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Qatar’s prospects are really bright in view of the nation’s abundant natural gas, which is the “energy source of future”, said KPMG International chairman Michael Andrew.
“Natural gas is the obvious answer when you talk about climate change, responsible energy sources and environment issues,” Andrew said in an interview with Gulf Times.
Qatar, Andrew said, is one of the “most efficient” producers and “incredible” suppliers of gas in the world.
“You have got huge gas resources and are closer to the key markets. Qatar has got good connection with lots of those markets as well. I think Qatar will be the winner out of the debate that is going on, because of its gas supplies.”
Asked whether a fall in commodity prices would hurt Qatar, he said: “Commodity prices fluctuate…they are cyclical.”
Andrew said it would definitely be in Qatar’s interest if it diversified its economy away from oil and gas.
“Qatar has a good commodity — cash — which many do not have now. You have got the capital capacity, which the world desperately needs. If you can find products and markets that leverage your capital base, you will have a huge competitive advantage over rest of the world.
“And by investing today, you will be able to reap benefits in 10 to 20 years’ time. Your re-insurance strategy is very clever.
“Frankly, I would like to see more in banking and asset management, and also in project management where you can use your skills.”
But, Andrew stressed, Qatar needed to change its ownership rules if it were to succeed in tapping foreign investment, which is key to diversifying the national economy.
“Foreign investors would like to see more flexible ownership rules, which exist in many countries around the world,” Andrew said.
He also hailed Qatar’s efforts towards realising a knowledge-based economy over the next few years.
“It is essential the research capabilities of the universities be enhanced and a vertical integration provided with industries. The local SMEs must be boosted by providing them with technology.”
Andrew termed “very positive” Qatar’s move to develop a robust bond market.
“Many ask why Qatar is issuing bonds when it has so much of cash. To me, it is important because a bond market helps international investors understand more about Qatar. Increasingly, it gives you some liquidity and influence in financial markets around the world.”
Global economic recovery seen likely next year
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A recovery in global economy is likely in 2013 as many growth areas have started performing relatively well, says KPMG International chairman Michael Andrew.
“I think the fiscal cliff will be averted in the United States. We are already seeing some good signs in the world’s largest economy with the property market and jobs coming back.
“The US companies are in good shape … their balance sheets are very strong,” Andrew told the Gulf Times.
There are not many toxic assets left in the US now, Andrew said.
“The US banking and financial system have managed these. Also, the property market has bottomed in the US…the American housing market is coming back; there is quite a good appetite for property there,” said Andrew, who was in Doha to attend celebrations coinciding with global accounting firms’ 35th year of operations in Qatar.
He was also of the view the crisis in Europe had “largely passed”. Europe is largely into a classic recession. There are toxic assets in Europe, which need to be managed through its banking system.
“I think the EU and the ECB have plans in place to manage these,” the KPMG global chief said.
In China, he said, the new leadership is “very westernised”. They seem to know what exactly they have to do. In March, when the new leadership takes over, the Chinese economy is expected to be driven further.
“For the first time, in four or five years, we have seen reforms in India. In Brazil we have seen major infrastructure packages, of late.
Pockets such as the Association of Southeast Asian Nations (Asean), Middle East, Africa and South America are performing well, though not at the growth rates they have had,” said Hong Kong-based Andrew.
“There is a clear learning experience for everyone from the global financial crisis of 2008. People did not understand risks very well; they did not understand how interconnected risks were.
“No doubt, the world is inter-connected. A general economic slowdown must flow trough to every part of the world. But the impact will be different.”
Asked whether the global investment patterns flow towards the east, Andrew said: “Absolutely, yes. When you look at the growth pattern in the next 10 years, it will be the rising middle class in the emerging nations, which are going to drive the economy.
“When I talk to the CEOs of major global companies, I have seen their trying to re-allocate the portfolios — products and investments towards these markets.
“Therefore, you also got to change your investment patterns because domestic companies and markets in these economies grow much more than mature markets in the west.”
Those nations, Andrew said, are “more reformed” now.
“They are trying to attract more foreign direct investments (FDIs); open up their markets and become more competitive to attract the much needed capital.”
Andrew was elected chairman of KPMG International in 2011. He is the first chairman of one of the “big four” accounting firms to be based in the Asia-Pacific region.
Andrew has been actively engaged in shaping the future direction of KPMG’s member firm network, which employs some 145,000 professionals in 152 countries.
He has been a member of KPMG’s Global Board and Council since 2007, was involved in the development of KPMG’s Global Strategy and a member of its Global Governance Review in 2008.