency the organising syndicate can expect a profit of between 18 and 22 per cent on a consignment. This adequately covers the losses on consignments that are caught by Indian or Pakistani customs patrols, or which have to be dumped into the Indian Ocean if arrest seems imminent. Import statistics show that Dubai is the second largest importer of Swiss watches in the world—£7 million worth arrived in 1968.

The state's main source of income has been its 4.625 per cent custom duty on imports, but in 1967 oil was discovered in commercial quantities off-shore and shipments began last year. This year Sheikh Rashed's income could reach £10 million and next year £14 million. In anticipation Rashed has embarked on one of the major development projects on the Trucial coast—a 15 berth deep-water harbour, which is being constructed by Costain at a cost of £24 million. It is a brave venture, for Qatar, Abu Dhabi and Sharjah are in the process of building their own, more modest ports, and if Dubai's is to prove worth its cost, it will have to attract the merchandise destined for the other states as well. This is not just the Sheikh's wild dream, for by the time his harbour is finished, the whole Trucial coast from Doha to Ras-el-Khaimah will be joined by asphalted roads. He is also confident that the experience and standing of the Dubai merchants will justify his investment.

Rashed understands the economic advantages that will follow a federation of the states, but he does not hesitate to tell his brother rulers and his visitors that no one is going to interfere in the running of his state. It is very much a family affair. One son heads the municipal council of appointed merchants which runs the town; another, the Crown Prince, heads the Land Registration Committee; and a third is in charge of the police. But Rashed has his own eyes and ears and little escapes his notice. He drives around the town, fishing his pipe tobacco out of an old aspirin bottle, and if he notices anything amiss or new he stops to find out for himself what is afoot.

His next-door neighbour, Sheikh Khalid of Sharjah, whose state boundary is just a few miles down the road, is another able, hard-working ruler with a business background. In the five years since he took over he has also trasformed his small domain from a run-down fishing village into a small active trading town with water and electricity supplies. He is indebted to Sheikh Zayed for the road to the agricultural centre of Dhaid and to the Trucial States Development Fund for aid in developing the fishing industry in Sharjah's enclave on the Indian Ocean coast. The long jetty built at great cost by his predecessor to give the state a deep-water harbour is doomed to be a white elephant as the prevailing winds and tides deter captains from tying up alongside, but Sheikh Kahlid has started work on dredging the silted-up creek and this, he hopes, will bring trade back to Sharjah. He has recently granted oil exploration concessions to two groups on favourable terms and this income will more than compensate him for the loss of revenue from the British base, when it disappears.

Oil concessions have also brightened the outlook for the next two small states along the Gulf coast, Ajman and Umm al-Qaiwain, both little more than primitive villages. Ajman, however, sports a large cinema that could take more than its whole population, and both now have water and electricity and are trying to develop their dried fish industries. The youngest state, Fujairah, which was only recognised in 1952, lies on the Batinah coast of the Indian Ocean. It, too, is poor and its working population ekes out a living by farming and fishing. Both industries could be developed considerably were the money and the expertise available. Finally, there is Ras-al-Khaimah and its wily old ruler, Sheikh Saqr. A simple, stubborn, fighting man, Sheikh Saqr rules his 10,000 subjects without much outside aid. He keeps his fingers crossed that one of the two oil groups prospecting on and off shore will strike oil in commercial quantities. If they do, he may well insist on building his own international airport—a useless project—but he has plans as well for a cement factory and agriculture and fishery developments, while a power station will be in action in 1971. Saqr has been insisting that the defence headquarters of the proposed federal force should be in his capital—an impossible idea—but the motive behind this and his plan for an airport is his fear of Zayed of Abu Dhabi. In the conferences up to date, he has aligned himself with Ahmed of Qatar and Rashed of Dubai and it is noticeable that the Iranians have taken trouble to fête him on his visits there. He owns the two small Tumbs islets which the Shah wants for himself, and if Saqr plays his cards right, he could get a handsome cash payment for them. But so unpredictable are the alliances and feuds on the Trucial coast, that the recent news that Sheikh Saqr and his son have been visiting Sheikh Zayed comes as no surprise.

Replacing the Met

27 April 2012

Starwood Hotels and Resorts has signed an agreement with Al Habtoor Group to open three hotels in Dubai, including the emirate’s first St Regis and W branded properties. These hotels will be buily at the Habtoor Palace complex on the site of the old Metropolitan hotel - currently being demolished - on Sheikh Zayed Road.

The 1m sq ft development will include the 241-key St Regis Dubai, the 384-key W Dubai - Sheikh Zayed Road, and a 966-key The Westin Dubai Sheikh Zayed Road. All there all scheduled to open in 2017.

The contractor, Al Habtoor Leighton Group, will start construction of the hotels by May 1.

The three hotels are expected to open within months of each another in 2017, starting with the St Regis, followed by the W hotel and then the biggest hotel, the Westin.

Starwood insists that this will become a destination in itself. In addition to the three hotels, the Habtoor Palace complex - which was unveiled in January - will include 1100-seat theatre, a shopping arcade, tennis and sports academy and multiple-themed restaurant.

Starwood currently operates 15 properties in Dubai, representing the second largest concentration of the company’s hotels in a single city outside of New York.

Lets hope Al Habtoor brings a little more quality to the hotel construction than they did to the Executive Towers development.

Why Flydubai is anything but Emirates lite

25 April 2012 - Flight Global

Flydubai was spawned from Emirates in 2008 as an attempt by Dubai to lure a segment of the travelling public being lost to the large airline's full-service, widebody product. But the low-cost carrier - which launched services in June 2009 with a flight to Beirut - is anything but Emirates-lite. In its early days, the Boeing 737 operator relied on its big sister for most of its back-office functions. Today, however, any visible links with Emirates are few and flydubai has developed its own low-cost infrastructure and a clear identity in the market.

Its infrastructure includes a grey, two-storey prefabricated headquarters near Dubai International's low-cost Terminal 2 - a far cry from Emirates' palatial complex across the runway, with its leafy atrium crammed with restaurants. The airline has a fleet of 22 aircraft and goes to almost 50 destinations across 27 countries, all within a 5h radius that allows a return daily flight. Half its routes are also served by Emirates, although Ghaith Al Ghaith, the former Emirates executive who has run flydubai since the beginning, says there is no consultation with his former employer over route planning.

Flydubai's service is traditional unbundled no-frills - food, drink and even over-the-counter medicines are available to buy on board - with one exception. All its 44 new 737-800NGs - which are entering service now - come with a fibre-optics-based in-flight entertainment system from Lumexis, which offers passengers 150 movies as well as games, maps and news, and for which flydubai was launch customer in 2010. "This is one of the most innovative IFE systems ever and is a huge differentiator for us," says Al Ghaith. "We charge for the movies and we have already covered the running costs, including the additional fuel burn."

Life for flydubai's 315 flightcrew is very different to that of their counterparts at Dubai's flag-carrier too. Pilots are expected to live in or near Dubai and there is no overnighting. As with Air Arabia, they receive a flat salary and find and pay for their own accommodation. "The single payment works very well," says Al Ghaith. "People who work for us have the ability to manage their budget and their lifestyle. We don't like hidden costs."

Al Ghaith with crew: "People who work for us can manage their budget and lifestyle"

Flydubai arrived on the scene a year before launching services with a 50-aircraft order for 737-800s. "All we had at the time was a business plan and a brand," says Al Ghaith. All the aircraft will be delivered by 2016. The fleet growth will require another 300 pilots, which will be recruited at a rate of around 100 a year. So far, says Al Ghaith, finding the right candidates has not been difficult given the number of qualified 737 pilots around the world.

After almost three years of existence, Al Ghaith says the airline is where it wants to be. "Overall, I think we're in a better position. There are places we wanted to fly to that we don't, but also destinations we didn't think would be possible. We are still growing rapidly but we've matured," he says.

The airline has opened a training centre next to Dubai International's Terminal 2 and signed a deal with Dubai-based Emirates CAE Flight Training to be anchor tenant for the joint venture's second simulator centre in the city. Earlier this year, it launched a cargo operation. Beyond 2016, Al Ghaith is looking at further fleet expansion with either the 737 Max or the Airbus A320neo, and is keeping his options open. "It was a very marginal call when we opted for the 737 over the A320," he says. "Moving forward, we will be closely monitoring what both new types can offer."

Away from unrest, Bahrain Grand Prix plays to empty stands

23 April 2012 Reuters on the Bahrain Grand Prix. The last few lines are hilarious and for Reuters, unusually subversive.

"When Formula One drivers performed their usual parade around the circuit on the back of a flatbed truck ahead of Sunday's Bahrain Grand Prix, they waved at rows of empty seats.

Few inside the Formula One bubble had any contact with the demonstrations in villages around the capital in which protesters hurled Molotov cocktails and police fired teargas and birdshot in nightly clashes.

Opposition activists denounced the Grand Prix as a lavish publicity stunt for a government that crushed Arab Spring protests. Their banners depicted race car drivers as riot police. Bahrainis mostly just stayed away.

Formula One earns its money from TV rights and corporate sponsors, not from selling tickets. But a government that wants to show that life is returning to normal had spared no expense to attract punters.

There was a rock music stage. Kids could enjoy tents for circus performers, arts and crafts, and musical theatre.

"It's like Disneyland," said one foreigner working in the stalls. "This is the best entertainment village I've seen in a long time. They've really pushed the boat out for obvious reasons."

Official attendance was announced at 28,000 in a circuit that seats 46,000. It looked like fewer. TV cameras on the front of the cars beamed to the world the unmistakable images of many empty seats as the racers roared past the grandstands.

With organisers doing what they could to attract crowds, even super-elite status had lost some of its cachet. Regulars at the normally overflowing Paddock Club, reserved for big-ticket corporate sponsors and their guests, said attendance had fallen through the floor.

No-longer-so-coveted Paddock Club passes were even falling into the hands of ordinary mortals - unaware, for example, that access includes free gourmet meals.

"You can see people wandering around with Paddock Club passes and eating at the fast food stalls. They clearly don't know what to do with them," said the foreigner at the stalls.

A column of black smoke could be seen from the circuit on the distant horizon before the race, although there was no way to tell whether it had anything to do with the violence. Tyres were set alight overnight in the village of Budaiya, scene of mass demonstrations this week.

Most of those who did attend were expatriates, like Phil Mitchell, originally from England, who wore a McLaren cap and was rooting for Jenson Button and Lewis Hamilton.

"There is definitely more security. But not marked. I think it's just a precautionary measure," he said. "I'm just looking forward to a really good race today."

Omer Mazhruddin, originally from Lahore in Pakistan but living in Manama, attended with his visiting father.

"We're very excited and happy it's happening," he said. "I think this will help normalize things in Bahrain going forward as well. You can see people are very excited."

Bonkers, Buttons and Chuckles - three British clowns flown in as part of the family entertainment - said the show would go on.

"Everything's been alright so far, fantastic," said Buttons.

"No worries," agreed Bonkers. "Obviously we've seen stuff on the news about what's been happening but we didn't have any real concerns."

Tonight is the peak of the 2012 Lyrid meteor shower

21 April 2012

Tonight is an opportunity to see the 2012 Lyrid meteor shower, at its best from late night Saturday (April 21) until dawn Sunday (April 22). Usually, the hour before dawn is best, regardless of your location on the globe. The Lyrids are generally a modest shower, offering perhaps 10 to 20 meteors per hour. Since it’s radiant point – the point in the sky from which the meteors appear to radiate – is fairly far north, it’s better seen from the Northern Hemisphere than from the southern part of Earth’s globe. With no moon to ruin the show, and clear skies over the Grand Canyon we should try and stay out tonight to watch. But it will be cold.

The radiant point for tonight's Lyrid meteor shower is near the bright star Vega in the constellation Lyra. They rise in the northeast in late evening in April.

The chart at the top of this page shows the constellation Lyra the Harp, radiant point for this meteor shower. If you’re in the Northern Hemisphere, Lyra rises over your north-northeastern horizon around 10 to 11 p.m. tonight. What is a radiant point? If you see a meteor tonight, you can trace its path backwards to find that it radiated from the constellation Lyra. Yet you don’t have to know how to identify Lyra – or even know its direction in the sky – to see a meteor in this annual shower. Meteors often don’t become visible until they are 30 degrees or so from their radiant point. In other words, the meteors will appear in any and all parts of the sky after Lyra ascends over the horizon in late evening.

The constellation Lyra is easy to see because it’s small and compact. Many people see it as a little triangle set on top of an oblique parallelogram.

If you’re standing out there looking, you might also try checking out some of the stars in Lyra. The constellation is dominated by the brilliant star Vega. Vega is sometimes called the Harp Star.

This tiny but prominent constellation represents a lyre, an ancient musical instrument that is essentially a small harp. In Greek mythology, Lyra represents the lyre or harp of the musician Orpheus. It was said that when Orpheus played this instrument, neither mortal nor god could turn away.

Bahrain Grand Prix: Formula One demeans itself with this event

21 April 2012 Editorial The Observer (from 14 April)

"The kingdom of Bahrain is a repressive regime that has jailed and killed citizens who campaign for the reform of its monarchy. In Shia villages in the minority Sunni-led state, which was propped up by last year's intervention by Saudi troops, protests continue daily.

Only last week, Shia villages were attacked by supporters of the regime with knives and sticks. And while it is true that the country's ruling family commissioned a critical report into the violence of last year, it is also a fact that despite promising reform the regime has reneged on most of its promises while the perpetrators of abuses in its security services have gone largely unpunished.

You might think, in these circumstances, that a leading international sport and those who represent it might feel a little queasy about being asked to stage an event in Bahrain that is already being used by the regime to whitewash what happened last spring and the abuses that are still occurring.

But the "sport" we are talking about is Formula One, whose administrating body, the FIA, announced last week that it is "safe" for the Bahrain Grand Prix to go ahead next Sunday, even though last year's was cancelled in the midst of the bloody government crackdown.

The reality is that Formula One is not really much like other sports or, indeed, much like a sport at all.

Instead, the business, owned by venture capital firm CVC and run by Bernie Ecclestone on its behalf, more routinely demonstrates the worst aspects of global corporate culture than the best of the Corinthian ideals.

It consists of a too-cosy arrangement of rich teams, super-wealthy "athletes" – if they can be called such – sponsors and grand prix-staging countries whose interest is more about the bottom line and prestige than competition.

Unwilling to upset Bahrain's royal family – which owns 40% of the McLaren team – the cynical manoeuvres to justify holding the Bahrain Grand Prix have become ever more shoddy.

That has included Bahrain's employment, as a consultant, of former Metropolitan Police chief John Yates who dutifully wrote to the FIA's administrator, Jean Todt, to say he felt "safer" living in Bahrain than London and blamed protests on a "criminal" minority.

The reality, however, as Amnesty made clear a few days ago, is that "the human rights crisis in Bahrain is not over". It added: "Despite the authorities' claims to the contrary, state violence against those who oppose the Al Khalifa family rule continues, and in practice, not much has changed in the country since the brutal crackdown on anti-government protesters in February and March 2011."

Perhaps it is too much to expect Ecclestone, who has enriched himself hugely out of Formula One, to show a moral backbone. But the drivers, sponsors and team owners who participate should consider that they will be giving cover to a violently human rights-abusing regime by their participation and will be seen by many Bahrainis and others as accomplices in those continuing abuses. We can act, too, by not watching. Because sport – despite the protestations of Formula One's paid lobbyists – is not divorced from the moral world and this event, and Bahrain's continuing behaviour, demands our disapproval."

Razorfish to drive Emirates social media

19 April 2012

The Emirates Group has appointed Razorfish to handle its global social media activity after a pitch. Razorfish provides services including digital advertising and content creation, media buying, strategic counsel, analytics, technology and user experience.[

The appointment comes as the global airline group, which has previously lacked an organised social media presence, is turning to Facebook to build an emotional connection with its customers.

Razorfish will create a Facebook page as the first step in establishing the group's social media footprint.

The airline hopes to make its brand more relevant to a wider audience, as well as driving loyalty among existing customers.

Emirates is hoping to catch up with rivals such as American Airlines and Air France - the carriers with the most popular Facebook pages.

British Airways launched an app last August and also uses its Facebook page as a marketing tool.

Emirates recently launched a global TV campaign by its lead creative agency, StrawberryFrog, using the strapline: "Hello tomorrow."

Emirates - Jet Blue code share

19 April 2012

JetBlue and Emirates have announced a codeshare agreement to connect the carriers' networks via New York's John F. Kennedy (JFK) International Airport.

The two airlines have been interline partners since 2010, enabling customers to enjoy the convenience of a single combined ticket for Emirates and JetBlue-operated flights, plus other benefits including one-stop check-in and baggage transfer.

Tickets featuring an Emirates flight number will soon be available for sale for JetBlue-operated connections between New York/JFK and the following U.S. destinations:

Boston (BOS) Burlington, Vermont (BTV) Buffalo, New York (BUF) Charlotte, North Carolina (CLT) Chicago/O'Hare (ORD) Fort Lauderdale, Florida (FLL) Jacksonville, Florida (JAX) Orlando, Florida (MCO) Portland, Maine (PWM) Raleigh/Durham, North Carolina (RDU) Tampa, Florida (TPA) and Washington/Dulles (IAD).

"We are pleased to expand upon our successful relationship with Emirates through this new codeshare at JFK, where JetBlue is the number one domestic airline," said Scott Laurence, JetBlue's vice president of network planning and partnerships. "Emirates has been a terrific travel partner for JetBlue, affording our customers easy access to all corners of the globe in comfort and style."

This is similar to the arrangement with Westjet out of Toronto.

Mall of the masses

16 April 2012

The traders in Dubai’s Dragon Mart are kitting out the emerging world’s new middle class. And the article touches on many issues: the emerging market middle class, the hybrid state/ free market capitalism model, Chinese trade in Africa, the imminent rise of Chinese brands, Dubai's position as a trading hub, the surrender (or at least failure to adapt) of established brands in this new market space.

The Economist:

"Dubai boasts some of the world’s most spectacular shopping malls, including the Mall of the Emirates with its indoor ski slope and the Dubai Mall with its 33,000-creature aquarium. But for anyone with an eye to the future the most interesting mall is one that few tourists visit: 20 minutes’ drive from downtown, through scrubland and past abandoned building projects.

The embellishments on the Dragon Mart are feeble by Dubai standards. The architects did try to make the building look like a dragon; at least, they gave it some curves and stuck scalelike spikes into the roof. There is also a dragon coiled around a giant golden globe near the main entrance. Yet the mart is resolutely utilitarian. The most colourful decorations are giant Chinese flags. The first thing the visitor encounters upon entering the dragon’s mouth is the Zhong Dong Sanitary Ware Centre, “the largest sanitary ware centre in the Middle East”.

But what the mart lacks in bling it makes up for in size and vitality. Dragon Mart is the biggest Chinese shopping mall outside the Chinese mainland: it is 1.2km (0.75miles) long and contains 3,950 shops. Here you can buy everything from mock Roman pillars to “development cream for the intimate parts of man”, tablet computers to mobile phones shaped like handguns. Girls in tight jeans and T-shirts sell hijabs and prayer mats. Chinese immigrants who cannot speak a word of Arabic flog talking Korans: you trace a pen over the Arabic words and a computerised voice renders them in any one of a dozen languages.

Both the shops that fill the mall and the products that fill the shops bear unfamiliar brand names. Most of the world’s malls are full of things made by Chinese hands but designed and branded by Western brains. The Dragon Mart provides an insight into a different world: of Chinese-owned companies that are injecting their cut-price products into the world’s commercial bloodstream, often via the Dragon Marts springing up across the Middle East and Africa. Companies such as JZX Double Goats Grinding Wheel Manufacturing (which sells building machinery), Snow White Princess Trading (carpets), Yongde Shoes and Wen Ling Better Shoes (which respectively sell wallpaper and handbags). Or innumerable electronics companies that sell cut-price gadgets bearing names such as Wintouch and Titanium.

The mart is dedicated to efficiency and cheapness. The China Ocean Shipping Company (COSCO) has a huge logistics centre next to the mall allowing new goods to be brought straight off the ship from China and wholesale purchases to be exported anywhere in the world. The workers who man the stores live in the Chinese section of the International City that abuts the mart.

The customers are wholesalers and bargain-hunting migrant workers. This is the mall where the people who build and maintain Dubai shop. They include a fast-growing Chinese population. The bargains are enticing—a digital camera for 99 dirhams ($27) or a treadmill for 700 ($190) dirhams if you pay the advertised price; less if you haggle.

It is easy to make fun of Dragon Mart. It sells some of the most hideous things devised by man—polyester Persian carpets, plastic executive desks and plastic gilded bookshelves. Many companies specialise in producing cheap knock-offs of Juicy Couture or Barcelona Football Club paraphernalia. Others peddle slimming soap or slimming navel magnets or Touch Me Please Breast Enlarging Cream. It is hard to see Boil Fashion becoming a challenger to Zara or Zhejiang Best Plastic becoming a global leader in its signature product, wallpaper.

Yet it would be foolish to dismiss these frugal Chinese manufacturers. They cater for the world’s most exciting group of consumers, the emerging middle class, a group that McKinsey, a consultancy, estimates includes two billion people who spend $6.9 trillion a year. These people cannot afford to shop in the Mall of the Emirates; yet they are greedy for the trappings of middle-class life. Many of the goods displayed, like children’s desks and patio furniture, represent a dream of upward mobility. Plastic tat to Western eyes may be luxuries to the offspring of slum-dwellers.

The Dragon Mart is evidence of the symbiotic relationship between state and entrepreneurial capitalism. It is tempting to think of these as polar opposites: the more you have of one the less you have of another. But the mart suggests they can advance together. It is owned by a local state-owned company, Nakheel, a subsidiary of Dubai World, and fed with daily shipments by a Chinese state-owned company, COSCO. But the mart is home to thousands of independent “bamboo capitalists”, its Chinese retailers.

The Dragon Mart is also evidence of the rebirth of one of the world’s oldest trading routes, the silk road. The old silk road specialised in luxuries like silk. The new silk road specialises in everything, albeit with a stress on plastic. Dubai boasts two of the most important nodes on this road: the world’s ninth-biggest container port and one of its busiest airports. It is also building a new airport close to the port which will reduce the time it takes to transport goods from port to airport from seven hours to an hour.

The trading route will increasingly bypass Europe and take goods from China to Africa. So too the products: rather than providing labour for Western companies, the rising Chinese companies will produce their own designs. Some of the firms hawking goods in the Dragon Mart, such as Haier in kitchen goods and Go Baby in prams, have already gone global. Others will follow.

These new global champions will have no shortage of space in Dubai. The builders have already started work on a second mart right next to the first that will provide another 175,000 square metres of space and 4,500 parking spaces. The dragon’s coils encircling the world are getting tighter by the day."

Looking for peace and love

14 April 2012 - The Economist

Almost six years after Thaksin Shinawatra (above) was ousted as prime minister in a coup by royalist generals, it might seem like time to move on. Not a bit of it, Thailand’s politicians seem to think. Legislators have spent the past few weeks arguing obsessively and bitterly about the rights and wrongs of the coup and its long aftermath—all, apparently, in the name of “national reconciliation”. The result, not unexpectedly, is not so much reconciliation as even more recrimination.

National reconciliation has the laudable aim of bridging the chasm that opened up in Thai society after the coup. Politics swiftly descended into colour-coded enmity, with the “red shirts” backing Mr Thaksin and the “yellow shirts” supporting the army, monarchy and, in part, the Democrat Party (DP). The cycles of protest and confrontation culminated in bloody street battles in central Bangkok in April and May 2010 between the red shirts and the police, leaving over 90 people dead.

Right after these events the government of the day, which was led by Abhisit Vejjajiva of the DP, set up a Truth for Reconciliation Commission to look into the killings in Bangkok. Yet to its critics the commission lacked the authority to delve deep, especially into the actions of the police and army. The new government that took over last year, headed by Mr Thaksin’s younger sister, Yingluck Shinawatra, has instead vested its own hopes of reconciliation in a committee of legislators, the House Committee on National Reconciliation (HCNR). It has an inbuilt majority of parliamentarians from Mr Thaksin’s and Ms Yingluck’s Pheu Thai party.

The chair of the HCNR is none other than a general, Sonthi Boonyaratglin, turned member of parliament, who led the coup against Mr Thaksin in 2006. His appointment may have been an attempt at humour, or more probably a bid to give the committee some credibility among anti-Thaksin types. By the standards of a former general, he has tried to sound conciliatory. Recalling that Thailand used to be “a society of love, peace and unity”, he has acknowledged that the political divisions of the past six years have made things “very dangerous”—without ever quite regretting the coup.

Yet however touchy-feely Mr Sonthi now appears, his committee’s proposals, presented to parliament last week, failed to fill the legislators with peace and love. After two days of acrimonious debate, 307 of the MPs supporting the government voted for the committee’s plans, while all those from the DP refused to vote. It left everyone more divided and upset.

Two proposals by Mr Sonthi’s committee are particularly controversial. One is a broad amnesty for those involved in the violence in 2010, and even back to 2006. The other is to drop all corruption charges brought against Mr Thaksin and his administration by the now defunct Assets Examination Committee (AEC), a body set up by the military junta that assumed power after Mr Thaksin’s fall.

The second proposal has enraged the DP, whose members say it has nothing to do with the national interest but is a contrivance to enable Mr Thaksin to return to Thailand after years of self-imposed exile. (He has lived in Dubai to avoid a prison sentence for corruption on charges brought by the AEC.) This week Mr Thaksin was in Laos, with plans to travel to Cambodia to play golf with the local strongman and prime minister Hun Sen, and to hold a rally to which Thai red-shirt supporters were expected to flock.

The DP has called for time for a nationwide debate on these reconciliation proposals, an idea turned down by Ms Yingluck’s government. Democrats see it as further evidence that the committee’s proposals are a ruse to get Mr Thaksin home as soon as possible. The idea of a general amnesty has upset many people. Human Rights Watch, a New York-based lobby group, argues that it “will undermine justice by giving immunity to those responsible for human-rights abuses.”

Nonetheless, the proposals now go to the cabinet for consideration. Ms Yingluck has to tread carefully. She could endorse them. But she also knows how divisive her brother remains in Thailand. His return might easily set off further protests.

Meanwhile, any reconciliation looks even more out of reach in Thailand’s three southernmost provinces, where a Muslim insurgency has raged since 2004. On March 31st car bombs exploded in the city of Yala, killing 14 people and injuring hundreds, the deadliest attack in years. The lethal insurgency cries out for a resolution, yet the politicians in Bangkok only bicker about Mr Thaksin.

No fairytale ending in land of smiles

12 April 2012 - W. Scott Thompson in the New Straits Times

After reading the article then read PTT's commentary which is here.

I've never known any farang in any country who has assimilated and learned his adoptive country as well as Professor Bill Klausner, who has been in Thailand 56 years, and written eloquently on its culture. Our friendship goes back 43 years and no one has taught me more about the kingdom.

We covered the whole spectrum at a long lunch last week. He's neither "red" nor "yellow", but understands the grievances of the Reds -- he is married to an Issan -- and understands the creation that the Thai elite are responsible for: a modern but different player in international politics that has elicited a particular form of respect, for its patience, economic miracle, smiles, ability to manoeuvre gracefully but successfully in politics, for presenting a unique personality in world affairs.

"Why are the vaunted vales of civility and graciousness no longer in evidence? How has traditionally polite discourse been so easily sidelined?" Klausner asks in an essay.

It's all gone. The Reds and Yellows are playing a zero-sum game, of which only the outcome is clear, not its timing or its manner. The finest analyst in Bangkok now, Dr Thitinan Pongsudhirak, recently wrote: "I can now say with some sadness and measured conclusiveness that the royalist establishment has lost the battle, although the winner is as yet unclear. It now depends on whether/when/ how/under-what-conditions they throw in the towel. Resistance will breed more turmoil. But concession requires the right conditions to keep Thaksin out of play and democratic institutions to strengthen and rule the day."

Former prime minister Thaksin Shinawatra is not willing to be the lamb led to slaughter. He's busy placing his people in every agency and ministry, and his political hacks visit him wherever abroad he's staying (often Dubai) to get his guidance.

In fact, he's more of a raging bull right now, feeling not without reason that he's been cheated out of his rightful job, for which he was overwhelmingly elected. But his opponents know that his return means the end of democracy. His Mussolini-like bullying may bring benefits to the masses, but at the end of the day, even they will no longer have any say in whether he ever leaves office.

Under the arrangement between the powerful army chief and Thaksin's sister, Yingluck, serving as prime minister, no one touches the royal family and Thaksin doesn't return.

But unless the opposition and the royalists play their cards very well indeed, he'll find a way, and then they are history.

The king is still alive, almost well. Twenty years ago, he could summon the leaders of two sides fighting it out with many casualties and in they went, prostrating themselves, and pledged to stop the carnage. He could summon the spirits from the "vasty deep", as Glendower brags in Henry IV. Hotspur replies: "But will they come when you do call for them?" Now, the answer appears to be no, they won't, which is why the palace has been so quiet. It would hardly enhance the throne's majesty for it to be ignored when trying to be relevant.

Last week, a majestic funeral was held for the only child of King Rama VI, Princess Phetcharat.

Millions of dollars were spent on it and the temple. Very few people whom I talked to knew what it was about, who she was, or in fact cared.

The king is still venerated for his lifetime of good deeds. But there's going to be a "a long twilight", to use Thitinan's phrase, during his decline and the emergence of a new order, with no one except Thaksin clear about what to do.

"Stopping him" is not a programme. The opposition has only a negative agenda, and all of them, from the politicians to the very top, are seen as compromised.

They used the military to oust Thaksin in 2006, but then wasted their opportunity to build an alternative programme to negate his appeal. So no matter how his support group is renamed, it wins, overwhelmingly.

Of course, it would be convenient were he to disappear from the scene, and there are some who hope they can accomplish just that. It's wishful thinking; he's well-guarded and not stupid.

About the only good solution that is faintly possible is if the "opposition" -- from Democrat Party to the palace itself -- realised its hopeless position and negotiated a long-term deal, in which they gave up much of their privilege, yielded full power to Thaksin's people, but with a backed-up and locked-in guarantee that he would not himself take the leadership, and that the palace was safe. But this more and more sounds like a fairy tale. As Klausner summed it all up: "Something is lost."

Emirates latest A380 changes

12 April 2012

Dubai – Johannesburg EK761/762 A380 resumes operation from 01JUN12 (Previously planned eff 16MAY12)
Dubai – Kuala Lumpur EK346/347 A380 resumes operation from 26APR12 (Previously planned eff 22APR12)
Dubai – Munich EK049/050 A380 replaced by Boeing 777-300ER from 17APR12 to 21APR12 (Latest addition to A380 operation changes)
Dubai – Rome EK097/098 A380 resumes operation from 01MAY12 (Previously planned eff 28APR12)
Dubai – Seoul Incheon A380 resumes operation from 01MAY12 (Previously planned eff 28APR12)

Previously reported adjustment remains unchanged:

Dubai – Beijing EK306/307 A380 resumes operation from 14APR12
Dubai – London Heathrow 4th Daily A380 service on EK029/030, to start from 01JUN12

Thaksin getting ever closer to home

12 April 2012 - Reuters

Thailand's fugitive former premier Thaksin Shinawatra took some small but symbolic steps towards the fringes of his homeland on Wednesday after five years in self-exile and at the heart of a bitter and bloody power struggle.

The tycoon arrived on his personal jet in the Lao capital Vientiane and waited seven hours before greeting a crowd of 1,000 of his cheering "red shirt" supporters, who crossed the nearby border to greet the populist hero as legal moves to bring him home a free man gather steam in Thailand's parliament.

"I think about home all the time," a smiling Thaksin told a scrum of Thai reporters, photographers and TV cameramen.

"I'm here because there are so many people I haven't seen for a long time. I will come back home, but in a smooth way."

With his 44-year-old sister Yingluck Shinawatra installed as prime minister and backed by three-fifths of parliament, Thaksin's return, whitewashed of his graft conviction, is looking increasingly likely, but could be anything but smooth.

But while his homecoming might unnerve his powerful and uncompromising enemies among the military and establishment elite who might try to thwart him, those who elected him in 2001 and 2005 landslides are counting down the days.

"This is the most exciting moment of my life. When I see him, I want to tell him to fight, fight and to hurry back home," said red shirt Somboon Chaiyasuth, wearing a T-shirt and necklace bearing pictures of a smiling Thaksin.

Thaksin's visit to Vientiane, just 20 km (12 miles) from Thai soil, is the closest he has been to home since fleeing into exile for a second time in August 2008 to evade a two-year jail term for a conflict of interest case levelled by graft-busters appointed by the military junta that toppled him in a 2006 coup.

He pleads innocence and insists he wants to stay out of the limelight and has no political ambitions.

His chief aide, Kwanchai Praipana, a radio deejay who commands Thaksin's vast network of northeastern red shirts and led bloody confrontations with the army in 2009 and 2010, insists Thaksin has officially retired.

"If Thaksin returns it won't be as prime minister," he told Reuters on Tuesday, dressed in red bathtowel at his radio station in Udon Thani, a city he calls the "red shirt capital" an hour's drive across the border from Laos.

"Yingluck is the best replacement for Thaksin."

Thaksin, 62, met politicians, businessmen and loyalists in Vientiane on Wednesday, adding fuel to opposition claims he is a "remote-control premier", running a government from his Dubai mansion via his proxy, the politically inexperienced Yingluck.

While Yingluck has utilized her charisma to uphold an unspoken truce with Thaksin's enemies since coming to power last July in the third Shinawatra election landslide in a decade, her elder brother remains an divisive figure seen by many Thais as capable of derailing the fragile peace.

To the rural and urban working classes, Thaksin was a mould-breaking premier who prioritised millions of downtrodden poor, but for the army top brass and the elite in faraway Bangkok, he is crony capitalist who manipulated the masses and orchestrated the violent red shirt uprisings to try to re-take power.

Thaksin is racing to consolidate power and shore-up allegiances with big business and politicians as Yingluck's government pursues changes to the constitution and a reconciliation programme to strengthen democracy and heal rifts.

The current parliament session has been extended to allow debates over the formation of a 99-member Constitution Drafting Assembly and a peace bill that has sparked widespread anger, with the opposition warning of an imminent "reconciliation war".

A house reconciliation committee, chaired by retired General Sonthi Boonyaratakalin, who led the coup against Thaksin, has selectively picked out two recommendations by an independent research body to put to debate: an amnesty for political offenders since 2005 and the nullification of probes by the now-defunct Assets Scrutiny Committee, appointed by the army to investigate alleged graft by Thaksin and his cabinet.

Commentators see trouble brewing and warn of a return of devastating "yellow shirt" street protests or even a coup if Yingluck's "parliamentary dictatorship" - as the anti-Thaksin camp calls it - moves to rescue the multi-millionaire.

Emirates seeks way around Heathrow night ban

11 April 2012

The London Evening Standard reported last night that Emirates' A380s could be allowed to land at Heathrow for more than 20 hours a day under plans being considered by ministers.

This is not going to happen; and is really little more than PR for Emirates.

Emirates says that it would like to bypass restrictions on night flights by landing its A380 airbuses — the world’s largest passenger airliners — at steeper angles to protect homes from jet-engine noise. The airline wants permission to fly in and out until 1am every day, restarting flights after 4am.

Immediate problems; there are no rail and subway connections at this time.

At present tough restrictions are in place on night flights, with only 16 allowed at the airport, the majority of which are arrivals between 4.15am and 6am. Campaigners today warned that around 500,000 people who live near Heathrow are already affected by night flights and that steeper approaches would not help the problem.

Actually the A380 is significantly quieter than older airplanes and a steeper approach would help. The problem is that the UK government was never far sighted enough to build a new airport for London in a location that would support 24/7 operations. And now such a plan is prohibitively expensive.

However, Emirates believes that it could increase the number of daily flights from London to Dubai from five to seven using the new take-off and landing methods. If allowed, it could allow Heathrow — which is operating at nearly full capacity — to increase flight numbers despite continued opposition to a third runway.

Tim Clark, Emirates Airline’s president, told the Financial Times: “If you can demonstrate the noise profile is much quieter, why not look at that as a means of growing capacity at constrained hub airports?”

Emirates estimates that the steeper descents into the airport could reduce the impact from jet engine noise by between 15 and 20 per cent.

So the A380 would fly an approach similar to landing at London's city airport in a small regional jet. Possible? Maybe. Practical?

The planes would fly into Heathrow at a 5.5-degree angle, rather than the usual three degrees. Aircraft would also land a kilometre further along the runways, meaning that they would be further from homes near the airport.

John Stewart, of campaign group HACAN clearskies, said: “At night, there is no such thing as a quiet plane. A new landing approach will not mean fewer people being affected by noise.

“It seems that they are using the fact that the A380 is a bit quieter to try to get this through, but I don’t think they’ll get away with it. Night flights are so controversial. It’s almost impossible to see a minister authorising any more night flights.”

Last month, the Government said it would keep existing night flying restrictions at the airport until 2014 but would consult on the issue this year.

A Department for Transport spokesman said: “We will launch a first-stage consultation this year which will seek detailed evidence, and we welcome any contributions to this debate.”

Any change to the permitted 480,000 annual flights allowed at Heathrow would need a planning application to be submitted by airport owner BAA.

Both Boris Johnson and Ken Livingstone today said they would oppose moves to increase night flights.

Emirates will go ahead and launch a sixth flight anyway - expect a 6.45am departure to London; arriving about 11.00am in summer - departing at 1.30pm for an 11.00pm arrival in Dubai. This is likely by summer 2012 in time for the London Olympics.

Cashing in - big time

10 April 2012

Social network giant Facebook has bought Instagram – a profitless, two-year-old photo sharing website – for a staggering $1bn...yes One Billion Dollars!

Yet only days before the acquisition, the blogosphere buzz around Instagram was of a new $50m funding round for the company – a round that TechCrunch is claiming went through – valuing it at $500m rather than $1bn.

Instagram is a mobile app that counts Twitter co-founder Jack Dorsey among its backers. It has been downloaded by over 30 million people. When the Silicon Valley startup released a version for Android phone users this month, it was downloaded a million times in its first 12 hours.

Celebrities including Justin Bieber and Kim Kardashian have accounts. President Barack Obama signed up in January.

The app allows people to share photos taken with their mobiles with friends on its own site and Facebook, Twitter or via text. Photographers can use a variety of filters to alter the look of their pics, with names like Lo-fi, Earlybird or Nashville giving their images a vintage, old world feel. Users can then vote on pictures and add comments.

Facebook founder Mark Zuckerberg broke the news on Facebook: "This is an important milestone for Facebook, because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."

Instagram was was founded in October 2010 by Stanford graduates Kevin Systrom and Mike Krieger. At $1bn the price is the highest for a profitless startup since Google – also founded by a couple of students from Stanford, Sergey Brin and Larry Page – bought YouTube for $1.65bn in 2006.

Asked about Instagram's history on the Q&A site Quora recently, Systrom said he had "never expected the overwhelming response" the app had received. "We went from literally a handful of users to the No 1 free photography app in a matter of hours."

Systrom said Instagram took just eight weeks to build and launch, but was the result of over a year or work. "We decided that if we were going to build a company, we wanted to focus on being really good at one thing. We saw mobile photos as an awesome opportunity to try out some new ideas," he wrote.

After experimenting with a more complicated app, the pair scrapped the project and started with something far simpler. "What remained was Instagram. (We renamed because we felt it better captured what you were doing – an instant telegram of sorts. It also sounded camera-y)," he wrote.

Last year he told the Guardian that for all its apparent simplicity Instagram had a lot of technological depth.

"There's this large network underneath where people can connect and follow inspiring photographers and friends around the world," said Systrom.

"That's what a lot of other apps don't provide, but we've combined it with the effects. We tried to lower the bar for producing awesome stuff, so people can walk around with their iPhones and produce amazing pictures. The network really democratises attention: everyone from celebrities to a random guy in Japan taking pictures of his dog every day can get many thousands of followers. Taking images is the great equaliser."

At the SXSW conference in Austin this year, Systrom and Kreiger announced that the company's iPhone app had nearly doubled its number of registered users since December, going from 15 million users to 27 million.

This is the first time that Facebook, which is in the process of going public in a deal that could value the company at more than $100bn, has made a big acquisition.

Zuckerberg said the Instagram team would continue to operate as a separate company.

"We will try to learn from Instagram's experience to build similar features into our other products," Zuckerberg said in a statement. "At the same time, we will try to help Instagram continue to grow by using Facebook's strong engineering team and infrastructure."

The sale comes shortly after Zynga, the online games firm, paid $200m for OMGPOP, maker of Draw Something, an online version of Pictionary that in less than two months has been downloaded over 50m times.

In the meantime, watch for knock-on effects. Instagram rival Path may have just become an even more tempting acquisition prospect for Google or Apple, for example.

Remember this is US$1 billion for a two year old business, with thirteen employees that has never ever made a profit. Bizarre.

It will also be interesting to see how Instagram's co-founders and still-small team fare at Facebook. Wired is already suggesting that Systrom owns 40% of the company, meaning a cool $400m from the acquisition, with co-founder Mike Krieger taking $100m, and another $100m to be shared between the company's 13 employees.

Continuing "to add new features to the product and find new ways to create a better mobile photos experience" is an important ambition for an app that is still relatively young. The challenge – for Systrom and Zuckerberg alike – will be to keep this creative momentum going in the face of such riches.

Instagram users immediately took to social networks to denounce the deal. For many, Facebook is already an internet hate-figure – and the prospect of an internet behemoth swallowing up a popular start-up seems to have caused a pretty strong backlash.

At BreakingViews, Robert Cyran thought the acquisition a defensive move by Facebook, keen to retain the "whip hand" in mobile photo-sharing. But he worried about the implications:

For serious photographers Instagram is a toy; a misguided replacement for a properly composed shot and a decent sensor.

Lets come back to this in 5 years and see if Facebook even exists then. The simple fact that my very tech savvy 15 year old has no interest in continuing to use facebook should be a loud message. It has become the tool of the middle aged.

CX versus EK

9 April 2012