“British Prime Minister kept his word regarding referendum”

Manama : Brexit evoked a great quip from one of our leading business figures “Divide and rule specialists; divided themselves without ruling”.

Khalid Abdulla Janahi deeply appreciates the choice exercised by the British and says that the integrity shown by its Prime Minister is exemplary and should be emulated by all world leaders.

Nevertheless, he is of the opinion that it is for the first time he has observed the British not being able to think through the problem before committing to a decision.

Janahi is Group CEO of Dar Al Maal Al Islami Trust (DMI Trust), chairman of Faisal Private Bank (Switzerland), DMI Administrative Services and Islamic Investment Co of the Gulf (Bahamas) Ltd, and chairman of Solidarity Group.

In a detailed discussion with DT News, the business veteran made a bold assessment of the Arab world, dissecting the reasons that pull down the region and the Muslim world as well. He also speaks about the need of true diversification in the region.

Regarding the present liquidity crunch in the region, triggered by the steep fall in oil prices, he notes that the fund requirement of the government itself is crowding out the liquidity availability in the region.

“So, what happens is that the banks even though have substantial amount of cash, it is being taken away from them to fund infrastructure development and government expenses.” This situation of tight liquidity will continue for some time, especially if oil prices stay low.

“Anybody who thinks that oil price is going to go above US$100 is wrong. The maximum we can expect for oil price depends on the factor of shale oil, the extraction and production cost of which is falling to below US$50 levels.”

Saudi expects only US$30 for oil, he says, referring to the Vision 2030 recently released by its rulers. “Even that price we will be able to achieve, only if we are lucky.”

To be relevant in the future, he notes that the economies in the region have to change, he warns.” They will change, not because they like to change or they want to change. But, because they have no option but to change”

“We might become a real economy, not the present rentier economy. Real economy is where substantial amount of activity is done by the private sector not the public sector. All the economies in the Gulf are run by the public sector and that is not a healthy situation.”

“This time change is going to happen, because that is the only way every one will survive. This is where Dubai (not UAE) is interesting. It is the only place that is diversified its economy well enough. Ok, it is all based on turning real estate to something. But, the diversification is there.

It has put itself on the map as the city of the world. That is why in 2008 financial crisis, the only place that was affected in GCC was Dubai, because it is part of the real economy.”

“We thought that global recession will not hit us, but within a couple of years it hit us. We don’t read about happening until it hits us. That is the problem we are facing now, we should have been prepared for this scenario long back.”

Janahi said that the Arab and the Muslim world is always stuck in the past and is not able to foresee the future. “We always say we are good because of the past, not for what we can do in the future or for what we are now. This is a mental problem faced by the Arab and Muslim world.”

He argues that reforms are not what happened in the Gulf like taking subsidies away. Problem of reforms is that the reformers have to first change themselves, commit to reforms and then urge others to reform,” he says.

According to him, diversification about Bahrain has been there since decades. But, diversification got a big hit with the emergence of Dubai and the financial service sector started shifting base there.

Hence, instead of increasing our share, the sector to which we planned to diversify into is shrinking. “FDI in the last year was negative for us. It is bad for a beautiful country like ours.

“As an example of transparency, look at what happened in Britain. There are many view on what happened is good or bad. But, what everyone agrees on is that the British Prime Minister kept his word given to his people during his election campaign regarding conducting a referendum. And, once the referendum is done and the mandate became clear, he accepted it without hesitation and moved forward. 

“We basically blame all the other people for our mistakes. If no one else, we will say Shaithan did that. My question is if we know Shaithan is bad, why the hell we shake the hands with him?

“Something is wrong with us, we need a big change. Change will happen, as we have to survive. Modernity is not about big flashy cars or buildings, it is in the heart,” he said.