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TUNIS — Tunisia has stabilised from the fallout of the 2011 revolution and is now ripe for investment in its battered economy, Prime Minister Mehdi Jomaa told AFP in an interview.

Speaking ahead of the "Invest in Tunisia: Start-up democracy" conference to be held Monday, Jomaa said Tunisia's new government was upbeat but realistic about a recovery.

"We expect a strong signal from the entire political, financial and business communities to say that today there's confidence in Tunisia's future," said the premier.

"We also expect our partners to spend and to actually invest in projects," added Jomaa, who came to power in January tasked with leading Tunisia out of a political crisis and preparing fresh elections.

 Thirty countries are to attend the conference aimed at showcasing investment opportunities in Tunisia, where an uprising against longtime president Zine El Abidine Ben Ali triggered the Arab Spring.

But Jomaa declined to declare his expectations, noting that at "donor conferences, we have seen that it doesn't work: They create hope but achieve little."

The purpose of the conference "is not to put forward figures, but rather to generate interest" in projects that are to be presented on Monday.

Sustainable Development Minister Hedi Larbi told a news conference Thursday that Tunisia would unveil 22 projects at an overall cost of around 12 billion dinars (more than five billion euros/$6.6 billion). 

The central bank said last week Tunisia's economic growth slowed to 2 per cent in the second quarter of 2014 from 2.8 per cent a year earlier.

A recovery is all the more important for Tunisia as poverty and unemployment were among the key issues that sparked the 2011 uprising that toppled Ben Ali.

In the wake of the uprising, Tunisia was rocked by violence blamed on hardline Islamists who were suppressed under the former dictator, paralysing the country's institutions and its economy.

Jomaa heads an independent government tasked with leading Tunisia out of the festering crisis fuelled by violence and mistrust between the Islamist Ennahda Party — the majority in the assembly — and its opponents.

'Confronting fears'  

Jomaa gave assurances that Tunisia was evolving "from a planned and politically oppressive state to one that is rather regulatory".

"There are a few years of sacrifice that we must see out," he said. "We have worked on macroeconomic stabilisation and on reducing the state budget deficit, but the economy goes through long cycles: Decisions are taken today and the benefits are seen in two, three years."

STAVANGER, Norway — The recent flare-up of violence in Iraq is past its worst and Kuwait Energy is keen to invest more in the country because of its potential, Chief Executive Sara Akbar said. Several oil companies in Iraq's Kurdistan region withdrew staff last month after Islamic State militants approached Erbil, the region's capital, threatening its vast oil infrastructure. "I think we've been through the worst and things will stabilise," Akbar told Reuters on the sidelines of an oil conference in Norway. "Most of the developments in Iraq are on plan, especially in the south, where most of the international oil companies are still working, with field developments and exports going normal," said Akbar, whose firm operates in the southern part of the country and has been mostly unaffected. Akbar said she was not deterred by the violence, arguing that it was temporary and could not overshadow the country's vast potential for relatively easy oil. When asked it she would invest more, she said: "If we could get into more projects, yes, I'd love to."

RIYADH — Saudi Arabia is changing tack in its labour reforms, softening the blow to companies with money for subsidies and training while trying to lure Saudis to the private sector with more attractive working conditions.

A draft law would limit working hours at companies to entice new employees and adjustments are being made to recent rules. 

Meanwhile, the government is spending billions of riyals to help pay Saudi workers' salaries, and is setting aside more money to smooth the path of the most sweeping economic reforms in decades.

Authorities launched labour reforms in 2011 after the Arab Spring uprisings to head off political unrest by reducing unemployment. 

They also want to lower the cost to the economy of Saudis' dependence on comfortable but expensive state jobs.

The reforms so far have slowed the economy and slashed profits at some firms, interfering with other policy goals such as diversifying the economy beyond oil. 

They boosted the number of Saudis in the private sector, but many workers have not been effective or only stayed in their jobs for a few weeks.

So the government is now adjusting its strategy in an effort to improve the system for both companies and employees.

"Our intention is not to harm business — our intention is to get Saudis hired and reform the market," Ahmed Al Humaidan, deputy minister for labour policies, told Reuters. "If this involves costs, we are willing to share them."

Reforms in the past three years have focused on pressing firms to employ more Saudis, by making it harder and more costly to hire foreign staff.

Alongside a population of about 20 million Saudi citizens, roughly 10 million foreigners from south Asia and elsewhere work in sectors such as construction, transport and services, receiving salaries that most Saudis would consider too low.

That arrangement is fine when oil prices are high and the government is flush with money to create state jobs for its citizens. But the uprisings elsewhere in the Arab world underlined how vulnerable the country would become if a sustained drop in oil prices left it unable to employ Saudis.

The draft law on working hours aims to make private companies more attractive by limiting the working week to 40 hours, down from 48 in many firms, and increasing the weekend to two days from one. State workers have a 35-hour workweek plus generous pensions and health benefits.

Electric shock

Any reform effort in Saudi Arabia involves overcoming a sluggish, conservative state bureaucracy. So the government's determination to proceed with labour reform has been striking — a sign that it views the issue as one of long-term survival.

Since 2011, the reforms have been led by Labour Minister Adel Fakieh, a former chairman of private Saudi food maker Savola Co. who has a reputation for finding his way around bureaucratic obstacles.

But prominent Saudi economist Abdul Wahab Abu Dahesh said the latest measures marked a recognition among officials that the "electric shock" approach of the initial labour reforms, although effective, needed to be softened.

"The shocks were too strong for the private sector to cope with," he said.

The number of Saudis working in the private sector jumped to 1.5 million people by the end of last year from 681,481 in 2009, according to the latest available data in the ministry's annual report for 2013, published in late July.

That brought the "Saudisation rate" — the proportion of all private sector jobs held by Saudis — up to 15.2 per cent from 9.9 per cent over the same period.

But Fawwaz Al Khodari, chief executive of major construction firm Abdullah A. M. Al Khodari Sons, said all contractors were having "a serious battle trying to get those that they hire to actually do anything".

He added that many Saudis were not willing to work in projects such as city cleaning or at remote sites, making hiring a large number of Saudis in non-administrative jobs a major challenge.

"By forcing the contracting sector to hire nationals that are neither available in the numbers needed, nor with interest in the sector, we are encouraging unproductive dependency," Khodari said in an April interview with Reuters.

The policy adjustments come as the country prepares to open its stock market to direct investment by foreign institutions. Companies depending on large supplies of foreign labour have been hit hard by the reforms. 

Second-quarter net profit at Khodari Sons tumbled 69 per cent from a year ago.

According to Abu Dahesh and other economists, some businessmen hired acquaintances purely to meet Saudisation quotas, or paid 1,500 to 2,000 riyals ($400 to $535) a month to university students or stay-home graduates in exchange for their names on a company's employee records.

The costs of the reforms are slowing the economy moderately; annual gross domestic product growth eased to an annual rate of 4.7 per cent in the first quarter of 2014 from 5.0 per cent in the previous quarter. Non-oil private sector growth slowed to 4.4 per cent, the lowest pace in at least a decade. 

Costs 

Through its Human Resources Development Fund (HRDF), the government is spending billions of riyals on subsidising Saudi workers' salaries, paying up to 50 per cent of increased payroll costs due to firms hiring more Saudis or raising their wages.

Additional amounts are spent on sharing the cost of companies' training programmes and paying monthly unemployment benefits to job seekers.

"Reforms started in 2011 and now we are coming to the end of 2014. We are probably spending 20 or 30 times as much as we spent in 2011," indicated Ibrahim Al Muaiqil, the HRDF's director.

In its annual report, the labour ministry said it was asking the government to spend 14.9 billion riyals annually on labour market reform.

The ministry is also adjusting some rules to make them easier for companies to obey, or interpreting them somewhat more benignly. 

For example, it previously calculated whether a firm was meeting its quota for employing Saudis by looking at data for a 13-week period; from January, it will expand that period to 26 weeks, giving companies more flexibility in complying.

Another new initiative, which is to be launched in the next few weeks, will see the HRDF contact young Saudis while they are still at school to identify career paths and give them online vocational training.

Asim Khwaja, professor and researcher at Harvard Kennedy School in the United States, who worked on the Saudi labour reforms, said that after initially focusing on enforcing Saudisation quotas, authorities were now taking action to get companies on their side.

"You have created big pressure on them, so you have to help them now," he added.

The government and many private economists think the labour reforms will boost economic growth in the long term, by ensuring more money stays within the country and is spent on consumption rather than being remitted abroad by foreign workers.

For now — at least into next year — the labour reforms look set to continue slowing growth and dampening corporate profits. But that is a price which the government is willing to pay.

Muaiqil said of state spending on the reforms: "Whether it is 15 or 50 billion, the only thing I can assure you is that the government... is determined to fix those issues, because they will shape our future."

GENEVA — The already faltering Palestinian economy further shrank in 2013 and 2014, even without taking into account devastation caused by the recent conflict with Israel, a UN development agency said Wednesday.

Economic growth slumped from 11 per cent in 2010 and 2011 to just 1.5 per cent last year, and was set to shrink further, the UN Conference on Trade and Development (UNCTAD) indicated.

"The deterioration of the Palestinian economy, largely rooted in the territory's occupied status, has resulted in weak growth, a precarious fiscal position, forced dependence on the Israeli economy, mass unemployment, wider and deeper poverty and greater food insecurity," UNCTAD said.

The agency, which produces regular studies of the Palestinian economy, underlined that its latest edition did not take into account the impact of the latest Gaza conflict.

But UNCTAD's coordinator for the Palestinian territories, Mahmoud Elkhafif, told reporters that $4 billion was a "very conservative estimate" for the cost of rebuilding Gaza.

According to the UN, Israeli military operations in Gaza destroyed or damaged 40,000 homes, 141 schools, 29 hospitals, dozens of factories and vast swathes of farmland in the densely population territory.

Unemployment is sky-high, at 36 per cent in Gaza and 22 per cent in the West Bank, and one family in four struggles to feed itself, Elkhafif pointed out 

UNCTAD said Gaza's economy was in a "state of total collapse" even before the summer's fighting.

It blamed the seven-year blockade on the territory and previous Israeli operations in November 2012 and December 2008.

"Exports from Gaza are almost completely banned, imports are severely restricted and the flow of all but the most basic humanitarian goods has been suspended for years," it said.

"Gaza's local economy has been further suppressed by restrictions on the transfer of cash, including dollars and Jordanian dinars, which have stunted its banking sector," it added.

UNCTAD warned of "grave consequences" if the Palestinian economy was not brought back on its feet fast.

Foreign aid alone is not enough, it remarked, calling for "renewed development efforts through investing in productive sectors and crucial infrastructure so that the productive base is rebuilt".

But a lasting recovery of the Palestinian economy in general will be impossible without a sustained international effort to end restrictions on movement in and access to the West Bank, UNCTAD stressed.

It also called for the "complete lifting of the Gaza blockade, which has been smothering Gaza's local economy and isolating 1.8 million people from the outside world”. 

UNCTAD warned of the ongoing "de-development" of the Palestinian economy, reinforced by recurring military campaigns.

It also criticised Israel's total control of the resource-rich "Area C", which covers almost two-thirds per cent of the West Bank.

Israel has an effective ban on Palestinian construction in 70 per cent of Area C and imposes limits in 29 per cent, leaving just one per cent for Palestinian development, UNCTAD indicated.

"Israeli policies in Area C and the ongoing construction and expansion of illegal settlements have altered the West Bank's landscape into an archipelago of disconnected islands," it said.

The number of colonists in the West Bank topped 360,000 in 2012, compared with 800 in 1972, the report underlined.

Separately, the Palestinian Authority (PA) said on Thursday that rebuilding Gaza will cost $7.8 billion, in the most comprehensive assessment yet of damage from a seven-week war with Israel during which whole neighbourhoods and vital infrastructure were flattened.

The cost of rebuilding 17,000 Gazan homes razed by Israeli bombings would be $2.5 billion, the PA indicated, and the energy sector needed $250 million after the Strip's only power plant was destroyed by two Israeli missiles.

"The attack on Gaza this time had no precedent, Gaza has been hit with a catastrophe and it needs immediate help because many things can't wait long," Mohammed Shtayyeh, a Palestinian economist and a senior member of the West Bank's dominant Fatah party, told reporters in Ramallah.

Rebuilding Gaza would depend heavily on foreign aid and would require an end to Palestinian rivalry and Israel opening its border crossings, stressed Shtayyeh, who heads the Palestinian Economic Council for Research and Development (PECDAR) which ran the survey.

But none of the factors mentioned by Shtayyeh appeared forthcoming. A donor conference in Cairo has yet to be formally scheduled, Palestinian institutions remain divided between Gaza and the West Bank and Israel has yet to fundamentally ease the movement of people and goods at its Gaza border.

The PA's assessment also found that the strip's education sector would need around $143 million to get back on its feet. About half a million children have been unable to return to their schools due to damage or because the buildings are being used to house refugees.

Over 106,000 of Gaza's 1.8 million residents have been displaced to UN shelters and host families, the UN says.

The remaining billions of dollars in the PECDAR assessment, which was compiled by 13 experts resident in Gaza and their research teams, were allocated to the financial, health, agriculture, and transportation sectors, all of which suffered widespread damage during the war.

The assessment also earmarked $670 million for an airport and sea port, which Shtayyeh said was a Palestinian right, but Israel has so far rejected.

A ground incursion and bombing from the land, air and sea caused huge destruction in Gaza, while Palestinian rocket fire drove many Israelis from border communities, hit Israel's summer tourism revenues and briefly shut down its main airport.

An international donor conference jointly chaired by Egypt and Norway has yet to be formally scheduled, and Israel has not fundamentally changed its curbs on the movement of people and goods, especially crucial building materials, on Gaza's border.

The cash-strapped PA barely has enough money to pay its own employees in the West Bank and has no immediate plans to pay employees in the Hamas-run Gaza Strip, despite a unity pact signed between Fateh and Hamas in April.

"The Authority needs to be able to work as an authority to become completely responsible for all aspects of life in Gaza," Shtayyeh told reporters.

LONDON — On the day that the outlook for the European economy may have become a bit brighter amid hopes of a ceasefire in eastern Ukraine, a closely watched survey Wednesday showed the extent to which the crisis in the country has weighed on business confidence across the continent.

In its monthly survey, financial information company Markit highlighted tensions in Ukraine for a sharp fall in its gauge of business activity for the 18-country eurozone.

Its purchasing managers’ index, which collates figures from the manufacturing and services sectors, fell to 52.5 points in August from July’s 3-month high of 53.8. Though it remains above the 50 threshold that signals growth, the indicator is at its lowest level this year and below the preliminary estimate of 52.8.

“Tensions in Ukraine are clearly having an impact on confidence, subduing business spending and investment,” said Chris Williamson, Markit’s chief economist.

Separately Wednesday, the European Union’s statistics office, Eurostat, said eurozone retail sales fell by a monthly 0.4 per cent in July.

The figures echo a raft of recent findings that any momentum that the eurozone economy may have been showing earlier in the year came to a halt this summer. In the second quarter, the economy posted flat growth, raising fears of an unprecedented triple-dip recession.

The hope in Europe is now that the geopolitical tensions that have been hobbling Europe’s economy will ebb following a day of fast-paced developments.

First, Ukraine President Petro Poroshenko announced that a cease-fire for eastern Ukraine had been agreed on with Russian President Vladimir Putin. Putin then issued his own peace plan, calling on the Russian-backed insurgents there to “stop advancing” and urging Ukraine to withdraw its troops from the region.

Though details were sketchy and there was no immediate indication that the fighting would stop, investors around Europe responded positively to the news. The Stoxx 50 index of leading European shares was up 0.9 per cent, while Germany’s DAX spiked 1.3 per cent. Unsurprisingly, Russia’s RTS index was the standout performer, trading 5.6 per cent higher.

“Reports of a cease-fire in eastern Ukraine have been welcomed with open arms by the markets following months of growing tensions between Russia and the West that has resulted in painful economic sanctions being applied by both sides,” said Craig Erlam, market analyst at Alpari.

Germany’s economy, Europe’s biggest, has been one of the most affected by the tensions over Ukraine. Germany has a big trading relationship with Russia that has been threatened by the tit-for-tat sanctions between Moscow and the European Union.

It’s unclear whether the ceasefire agreement will have any bearing on Thursday’s monthly meeting of the European Central Bank. There are some expectations in the markets that the ECB, headed by President Mario Draghi, may back further measures to stimulate the ailing eurozone economy. There’s even been talk that it could back a Federal Reserve-style programme to inject new money into the economy.

Markit’s Williamson said it’s “likely to be too early” to see anything other than stronger rhetoric from the ECB as far as a stimulus is concerned, especially as the firm’s survey is pointing to strong growth in Ireland and Spain, two of the countries at the forefront of the region’s debt crisis.

He said the impressive performances of the two will likely encourage Draghi to “stress that recoveries in other countries are being held back by the lack of successful structural reforms rather than a lack of central bank stimulus”.

GENEVA — The United States’ competitiveness among global economies has risen to the No.3 spot behind Switzerland and Singapore in rankings published annually by the World Economic Forum.

In its survey released Wednesday, the Forum said the US — the world’s largest economy — moved up two spots from fifth position last year, thanks to improvements in its financial markets and public institutions.

Six European countries dominated the top 10: Switzerland, Finland, Germany, the Netherlands, the United Kingdom and Sweden. Aside from the US, the remaining three slots were Asian: Singapore, Japan and Hong Kong.

The results are based on data from the United Nations and other international organisations as well as the forum’s surveys of business executives.

The forum, which hosts the annual gathering of global business and political leaders in the Swiss ski resort of Davos every winter, ranks a country’s competitiveness according to factors such as its ability to innovate and the quality of its infrastructure.

Switzerland and Singapore were at the top of the rankings last year as well. Finland fell this year to fourth from third last year, while Germany was fifth, down from fourth last year. Japan moved up to sixth, from ninth.

Klaus Schwab, the forum’s founder and executive chairman, cautioned that the health of the global economy is at risk, despite years of support from central banks, because governments are struggling to make the economic reforms needed for growth.

“The strained global geopolitical situation, the rise of income inequality, and the potential tightening of the financial conditions could put the still tentative recovery at risk and call for structural reforms to ensure more sustainable and inclusive growth,” he said.

Switzerland has topped the rankings of 144 economies in the Global Competitiveness Report for six years. The forum said Switzerland’s standing is based on its innovation, sophistication of its business sector, top-notch education and scientific research institutions, and labour market efficiency.

The survey found that countries in southern Europe, such as Spain, Portugal and Greece, have made significant improvement in their markets, while France and Italy were lagging in that area.

BEIRUT — Lebanon's economy is expected to grow 1.5 to 2 per cent and inflation is not expected to exceed 4 per cent in the year 2014, despite the fall-out from the war in neighbouring Syria, the central bank governor said on Monday. Lebanon's economy has been hard hit by the war in Syria, which started in 2011 and has repeatedly spilled over into the small Mediterranean country. "Despite the circumstances that Lebanon is passing through on the political and security levels, we expect the actual growth in the Lebanese economy to be between 1.5 and 2 per cent," central bank governor Riad Salameh said in a speech in Beirut. "The inflation rate will not exceed 4 per cent."

AMMAN – Small- and medium-sized contractors accuse the government of harming the sector because of months of delays in paying outstanding dues estimated at JD13 million. 

However, a government official and the top representative of Jordan's construction sector told The Jordan Times that the government is going to pay its financial obligations to the contractors "very soon". 

Ziad Sakran, board member of the Jordan Construction Contractors Association (JCCA) and representative of the small- and medium-sized construction firms, complained that the Ministry of Public Works and Housing has been promising them to pay the dues for months, noting that contractors have been unable to pay their obligations to banks and the salaries of their employees. 

He noted that the dues are for agricultural road projects across the Kingdom.

According to Sakran, the government paid the contractors only JD1 million out of JD14 million in mid-July.  

"The government has hurt the business of a large number of companies in the sector because of unfulfilled pledges," Sakran said, adding that Public Works and Housing Minister Sami Halaseh told contractors at an Iftar banquet in Ramadan, nearly two months ago, that they would be paid immediately after Eid Al Fitr, which fell on July 28. 

Halaseh could not be reached to comment on the issue, but the ministry's Secretary General Anmar Khasawneh said the contractors would be paid "very soon" as the Cabinet has allocated JD20 million to solve the issue. 

Khasawneh refused to  specify a date for paying the dues. 

But JCCA President Ahmad Tarawneh said the ministry may start paying its financial obligations either Wednesday or Thursday, adding that he held meetings with government officials to discuss the issue of small- and medium-sized contractors. 

"The problem is over and JD20 million were allocated for paying them and other contractors," Tarawneh said, adding that officials have blamed technical and intra-government measures for the delay in paying the outstanding debts.

AMMAN — Information and Communications Technology (ICT) Minister Azzam Sleit and Indian Ambassador to Jordan Anil Trigunayat on Monday discussed ways to boost cooperation in the ICT sector. Sleit urged Indian businesspeople to visit the country to launch further investment projects in various sectors. Discussions addressed the 4th Indo-Arab Partnership Conference which will be held in New Delhi on November 26 and 27. Trigunayat highlighted the scope of mutual cooperation in various ICT aspects like cyber security, e-governance and telemedicine. 

AMMAN – Jordanian and Saudi investors are considering a joint project to set up a low-cost airline company,  Saudi-Jordanian Businessmen Council Chairman Mohammad Al Audah said Monday. 

Businessmen from both countries held several meetings and agreed to establish a joint airline linking Jordan and Saudi Arabia, Audah told The Jordan Times, noting that a feasibility study for the project is currently under way. 

Investors will also consider operating regionally, he said, indicating that there are businesspeople in the field of aviation engaged in the talks. 

"Turning the project from an idea into reality may start in the first half of next year," Audeh added. 

Asked about the value of the project, he remarked that it would be determined once the feasibility study is ready. 

The head of the joint business council said that during his stay in Jordan last week, he discussed with Khaled Abu Rabei , head of the Jordan Investment Commission, ways to boost cooperation between businesspeople from both countries. 

According to Audeh, the council is working to organise a visit to Jordan for a delegation of Saudi businesspeople to explore available investment opportunities. 

Saudi Arabia is among the largest investors in Jordan as official figures estimate the volume of investments from the Gulf kingdom at around $10 billion in various sectors such as banking, energy, tourism and industry. 

According to official data released recently by the Department of Statistics, trade exchange between Jordan and Saudi Arabia reached over JD2 billion in the first half of this year. 

Jordanian exports to the Saudi market were around JD370 million while imports from the Gulf state, mainly oil, amounted to around JD1.7 billion. 

Jordan is also considered a preferred destination for tens of thousands of Saudi tourists, particularly during summer. 

Official figures estimate that there are over 300,000 Jordanian professionals based in Saudi Arabia.  

Tens of thousands of cars driven by tourists and Jordanian expats entered Jordan from Saudi Arabia in the past two months. 

In the Middle East, there are few low-cost air carriers such as Nass Air in Saudi Arabia, Fly Dubai and Air Arabia in the United Arab Emirates. 

During a regional conference held last year in Oman, experts said the aviation industry in the region has a big potential for further growth if Arab countries adopt the Open Sky approach between each other and encourage intra-regional tourism.