Global recruiter Airswift Holdings has 57 operating locations

Source: Airswift Holdings. From left, Duncan Gregson, CEO of Air Energi; Janette Marx, COO, Airswift, Ian Langley, Chairman, Airswift; Peter Searle, CEO, Airswift; and Tobias Reed, CEO of Swift Worldwide Resources.

Air Energi Group and Swift Worldwide Resources have merged to form Airswift Holdings. a company specialising in global recruitment for contract staff and permanent hires, resource consultancy, global mobility and managed solutions for the energy, process and infrastructure industries. 

The company will have a total of 57 operating locations and three corporate hubs, in the UK, the US and Singapore.

The diversification challenge facing GCC countries

If the GCC countries were to catch up to the average OECD level of diversification, the region could see additional gains of up to US$17.7 billion. This is one of the findings of EY’s Growth Drivers 2 report: Digging beneath the surface - Is it time to rethink diversification in the GCC? 

Gerard Gallagher, MENA Advisory Leader, EY, says: “Dependence on oil and growing youth unemployment are the GCC’s biggest economic challenges. With recent oil price volatility, diversification has returned to the top of the GCC agenda; it’s an opportunity worth US$17.7 billion. To put that into context, it is more than three-quarters of the entire flow of foreign direct investment to the GCC region for 2013.” ­­

The EY Diversification Tracker, which benchmarks the GCC countries both globally and against each other, provides a standardised basis for assessing the degree to which economies have moved away from dependence on oil. It focuses on three aspects — export complexity, the share of the non-oil sector and private versus public sector spending — which have been combined to give a percentage of diversification relative to the highest global performer.

The report identifies a ‘sweet spot’ where regional strengths, economic impact and nationals’ employment preferences meet, allowing all three factors to be achieved.

“The best drivers of diversification are those that have the strongest linkages with the rest of the economy. These sectors are said to have a high economic multiplier: in other words, a dollar of investment translates into far more than a dollar of GDP due to the stimulation of other sectors. Sectors that fall in the sweet spot include: transport, financial services, retail and tourism, telecoms and R&D,” says Gallagher.

The analysis of multiplier sectors in hydrocarbon economies shows that additional investment in oil and gas brings the least additional return to GDP at US$1.30 and affects just seven other sectors. Construction is at the opposite extreme. It has the highest economic multiplier, averaging an impact of US$1.80 in GDP for every dollar invested in construction activity. This trickle down feeds into almost every other sector.

Michael Hasbani, New Markets Leader, MENA Advisory Services, EY says: “The key is not for governments to pump more public money into these sectors. The public sector needs to shift from being the main investor to being the enabler and driver of business, resetting the incentives, removing regulatory obstacles, encouraging collaboration and providing world-class infrastructure and services. The goal for diversification is not what is achievable in each individual country, it is how Gulf companies and governments can find innovative, proactive and profitable solutions to challenges such as resource scarcity, demographics and digitalisation, that are having a profound impact on how business is done and on where jobs are created.”

Creating jobs will be a critical outcome. However, diversification does not automatically create jobs that are viable substitutes for public sector employment. Creating private sector jobs will not ensure employment for young nationals unless they are taught the technical skills and professional attitudes that would both motivate and enable them to take on the increasingly demanding jobs that the knowledge economy brings.

To tackle this issue, many of the Gulf countries have been working to improve their education systems and have developed innovation ecosystems, encouraging technical research and entrepreneurship.

“Diversification will struggle if the GCC region only looks inwards. Governments and companies in the region should shape global trends to its advantage. The sectors that are preserved without transformation will no longer be relevant to the rest of the world, let alone competitive. The window of opportunity to break the reliance on oil and gas is now, but it will require new and innovative approaches to make it happen. It is time to truly capitalise the collective strength of the GCC, integrating our economies and harmonising regulations to encourage long term, sustainable prosperity and fulfill our global ambitions,” said Hasbani.

Environmentally friendly GROHE smart water system growing in popularity in Asia

Source: GROHE. The GROHE Blue system in action.

The GROHE Blue smart water system has seen significant takeup in Asia since a May 2014 study* which found that its carbon footprint is smaller than that of bottled mineral water. 

Estimated greenhouse gas emissions were 17.96 g CO2-eq/litre for the GROHE Blue system against emissions of 70 to 600 g CO2-eq/litre for bottled mineral water, depending on the type of packaging and the place of origin. The values achieved by GROHE Blue are also lower than those of conventional water dispensers, which range from about 35 to 50 g CO2-eq/litre. This means that GROHE Blue allows users to save greenhouse gas emissions of at least 25 to 50% over other alternatives. 

The system supplies filtered and chilled water in three different variants - sparkling, medium and still - directly from the same custom kitchen faucet, allowing different users in an organisation to enjoy their preferred type of water at any time. Unlike typical office potable water arrangements, no bottles have to be filled, transported or recycled in order to obtain the three types of water from a GROHE Blue system, which adds to its environmental friendliness.

Dorit Grueber, GROHE’s Vice President (Marketing), Asia, noted that Asian businesses are becoming more green and are attracted to GROHE Blue especially in matured markets, where their employees are more time-strapped.

There is definitely an increasing trend as consumers become more environmentally conscious," she said, naming Vodafone and Miele as customers of the product. "Since the publication of the study, we’ve seen a significant increase in orders that have been recorded, especially in the B2B sector. The main attraction for GROHE Blue for businesses would be the convenience of getting filtered water straight from the faucet, and an outstanding design which combines pure drinking water and washing water in a single faucet."

*The May 2014 study was carried out by the Production and Logistics Chair of GeorgAugust University in Göttingen in cooperation with Grohe. Between July and November 2013, the scientists of Göttingen University compared the carbon footprint of one litre of water tapped from the GROHE Blue system with the footprint of one litre of bottled water. The scenario was based on the assumption of 30 users per day who drink one litre of bottled water on 220 days of the year over a period of five years. The calculation of the carbon footprint covered all five lifecycles of GROHE Blue and of bottled mineral water, which range from production and transport of the raw materials as well as transport of the finished product to consumption and disposal. 

EIU identifies six areas of growth for Asia

The Economist Intelligence Unit's (EIU's) "industry dynamism" barometer, commissioned by InvestKL, Greater Kuala Lumpur's investment promotion agency, has seen a bright future for six industry sectors across Asia: engineering services, environmental technology, food processing, healthcare, oil & gas, and wholesale & retail. 

The findings indicate that continued corporate investment in Asia will support longer-term opportunities. Speaking at the launch of six reports under the barometer umbrella, Zainal Amanshah, CEO of InvestKL, said that the findings "reinforce the importance of Asian cities as drivers of the region's growth." 

The six sectors are:

Engineering Services 

Rapid economic growth has translated into engineering opportunities for US$8 to US$9 trillion of new infrastructure needed between 2010 and 2020. Asia's engineering companies are growing at breakneck speed as they capitalise on these opportunities. Between 2005 and 2011, the approximately 120 engineering companies listed on the region's stock exchanges grew top-line revenues by an average of 20% every year. 

"Remarkable rates of economic growth make Asia the part of the world for engineering services firms, with this region accounting for 36.6% of global GDP in 2013, up from 26.8% in 2001," said Amanshah of the findings in this sector, which is also a key economic area identified by the Malaysian government.

Environmental Technology  

Policy support for renewable energy in Europe may have fallen, but is strong in Asia. Asia is experiencing record levels of cleantech investment – across the six years of this study, value of fixed assets per company increased by an average of 9% every year. The combined revenues of Asia's cleantech firms more than doubled from 2005 to 2011, while growth rates were at nearly 13% a year for the same period.

"The huge wave of urbanisation sweeping Asia requires a lot more investment in ensuring our urban environments and infrastructure are more efficient," Amanshah noted. "The opportunities for companies that can provide sustainable solutions limiting the environmental impact of our rising population are significant - to put them into context, this region already emits more carbon dioxide than the US, EU and Russian Federation combined."

Food Processing 

Rapid urbanisation is changing food consumption patterns, and creating opportunities for more efficient distribution, including upstream into rural supply chains. Asia's food companies are thriving as they leverage these opportunities. Between 2005 and 2011, the 400 or so food companies listed on the region's stock exchanges grew top-line revenues by an average of 23% every year.

However, companies will need to invest in innovation in order to tailor their products to the diverse local taste preferences across the region – global brands will have to localise their products, while Asia will be a source of new home-grown food ideas (such as the halal-certified food market). 

"We already account for more than half of the world's population. By 2040, we will add another 800 million people to our count – all of whom are rapidly getting richer," said the CEO of InvestKL. "Asia's spending on food is forecast to double between 2007 and 2050 in real terms – representing three quarters of the global increase over the same period."
 
Healthcare

In the hospital sector, Asia will need an additional 180 million new hospital beds in the next decade. In pharmaceuticals, Asia's market will grow more than 13% annually – from US$214.2 billion in 2010 to US$386bn by 2016.
 
In 2007, Asia and Oceania together accounted for 18.1% of global biomedical research. By 2012, that share had grown to 23.8%. Between 2005 and 2011, revenues at Asia's listed healthcare fims rose by almost 23% a year. Profits rose even more swiftly, by 31% a year.
 
Challenges on the horizon include competition that is intensifying as the number of firms entering the sector grows. Costs, especially labour-related, are rising rapidly. And regulations are getting much more stringent as a growing middle class demands greater safety, security and consumer protection. 

With populations and incomes rising, Amanshah noted that "health spending is growing even faster – Asia's share of world health spending is expected to rise from 21% in 2012 to 24% by 2017. Although parts of our region's population are still in need of basic healthcare services, more and more are beginning to require treatment for 'diseases of the affluent'." 

Oil & Gas

"ExxonMobil expects a significant rise in Asia's share of global energy consumption, from 38% in 2010 to 45% by 2040," said Amanshah. "Meeting this rising demand for oil and gas in this region will be challenging, even though some countries are net energy exporters (such as Malaysia and Brunei)."
 
Growth in the demand for gas will outstrip all other fuels, given its cleaner environmental characteristics and superior flexibility.
 
Most countries import more than they produce. BP calculates that Asia produced 8.3 million barrels of oil a day in 2012, or 9.6% of global production, but consumed 29.8 million barrels of oil a day, 33.5% of global consumption. 

Despite being a net energy importer, the Asia Pacific region still has plenty of potential for upstream development. The biggest opportunities exist in new gas fields, such as in Myanmar and Papua New Guinea. In order to extract gas from Asia's more complicated fields, regional oil and gas companies are investing more heavily in new technologies. In 2011, Asia's 50 listed oil & gas firms spent US$2.13 billion on R&D, up from US$368 million in 2004.

Given the landscape of opportunity in Asia, the region's listed oil and gas companies are reporting strong revenue growth. In 2004, revenue per company in the sector stood at US$2.9 billion. By 2011 that had grown to US$10.2 billion, an average annual growth rate of 20%.
 
But while growth is rapid, the industry also faces challenges in the form of increased competition and costs, and talent shortages. These issues contributed to the return on capital employed for Asia's listed oil and gas sector falling from 19% in 2004 to 8.3% in 2011.

Wholesale and Retail

"The population of Asia is predicted to be 4.6 billion by 2040, with average consumer wealth rising in tandem," said Amanshah. "To put the impact of this population increase in perspective, in 2001 Asia accounted for 26.8% of global GDP measured using purchasing power parity – by 2013, our share had risen to 36.6%. Significant urbanisation and penetration of modern retail formats are driving sales."
 
Asia's homegrown retail companies are growing. Between 2005 and 2011, revenues at Asia's listed retail and wholesale firms rose by an average of 21% every year. Most of this growth was organic in character. Between 2013 and 2018, the EIU forecasts that retail sales in Asia Pacific will grow by 10.2% every year, whereas globally retail sales will grow by only 6.9% a year. In 2013, Asia had 80m square meters of modern retail space, but this will rise to 135m square meters by 2018. 


Retail opportunities are highly varied, from mass market grocery chains and fast-food outlets to high-end fashion stores and luxury boutiques. The opportunities for online retail look especially good, with growth rates of close to 17% a year.  

While topline growth is exciting, a number of structural issues are making profits growth harder to achieve. Human capital with retail skills is in short supply, forcing companies to invest heavily in training. Wages are rising, with staff costs up from 3.5% of operating revenues in 2005 to 5% by 2011.

Further reinforcing the eastward shift of power is a study by McKinsey & Co quoted by the EIU in the reports, which notes that 420 cities in emerging markets (more than half of which are in Asia) are expected to contribute 45% of global GDP growth between 2010 and 2015. The report further notes that Southeast Asia will have many significant economic engines of its own, with urban population growth and productivity improvements rising faster than in rural areas, driving incomes up at a much faster pace. This combination of faster population growth and faster income growth led the EIU to conclude that it "makes cities the dynamos of the future".

The six papers, covering engineering services, environmental technology, food processing, healthcare, oil & gas, and wholesale & retail sectors, can be found here.