Lebanon is working to implement a sweeping overhaul of its health sector, aiming to upgrade the direct provision of services, put in place more cost-effective management practices and expand basic medical coverage to all members of society.

With one of the highest per-capita outlays for health services provision of any country in the region, Lebanon spends $820 per person annually. The most recent World Health Organisation figures put Lebanon’s total expenditure on health at 8.9% of GDP and 11.9% of total state outlays.

While expenditure may be high, many believe that Lebanon is not getting full value for its money, with the National Social Security Fund (NSSF) – the workplace-funded health scheme covering those in contracted employment – heavily in deficit, while state services are under pressure to meet demand.

Key to the reforms proposed by the health minister, Mohammad Jawad Khalifa, will be providing insurance to those people who do not have access to coverage through the NSSF or other insurance options.

Though people currently without coverage are given free treatment through the Health Ministry, there are concerns that this system does not provide adequate or equitable service. As proposed by Khalifa, the 58% of people not currently covered would be included in a public programme giving them the option to access both public and private health care facilities.

Payment for treatment would be through a mix of direct charges met by patients and contributions from health insurance premiums, with the state paying 40% of a beneficiary’s total health care costs.

The reforms will also see the introduction of electronic cards, national insurance numbers and a fully computerised database, which are all aimed at improving managerial services and speeding up the processing of patients.

Among the proposed improvements to direct service provision include an increase in the level of free preventative care, including scanning for cancer and mammograms.

“There is an emphasis on public health care with these reforms, though I want to encourage the private sector as well,” Khalifa said in an interview with international media in late August. “There is no reason why everyone should not have access to affordable health care and excellent hospital treatment wherever they go.”

The latest reforms are just part of a far broader process that the ministry has been working to put in place over the past few years. Earlier this year, the ministry mandated fixed rates for certain medical procedures and treatment, with more than half of all procedures having set tariffs.

Another step was taken in mid-October, with the ministry announcing it has chosen Accreditation Canada, an independent non-profit organisation that undertakes external reviews of health and social service providers, to conduct a six-month study of current Lebanese primary health care standards.

The project is seen as an important step in accomplishing the ministry’s goal of upgrading health facilities, including hospitals, primary health care centres, laboratories and other medical institutions.

According to Accreditation Canada’s president and CEO, Wendy Nicklin, one of the aims of the project is to share the organisation’s expertise in health care excellence through accreditation with Lebanon’s Ministry of Public Health.

“This initiative clearly demonstrates the ministry’s commitment to improve the health and wellbeing of the Lebanese people by providing them with the best quality health care services possible,” Nicklen said on October 19.

Of course, drafting a programme for broad-based reforms is one thing; implementing them is another. While Khalifa has held the office of health minister since 2005, long-running political uncertainty, combined with a new cabinet, will do little to help his efforts of pushing through such important reform.

Though it will probably be a challenge to advance the proposed reform package quickly, Khalifa does have a blueprint to work from for the future. Such a dramatic overhaul of the sector will surely be costly, but with some of the highest health costs in the region already, short-term spending pain may result in longer-term gain.

As part of a four-year “emergency plan” to overhaul the education sector, the Moroccan government has signed DH12.6bn (€1.1bn) in new agreements to improve the quality of its universities.

This extra investment comes as the country seeks to meet its UN Millennium Development Goals by 2015.

At the beginning of October, HM King Mohamed IV oversaw the signing of 17 agreements between the government and universities to improve the higher education sector, ranging from hiring additional lecturers and raising teaching credentials to expanding general infrastructure. The moves come as the number of students in the science and engineering fields is expected to double by 2012, along with the number of those passing the baccalaureate exam after high school.

Enhancing the research reputation of Moroccan universities is another goal of the higher education reforms. “These contracts will commit the universities to taking the necessary steps to improve performance, promote high-quality teaching and develop scientific research, with a view to enabling Moroccan universities take their rightful place on the international stage,” local press reported Mohamed Marzak, the president of Cadi Ayyad University, as saying. The government has targeted accrediting 92% of its universities as research institutions by 2012, compared to 69% in 2008.

These agreements are part of the National Education Emergency Support Programme 2009-12, launched in March 2009 to address the short-term needs of the education sector. This emergency plan raised the age of compulsory primary education to 15 with an eye to eventually increase it to 18. Over the next two years, 15,300 schools will be upgraded, while 300 existing boarding schools will receive water and electricity. “The goal [of the emergency plan] is to make schools more attractive, in order to restore people’s con?dence in Moroccan schools and help them fulfil their purpose,” the minister of education, Ahmed Akhchichine, told OBG.

The four-year DH31bn (€2.7bn) emergency programme is being partially financed by a number of grants and loans from international organisations. In November, Morocco received a combined €13m in loans from the French Development Agency, the African Development Bank, the European Investment Bank, the World Bank, the European Commission and the Moroccan Ministry of Education.

While spending on education has hitherto been relatively high (5% of GDP and 24% of government expenditures in recent years), change has been slow in coming. A royally designated “decade of education” was kicked off in Morocco in 1999 with the publishing of the National Charter for Education and Training, a road map to sector reform. As a result, literacy for men aged 15-24 has risen from 84% in 1990 to 87% in 2008, according the World Bank, while the percentage of all students completing primary school rose from 82% to 87% over the same period.

However, the system has faltered in other areas, with only 15% of students passing the baccalaureate exam to enter university. In its 2007 Middle East and North Africa development report, the World Bank gave the Moroccan education system low marks. “Morocco needs to speed up its reform effort, with a special focus on reducing adult literacy and improving access to post-compulsory education,” wrote the World Bank. Gender parity also remains a challenge, with a 1:0.87 male-to-female ratio in tertiary education in 2004 and 60% of the adult female population illiterate, one of the highest rates in the Arab world. Local press has reported that only 16.5% of girls in rural areas attend school, compared to 60% nationwide.

The emergency programme should help Morocco make significant headway towards meeting some of its UN Millennium Development Goals by the target date of 2015. In its 2007 progress report, the UN indicated that for Morocco the goal of universal primary education was “possible to achieve if some changes are made.” The Ministry of Education believes that the emergency programme should help boost overall enrolment from 6.3m students to 6.5m within two years.

Unlike the National Charter, which lacked funding and coordination, the emergency programme appears to be a well-financed, focused plan to reform the education sector. The programme’s budget reflects an impressive 23% increase in education spending from 2008, indicating that tangible results may soon be seen.

Syria is embarking on a new era of infrastructure development, pursuing partnership with the private sector in the construction, delivery and maintenance of public services traditionally undertaken and managed solely by the government.

While there is no universally agreed definition of what technically constitutes a public-private partnership (PPP), the concept most broadly involves the tender of public services and public projects to private operators. The arrangement has become increasingly popular around the world as a result of constricted public funding.

According to findings by the World Bank, developing countries such as Syria should be dedicating around 10% of GDP towards infrastructure spending should they wish to fully capitalise on, and keep pace with, their growth potential. Abdullah Dardari, the deputy prime minister for economic affairs, recently told OBG, “We estimate the need to spend a massive $50bn on infrastructure from now until 2015. Attracting and facilitating PPPs is crucial to achieving this.”

In late October of this year, Syria played host to conference on and titled Public Private Partnership, in which it unveiled the legislative and institutional framework surrounding PPPs developed so far.

Syrian ministers and international panellists from the likes of the World Bank and IFC were quick to point out that while the financing gap is a major reason behind the pursuit of a PPP, the private sector is often more disciplined and efficient in delivering public services on time, and at better quality and lower costs to the end user

While PPP is in its infancy in Syria, and the government acknowledges that it will be a long learning process until it gets the recipe right, the country has established a PPP unit under the direct supervision of the deputy prime minister as well as separate ministerial PPP agencies to oversee projects in the targeted areas of transportation, electricity, housing, agriculture, health and education.

It has also set up a separate PPP advisory board to consult on legislative developments, constituting both public and private stakeholders as its members. While separately, a PPP procurement law is being drafted with input from the conference to be incorporated in the final result that will be publically unveiled in the near future.

Hassan Mukayed, the CEO of Syrian-Qatari Holding (SQH), a holding company formed in 2007 to undertake large-scale PPP and other projects in a variety of strategic fields, told OBG, “The establishment of a PPP unit with the executive authority to oversee projects is highly important as it allows smooth communication with potentially overlapping authorities.”

While the drafting of PPP-specific legislation and establishment of dedicated regulatory bodies are being applauded by the private sector, there is concern over issues related to financing, risk sharing and arbitration.

On the financing side, while Syria has seen the arrival of 11 private banks since the sector was liberalised in 2001, they lack the balance sheets and capital to fund mega projects. Domestic banks have expressed a willingness to participate in PPP project financing, but are reluctant to lend large sums due to limits on the amount they can lend to an individual project, as well as the absence of a treasury bill market in which to generate returns on deposits, and the lack of government-extended guarantees.

In addition, the country does not yet have an independent sovereign rating, which many international lending institutions depend upon for project financing decisions.

Bassel Hamwi, the deputy chairman and general manager of Bank Audi Syria, told OBG that these issues should be resolved, and “Syria did not start having all the elements in place to finance such projects. However, if a project has solid fundamentals and is well structured, securing funding should not be an issue as liquidity in the system is very high.”

A key element of a successful PPP is the transfer of risk to the private sector, and investors are also seeking further clarification regarding payment guarantees and termination of contract clauses. Many are also calling for the establishment of an independent arbitration body to oversee dispute resolution.

Syria already has a few examples of successful PPPs working in its favour, including the recent privatisation of the management of the country’s Lattakia and Tartous container terminals to France’s CMA CGM and the Philippine’s ICTS, respectively.

Yarob Badr, the minister of transport, highlighted the benefits of the privatisation decision, telling OBG, “Both players are bringing skills and experience, which results in better fluidity and management efficiency. Both are also well regarded throughout the world, so their name alone serves as a sign of reliability to companies choosing to operate out of the terminals.”

Romeo Salvador, the general manager of Tartous International Container Terminal, told OBG that, “At the beginning, the takeover of operations was very difficult as it was new for the country and a first for everyone. On the government and administration side, many people were afraid to make decisions on certain things, which lead to delays. But on the whole, we are happy with the experience to date.”

Overall, while a number of important PPP-specific issues have yet to be resolved, there remains little doubt that it can serve as a major platform in the country’s future economic development. By drafting the necessary legislation and putting together the required institutional framework, Syria is showing that it is determined to make PPP a success.

The H1N1 virus is still spreading globally – a worrying trend, no doubt – but an apparent boon to pharmaceutical industry around the world, including that of Ras Al Khaimah (RAK).

While economic uncertainty has plagued most sectors recently, the historically non-cyclical health industry – and the pharmaceutical sector in particular – has been faring well, receiving an additional boost from the fallout of the global swine flu pandemic.

On 22 October Gulf Pharmaceutical Industries (Julphar), based in RAK, announced third-quarter results, which included healthy growth in sales figures driven by strong private market demand, according to the company’s statement. Overall, sales revenues were up nearly 30% in the first nine months of the year, compared to the same period in 2008. Private market sales saw year-on-year (y-o-y) growth of over 40% during the January-September interval, while tender sales rose by 12% y-o-y.

Julphar was established in 1980 under the guidance of RAK’s ruler, HH Sheikh Saqar Bin Mohammed Al Qasimi, and has since expanded to become one of the largest pharmaceutical manufacturers in the Middle East. It is publicly listed on the Abu Dhabi Securities Market and the government of RAK is the largest minority shareholder. The firm now boasts nine production plants in the UAE and a commercial presence in over 45 countries, specialising in the production of a broad spectrum of generic medicines.

While the markets did not react much to the announcement of Julphar’s third-quarter results, closing prices remained high – at around 1.85 – on the back of momentum from a recent stock rally sparked by a different announcement. Trading reached an annual low in late December of 2008, closing at 1.08. On September 23 Julphar declared it had struck an exclusive agreement with the Hualan Biological Bacterin Company – a leading Chinese biopharmaceutical producer – to mass-produce single doses of Hualan’s H1N1 vaccine formula for regional distribution. While the agreement will not be made official until production methods are fully approved by the UAE Ministry of Health – a process currently under way – the volume of Julphar stock jumped by nearly 150% in one day following the announcement, from 288,220 to 715,574. Closing price rose an impressive 8% in the same day, from 1.83 to 1.98.

The Julphur-Hualan agreement names Julphur as the exclusive producer of Hualan’s H1N1 vaccine for the Middle East and North Africa region. The Chinese firm will provide raw materials and the technical knowledge required for producing the vaccine and the UAE firm will manage the manufacturing in its local factories. Julphar company officials have set a production start-up target for January, though, again, production is contingent on meeting various Health Ministry protocols before then.

Like elsewhere around the globe, H1N1 – popularly known as “swine flu” – has emerged as a serious public health concern in RAK and the wider UAE. Speaking to the local press in late September, Dr Ayman Sahli, the general manager of Julphar, stated that the company will produce enough vaccine “for the entire requirement of the UAE” but, he added, may not be able to meet the needs of the whole region though some quantities will be exported.

Pending the Health Ministry’s approval – which is widely expected by industry observers – Julphur’s vaccine production will represent a significant step in the evolution of the local and national health sector.

Traditionally, the Gulf Cooperation Council has been reliant on imports for its pharmaceutical needs. Julphar – which specialises in generic products over a broad pharmaceutical range – along with other regional producers has cut consumer costs and widened the spectrum of available pharmaceuticals in the region. In the case of RAK, Julphar is also a prominent plank in the emirate’s continually growing industrial platform – part of efforts to diversify the overall economy.

Moreover, local and federal attempts to control H1N1 mark an important step in the evolution of health infrastructure as the population of the UAE continues to expand at a rapid clip. Besides the coming vaccine, Abu Dhabi’s Neopharma is producing the generic version of Tamiflu – the antivirul drug used to treat H1N1. The UAE Health Ministry has threatened to fine any hospitals that do not report cases of H1N1 contagion in an effort to more accurately monitor the virus’ spread.

On October 26 US President Barack Obama declared H1N1 a national emergency, mainly in order to ease bureaucratic restrictions involved in administering vaccines. The move nevertheless refocused attention on the virus and also helped to send the stock of pharmaceutical companies producing the vaccine soaring – Hualan’s shares, for example, jumped to the 10% daily trading cap on the Shanghai composite index.

As panic over the pandemic increases in the coming flu season, countries around the world are stepping up efforts to contain the virus, and the UAE looks particularly well placed to deal with any outbreaks.

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Kuwait appears to be sharpening its industrial focus, looking to build on its existing strengths while reinforcing existing high-profit revenue earners.

Although Kuwait has sought to diversify its economy away from a dependency on oil production, hydrocarbons still form the backbone of GDP, contributing around half of the total. The programme of diversification has certainly seen a broadening of the economic base, but directly or indirectly the foundations are still built over the country’s energy reserves.

This is very much the case for Kuwait’s manufacturing industries. Though a wide range of sectors have been fostered, nearly all rely on hydrocarbons either as feedstock or to provide cheap sources of energy to process imported raw materials.

Though most of these industries have proved profitable in their own right, and in cases such as steel or cement production directly supporting Kuwait’s growth, it now seems that some may fall by the wayside, as focus turns to olefins. The chemical compounds made from fractionates of natural gas liquids, typically turned into ethylene and propylene, act as the building blocks for other chemicals, plastics and fibres.

On October 11, Yousef Al Ateeqi, the deputy managing director for olefins at Petrochemicals Industries Company (PIC), said the firm was planning to sell off or shut down its fertilisers business, one of the company’s oldest arms.

The move would allow PIC to focus on its more profitable petrochemicals division, said Al Ateeqi, who is also the chairman of Equate Petrochemical Company, which runs PIC’s main olefin plant.

“Our plan is to quit the fertilisers business in the medium to long term through privatisation or closing down,” he told the Reuters news agency. “In petrochemicals, we plan to pursue growth inside and outside Kuwait by building or acquiring leading petrochemicals assets in mature markets with a proper foreign partner.”

Kuwait began chemical fertiliser production in 1966, the first such project in the region, with a gradual build up seeing three ammonia plants and two urea plants brought on-line. However, being heavily reliant on gas as its basic feedstock for production, the fertiliser sector now has to compete with other petrochemical industries for the same raw material.

In June this year, PIC had to shut its fertiliser plant at Shuaiba due to the shortgae of gas. Though still profitable, it seems as if Kuwait sees more growth potential in olefins than fertiliser.

And the country is making a serious commitment to olefins production as a driving force for industrial expansion. With the completion and subsequent launch of the Olefins II project in June, managed and operated by Equate, a joint venture between Dow and PIC, Boubyan Petrochemical Company and Al Qurain Petrochemical Company, Kuwait’s industrial development took a major step forward.

The new facility combines an ethane cracker with an annual capacity of 850,000 tonnes

; a 600,000-tonnes-per-year ethylene glycol unit; and a 450,000-tons-per-year ethyl benzene/styrene monomer unit, while an additional 225,000 tonnes per year capacity for polyethylene production was added at the existing complex.

Though having only just started full production, PIC and its partners have plans to further expand olefins output, with a proposal to develop Olefins III, a new high-tech cracker that would produce about 1.4m tonnes of ethylene annually. Though still in the planning stages, work on the new $7bn-8bn facility is expected to begin by 2015, according to company officials.

In a recent interview with OBG, Al Ateeqi said Equate was looking at constructing a third cracker, which would have the capacity to produce both specialised products and basic commodities. This would help develop a more diverse portfolio in what he described as a cyclical industry.

“Manufacturing more value-added products would not only have a considerable financial benefit but would also protect us, to a certain extent, from the ebbs and flows of the cycle,” said Al Ateeqi.

To ensure that the wheels do not fall off the cycle, Kuwait’s petrochemicals industry has to have a guaranteed source of energy and feedstock. The same shortages that affected fertiliser production saw gas consumption in the Kuwaiti industrial sector fall from 13m cu metres per day in 2005 to current levels of 10.5m cu metres per day. These shortages have seen the country become a net importer of liquid natural gas (LNG), with gas even shipped from as far afield as Russia.

Although having to import gas will add to industrial production costs, according to Sheikh Mubarak Abdullah Mubarak Al Sabah, the chairman of Qurain Petrochemicals, the wheel is turning, following a period of restructuring and consolidation within the industry.

“Now is an opportune time to invest, as we are benefitting from a reduction in the cost of building materials, plants and equipment,” he told OBG.

Though hit by the global economic downturn, Kuwait’s economy is emerging from recession, with higher than predicted oil prices helping fuel the recovery. With better than expected earnings from its economic mainstay, Kuwait is in a position where it can channel further funding and support towards its more focused but expanding industrial base.

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