Are you happy with one summer cottage or are You still looking for a Silver Bullet?

- Opportunities in India, Middle East and Africa

Oskar RautiainenHead of Finland Trade Center, Saudi Arabia

Personal task

1. Concerning either India, Africa or Middle East:- Think about - what are your concerns doing business in these regions – what are you afraid of / unsure?

2. Tell your worries / thoughts to your friend beside you!

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Hundreds of ways to kill a business idea...

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‘Markets are not developed in that

region’

‘Prices there are way too cheap, our products are

not cheap’

‘The political and overall business

environment is not very good in Middle East’

‘I have tried to enter the Africa in the past, and I’ve

decided I am not going again!’

‘I am already in China, why

should I be in Africa also?’

‘REALISM or just a MYTH?

India -Isn’t it a land of snakes,

fakirs and elephants?’

Arabs -Can I really trust the people

there?’

1. Pick up 1(ONE) of these countries (India, Africa (many), Middle East (many)) where you would like to have some business!

2. Tell the name of country to your friend beside you!

Second personal task

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Courage means ability to decide and focus!- in order to get one client you need to leave the other 20000 potential clients behind You!

- for a while at least...

Africa – Multinational and national possibilities

• Development towards democracy - Tunisia, Egypt, Libya...

• Growing importance of social media (Facebook, YouTube, blogs)

• Strengthening EU relations through Association Agreements – future free trade area

• Offshore – many countries offer privileges to companies

• Improving agricultural productivity especially in Algeria

• Increased use and production of health and organic products

• Increase of water and energy needs• Improving security systems• Aging of the population – rehabilitation

services

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Source: AfDB

AfDB Financing in 2010

Financing by sector 2010 USD 6.3 billion

• Infrastructure $ 4.0 billion– Energy supply $ 1.37 billion– Transport $ 1.91 billion– Water supply and sanitation $ 0.68 billion– Communication $ 0.05 billion

• Multisector $ 0.46 billion• Finance $ 0.49 billion• Social $ 0.30

billion– Education $ 0.07 billion– Health $ 0.01 billion– Other $ 0.22 billion

• Agriculture & rural development $ 0.10 billion

• Others $ 0.95 billion

(Private sector total $ 1.9 billion)

Cross-cutting: climate change, gender and environment

© Finpro

Source: AfDB

Examples of AfDB Projects

• Menengai Geothermal Power Project GDC in Kenya (ESIA – Environmental and social impact assessment done by AfDB)

• South Helwan 3 x 650 MW Supercritical Thermal Power Plant project in Egypt (ESIA done by AfDB)

• Multinational: Ethiopia-Kenya Power Systems Interconnection project (ESIA done by AfDB)

• ADF loan of UA 53.59 million to finance the Awoshie-Pokuase Road and Community Development project in Ghana

• ADF loan of UA 14 million to finance Bamako Digital Complex Support project in Mali• Railway Infrastructure Development in East Africa – AfDB USD 40 million for Rift Valley

Railways, total financing USD 165 million (IFC, KfW, Equity Bank of Kenya)• ADB loan of USD 265 million and a CTF (Clean Technology Fund) loan of USD 100

million to finance ESKOM Renewable Energy project in South Africa • Private sector loan of USD 1 billion to TRANSNET to finance the capitalised maintenance

plan part of the 5 year investment program in South Africa• ADB loan of EUR 137.34 million to finance the Gabes-Medenine-Ras Jedir Highway

construction project in Tunisia (connection to Libya)• ADF loan of UA 15 million to finance the Alternative learning and Skills development

project in Tanzania• ADF loan/grant of UA 26 million to finance the Support to Higher education, science and

technology (HEST) project in Malawi• ADF loan of UA 53.59 million to finance the Awoshie-Pokuase road and community

development project in Ghana • Inga Hydroelectric Development project in DRC – ongoing

Opportunities in the Region

• Environment and Energy – Comprehensive waste management

systems, water and sanitation– Use of renewable energies is

increasing (many solar and wind energy projects)

– Energy efficiency

• Agriculture and Forestry– Developing agro-industry (machinery,

irrigation systems)– Improving the quality of cereals,

increasing the use of oat in the feed and food industries

– Sustainable forest management

• ICT– Outsourcing (– educated labour, good

location, reasonable price level)– Increase of mobile- and e-

applications (payment services, e-health, e-learning, e-government)

– Improving telecommunication networks

• Health care– Medical equipment (especially public

hospitals)– Telemedicine– Biotechnology (Tunisia, cooperation

with Technopark of Sidi Thabet)– Health tourism– Pharmaceuticals

• Education– Vocational training, higher

education– Innovation, R &D (North Africa:Tunisia

as regional leader)

• Infrastructure– Construction (hotels, business

premises, housing)– Roads, railways, ports, airports

India

Geographic Concentration of Industries and its AncillariesServices sector is more wide spread and caters across the states

Engineering

Power

Sugar

Chemicals and Fertilizers

Automobiles and Auto Components

Metals and Minerals

Textiles and Leather

Pharmaceuticals

Biotechnology

IT, ITES and Electronics

Agro, Food and Diary Based

Petrochemicals, Oil & Gas

India

• India is the second-most attractive destination for FDI in the world ( as per UNCTAD’s World Investment Prospects Survey 2010-12, Doing Business in India by E&Y)

• The strongest labour market is anticipated in the Services sector, where employers report a Net Employment Outlook of +59 per cent ( the strong sectors are Finance, Insurance, Retail , Transportation & Utility services & Information Technology )

• Indian export sector is moving towards a services led export industry– Even though the GDP fluctuated downward from the predictions,

service sector performance was consistent, current growth rate is 9.6% (2011)

– the growth rate of IT-service export growth is expected to be 19.5%

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Composition of GDP:

Services – 56.9%Industry – 28.5%Agriculture – 14.6%

Major Sectors attracting Highest FDI Inflows:

•Services Sector, •Computer Software & Hardware, Telecommunications, •Housing and Real Estate, •Construction Activities, and•Automobile

• 7th largest country geographically – .28 million sq. Km

• 2nd most populous country – 1.19 billion people

• 11th largest economy – USD 1.43 trillion GDP (IMF)

• One of the largest labour forces – 467 million

• One of the largest middleclass population – more than 300 million

• 8th highest Industrial production growth rate – 9.3%

Service Sector Overview

Services Sector Classification• Group – I

– Public administration, Defence

– Retail Trade

– Transports & Storage

– Wholesale Trade

• Group – II– Education

– Health, Social Work

– Hotels & Restaurants

– Other Community, Social & Personal Services

• Group –III– Posts & Communication

– Computer Services

– Financial Intermediation

– Legal, Technical, Advertising

– Other Business Activities

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• Indian export sector is moving towards a services led export industry– Even though the GDP fluctuated downward from the

predictions, service sector performance was consistent, current growth rate is 9.6% (2011)

– the growth rate of service export growth is expected to be 19.5% for IT – BPO services,

– 18.5% for exports and 22.8% for domestic IT related services for the same period

• Top performing sub sectors• Education• Transportation• Real estate & Urban Infrastructure • Retail • Heath care• Tourism• Financial & Banking• Communication & Information

• Other related sectors• Information Technology • Hospitality• Manufacturing

Priority Services Sub-sectorTrends & Opportunities (1/2)

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Education

Largest capitalized space in India with USD 30bn of government spend (3.7% of GDP) Private education is currently estimated at USD 50bn (14% CAGR over FY08-FY12E); expected to reach USD 115bn in the next 10 years 100% FDI allowed through the automatic route,Future potential is high due to

Massive shortfall on the supply side Emerging segments: learning solutions

through high end technology

Education

Largest capitalized space in India with USD 30bn of government spend (3.7% of GDP) Private education is currently estimated at USD 50bn (14% CAGR over FY08-FY12E); expected to reach USD 115bn in the next 10 years 100% FDI allowed through the automatic route,Future potential is high due to

Massive shortfall on the supply side Emerging segments: learning solutions

through high end technology

Retail

Organized retail has grown from USD 2bn in 2002 to USD 37bn today – total size USD 350bn Investments in the range of USD 30+ bn expected by 2011 in Retail and Supply Chain Size of organized retail likely to touch USD 70 bn Over 850K direct jobs to be created in Retail in the next 5 years

Retail

Organized retail has grown from USD 2bn in 2002 to USD 37bn today – total size USD 350bn Investments in the range of USD 30+ bn expected by 2011 in Retail and Supply Chain Size of organized retail likely to touch USD 70 bn Over 850K direct jobs to be created in Retail in the next 5 years

RetailSupply Chain

Logistics and supply chain infrastructure Know how and logistics techniques

Information Technology Communication, collaboration with suppliers,

efficient supply chain management Manpower

Tie-ups with universities ,dedicated retail institutes

Utilize experience of international retailers to train local talent

RetailSupply Chain

Logistics and supply chain infrastructure Know how and logistics techniques

Information Technology Communication, collaboration with suppliers,

efficient supply chain management Manpower

Tie-ups with universities ,dedicated retail institutes

Utilize experience of international retailers to train local talent

Education

School Solutions: content delivery, carrier orientation etcTechnology solutions: ICT, Multimedia aids, ERP & IT management, Accounting record management etcTeaching, assessment & marketing solutionsInfrastructure services and consultingSkill developmentR&D

Education

School Solutions: content delivery, carrier orientation etcTechnology solutions: ICT, Multimedia aids, ERP & IT management, Accounting record management etcTeaching, assessment & marketing solutionsInfrastructure services and consultingSkill developmentR&D

Trends Opportunities

Priority Services Sub-sectorTrends & Opportunities (2/2)

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Transportation

•Caters to 1.1bn population, contributes approx 6% to GDP, worth USD 3.48bn •Enhancing sector capacity & improving efficiency through policy directives•Increased public funding in India’s 5-year plans and Urban renewal programs

Transportation

•Caters to 1.1bn population, contributes approx 6% to GDP, worth USD 3.48bn •Enhancing sector capacity & improving efficiency through policy directives•Increased public funding in India’s 5-year plans and Urban renewal programs

Building Solutions

•Real estate contributes about 5% to GDP•The total revenue generated in 2010-11 stood at USD 66.8bn •Urban population has been increasing and is expected to cross 590mn by 2030•With a footprint of 888mn sq.ft, Green Building technology, materials & services estimated at USD 100bn by 2013

Building Solutions

•Real estate contributes about 5% to GDP•The total revenue generated in 2010-11 stood at USD 66.8bn •Urban population has been increasing and is expected to cross 590mn by 2030•With a footprint of 888mn sq.ft, Green Building technology, materials & services estimated at USD 100bn by 2013

Building Solutions

Architectural and engineering services for high-rise structures, theme parks & hotels

LEED Facilitation services & Energy Simulation

Urban planning and design Other niche architectural services &

energy efficiency consultancies

Building Solutions

Architectural and engineering services for high-rise structures, theme parks & hotels

LEED Facilitation services & Energy Simulation

Urban planning and design Other niche architectural services &

energy efficiency consultancies

Transportation

Creating infrastructure for Intelligent Transport SystemsR&D activities & application of scientific technologies & toolsReal time integration services Urban Transportation Infrastructure ManagementCongestion management & Road safety

Transportation

Creating infrastructure for Intelligent Transport SystemsR&D activities & application of scientific technologies & toolsReal time integration services Urban Transportation Infrastructure ManagementCongestion management & Road safety

Trends Opportunities

Examples from India

• IL&FS Skills – The Skills Initiatives Group within IL&FS Education catalyses, facilitates and manages large scale, demand-driven skills training and placement programs, to connect industries in need of skilled workers with trained personnel and to address employability issues in both Private and Public Sectors

– IL&FS Skills Development Corporation (ISDC) is a joint venture between IL&FS and the NSDC (National Skill Development Corporation), established with an objective to build and manage 100 multi skill schools across India. It offers

• Vocational training through community colleges• Innovative placement linked programs• Industry driven training modules• Interactive training sessions through K-Yan technology, a community-learning device

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• IBM launches “Centre of Excellence” for smarter commerce at the India Software Lab, Bangalore to offer solutions to automate and accelerate the purchasing, marketing, sales and customer service functions to organisations across India, South Asia and Asia Pacific

• Mobile ad network, Vserv.mobi, a leading mobile ad network, mobile advertising and publishing network for mobile developers, publishers and advertisers is planning to target the global emerging markets for growth

• The Institute of Public Enterprise, (IPE) in association with the U21Global (an online Graduate School that offers postgraduate programs) have signed a MoU to launch their new online, short-term Joint Executive Education Program in the eLearning mode

• Global hospitality major Marriott is reckoning big on India and Asia for its growth and has made huge plans for the hospitality sector

Middle East

Services in Middle East

There is an education drive to bring the population to the current demands of the job market (also because of industry diversification)

Banking and insurance sectors have been opened up for foreign operators

IT: telecom and internet grids will be extended. There is a need for operators providing new services and content

Demand for software development As there are an increasing number of elderly people, there will

be a great need for health-care, welfare, and other life-science services

Priority Services Sub-sectorTrends & Opportunities – Saudi figures as an example

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Education

Huge spending on education to boost knowledge-based economy.Saudi Arabia is exerting continuous efforts aimed at realizing a knowledge-based economy as it sees this as the best strategy toward achieving sustained development based on technology and innovation$45 bn of the 2012 budget, representing about 24% of the total spending, allocated to education and training

Education

Huge spending on education to boost knowledge-based economy.Saudi Arabia is exerting continuous efforts aimed at realizing a knowledge-based economy as it sees this as the best strategy toward achieving sustained development based on technology and innovation$45 bn of the 2012 budget, representing about 24% of the total spending, allocated to education and training

Life Science / Health Care

Leads health care expenditure in GCC Has the largest health infrastructure with 408 hospitals and an estimated 55,932 bedsExpected that the health care market in the Kingdom will expand at a compound annual growth rate of 12 percent to $25.7 bn in 2015.

Life Science / Health Care

Leads health care expenditure in GCC Has the largest health infrastructure with 408 hospitals and an estimated 55,932 bedsExpected that the health care market in the Kingdom will expand at a compound annual growth rate of 12 percent to $25.7 bn in 2015.

Life Science / Health Care

High incidence of lifestyle diseases including obesity, diabetes, and cardiovascular diseases.Spending on pharmaceuticals, hospital services and medical devices will increase considerably in the future.Planned to build medical colleges and hospitals at all government universities in the country.Continues to lead an important role in managing local health issues, such as obesity and diabetes, which need enhanced methods of detection, prevention and care, especially in terms of patient health information management

Life Science / Health Care

High incidence of lifestyle diseases including obesity, diabetes, and cardiovascular diseases.Spending on pharmaceuticals, hospital services and medical devices will increase considerably in the future.Planned to build medical colleges and hospitals at all government universities in the country.Continues to lead an important role in managing local health issues, such as obesity and diabetes, which need enhanced methods of detection, prevention and care, especially in terms of patient health information management

Education

Plans to build 742 new schools in addition to the 2,900 already under construction, and 2,000 existing schools will be refurbished. Support the establishment of an electronic college and 40 new collegesDevelopment existing universitiesIncrease in the number of scholarship programs that allow Saudi students to study abroad

Education

Plans to build 742 new schools in addition to the 2,900 already under construction, and 2,000 existing schools will be refurbished. Support the establishment of an electronic college and 40 new collegesDevelopment existing universitiesIncrease in the number of scholarship programs that allow Saudi students to study abroad

Trends Opportunities

Priority Services Sub-sectorTrends & Opportunities (2/2) – all countries

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Energy and Water

Multi billion US$ projects in Oil & Gas, Power & Water, Desalination Projects

Energy and Water

Multi billion US$ projects in Oil & Gas, Power & Water, Desalination Projects

Building Solutions

Multi billion US$ projects in Transport Infrastructures, Railways, Economic Cities, Real State, Medical Cities, Hospitals, shopping malls and educational facilities

Building Solutions

Multi billion US$ projects in Transport Infrastructures, Railways, Economic Cities, Real State, Medical Cities, Hospitals, shopping malls and educational facilities

Building Solutions

Proven innovative technology & Know-How for sustainable solutionsConsulting Services > City planning – Architectural - Interior design, Consulting & supply (strong local presence is necessary to do this)Building & Facility Management Systems, Intelligent buildings and smart network solutions (for coming & future projects, strong advance local presence is necessary)Rail construction, services & maintenance solutions.Tunnel & Bridge construction solutionsAdvanced Waste Collection & management systemsPower & water saving & optimization systems

Building Solutions

Proven innovative technology & Know-How for sustainable solutionsConsulting Services > City planning – Architectural - Interior design, Consulting & supply (strong local presence is necessary to do this)Building & Facility Management Systems, Intelligent buildings and smart network solutions (for coming & future projects, strong advance local presence is necessary)Rail construction, services & maintenance solutions.Tunnel & Bridge construction solutionsAdvanced Waste Collection & management systemsPower & water saving & optimization systems

Energy and Water

Power & water generation, transmission and distribution operation and maintenance & optimization solutionsSpecialized Engineering Technology for oil & gasDistrict cooling solutions & materials for new projectsMeasurement, leakage control, power & water saving and optimization solutions and equipment for water & electricity distribution to new cities / projects Water & Waste Water treatment and recycling solutions

Energy and Water

Power & water generation, transmission and distribution operation and maintenance & optimization solutionsSpecialized Engineering Technology for oil & gasDistrict cooling solutions & materials for new projectsMeasurement, leakage control, power & water saving and optimization solutions and equipment for water & electricity distribution to new cities / projects Water & Waste Water treatment and recycling solutions

Trends Opportunities

Services in Middle East

ICT IT sector grown by over 10% annually

(Telecom, e-Commerce & Government, Banking, Insurance, Health IT, Data Security) Quality Control, [Industry / Food], Medical applications, Surveillance & Security

Health & Well Care New technologies, Management, Diagnostics, Diabetes control, Rehabilitation, Equipment

Food Functional Food Products & technology development 40 million people high income market – retail services / design and planning of malls More hyper markets are opening across the region – membership programs, ecommerce

Mining Multi billion US$ mining and refining projects – outsources services Mining equipment, services & technology for over 500 million tons of Gold, Phosphate, Bauxite,

Iron, Copper, Zinc

Oil, Gas, Petrochemical Industry Multi billion US$ investments and projects – expertise and consulting Supporting equipment and services like, Boiler plants, Burners, Security, etc services

Transport & Logistics Multi billion US$ port, airport, railways, metro road, etc. projects for transport & logistics related

equipment & services – planning, design, consulting

Examples from Middle East

Saudi Arabia Kingdom will spend an estimated $400 billion (SR1.5 trillion) on large infrastructure

projects over the next five years US$ 67bn housing projects, building of 500,000 low costs houses by 2014. Covering only 25%

of demand Contract for the Phase II of high-speed Haramain railway project (US$ 10bn) has been awarded

to the Al-Shoula consortium. Scope is to supply rolling stock for a high-speed rail line, electrifications services, signaling and telecoms networks.

Saudi Arabia and United Arab Emirates launched high-speed mobile broadband/LTE technology. Consumers are hungry for data turn to 4G devices.

Security Forces Medical cities contract, US$ 6.7bn. will be awarded soon. ABV rock group & Binladin contractors are frontrunners

UAE The Khalifa Industrial Zone and Port – 417 Sqkm for manufacturing, industries and logistics by 2030 Metro – 131 km coverage within the city by 2016 - 2017 100 new schools by 2018 14 new health care facilities (incl. e.g. 4 new public hospitals) US$272 billion investment in infrastructure projects 2011-2016 Will launch tenders for the second stage of its AED40bn (US$10.89bn) national railway system project

Examples from Middle East

Kuwait 108 billion US$ 4 year (2011-2014) development plan approved

The plan includes lots of Mega Projects such as new business hub (Silk City) US$ 77bn, Major container harbor, 25km causeway, railway and metro systems, building facilities for leisure, sport and media sanctuary

The US$25bn GCC rail network project is expected to be tendered this year with development to begin in Kuwait.

Development projects for Bubiyan Island and Mubarak Sea Port, Failakah Island (lot of construction activities re. roads, bridge, port, residential, hotels, etc.)

Qatar New Doha internatíonal airport 11 Billion US$ Barwa Al Khor City 8 Billion US$ Qatar – Bahrain causeway 4 Billion US$

Iran / Iraq Iraq is in the early stages of a large scale reconstruction effort of its entire infrastructure valued at 150

billion US$. The population of Iraq will reach 40 million in 2025 and 2 million additional new housing units are needed

by 2015. In Iran domestic demand for software development has been estimated to grow from its current level of

about US$2bn per year to about US$10bn over the next five-year

If you are looking for a Silver Bullet -

Courage to Decide and Assistance to Execute

Oskar Rautiainen+358 (0)40 500 9215oskar.rautiainen@finpro.fi