Business

DUBAI — Dubai's Emaar Properties  plans to build a new tower in the emirate to surpass the Burj Khalifa, currently the world's tallest building, Chairman Mohammed Alabbar told reporters on Sunday.

The new project comes as Dubai developers continue to announce new schemes despite a softening real estate sector, with the Emaar-built Burj Khalifa expected to be usurped by a tower currently under construction in Saudi Arabia.

Alabbar would not confirm the height of the proposed new tower, saying only that it would be "a notch" taller than the Burj Khalifa, which stands at more than 828 metres.

Supported by a matrix of cables, the futuristic tower will anchor the redevelopment of the Dubai Creek, the heart of old Dubai where traditional dhow boats continue to ferry goods.

The tower, designed by Spanish-Swiss neo-futuristic architect Santiago Calatrava Valls, is slated to have a rooftop courtyard, residential units and a link to a retail plaza.

The building is expected to be completed for the Dubai Expo trade fair in 2020, the same year that the kilometre-high Kingdom Tower in Jeddah is due to overtake the Burj Khalifa as the world's tallest building.

Funding for the $1 billion project will be 50 per cent equity and 50 per cent debt, Alabbar indicated, undeterred by a residential property market that consultancy Cluttons says has softened for at least five quarters.

The balance between supply and demand is very encouraging, Alabbar remarked. He declined to give figures, but said: "I don't see a pullback. We are doing better than 2015.”

CAIRO — Egypt will reduce spending on fuel subsidies by nearly 43 per cent in the 2016/17 budget due mainly to lower global energy costs, officials said on Saturday.

Finance Minister Amr Al Garhy told a news conference state energy subsidies would fall to 35 billion Egyptian pounds ($3.94 billion) from about 61 billion pounds in the 2015/16 budget.

Consumers reacted angrily when the government cut spending on energy subsidies in mid-2014, a measure that caused domestic prices of natural gas, diesel and other fuels to rise by as much as 78 per cent. They were reduced again in the current budget.

However, the deputy finance minister for fiscal policy said a decline in international oil prices would account for the bulk of the reduced subsidy spending in the next fiscal year.

"Most of the savings in petroleum product subsidies will be a result of lower global oil prices," the deputy minister, Ahmed Kojak, told Reuters.

"There is also a saving of about 8-10 billion [Egyptian] pounds that will come as a result of new reforms that the petroleum ministry will outline in agreement with us," he added.

Egypt is struggling to revive its economy since a popular uprising in 2011 shook investor confidence and drove tourists and foreign investors away. Its foreign currency reserves stood at $16.56 billion in March, down from about $36 billion in 2011.

The government has been trying to cut subsidies, which eat up a big chunk of the budget.

President Abdul Fattah Al Sisi has approved a draft state budget that reduces the budget deficit in the 2016/17 fiscal year to 9.8 per cent of gross domestic product (GDP) from the current 11.5 per cent.

Separately, Egypt is confident of luring back millions of foreign visitors and putting a smile on their faces, according to its new tourism minister, despite heavy first quarter losses and setbacks including a bomb that brought down a Russian passenger plane.

Yehia Rashed said the ancient land of the pyramids and Red Sea resorts was determined to secure a strong recovery even though the number of foreign tourists fell by 40 per cent in the first quarter of 2016, compared with the same period last year.

The most populous Arab nation aims to attract 12 million tourists by the end of 2017 with a six-point plan, he added.

"I am very hopeful, optimistic about the future of tourism into Egypt," Rashed told Reuters in an interview. "I want to get that smile that you are smiling into the faces of everybody. We want to stay positive."

Egypt tourism revenue has taken a heavy hit since a Russian plane crashed in the Sinai last October, killing all 224 people on board in what President Sisi called an act of terrorism. 

Rashed assured that Egypt had improved airport security since the crash. 

"These people have worked day and night," he stressed. "Egypt is safe."

The torture of Italian graduate student Giulio Regeni, whose body was dumped on the side of a road in February, has also hurt Egypt's image.

"We care big time about human rights. The best way, actually, is to create positive vibes in the mind of people that Egypt is safe and it is worth visiting," he said.

Hurting earner

Egypt's tourism industry, a cornerstone of the economy and critical source of hard currency, has been struggling to rebound after the political and economic upheaval triggered by the 2011 uprising.

More than 14.7 million tourists visited Egypt in 2010, dropping to 9.8 million in 2011.

"The first quarter is down about 40 per cent compared to last year. However, there is a positive with every negative. The Gulf business is up about 45 per cent from last year," Rashed indicated.

Egyptian tourism has survived hard times in the past.

In 1997 militants killed tourists at a temple in Luxor, on the Nile.

Rashed seemed optimistic. He said the new six-point plan to boost tourism would include increasing the presence of national carrier EgyptAir abroad, working with low-cost airlines and the improvement of services.

Asked how the state would fund these projects, he said:

"We are not doing new things what we are doing is stimulation programmes. Taking from the current funding and putting it into where our bread and butter is," Rashed explained. "We don't have the figures of the total cost of this. We are currently working on the costing." 

LONDON/BEIJING — Britain asked China on Saturday to hurry up in tackling overcapacity in its steel industry, hoping to stem the flood of cheap imports into Europe which India's Tata Steel has blamed for its decision to pull out of the United Kingdom, putting 15,000 jobs at risk.

Tata put its entire UK business up for sale last month, including its flagship production plant at Port Talbot in south Wales, saying it could no longer endure mounting losses caused by increased imports to Europe from countries like China, high manufacturing costs and domestic market weakness.

"I urged China to accelerate its efforts to reduce levels of steel production," Britain's Foreign Secretary Philip Hammond said in a statement issued after he met with his Chinese counterpart Wang Yi in Beijing.

"The UK's focus is on finding a long-term sustainable future for steelmaking at Port Talbot and across the UK and I welcomed the potential interest of Chinese companies in investment in UK steelmaking," Hammond added.

The global steel industry is suffering from overcapacity as a slowdown in growth in the Chinese economy has reduced domestic demand.

China, which produces half of the world's steel, as well as Russia have responded by diverting more of their output to markets like Europe, sending prices plummeting.

The European Union opened three anti-dumping investigations into Chinese steel products in February and imposed new duties on imports after the European steel industry said thousands of jobs were at stake.

China said earlier on Saturday that plans to shut steel mills over the next five years would cut capacity to an estimated 1.13 billion tonnes by 2020, which is still far in excess of the country's needs.

Britain said last week that UK steel producers must be considered for infrastructure and other government contracts involving steel supplies, as part of plans to find a long-term solution to a crisis in the industry.

As the government looks for ways to support domestic steel producers, Prime Minister David Cameron said there was no guarantee of a buyer for Britain's biggest steel producer, and that a state takeover was not the answer.

Under its support measures, the government will create an approved supplier list for steel companies wanting to bid for public sector projects, such as Britain's £55 million ($78.25 million) high-speed rail link, which will need 2 million tonnes of steel.

"By changing the procurement rules on these major infrastructure projects we are backing the future of UK steel — opening up significant opportunities for UK suppliers and allowing them to compete more effectively with international companies," Business Secretary SajidJavid said in a statement.

The introduction of measures to ensure British steelmakers are considered for government contracts could take six to nine months, a spokeswoman for Javid's department said.

The government has faced criticism over its response to Tata's decision to sell its UK plant in south Wales, which employs 15,000, with opposition politicians saying it was "asleep at the wheel".

The government has said it is working to broker a deal with potential buyers.

Liberty House Group, which produces steel in Britain, has begun talks with the government over a potential partnership but does not want to buy all of Tata's UK operations, its Executive Chairman Sanjeev Gupta was quoted as saying by the Sunday Telegraph.

Javid told the BBC he would not talk about specific offers but said he wanted to find a buyer for the whole business and the government would engage with any willing and serious buyer.

He added that the government was looking at how it could help with issues such as Tata's pension burden and costly energy supplies.

"These are the kind of things we have already thought of, we have already started working on and what I hope is that you will have the offer document from Tata, overlay on top of the help the British government can provide and then you have the makings of a successful deal," he elaborated.

Cheap Chinese imports have hit Britain's steel industry. Britain imported 826,000 tonnes of Chinese steel in 2015, up from 361,000 two years earlier, according to the International Steel Statistic bureau.

Cameron has said he wants Britain and China to work together to tackle overcapacity in steel. 

Last month, however, China imposed anti-dumping duties of up to 46 per cent on specialist steel products from Japan, South Korea and the European Union.

WASHINGTON — The International Monetary Fund (IMF) offered a solution to persistently sluggish economic growth last week that included proposals to deregulate product markets and adopt policies to boost labour market participation.

But the analysis in the IMF's annual World Economic Outlook acknowledged arguments from sceptics of such "supply side" reforms that deregulation can cause near-term falls in wages and price deflation and so need to be accompanied by fiscal stimulus aimed at boosting near term.

The IMF said new research shows that structural changes to labour makets and some more heavily regulated business sectors could help lift potential output over the medium term while also helping to strengthen consumer confidence in the near term.

It recommended deregulation of the retail and professional services sectors and network-based sectors such as air, rail and road transportation, electricity and gas distribution, telecom and postal services, particularly in the eurozone and Japan.

But the fund stressed that it is important to pair supply side reforms with fiscal stimulus measures to boost near-term demand and cushion negative shocks. For example, reductions in unemployment benefits and worker protection laws should be paired with reductions in labour taxes to help boost take-home pay and draw people back into the labour force.

"There is a role for complementing structural reform with macroeconomic policy support. That includes fiscal stimulus wherever space is available," said IMF researcher Romain Duval, a lead author of the report.

Duval and co-author Davide Furceri said that product market deregulation can start to pay growth dividends immediately regardless of the economic environment so they should be forcefully implemented. Economic growth can increase by one percentage point by the third year of the reforms, their research showed.

Another analytical chapter released by the IMF shows that emerging markets are coping better with recent capital outflows due to stronger reserve buffers, less foreign currency debt and more flexible exchange rates.

Those with more prudent fiscal policies, less public debt, stronger financial oversight, and foreign exchage flexibility are avoiding the abrupt currency shocks that characterissed previous major emerging market outflows in the late 1980s and late 1990s, the IMF concluded.    

Separately, a World Bank official said recently that concerns over competing countries scrambling for resources such as oil, minerals and farmland have decreased due to lower commodity and food prices.

High oil costs from 2007 to 2008 contributed to higher food prices and food riots in several developing nations including Haiti, Bangladesh and Mozambique.

But a reduction in petrol prices and other factors mean food prices are currently hovering around a seven-year low, providing relief for low-income consumers.

Prior to 2015, at the height of the commodities boom, sovereign wealth funds and large investors poured money into acquiring long-term access to mines and farmland.

Analysts said this scramble for natural resources disproportionately hurt the poor.

The situation has changed markedly since then, said World Bank official Michael Jarvis.

"I am not sure I see a scramble for resources," Jarvis, the bank's global lead for extractive governance, said in Toronto at a mining industry conference.

"Some of the debates around that have died down due to low commodity prices. But they may come back."

As part of what some analysts considered a rush for resources, an area of farmland larger than Poland was sold or leased to foreign investors, according to a 2014 Swedish study.

To avoid another round of large-scale land deals or fight for natural resources if commodity prices spike again, a coalition of 300 organisations launched a campaign last month to double the amount of land formally owned by communities and indigenous groups.

If demand for commodities rises in the face of a growing global population, formal landownership for small farmers provides protection against displacement by outside investors,  rights campaigners said.

AMMAN — The committee tasked with studying the establishment of a company to organise and administer exhibitions in the Kingdom in cooperation with the private sector exchanged views on the company's work mechanism, the Jordan Investment Commission (JIC) said Saturday.

JIC President Thabet Al Wir, who chaired the meeting, said the gathering discussed Jordan Chamber of Industry's demands to allocate a 100-dunum plot of land from the Treasury to establish a comprehensive city for exhibitions as followed in many countries. He also noted the JIC will take into consideration selecting a land serviced by infrastructure and easily accessible to guarantee the success of the project.

Wir said added that providing a land for fairs is an important strategic project that helps attract investments and promote national products, noting that JIC will cooperate with the private sector on the issue, especially that the Investment Law allows the commission to transfer some tasks to private institutions.  

BERN/GENEVA — Banking watchdogs across Europe have begun checking whether lenders have ties to a massive document leak from Panama that showed how offshore companies are used to stash clients' wealth.

Switzerland's financial watchdog FINMA said on Thursday that banks must clamp down on money laundering, as the Geneva prosecutor opened a criminal probe.

Four decades of documents from Panamanian law firm Mossack Fonseca, which specialises in setting up offshore companies and has offices in Zurich and Geneva, showed widespread use of those instruments by global banks and triggered investigations across the world.

"Do I think we are where we should be in fighting misuse in the financial system? No," FINMA Chief Executive Mark Branson told Reuters following its annual news conference.

"We think in some ways the risks in Switzerland have risen, not fallen, and that there is more that can be done. We don't want to see large scandals involving Swiss banks," he said.

Switzerland is the world's biggest international wealth management centre with around $2.5 trillion in assets and has taken on more wealth of late from emerging markets, from which it is harder to determine the origin of assets, Branson indicated.

Britain's Financial Conduct Authority said on Thursday it has written to 20 banks and other financial firms, giving them until April 15 to spell out any involvement they have with the "Panama Papers".

HSBC, Britain's biggest bank and its affiliates created more than 2,300 shell companies with Mossack Fonseca, according to the International Consortium of Investigative Journalists (ICIJ). HSBC has dismissed suggestions it used offshore structures to help clients cheat on their taxes.

Also on Thursday, France's ACPR financial regulator said it has told French banks to hand over extra information about their business ties with tax havens.

German regulator BaFin is likewise probing the role of Germany's banks, a source told Reuters on Monday.

Watchdogs in Sweden, Netherlands and Austria said earlier this week that they were looking into banks named in the papers.

The chief executive of Austria's Hypo Landesbank Vorarlberg became one of the first top bankers to quit over reports based on the data leak on Thursday, though he denies his bank violated any laws or sanctions.

Swiss banks

The "Panama Papers" investigation has exposed financial arrangements of public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine.

Branches of Swiss lenders including UBS and Credit Suisse were mentioned in the leaked documents as being among the main banks that requested offshore companies for clients. Both banks have denied wrongdoing in connection with the practice.

Swiss financial institutions, a focal point of efforts by European governments to crack down on tax avoidance, trailed only Hong Kong in having used Mossack Fonseca, the reports have said.

Branson said FINMA would first check for signs of illegal activity before deciding whether to launch an investigation linked to the Panama Papers. 

There were a few indications that they may be relevant in Switzerland, Branson added.

Geneva's prosecutor also said on Thursday he had launched a criminal inquiry in connection with leaks that revealed many offshore companies set up by lawyers, and institutions in the Swiss lakeside city and financial centre.

"Some information has been made public this week and the prosecutor's office wanted to verify if this information showed anything that was against the law," a spokesman for the prosecutor said.

One prominent Geneva lawyer helped set up 136 Panama offshore companies, Swiss television has reported.

"Yes, it is an industry with a legal dimension. I have been in this business for 30 years and this activity was sought after by foreign nationals. There is nothing illegal, illicit or perception of criminality to it," another Geneva lawyer, Francois Canonica, said on Swiss television on Wednesday night.

Canonica, a former head of the Geneva bar association, referred to a period after the 1981 election of French President Francois Mitterrand, which he said drove French fearful of nationalisation to place their money in offshore Swiss accounts.

Credit Suisse Chief Executive Officer Tidjane Thiam said on Tuesday his bank was after only lawful assets.

UBS said on Monday it conducted its business in full compliance with applicable law and regulations and that it had no interest in funds that are not taxed or derived from unlawful activities.

Branson said a number of Swiss banks were implicated in a corruption scandal surrounding Brazil's Petrobras and suspicious cash flows linked to the Malaysian sovereign fund 1MDB.

FINMA has launched four enforcement proceedings against institutions in the 1MDB case and three over Petrobras.

Branson said: "There are concrete indications that the measures those banks had in place to combat money laundering were inadequate."

Separately, Panama is fighting off a feared international crackdown on its pivotal finance sector, calling for talks to calm a worldwide storm sparked by revelations of its role in a mass of secretive offshore dealings.

The small Central American nation launched the fierce rearguard action after a huge leak of 11.5 million documents from Panamanian law firm Mossack Fonseca, the so-called Panama Papers, exposed the confidential dealings of world leaders, celebrities and sports stars.

The revelations have toppled Iceland's prime minister, led to a Swiss police raid on the headquarters of European football body UEFA, and prompted media allegations against the inner circles of both the Russian and Chinese presidents.

Faced by accusations that Panama has allowed the rich and powerful to hide their funds from international tax authorities and the law, President Juan Carlos Varela vowed to "confront whoever comes to put down Panama's image".

"I call on the countries of the Organisation for Economic Cooperation and Development to return to the table for dialogue and seek agreements, and to not use these events to affect Panama's image," said Varela, whose country depends on the finance sector for 7 per cent of its economic output.

'Unfair and discriminatory' 

There was no immediate reaction to Varela's comment from the Paris-based, 34-nation Organisation for Economic Coooperation and Development (OECD), which helps to coordinate the global fight against tax evasion.

Panama has already warned it could retaliate against France if it makes good on a promise to put the country back on France's blacklist of "tax havens" — a status that would cause transactions in Panama to be viewed as likely tax-dodging gambits.

The Panama government has also written a complaint to the head of the OECD, Angel Gurria, attacking a statement he made describing Panama as "the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities". 

Those accusations were false, "unfair and discriminatory" Deputy Foreign Minister Luis Miguel Hincapie wrote in the letter which was obtained by AFP.

The embattled world of football was the latest victim of the leaked papers, which were obtained from an anonymous source by German daily Sueddeutsche Zeitung and then shared with more than 100 media groups through the ICIJ.

KUWAIT CITY — Kuwait's state-run oil firm has signed contracts to import 2.5 million tonnes of liquefied natural gas (LNG) a year through 2020 to meet the emirate's needs, a company official said on Thursday.

Kuwait, a member of the Organisation of Petroleum Exporting Countries is rich in crude oil, but its natural gas production is too small to meet its needs, which surge during the heat of the summer when power consumption soars. Kuwait Petroleum Corp.

(KPC) signed contracts with British Petroleum and Royal Dutch Shell to buy 1 million tonnes a year from each company, its marketing chief, Nabil Buresli, told the official KUNA news agency. It signed a third contract with Qatar Gas to import half a million tonnes a year.

Buresli did not provide details of the value of the contracts. He said that after 2020, KPC plans to sign long-term contracts of up to 15 years to import 6-7 million tonnes of LNG a year. Kuwait last week inked a $2.93 billion contract with three South Korean firms for the construction of a new LNG import terminal that is due for completion in the first quarter of 2021.

ABU DHABI — Renewable energy capacity grew worldwide by a record 8.3 per cent in 2015, according to a report published on Thursday by a global green energy organisation. “As of the end of 2015, 1,985 gigawatts (GW) of renewable generation capacity existed globally,” the International Renewable Energy Agency (IRENA) said in a statement.

The report from the Abu Dhabi-based organisation described an increase of 152GW last year as “the highest annual growth rate on record,” with wind and solar energy driving the hike “due in large part to a continued decline in technology costs”.

“Renewable energy deployment continues to surge in markets around the globe,” said IRENA Director General Adnan Amin. “Falling costs for renewable energy technologies, and a host of economic, social and environmental drivers are favouring renewables over conventional power sources.”

Wind power capacity grew by 17 percent, or 63GW, “driven by declines in onshore turbine prices of up to 45 per cent since 2010”, the report indicated. Solar power capacity rose by 37 per cent, or 47GW, after prices of solar modules fell. However, hydropower capacity increased only by three per cent, while bioenergy and geothermal energy capacity increased by five per cent each.

LONDON — International firms are hunting for Western-educated Iranians to take on executive jobs in the Islamic Republic after the removal of most sanctions, but are finding it hard to win them over.

Interviews with Western companies and headhunters as well as more than 20 Iranians living abroad showed that expatriates are waiting to see how promised reforms progress before deciding whether to go back, despite lucrative job offers.

Many in the diaspora are put off by the poor quality of life and problems such as red tape, a murky business culture, security issues, pollution and a lack of international schools for their children. They are also concerned about their rights and protections under the Islamic Republic's judicial system.

Their reluctance is making life harder for conglomerates who need help to navigate Iran's complex business world, train the local workforce, and bridge a cultural and linguistic gap with affluent local consumers in the country of 80 million.

"This is the place where an expatriate who holds an MBA [master of business administration] and has the right entrepreneurial attitude can make a real impact. Yet there's never been a queue of expatriates applying for jobs here," Giuseppe Carella, the Iran country chief of Swiss food group Nestlé, said.

To nurture future managers, Nestlé sends local graduates overseas for several years, honing their skills away from Iran until they're ready to go back, Carella added.

Expatriates remain a tiny minority of the about 1,000 employees at the firm's subsidiary in Iran, 15 years after its launch.

President Hassan Rouhani met Iranian expatriates in New York last September and urged them to re-engage with Iran, weeks after Tehran agreed to curb its nuclear programme in exchange for the lifting of nuclear-related sanctions.

During a visit to Singapore last month, Foreign Minister Mohammad JavadZarif said Iranian nationals living abroad were "the best bridges for dialogue of cultures and civilisations".

Many misgivings

The Iranian diaspora is estimated by Iranian officials at between five and seven million people, mostly living in North America, Europe and the Gulf.

Some, like PanizGolkar, a 26-year-old dual national of Iran and Canada, are tempted to return.

"I feel it's my responsibility to go back. Iran needs professionals from all fields," said Golkar, who is due to finish her studies at the Southern California Institute of Architecture in April. 

"It will be challenging to prove myself as a woman in business but there are more career opportunities in Iran than anywhere else," she added. "A lot of Iranians in California are talking about moving back, it's an option we can't ignore." 

But there are many challenges to consider.

Some expatriates whose families left Iran before or soon after the 1979 revolution are skeptical about career prospects and worry that Tehran's refusal to recognise their dual citizenship status makes them vulnerable to arbitrary arrest.

Security forces have arrested some dual nationals who hold US and European passports in recent years on unspecified national security charges.

Others hesitate because of concerns over the bureaucratic regime, the lower standard of living in traffic-clogged Tehran and restrictions enforced by the "morality police" on Islamic dress and behaviour codes.

British-Iranian Ali Tehrani, 24, tried to relocate to Iran last October but was worn down by the challenge of securing permits and licenses and an exemption from military service, which in Iran is compulsory and lasts 24 months.

"I quickly realised I didn't have the skill sets to navigate the bureaucracy in Iran," he said.

A graduate of University College London who founded a human resources tech firm, KeyPursuit.com, he had hoped to launch an Internet start-up in Iran focusing on online payments. He abandoned the project after three months.

A 2016 survey of 230 cities by consultant Mercer ranked Tehran 203rd for quality of living, worse than Pakistan's Islamabad and Kenya's Nairobi.

Home to around 14 million people, Tehran's metropolitan area is often blanketed in smog and schools are frequently shut because air pollution keeps reaching alarming levels.

Several Iranians based in the Gulf told Reuters that Western firms wanted to recruit them as they don't trust the local workforce because of concerns about corruption and breaches of security and intellectual property rights.

"Loyalty remains one of the main issues when it comes to local staff," indicated a Tehran-based management consultant who requested anonymity. "Compensation is so low that people tend to have two or three different jobs, without any serious full-time commitment."

Iran ranked 130th out of 168 countries on Transparency International's 2015 Corruption Perceptions Index.

After watching many swings of the political pendulum in recent years, Iranians abroad also worry that the economic reforms led by President Rouhani may ultimately be blocked.

Rouhani wants to modernise the economy with the help of foreign investment and wealthy rich expatriates owning assets worth an estimated $2 trillion. Gains by allies in parliamentary elections are expected to help him push through the reforms.

But hardline allies of Supreme Leader Ayatollah Ali Khamenei that Western business delegations have failed to deliver any benefit to Iran's economy.

Competition to woo diaspora

Aware of expatriates' reservations, foreign firms are trying to woo Western residents with packages that can include high pay, family expenses and private school fees, and are billed as offering a faster career path than in the West.

A Western-educated Iranian can earn in excess of $15,000 a month, up to about $250,000 a year, in a senior executive role at a Western conglomerate in Iran, several headhunters and executives told Reuters.

For the same job at an Iranian firm, they said, locals would earn around $5,000 a month, up to about $100,000 a year.

This compares to a minimum monthly wage for local workers of $225, according to a 2015 study by Tehran-based consultancy REF Group.

Former science and technology minister Reza Faraji Dana indicated that in 2014 about 150,000 of Iran's "highly talented people" were leaving annually, costing the economy as much as $150 billion a year.

"For years Iran has had a brain-drain problem. Now people holding a Western degree can get high-profile jobs and move up through the ranks [in Iran] at a much faster pace than anywhere else," said Sarmad Afarinesh, an Austrian-educated Iranian whose Vienna-based company, Arhax Consulting, helps multinational firms enter Iran.

Consultants who cater to Western conglomerates seeking access to Iran, one business that is growing fast across all sectors, can earn up to $10,000 a month without relocating permanently, headhunters say.

Reza Joorabchi, a 35-year-old Iranian-Canadian who left Iran at the age of six months, moved back to Tehran in November to help Western firms crack the market.

"Everybody is surprised that I've lasted for more than two months. The quality of living is so poor that many expatriates give up almost immediately," he said. "You need to have a thick skin to survive."

Joorabchi added that foreign companies must now distinguish between expatriates willing to live in Iran and those who are ready only to travel there.

Many executives prefer to be based in Dubai where international companies have their Middle East headquarters.

Dubai-based executive search firm Wise & Miller, which has placed senior managers at international companies such as Royal Dutch Shell, Unilever Plc., Heineken and Philips in the Middle East, is building a database of foreign-educated Iranians willing to relocate.

It is "an increasingly crowded market”, according to the company's co-founder, Marc Mulder, who says he approaches dozens of candidates each week using social media to establish a connection with Iranian professionals around the world.

Hamid Biglari, a former Citigroup vice-chairman and financier with emerging market expertise now also advising investors on Iran, indicated that the country needs to come up with incentives for people of Iranian origin to come back, such as issuing identification cards that would allow them to travel to and invest in Iran without a visa or dual citizenship.

"More needs to be done to persuade the Iranian diaspora to re-engage with their land of origin," said Biglari, who left Iran in 1977.

Their role could be similar to that of Indian expatriates in the United States who helped make India a global technology powerhouse, he added.

"Iranians abroad can provide capital, knowledge and business connections, all of which are vital to rebuild the country," Biglari elaborated.

NEW YORK — Moves by the Obama administration to protect the US tax base torpedoed the massive $160 billion merger of drug giants Pfizer and Allergan Wednesday.

Pfizer said the deal announced last year, which would have seen it move its corporate domicile to Allergan's Ireland headquarters to slash its US tax bill, was cancelled due to new tax rules directly aimed at halting such "inversion" takeovers.

The companies said they were terminating the merger "by mutual agreement" just hours after President Barack Obama labelled such deals "insidious".

‘Gaming the system’

While not mentioning the Pfizer-Allergan inversion, the largest such deal announced yet, Obama on Tuesday called tax avoidance using legal loopholes "a big global problem".

He said wealthy individuals and corporations are "gaming the system" and are not "paying their fair share" while benefitting from the country's skilled workforce, infrastructure, and rule of law.

"They effectively renounce their citizenship. They declare that they're based somewhere else, thereby getting all the rewards of being an American company without fulfilling the responsibilities to pay their taxes the way everybody else is supposed to pay them," he said.

The decision to cancel the merger "was driven by the actions announced by the US Department of Treasury on April 4, 2016, which the companies concluded qualified as an 'Adverse Tax Law Change' under the merger agreement," Pfizer said in a statement.

The deal, in which Pfizer was to buy Allergan but then move its corporate administrative base into Allergan's Dublin headquarters to benefit from Ireland's ultra-low business tax rates, would have created the world's largest pharmaceutical company.

At least two dozen inversion mergers have been announced over the past four years, with Ireland the preferred destination for US companies relocating their legal domicile offshore. Other destinations have included England, Bermuda and Canada.

For example, in 2014 Miami-based Burger King's Brazilian owners 3G Capital merged the fast food giant with smaller Canadian coffee shop chain Tim Hortons in order to move the corporate address to Canada for tax savings. The main operations remained in Miami.

While US companies say the US corporate tax rate is uncompetitively high, the US Treasury has repeatedly warned that such deals are eating away at an important source of government revenues.

The Pfizer deal was particularly targeted by the new Treasury rules because Allergan itself had been built on previous inversion deals. In 2012, the US drugmaker Watson Pharmaceuticals took over Swiss company Actavis but took on Actavis' identity and offshore location.

In 2013, Actavis took over Ireland-based Warner Chilcott in an all-stock deal and moved its administrative headquarters to Dublin, where the corporate tax rate is 12.5 per cent, compared to a maximum rate of 35 per cent in the United States.

In 2014, Actavis took over US drug maker Forest Laboratories, reaping more tax benefits. And then last year Actavis merged with Allergan, the US maker of Botox, in a $66 billion deal that also cited huge tax savings.

Both Allergan and Pfizer expressed disappointment that their merger would not go ahead.

"Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies," said company Chairman and Chief Executive Officer Ian Read.

Pfizer agreed to pay Allergan $150 million to reimburse its expenses linked to the planned merger.

Allergan Chief Executive Officer Brent Saunders said in a separate statement that while he is "disappointed" that the merger will not proceed, his company is nevertheless "poised to deliver strong, sustainable growth built on a set of powerful attributes".

Obama called global tax avoidance a "huge problem" and urged Congress to take action to stop US companies from tax-avoiding corporate "inversions", which lower companies tax bills by redomiciling overseas.

"While the Treasury Department's actions will make it more difficult... to exploit this particular corporate inversions loophole, only Congress can close it for good," Obama said.

Several US presidential candidates, including Republican Donald Trump and Democrats Hillary Clinton and Bernie Sanders, have seized on the issue in their campaigns.

"We have so many companies leaving, it is disgraceful,"  Trump told reporters as he greeted voters in Waukesha, Wisconsin on Tuesday. Clinton and Sanders both expressed support for Treasury's plan.

Besides Pfizer-Allergan, other pending inversion deals that have not yet closed include the proposed $16.5 billion merger of Johnson Controls Inc. with Ireland-based Tyco International Plc., Waste Connections Inc.'s  $2.67 billion deal with Canada's Progressive Waste Solutions Ltd., and IHS Inc.'s $13 billion acquisition of London-based Markit Ltd.

In all these cases, the shares of the target companies fell only slightly. Johnson Controls and Tyco said they would respond after conducting a review of the new rules.

Waste Connections and Progressive Waste Solutions said they expected the rules would impact less than 3 per cent of the combined adjusted free cash flow in their first year after the deal.

IHS and Markit said they believed the rules would not affect their adjusted effective tax rate guidance of a low to mid-twenties percentage range.

Three-year rule

Under previous rules which still apply, Allergan shareholders needed to own at least 40 per cent of the combined company for the two companies to enjoy the full tax benefits of an inversion, and more than 20 per cent to have any inversion benefit at all.

But a new “three-year-look-back rule” issued by the Treasury on Monday made this much harder for Allergan, and appeared to take aim directly at it because of how the company was put together.

The new rule does not allow stock accumulated through a foreign company's US deals in the last three years to count towards the book value needed to meet the inversion threshold.

This weighed on Allergan heavily because of its significant deals in this timeframe. These include the $66 billion merger of Allergan and Actavis Plc., the $25 billion purchase of Forest Laboratories and the $5 billion takeover of Warner Chilcott.

"The serial acquisition portion of the regulations will cause Pfizer to be treated as an 'expatriated entity' [under the terms of its existing deal with Allergan]," Robert Willens, a  corporate tax and accounting analyst, wrote in a note.

Shedding generics

In a second change to the rules, the Treasury also said it would seek to limit a practice known as earnings stripping that is often undertaken following, but not limited to, an inversion. The new Treasury rules would restrict related-party debt for US subsidiaries in dealings that do not finance new investment in the United States.

Without Allergan's new, fast-growing medicines, Pfizer may need to look for other companies with attractive products, such as US drugmakers Biogen Inc., Regeneron Pharmaceuticals Inc. and AbbVie Inc., said Raghuram Selvaraju, managing director of brokerage H.C. Wainwright.

Pfizer had planned to make a decision by 2016 whether to split off its hundreds of generic medicines, but delayed the decision until 2019 after announcing its merger with Allergan. Morningstar analyst Damien Conover had said the decision could be moved to late 2017 or 2018 if the deal with Allergan collapsed.

Pfizer, which announced the deal in November, had said its tax rate would drop to about 17 or 18 per cent after the deal, from around 25 per cent. That would have represented more than $1 billion in annual cost savings.

The deal's collapse is also a blow to the investment banks involved. 

Guggenheim Partners LLC, Goldman Sachs Group Inc., Centerview Partners Holdings LLC and Moelis & Co.  stood to share $94 million in fees advising Pfizer had the deal closed, while Allergan would have paid its advisors, JPMorgan Chase & Co. and Morgan Stanley, $142 million in total, according to the latest estimates by Freeman & Co. LLC.

Bankers may now get paid only 10 per cent of these amounts, according to Freeman.

This is not the first time a tightening of the US inversion rules have caused a merger to unravel. US pharmaceutical company AbbVie abandoned its $55 billion takeover of Ireland-domiciled peer Shire Plc after the Obama administration cracked down on inversions in 2014. AbbVie had to pay Shire a $1.6 billion break-up fee.