03 January 2009

* U.S. Reforms Promote Openness

Two years after Dubai Ports World, Uncle Sam delivers a clear message to the rest of the world.

 Two years ago, the Dubai Ports World controversy led to a lot of soul-searching in Washington, not to mention a lot of anxiety around the globe.
Fast-forward to 2009, and there is a clear message coming from the nation's capital. "America is open for business," a top U.S. Commerce Department official declares. "We are the most open major economy in the world, and we welcome foreign direct investment."

While that statement may not seem extraordinary – after all, almost every country welcomes FDI – the path that the United States took to go from a broken deal to a new era of investment promotion was not easy.
Invest in America – an initiative of the Commerce Department – was established in 2007 to "demonstrate clearly to the world that America is the best place to invest and the safest place to invest in the world," says David Bohigian, Deputy Assistant Secretary for Market Access and Compliance and the creator of the Invest in America program.
"In the aftermath of the Dubai Ports World debate, that fact was called into question," Bohigian tells Site Selection. "It looked bad to the world. It made us look like we didn't want foreign investment."
      What followed was an extensive rewrite of CIFIUS (Committee on Foreign Investment in the United States) legislation and the launch of America's first-ever, focused strategy to promote FDI.
      "If we do not play an active role in promoting inward investment, we are at risk of having our investment climate perceived around the world only by the occasional difficulty," said Franklin Lavin, Under Secretary of Commerce for International Trade, at Invest in America's debut in March 2007.
      One "difficulty" captured the most attention: the controversy that erupted over the proposed Dubai Ports World deal in February 2006. At issue was the pending sale of port management businesses in six major U.S. seaports to a company based in the United Arab Emirates. Critics said the deal would compromise national security, even though President Bush argued that UAE was a political ally and that DP World in no way compromised America's safety.
“The United States unequivocally supports international investment in this country and is equally committed to securing fair, equitable and non-discriminatory treatment for U.S. investors abroad”

      After a key U.S. House of Representatives panel voted 62-2 to block the deal, and U.S. Sen. Charles Schumer of New York added amendments to a Senate bill to prevent the sale, DP World relented. On March 9, 2006, the company said it would turn over operation of the ports to a U.S. entity. DP World eventually sold the port operations to AIG's asset management division, Global Investment Group.
      The aftermath reverberated around the world, as suddenly the openness of the United States to FDI was called into question. Would the nation treat other allies this way? The question, once unthinkable, was at least being asked. 

The President Speaks Out       The result was a dramatic policy offensive aimed to restore the United States' reputation for openness. President Bush issued an historic statement on May 10, 2007: "The United States has a longstanding commitment to open economies that empower individuals, generate economic opportunity and prosperity for all, and provide the foundation for a free society. Economic freedom, supported by the rule of law, reinforces political freedom by encouraging and supporting the free flow of ideas. To continue the advance of liberty and prosperity, my Administration will work vigorously to promote open investment policies and free trade on a level playing field."
      He added: "The United States unequivocally supports international investment in this country and is equally committed to securing fair, equitable and non-discriminatory treatment for U.S. investors abroad."
      For the world's largest investor and largest recipient of investment, this was an extraordinary statement – but it was also an admission that more work needed to be done at home to ensure that such pledged openness would be more than words on paper.
      Bush then moved quickly to sign into law, on July 26, 2007, the CIFIUS reform legislation that streamlines the process by which foreign direct investment into the U.S. is reviewed for national security reasons.

      Bohigian says these were key developments in reinforcing the message that America meant business.
      "Invest in America communicates that we are open to FDI from around the world," he says. "Dubai Ports World happened in 2006. Invest in America happened in 2007. The President's statement came out in 2007, and CIFIUS reform became effective in late 2007. We think that the legislation passed by Congress and signed by the President helped bring CIFIUS into the 21st century."
      Bohigian notes that less than 10 percent of all cross-border transactions are reviewed by CIFIUS. "And the committee does not review greenfield investments," he says. "In 18 years, we had only one real hiccup."
      Bohigian says people should know that "in the long history of CIFIUS, we have blocked only one deal – out of thousands of transactions. They have all gone through. Dubai Ports World decided voluntarily to divest. It doesn't prove we are closed; it only proves we messed one up."
      In fact, argues Bohigian, the whole ports deal controversy obscured the real "reality" about FDI in the United States – the fact that "America is the best place for risk-adjusted return in the world."
      In 2007, the U.S. garnered $238 billion in FDI, most in the world. In that same year, 5.3 million workers were employed by foreign companies on American soil.
      "FDI jobs pay 25 percent higher in wages than regular U.S. jobs," says Bohigian. "They help strengthen manufacturing. Over 30 percent of FDI jobs are in the manufacturing sector."

A Pipeline From Dubai to Houston 
A case in point is the world's largest maker of fiberglass pipes. Michael Olivier, president of Future Pipe USA, an entity of Dubai-based Future Pipe Industries, says that his company continues to expand its capital investments in the U.S.
      "While we intend to close our plant in Mississippi and relocate the capacity, we will expand a pipe production line in Houston," he tells Site Selection. "Future Pipe is the largest privately owned company in the fiberglass pipe business in the world. Obviously, having been the largest player in the last five years, much of the growth in our industry has been in the Middle East. But the company's next step is to expand in the Americas."
      With $1.2 billion in sales in 2008, plus a large backlog of orders for 2009, Future Pipe is positioned to grow its business in North and South America, says Olivier, formerly the chief economic development officer for the state of Louisiana.
      "The doubling of the capacity in our Houston plant will take us about a year and a half," he says, noting that the expansion will include a 120,000-sq.-ft. (11,148-sq.-m.) facility. "We feel that it is an appropriate time to expand. We have a niche in the medium-to-high-pressure pipe business here in the U.S."
      Ultimately, Olivier says, "we will re-establish a large-diameter pipe plant in the Americas. We will be looking for a site. One of my charges from the owners is to be constantly looking for site selection. If we get a contract that will bring us two years of production, we will make an investment of 100 to 200 jobs and $15 million to $20 million typically."
      Olivier can't say when such a search might be completed, but, he adds, "Our owners are able to make decisions quickly."
Future Pipe Industries
Dubai-based Future Pipe Industries is bullish on investment in new and expanded manufacturing plants in the U.S. Michael Olivier, president of Future Pipe USA, a subsidiary of the UAE entity, says the firm will expand its Houston plant by adding a 120,000-sq.-ft. (11,148-sq.-m.) facility. 


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Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.