World Report

Khaled A. Al-Bisher, Vice-Chairman and Managing Director of Tijara:

“We believe in diversification.”

First of all, I welcome you on behalf of our Chairman and the Board of Directors. Let me give you some information about Tijara & Real Estate Investment Company, which was renamed in March 2004. Our share capital is of KD 38.50 Million, equivalent to US $ 132 Million. Since joining the company in 1999, my main focus was how to improve the weak sectors and to define new strategies for company. Until then, the company faced its hardships but later on, after the induction of new management, it showed an impressive overall growth. The management turnaround delivered the best results, a testimony to the determination of the management to work for the betterment of the company.

Management has always stressed on the policy of minimizing risk and maximizing return. In order to achieve that, our operations are diversified in terms of geographical and asset allocation. It means that allocations of assets are not only limited to a local area, but we also have our presence in regional and international markets in the Real Estate and Investment Sectors. That's why, when there was panic during US led war on Iraq, we were very comfortable. Thanks to the diversification of our assets.

Concerning our business in the Real Estate and Investment sector, these are diversified themselves with a combination of different nature of investments with different goals and maturity. In real estate, we have residential, commercial, resorts and industrial (self storage and warehouse storage) investments. We were the first Real Estate Company to own 878 plots of land, valuing KD 50 Million (=US $ 150 Million) in one piece in Al Shuhada in the year 2000. Our company restructured and redesigned the whole land, made it suitable for residential purpose and sold it to private sector later on. This is one innovative example of our company to resolve the housing problem of Kuwait.

Similarly, we have now completed a big real estate project in Jabriya named as "Al Zain", which has a total 80 residential units. After the "Al Zain" completion, we are currently constructing our ambitious project of Mahbola named as Mermaid. Mermaid is based on the sea front location and designed in a very special way so as to have sea view from each unit.

Addition to such factor, each unit has its own garden, its own car parking space in front of villa, with the facility for cars to move to any floor by road or by car elevator and many other facilities like Internet, Gym, Play rooms etc. Our projects meet the demand and this clearly shows that we do play an important role in country's development and uplifting. We believe that it is our duty to act more sincerely and responsibly for the country's economic growth.

Apart from the local market, we also have a real estate project in United Kingdom, at Vicarage Gate, close to Hyde Park valuing at £ 60 Million. It is also a unique residential project as it is located in centre of London.

From time to time, we do our own search for new projects and we have two future plans in pipeline, one for a commercial building and the other to construct a hotel on the Gulf Road in Kuwait. It will be a different concept of Hotel and Restaurant and design for such projects are already outlined and very soon we will start working on that.

In this competing market where we respect all other companies, I must say that at the end of the day it is not the number of buildings or projects in your business which counts, but rather the value-added projects for the benefit of country and company's shareholders wealth. We are also interested in BOT projects and we will announce our BOT projects soon in 2005.

As far as economy of Kuwait is concerned, we do appreciate all efforts from the Prime Minister H.H. Shiekh Sabah Al Ahmad Al Sabah. The plans and steps taken by the government to open the Kuwaiti Market for private players in all sectors will increase GDP growth and bring fair competition to market in future. Economy of Kuwait will become stronger because of Iraq factor also as I believe that many companies will soon start their operations once it becomes stable.

Is entering Iraq part of Tijara's plans?
Not at this stage, where Iraq is facing instability in economic sense. We believe that within 3 to 5 years, there will be more favorable environment for investments. Further due to limited market size of Kuwait, we think that many corporate will move to Iraq for their expansion, as we will. Last week, I was in Bahrain, where I met with the personnel of a group of companies from US and UK, who opines the same but looking for right time to enter Iraq.

We recently met with Dr. Al-Barrak, the Director General of MTC, and he shared his 3x3x3 vision for MTC, taking his company from regional to international to global. Is this a strategy you would like for Tijara?
Tijara and MTC operate in different segments of the industry. Tijara has made a presence abroad for a long time now and we already have our allies in US and UK. Moreover, our investments abroad are not limited to real estate only, as we have investments in Medical, Sports Equipment, Aviation, Telecommunications, Islamic bonds and Warehousing industry. Combining all these together give us an edge over risk due to diversification. Hence, any downward change the in real estate industry will not leave any great impact on us due to our other portfolio investments, which redefine our strategy to minimize risk by diversification.

Regarding the change of name from Tuhama to Tijara, does this symbolise a new business philosophy for the company?
The company had already changed its strategy and vision by 2000. The shareholders and Board of Directors decided to change the name in light of our strategies and expansion of our business, focusing both on real estate and investment sectors. In 1999, when the turnaround of management took place, the company was having a loss of KD 600,000 and from the year 2000 onward, we did not look back. The year 2004, was the another landmark in our success journey as we matched our shareholders expectations and rewarded them with dividends and as I said, the company strengths and abilities are self spoken by its figures.

Moreover, our company has also been awarded ISO quality certificate and we are also rated A3 for short term and BBB- for long term by "Capital Intelligence", a world leading rating agency for banking and investment companies. This again shows our strength to achieve our long term growth and short term capabilities to meet any undesirable situations.

You said before that the standard of the real estate market in Kuwait does not accurately reflect the income level of this country. Do you think that this is due to the Iraqi situation and that people do not want to invest too much in Kuwait wondering what might happen? If that is true, do you think that Kuwait is going to enter a new golden era in terms of high-end real estate development?
Regarding Real Estate in Kuwait, we have witnessed an increase in activities. A few of the major contributing factors for increase in real estate activities are a low interest rate regime, inflow of UN compensation, the increase faith in Kuwait's economy after Saddam's fall, the economic scenario after the September 11 attacks, the fall of US $ and returns on them, high demand for infrastructure projects, rising population, municipality approval for more area of construction and the allocation of housing loan from government to married individuals.

We have always played a positive role in solving the demand and supply problems for housing. For example our Jabriya project, which is getting its last touch, has already brought us the potential customers at our door. Similarly, we are confident enough that there will be no delay in selling our other projects in the future, once they finish as we will continue working to bridge the gap of demand and supply for housing and commercial sector.

Although, investment opportunities in US market may have decreased after the September 11 attacks, our investments remained as we have long term planning for them. We will keep investing in US market.

You have certain standards for the company and you are not just building one project after the other. You keep this philosophy in the region and in the UK. In that respect, do you see Tijara as some kind of real estate Kuwaiti ambassador in the UK or in the region?
We are building high standard unique developments to reflect Kuwait's expertise and image internationally. We want to use high-technology in terms of creativity & design and also bring an international aspect to Kuwait. The Mahboula project for instance is not necessarily for Kuwaitis only as we believe there are high net worth foreigners, to whom we want to cater this higher standard units.

But when we talk about United Kingdom, our investments in UK are the part of our strategy to diversify our business. We believe that bringing know-how from the US and the UK markets to Kuwait is healthy and beneficial.

What was the most significant element in the management turnaround that took place in 1999?
There was a change of thought. The reform of the company was very successful, quickly obtaining ISO and Capital Intelligent awards. The success of the company over the past 4 years makes Tijara one of the leading companies in Kuwait. We have almost completed the procedure of Listing on Kuwait Stock Exchange and in September 2005, Tijara will be traded on market floor. Such event will provide better access for people to know more about our strengths and abilities.

What has your strongest contribution been in the turnaround of the company?
I think the combination of the right thinking and the right people who have a vision and sense of responsibility always makes the difference. I am of true belief that determination, an urge to resolve issue and the thought to enhance and preserve the values of company are the three most important factors for the success. If you do not have these, you will not benefit. Apart from all these, the support from the Board and the shareholders is very crucial.

What is your vision for your company? Where do you want to take it?
We consider ourselves as one of the leading real estate and investment companies in Kuwait. I believe in the diversification of the company's investments and we will continue undertaking projects also in other countries. We have 3 or 4 projects in the pipeline including BOT projects with international firms.

What is your final message to the politicians, opinion leaders and businessmen who will read this report?
I encourage businessmen and investment companies to come to Kuwait and invest here as I personally believe that Kuwait played a crucial role for Gulf economy before Gulf War I and even today due to its location. Kuwait can be economic and financial centre of the region. In the recent developments of the region Kuwait has emerged as more secure nation and after the political reforms initiated by His Highness Sheikh Jaber Al Ahmed Al Sabah, Kuwait's economy is shaping to grow fast with stable outlook. Moreover the economy, which is going to open for private players soon, has huge potential and the country has the enormous capabilities and the opportunities for foreign companies. Recently, most international companies are visiting Kuwait and we have already seen a lot of movements in this regard here.

Thank you for your comments.