Business

AMMAN — Stuck for years in a cycle of losses, Jordan Clothing Company (CJC) accumulated a big financial deficit that eroded more than 50 per cent of its JD4 million capital.

According to auditor Arab Professionals, a member of Grant Thornton,  the accumulated losses reached JD2.3 million at the end of March 2015  following a JD300,000 loss during the first quarter of this year.

During the first three months of 2015, sales also were down by 40.3 per cent to JD300,000 from JD600,000 during the same period of last year.

Arab Professionals said the company should inform the Jordan Securities Commission and Amman Bourse about the extent and percentage of the losses and the reasons behind it, as required when accumulated losses of a company exceed 50 per cent of capital.

The review of the interim summary of the consolidated financial statements was qualified because the auditor was unable to quantify the JD800,000 worth of finished goods and goods under process through a physical verification of inventories.

The auditor also could not verify the balance of raw cloth and sewing materials worth JD700,000 and JD300,000 respectively because of mistakes in their quantities and prices.

Arab Professionals said CJC's management did not take necessary provisions to guard against JD400,000 of slow-moving goods.

The balance sheet as of March 31, 2015 showed total assets at JD4.2 million, JD2.5 million of which were goods, JD500,000 were property, machines and equipment, and around JD700,000 in receivables with  a single client owing JD200,000 to CJC. 

Short and long-term debt amounted to JD1.1 million, down from JD1.6 million at the end of last year, while accounts and notes payable totaled around JD1.1 million.

Net shareholders equity stood at JD1.9 million, down from JD2.2 million at the end of December 2014.

CJC's annual report covering the year 2014 indicated that sales last year dropped by 30 per cent to JD2.2 million, JD1.1 million of which were retail sales and JD700,000 were channeled through tenders.

Of the JD3.2 million of sales in 2013, JD1.4 million were retail and JD1 million were special orders, with exports and tenders each accounting for JD500,000.

Among several difficulties and challenges mentioned in the report was the weak purchasing power of consumers who, CJC noted, opted buying food and other basic necessities over clothes.

To counter lower demand, clothiers had to put forward discounts and special offers for long periods, at the expense of diminished profit margin, the report said.

It described wholesale activities as important but weak until now, pointing out that some traders took advantage of the company's trademark in the past and, as a result, CJC  lost some customers.

Noting that the wholesale business is still unfavourable because it entails a high degree of risk, in terms of settling bills, the company added that  it will consider a new approach to enter wholesale activities with competitive prices and new designs, while being vigilant against deceitfulness.

The company listed Algeria, United Arab Emirates and Saudi Arabia as export markets where it seeks to expand noting that CJC participated in an Algerian fair and will continue to join others in 2015. 

Other markets eyed by CJC include Hebron and Nablus, in the Palestinian territories where the company has a branch in Ramallah, and Aqaba.

Sales in Aqaba, considered by CJC as an export outlet because of its free area status, declined last year by 30 per cent to JD51,594 and its retail shop in the city posted a JD19,210 loss.  

Sales seemed worthwhile through government and military tenders, especially that a deal was clinched to supply the gendarmerie with special clothing over four successive years.

The gendarmerie will account for 31 per cent of the purchases from CJC as the company seeks profitable tenders without accompanying risks after countering some troubles in the past with certain government and military tenders.

Besides continuing to seek some tenders, the company will work on upgrading its clothing business for hotels, schools and hospitals and bringing in new designs that satisfy customers.

Reflecting lower demand, production dropped from 292,182 clothing pieces in 2013 to 221,658 pieces in 2014, the report indicated, mentioning Hong Kong Selection, Kerim Group, Union Garment and B.G.T Company as suppliers of more than 10 per cent of CJC's purchases.

The report listed several action plans to revitalise operations pointing in particular to production reorganisation at the factory with the assistance of highly qualified technical experts, and a marketing campaign, besides  merging the subsidiary Central Clothing Company with the mother firm CJC.

"The reorganisation would include production lines, worker's productivity, and distribution of industrial costs in addition to replacing unprofitable production lines with what used to distinguish the authenticity of the company's products," the report said.

The marketing campaign would focus on underpinning the CJC trademark, opening a number of outlets in commercial centres to sell goods on commission basis, encouraging wholesale dealings once again, completing the establishment of three branches in Palestine, and expanding the marketing of new products such as men's underwear. 

Moreover, the company plans to evoke past tradition and concentrate on shirts and trousers, its primary products, and to participate in local and international fairs in order to broaden its reach and enter new agencies.

Despite these remedial steps, a number of risks remain, such as higher production costs arising from the increase in the minimum wage to textile workers from JD170 to JD190 a month, and electricity charges.

Additional risks that "greatly affected" the company's sales were the high cost of living and labour strikes such as the one that took place at the Aqaba Container Terminal, CJC said.

It added that the company does not enjoy any government protection except the prime minister's decision which granted local manufacturers a 10 per cent preference over foreign industry for government purchases and tenders.

Another decisions that had a material effect on the company's performance, its products or competitiveness was the tax increase on imports from 5 per cent to 20 per cent.

CJC's labour force comprises 192 employees, 164 of whom work at the   head office and factory in Al Tajamouat Industrial City located in Amman's Al Raqeem southern suburb. The remaining staff are employed at over a dozen retail shops in Amman, Zarqa and Aqaba.  

The company, which estimates its capital investment at JD600,000, is owned by the retirement fund of the members of the Jordan Engineers Association (47.4 per cent), the social insurance fund of the members of the Jordan Engineers Association (1.9 per cent), and the solidarity fund at the Jordan Engineers Association (1.4 per cent) besides other investors.

AMMAN — Total exports during the first four months of 2015 amounted to JD1.7 billion, 12.1 per cent less than the figure during the same period of 2014, according to the Department of Statistics (DoS).

Data showed a 13.7 per cent drop in domestic exports to JD1.5 billion, and a 2.2 per cent decline in re-exported items to JD262.3 million, compared to the same period of 2014. Imports, at JD4.5 billion, were lower by 14.3 per cent, a DoS statement indicated.

The trade deficit in the January-April of 2015, stood at JD2.8 billion, marking a 15.7 per cent drop compared to the same period of 2014.

Exports of clothes increased by 11.1 per cent, while the value of fertilisers, fruits and vegetables, and pharmaceutical exports dropped by 45, 37.1 and 19.7 per cent respectively, the statement pointed out.

Imports of machinery and spare parts increased by 18.5 per cent; vehicles, motorbikes and their spare parts went up by 12.3 per cent; and electronics and their spare parts rose by 3.4 per cent, while imports of crude oil and its derivatives, decreased by 44.1 per cent and iron went down by 16.6 per cent, the DoS concluded.

LONDON — Capacity to generate power from renewable sources, including solar, wind and hydro, hit a new high in 2014, driven by a rise in the number of countries with green energy goals, according to an international group of experts.

An 8.5 per cent increase in renewable energy capacity allowed the global economy and energy consumption to grow without a parallel increase in carbon emissions for the first time, according to a report from green energy policy network REN21.

The growth in renewables was powered by green energy targets and other support policies now in place in 164 countries, up from 144 in 2014, indicated Paris-based REN21.

“Renewable energy and improved energy efficiency are key to limiting global warming to 2OC and avoiding dangerous climate change,” REN21 chair Arthouros Zervos said in a statement.

China’s push for renewables and efforts to promote them in wealthy countries helped keep carbon emissions at the same level as in 2013, despite an annual 1.5 per cent increase in world energy consumption in recent years and 3 per cent growth in global gross domestic product last year, said the report.

But government policies such as subsidies for fossil fuels and nuclear energy are constraining the renewables sector, keeping energy prices from non-renewable sources at artificially low levels and encouraging waste, the report added.

“Creating a level playing field would strengthen the development and use of energy efficiency and renewable energy technologies,” said Christine Lins, REN21 executive secretary.

“Removing fossil-fuel and hidden nuclear subsidies globally would make it evident that renewables are the cheapest energy option,” she added.

Renewable energy made up almost 28 per cent of global power generating capacity in 2014, enough to supply close to 23 per cent of electricity demand, the report pointed out.

The amount of energy available from renewable resources worldwide was greater than that produced by all coal-burning plants in the United States, the world’s second-largest coal consumer, it indicated.

Green energy investments in developing countries rose 36 per cent in 2014 from the previous year, reaching $131 billion and coming the closest ever to investments in developed economies, which stood at $139 billion.

China accounted for 63 per cent of the renewable energy investment in developing nations, while Chile, Indonesia, Kenya, Mexico, South Africa and Turkey each invested more than $1 billion.

Solar energy capacity has grown at the fastest rate, largely thanks to rapidly falling costs, followed by wind power, REN21 said.

Globally, more than 1 billion people still lack access to electricity, the majority of them in developing countries.

TOKYO — Japan’s once-mighty electronics makers have lost billions of dollars from TVs but Sony Corp. and Panasonic Corp. won’t quit, saying retreating from the world’s living rooms would close the door to more promising businesses.

Consumer electronics account for a shrinking portion of income after restructuring focused Sony on gaming and image sensors and Panasonic on electric car batteries. But TVs remain among their best-known products.

Staying in the TV market, particularly at the premium end, keeps the pair relevant and ensures their brands and quality are at the forefront when consumers shop for other electronics, they said. Sony, for example, said it saw a strong correlation between sales trends for its TVs and audio systems.

That makes it worth persevering in a TV market dominated by Samsung Electronics Co Ltd and cheaper Asian rivals, with Sony and Panasonic content to hold modest shares by focusing on high-margin, high-definition “4K” models.

“TVs are the soul of Sony and we don’t want to be without them,” Ichiro Takagi, head of Sony’s home entertainment and sound business, told Reuters in an interview.

Investors have long speculated about Sony and Panasonic gradually exiting TVs, reflecting Japan’s declining position in the tech sector. But analysts also said sticking it out was worthwhile as long as they were profitable.

“Especially for Sony... If they quit TVs, there’s a chance that the Sony brand will be diminished,” said Junya Ayada at Daiwa Securities.

Sony holds 7 per cent of an industry it once revolutionised with its Trinitron technology, while Panasonic has 4 per cent. South Korean leaders Samsung and LG Electronics Inc  together hold about 40 per cent.

“There was a time when we were going after volume, and we totally lost that race,” indicated Takagi. “Even in the days of the Trinitron, we only had a share of around 10 per cent. I think 10 per cent is appropriate now.”

Restructuring

Under Chief Executive Kazuo Hirai, Sony has shed thousands of jobs and sold off its personal computer (PC) unit after several years of losses. Hirai has not ruled out dispensing with the TV arm as well if it fails to stay profitable.

But Takagi said an exit was now less than likely after cost cutting helped the unit book a small operating profit in the last business year, its first in over a decade.

Moreover, Sony, with interests ranging from its Hollywood studio to PlayStation videogames, aims to recapture its cachet as an entertainment-to-electronics group through increased collaboration across the company, Takagi said.

TVs encapsulated the sound and picture technology developed by the various businesses, he added. Sony is also aiming for a high-end comeback in audio, earlier this year introducing a portable music player that costs over $1000.

“Historically, TVs have been at the centre,” Takagi indicated. “When sales rose, sales in audio and home theatre rose as well. As the TV operations recover... we’ll see a rise in audio sales.”

Pointing to a revival are Sony’s 4K televisions. Last year, Sony quadrupled its share of TV sales at Best Buy Co Inc, the largest US consumer electronics chain, to 12 per cent by concentrating on large, high-end models, Takagi pointed out.

Analyst Hisakazu Torii at DisplaySearch said Japanese TV manufacturers had little choice but to focus on high-end models, particularly when faced with a rival like Samsung whose smartphone success has given it overwhelming resources.

But 4K TVs already account for nearly 40 per cent of sets with screens larger than 50 inches, meaning they were starting to lose exclusivity, he added.

Analysts say consumers, particularly in the United States, are increasingly opting for larger sets for their living rooms to watch movies and live events, while opting for PCs and smartphones instead of small bedroom TVs.

“Once 4K penetration goes beyond 70 per cent, that means commoditisation and price competition,” Torii said.

Smartphones

Panasonic, on the other hand, has not seen a comparable upturn and is increasingly out-sold by previously little-known Chinese manufacturers such as TCL Corp.

Its TV division reported seven consecutive years of loss while the overall company turned itself around by focusing on automotive technologies and high-margin home appliances.

But Masahiro Shinada, head of Panasonic’s TV business, said maintaining a presence in television made it easier to sell more profitable white goods — not only by lifting the company’s image, but also winning cooperation from retailers who prefer to deal with manufacturers of high-volume products such as TVs.

“They really open the way to selling refrigerators and washing machines,” he added.

Panasonic, like Sony, is looking to the high-end TV market for prestige and profitability. But as consumers increasingly watch content on the go, there is a risk of TVs losing their status as brand-defining devices.

“Your kids’ cellphones are Samsung, those kids become young adults, those young adults become adults,” said Mark Sasicki, TV buyer at Abt Electronics — the largest single-store retailer in the United States, spread over 15 hectares of a Chicago suburb. “It plays into their appliance business.”

AMMAN — It is customary for different kinds of businesses to become public shareholding companies, but Al-Ekbal Printing & Packaging Co. is the first Jordanian entity seeking the other way.

As unanimously approved by shareholders during a recent extraordinary general assembly meeting, Al-Ekbal is now awaiting a government decision regarding its request to delist from the Amman Stock Exchange and become a limited liability company.

According to a knowledgeable source at the company, Al-Ekbal submitted all the documents required for the shift in legal status along with supportive justification to the authorities concerned.

“We are now waiting for a government ‘yes or no’ answer to our demand,” the source said, adding that the authorities need not justify their decision. He would not predict the outcome.

Legal government officials’ deliberations, conducted carefully and in confidentiality, may take some time because the decision could be a precedent that others may choose to copy.

Al-Ekbal, whose plant in Amman’s Naur suburb employs 123 workers, is the first company requesting to shift from a public shareholding to a limited liability status, according to the source.

Asked to elaborate on the motives behind seeking a limited liability company status, he mentioned ownership, share trading, financial costs, openness and extensive exposure of dealings that do not apply to competitors in the same line of business.

He explained that because the investors in the company were primarily Mayr-Meinhof Packaging International Gmbh (34.6 per cent), Mayr-Meinhof Packaging Austria (29.5 per cent) and Neupack Gesellschaft (20 per cent), the number of shareholders was limited and, as such, the share trading on Amman Bourse was occasional.

He also noted that expenses associated with the public shareholding status were large and do not commensurate with the company’s size in terms of ownership, business volume and market conditions.

In the company’s 20th annual report covering the year 2014, the board of directors described local and regional competition as strong that it may pressure prices and profit margins.

The board of directors attributed the competition to the high production capacity available in the region and the size of the market which was negatively affected by the security situation in neighbouring countries.  

But, the board of directors assured shareholders that the company possesses a big share of the local market and continues to expand domestically and regionally.

The annual report listed four risks that Al-Ekbal Printing & Packaging Co., faced during 2014 and might face in the future.

Insecurity and political instability in the region topped the list of risks as it negatively affected the demand for the company’s products especially in the Iraqi, Yemeni and Syrian markets.

The fluctuation in the euro’s exchange rate against the Jordanian dinar was the second risk as it negatively affected the company in the past and continues to influence it until now.

The third risk mentioned in the report was local tax modifications on tobacco and cigarettes as they may negatively impact the levels of cigarette consumption and production, and consequently the sales of the company.

Because a high percentage of sales is achieved in export markets, Al-Ekbal said that any changes in trade laws and regulations or changes in customs within the Arab League may affect its sales and profits.

The board of directors also listed four achievements accomplished last year, the first of which was the selection of Al-Ekbal as a qualified supplier for international tobacco and cigarette companies operating domestically and abroad.

The second success was the increase in production capacity in post-printing stages through the addition of a new gluing line for various products of high technical specifications besides the types that are currently produced.

Another accomplishment was building a new 900 square metres warehouse to stockpile raw materials, a step aimed at lowering storage costs.

Noting the success in gaining multinational producers of tobacco and cigarettes,  among new international clients in various sectors of packing and packaging, the company plans to push for entering new export markets.

At present, most of the exports go to Saudi Arabia, Yemen, Sudan, United Arab Emirates, and Qatar. 

A foreword written by Board Chairman Armin Hessenburger in the annual report showed that exports declined last year by 27 per cent to JD1 million from JD2.6 million in 2013.

But the company was able to compensate the drop in exports from local sales which rose by 9.2 per cent to 9.3 million from JD8.5 million in 2013. Overall sales hovered around JD11.2 million in both years.  

Moreover, Al-Ekbal generated a JD0.42 million net after-tax profit, 14.5 per cent higher than the JD0.36 million in 2013 taking into consideration that the gross profit was around JD1.5 million in both years.

Capitalised at JD5 million, the capital investment of the company at the end of last year was JD11.1 million.

When the company was established in 1994, its capital was registered at JD8 million but shareholders unanimously decided in 2006 to lower the capital to JD5 million because it was more than it is needed.

The subsidiary, Ekbal Company for Logistics and Paper Trade, was removed last year from the records of the Department of Companies Comptroller following a decision from the board of directors to liquidate the entity.

Financially, total assets as of March 31, 2015, amounted to JD10.6 million, JD4.2 million of which were in property, buildings and machinery. The remaining JD6.4 million were equally divided between inventory and receivables.

Shareholders equity includes JD1.4 million of retained earnings, JD1.1 million  of mandatory and voluntary reserves, besides the JD5 million capital.

Out of JD3.1 million in total liabilities, JD0.7 million are bank debts and JD0.9 million are commercial payables.

During the first quarter of this year, Al-Ekbal’s sales, gross profit and net pretax profit dropped to JD2.5 million, JD0.3 million and JD0.1 million respectively from JD2.9 million, JD0.4 million and JD0.2 million.

As authorised by the shareholders at the end of March 2015, the company is distributing JD0.4 million in cash dividends at a rate of 8 per cent.

AMMAN — The Islamic International Arab Bank (IIAB) and the Central Bank of Jordan (CBJ) on Saturday signed an agreement of restricted investment mandate to finance industrial, tourist, agricultural and renewable energy projects with soft loans.

Deputy CBJ Governor Maher Sheikh Hassan said the medium-term loan programme from CBJ is now available for Islamic banks working in Jordan.

He added that signing the agreement will enable the IIAB to benefit from the programme in a way that provides affordable sources of finance, expands beneficiaries from the medium-term loans and intensifying the economic activity in the targeted sectors.

IIAB General Manager Iyad Asali stressed the bank’s keenness to be the first Islamic bank to sign such an agreement, highlighting the significance of the targeted economic sectors.

PARIS — Airbus won more business than rival Boeing at this week’s Paris Airshow, helped by a last-minute deal with eastern European low-cost carrier Wizz Air and buoyed by demand from Asian customers.

Airbus ended the show with orders and commitments for 421 aircraft worth $57 billion, against 331 aircraft worth $50.2 billion for Boeing.

“This was higher than I personally expected,” Fabrice Bregier, the chief executive of Airbus’ plane-making division said at a press conference on Thursday, minutes after announcing Wizz Air intended to buy 110 single-aisle planes following all night negotiations.

“It confirms the market trend is positive,” he added.

Ahead of the show, which runs from June 15-21, many industry watchers had expected a quieter event, with the focus on how manufacturers and their supply chain deliver a record backlog of orders, rather than on winning new deals.

The show revealed some tensions between plane makers and suppliers. GE said it wanted to secure a record increase in engine production for single-aisle planes before deciding whether it could go higher, echoing comments from partner Safran. 

Bregier said suppliers risked losing out on business if they did not wish to go along with still higher production rates and sales chief John Leahy pointed out Airbus had two engine suppliers for its single-aisle planes.

“In this business we need to take risks, and I have to educate my partners that when I take risks, these risks are well under control and they have to share that with me,” Bregier added.

Manufacturers did not make any major new product announcements at this year’s show. Airbus said it was still considering whether to re-engine or stretch its A380 superjumbo while Boeing said it had not yet decided on whether to invest in a middle of the market jet to replace its 757.

The new management of smaller plane-maker Bombardier showed off the new CSeries jet for the first time at an air show, but did not win any new orders for the plane, which represents its push to compete in the market for smaller narrow-body jets dominated by Boeing and Airbus.

The Canadian firm had tempered expectations in advance of the show, however, saying it did not expect any orders for the CSeries in Paris. It did, though, announce test results showing the plane performing better than expected.

“They need to be getting orders at this stage so they helped brace the market for it, but it’s not good news anyway,” said Espirito Santo Investment Bank analyst Edward Stacey.

LONDON — Global humanitarian aid hit a record $24.5 billion in 2014 boosted by a nearly $1 billion extra from Gulf countries but the 20 per cent increase in funds failed to meet growing needs in conflict and disaster-hit areas, new figures showed on Thursday.

Saudi Arabia, the United Arab Emirates, Qatar and Kuwait more than doubled their combined contribution to United Nations appeals in 2014, raising $1.6 billion, according to Development Initiatives, a specialist independent think tank.

The largest of these donors, Saudi Arabia, trebled its input to $755 million, placing it among the top 10 providers, a list traditionally dominated by Western nations.

As well as government aid the funding includes donations from the European Union and private donors seeking to address the needs of a rising number of people, including those displaced by crises in the Middle East and Africa.

Despite the additional funds, Development Initiatives said agencies struggled to cope with larger numbers displaced from war zones such as Yemen, Syria and Iraq.

Sophia Swithern, head of the Global Humanitarian Assistance  programme at Development Initiatives, said about two thirds of global humanitarian aid continued to go to long term recipients such as Somalia and Pakistan.

“Within humanitarian financing, there is a need to increase resources from more diverse donors, and bring about smarter means of delivering them,” she added in a statement.

“In a year of global discussions on development and climate change, these unprecedented levels of need and continued shortfalls in funding highlight the need to sustainably address the underlying causes and long term impacts of crisis,” Swithern continued.

The UN Office for the Coordination of Humanitarian Affairs said only a quarter of required funds had been received, leaving a shortfall in aid donations of about $14 billion.

Of the $18.8 billion in humanitarian assistance needed in global crisis hot spots only $4.8 billion had been received, OCHA’s six-monthly status report showed.

“While donors give more generously every year, the gap between funds needed and funds provided continues to widen,” said Stephen O’Brien, UN undersecretary for humanitarian affairs.

Intractible conflicts, extreme poverty and political instability mean future targets are equally unlikely to be met without more sustainable solutions in place, development experts said.

“Beyond humanitarian assistance there is a need to understand and better mobilise both public and private resources across development, climate and security related finance,” said Swithern.

LONDON — Inside an upmarket London department store a genteel Middle Eastern woman glides by, trailing flowing robes and the distinctive smell of oud, a perfume popular with Arab women.

Outside, petrol fumes fill the air and motors roar, as young Arab men rev the engines of some of the world's most expensive cars at a stop light.

Welcome to London's Ramadan rush, when thousands of wealthy Arabs descend on the British capital in the weeks before and after the Muslim fasting month, packing hotels and fuelling a shopping frenzy.

"It's a prestige thing. This is a place to show off your wealth, super car or your clothes. You want to go where you'll be seen, and London is where all the Arabs are," indicated Fahad Al Ajmi, a 32-year-old Kuwaiti. "I know Kuwaitis who take out loans just to come to London and show off. How crazy is that?"

Qatari shoppers spend an average £1,432 ($2,237, 1,992 euros) per transaction,  the top amount among Middle Eastern visitors, closely followed by tourists from the United Arab Emirates (UAE) at £1,120.

'Part of the retail calendar'

Premium department stores and top brands have been quick to accommodate Britain's most well-heeled shoppers.

At Selfridges, the number of women wearing hijabs almost outnumbers other customers.

The premier London department store is one of several to adjust opening hours or specially train staff to serve Arab customers.

Global Blue, which provides British shops and hotels with cultural training, has a list of Dos and Don'ts. Among those: Do address the oldest man when speaking to a group. Don't give them a thumbs up, the gesture is interpreted in some Arab countries as obscene.

The company says Middle Eastern consumers are the top-spending foreign shopper group in Britain, representing 32 per cent of total international outlays to date this year, with Kuwait, Saudi Arabia, Qatar and UAE occupying four of the top five national spending slots.

Ramadan, which follows the lunar calendar and ends with the Eid Al Fitr celebration, this year starts on Thursday, with many Gulf Arabs holidaying before or after to stock up on gifts and outfits and escape searing temperatures back home.

"Much like the January sales and Christmas rush, Middle Eastern visitors celebrating Eid are now part of the retail calendar for many luxury brands," said Dave Hobday, the managing director of Worldpay UK, a payment processing company.

London, with its extensive transport links, global language, relative proximity, mild climate and historical ties to Gulf states, has become the destination of choice for many Ramadan tourists.

Several Gulf countries were former British protectorates, and their citizens have for decades come to London to shop, study, receive medical treatment and invest, most prominently in the city's booming property market.

"We like the English. As someone from the Gulf, we're used to them. We even like their food," laughed Khaled Abdullah Ghanem, 42, a Kuwaiti on holiday, noting that Britain is generally more welcoming towards Arabs than France or the United States.

Supercars and 'carparazzi' 

The economic boom Arabs create isn't restricted to high-end shopping and hotels, with firms that hire super cars or transport them to London from the Gulf reporting brisk business.

Young Arabs driving around London's most exclusive shopping streets in Ferraris, Lamborghinis, and other ultra-expensive vehicles, often bearing Middle Eastern number plates, have become an annual fixture.

The cavalcades of costly automobiles are a nuisance to some, but are welcomed by car enthusiasts, or "Carparazzi", who stalk the streets around posh department stores like Harrods and Harvey Nichols for rare vehicles, and share videos and photos of them online.

"Ramadan is a busy time for us... Quite often the whole family will travel, sometimes with security too. We have used Rolls Royce and Bentleys for some individuals and often use Mercedes Vianos for the security team," indicated a spokesperson for Signature Car Hire, which offers prestige vehicles to clients including the UAE and Qatari royal families.

The Lamborghini Aventador, one of the world's most expensive super cars, rents for £1,995 pounds a day. However, many Gulf visitors prefer to bring their own vehicles, paying as much as £12,000 for return shipping, according to media reports.

LONDON — The Organisation for Economic Cooperation and Development (OECD) called Wednesday for financial sector reforms to combat inequality and lift economic growth in developed nations.

The OECD, a policy body comprising 34 advanced economies, cited data stretching back 50 years in a key report unveiled in the British capital.

"Reforms to make the financial sector more stable can be expected to boost long-term economic growth and improve income equality," read the OECD study entitled "Finance and Inclusive Growth".

The Paris-based OECD said the sector would make a "healthy contribution" to "strong and equitable growth" if it could "prevent credit overexpansion" and ensure "supervision of banks to maintain sufficient capital buffers".

Credit has a more negative impact on economic growth when it is given to households rather than businesses, according to the analysis.

The OECD also criticised excessive financial deregulation, the use of bank lending rather than bond financing, and the deterioration of credit quality.

And it pointed to a growing income inequality, saying that high earners can and do borrow more than those on lower wages, with household credit more unevenly distributed than income.

The OECD criticised state support to systemic financial institutions deemed too big to fail without threatening the global financial system, and suggested that such groups could be broken up to prevent credit overexpansion and also boost stability.

"Substantial progress has been made... but much remains to be done in particular to reduce governments' support for too-big-to-fail banks," it said.

"The links between too much bank credit and slower growth, which are stronger where too-big-to-fail banks get more public support, underline the growth benefits of completing reform in this area," the OECD added.

The OECD indicated that "one way of ending too-big-to-fail would be to break up financial institutions into sufficiently smaller entities."

"Alternatively, reforms can focus on separating the utility functions of too-big-to-fail banks from their more risky activities and on requiring large institutions to set up credible resolution plans, so that they can be closed orderly if they fail the test of the market place," it said.

The group, meanwhile, estimated that another 10 per cent increase in bank credit across OECD nations would curb long-term economic growth by 0.3 percentage points.

"Finance is a vital ingredient of economic growth, but there can be too much of it," the OECD added. "Over the past 50 years, credit by banks and other institutions to households and businesses has grown three times as fast as economic activity.

"At these levels, further expansion is likely to slow long-term growth and raise inequality," it concluded.