Dubai, UAE. 6th December: With US $400 billion in oil revenue expected to accrue for 2006, reducing dependency on oil has been an ongoing initiative in the region. Addressing this issue at the Arab Strategy Forum, key factors such as education, less government involvement, deeper capital markets and more transparency were discussed towards ensuring improved retention of oil wealth.

Douglas Dowie, CEO of National Bank of Dubai said: "With nearly US $2 trillion of projects in the planning stages of the Middle East, the Government has been investing heavily in its environment, with petrodollars currently being invested in such sectors as trade, transportation and financial services."

H.E. Bader Meshari Al Humaidhi, Kuwait Minister of Finance, urged for the GCC countries to utilize all of its sources for the benefit of the future. As 94 per cent of Kuwait's budget is financed through oil liquidities, he stated that the GCC countries needed to look at three areas in order to move towards diversification: equilibrium in budget, support from the private sector, and finding employment for its nationals. "We have a wide pyramid where GCC people are looking for jobs - but they can't find jobs".

Dr. Omar bin Sulaiman emphasized the need to know more about the credible opportunities available in the region. In speaking about the current market situation, Dr. Sulaiman said: "I personally think if you see the boom, this isn't the boom. You haven't seen it yet..." He stressed that the impact of the boom will be felt when efficiencies are applied.

Mr. Maged Shawki, Chairman of the Cairo and Alexandria Stock Exchange, which had one of the best performing bourses in 2004 and 2005, said: "There are vast opportunities for liquidity; it is a matter of efficiency". He urged that for better efficiency, corporate governance and disclosure are key.

Arif Naqvi, CEO of Abraaj Capital, urged for more involvement to come from the private sector. "They have to help channel the excess liquidity into the right investment opportunities. We need to have a proper and level playing field.

"Looking at Emirates Airlines and PWC, they became global names and are excelling outside of the market. The key is looking at more efficient ways of channeling the money."

Soud Ba'alawy, CEO of DIG, in responding to ways of channeling the excess liquidity said: "Looking at the price of oil, if we were to focus on human capital, we would eventually be able to generate more income and we would be much more successful. In the Emirates, if we look at Dubai Holding, we gave people the chance to develop themselves.

"All that is required is the setting up of some legal structure by governments to promote the creation of funds, such as pension, government, education and healthcare.

"In the US, the biggest sectors are healthcare and education. With this wealth, the governments have to work on creating an environment where funds can be used efficiently. As for the region, in times of investment opportunities, we need to look at education and healthcare: the two most important sectors in any economy.

"We also need to look at the capital markets. In developed countries, the debt market is far larger than the capital markets. It is non-existent here; nothing is done about it."

He summed up by saying that creating a debt market will allow for a pricing mechanism to be in place, which is a necessity. Therefore, in all, the government should take its excess liquidity and invest in healthcare and education. The debt market can then develop this.

In contrast, Jeffrey Culpepper, MD of Merrill Lynch International, voiced that oil prices are at an all time high, but stressed the need for less government involvement in creating the next market. "We need to encourage the government to pull back. The private sector does not need to compete with government."

Commenting on Soud Ba'alawy's remarks, Culpepper said: "It is very important to look at education. Education needs to be driven by the needs of the local community, as well as those needs of the international. The generation going forward needs to be educated on cross-border investing, such as being able to invest in China in the morning and looking at Qatar in the afternoon."

He also strongly supported employee shares in ownership of companies, emphasizing that as an owner, employees will think better about what they are setting out to do.

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© Press Release 2006