Mr. Mahmoud Al-Jafar, Jiblah Holding's CEO announced that the government economic agenda will define the aspects of Kuwait Stock exchange general trend and not the market index.

Al-Jaafar criticized the approach adopted by the government in enforcing the law regarding B.O.T projects although in principle law enforcement should always be a priority.   

The government seeks seriously to make some reforms, however the decisions made were hasty and surprising.

In the interview with Al-Kabs newspaper, AL Jafar declared that the project to establish an Authority for the Stock Exchange was not given the required time and decisions were hasty. "Both private and public sector should be held accountable for the violation and transgressions on state properties", he added.

"The Stock Exchange might face lots of difficulties in case government did not change the way it deals with the B.O.T projects violations", he expected. 

When first asked about the Stock Exchange trend on the short and medium term, Jafar said that when tackling Stock Exchange performance during the last year, we can not have a positive perspective or see only the fluctuations; if we want to be objective we should consider the economic agenda adopted by the government this year and the procedures that should be taken and applied, which might have negative or positive impact on the Stock Exchange, Real Estate Market or the new economic projects in the country.

Although he praised government procedures regarding B.O.T projects considering them as the right actions, he criticized the way adopted to enforce them.

Force of Law

According to Al-Jafar what is right in this procedure is the principle of applying the law, however the way adopted was totally wrong, given that it was undertaken by non-competent authorities; the State and the other party from the Private sector that have signed B.O.T contracts are the only concerned parties, therefore no other party has the right to interfere and terminate these contracts, as was the case when some sites where taken from Agility Company (Public warehouses) and National Real Estate Company (The Free zone).

Al-Jafar tackled the repercussions entailed by such procedures such as the abstention of businessmen and investors to conclude contracts pursuant to the B.O.T system, saying that governmental decisions are not sacred and should be changed when erroneous.

Hasty Procedures

Al-Jafar considered that the government is serious in its endeavors to make some reforms; however, the procedures taken are very hasty, stating, for instant, that the establishment of the Authority for the Stock Exchange was an ancient idea but studying and tackling this project was very hasty and inconsiderate.

"One can ask in this regard, if we were able to meet this goal so quickly, why it was not done previously!", he demanded.

We should study carefully this subject from all its aspects and take into consideration the gaps in the Stock Exchange, whether concerning the laws and legislations, cover the deficiencies, respect the flexibility of the laws, and adopt strict financial procedures in preparing the legislations that will govern the Authority for the Stock Exchange.

Participation Principle

Al-Jafar urged the government to seek the assistance of investment companies specialized in laws stipulation, based on the fact that benefiting from the expertise and professionalism of such companies is not wrong.

"We are tackling the B.O.T system from a long time, however the first deal paid by the government was made to companies with B.O.T contract", he explained.

"If some violations and transgression affected government properties, where were the official entities during all this period, and why the public and private sectors were not both held accountable instead of the Private Sector only in order to apply justice and equity? In addition, why the decision was taken without having recourse to the court to ensure a just judgment free from any gap?" He asked.

Nevertheless, the government has made a right start, to which the parties who will sign B.O.T projects or who already have B.O.T contract will refer. 

Future Outlook

"The Future outlook for the Stock Exchange should be based on a sound and clear vision, taking into consideration all relevant conditions and objectives problems", he added. He considers that his personal view of the market is based on the compulsory governmental decisions to support private sector activities and provide it with more opportunity for the new projects, rather than following-up the indicator.

However, and despite its current standing, the market is still attractive due to the multi-purposes and multi-activities companies that do not adopt B.O.T system and do not have previous differences with the government, in addition to their long-term history in profits distribution knowing that most of the lead companies do not suffer from any impropriety.

"The market will know some instability and turbulence during the current financial year if the government maintained the same approach, method and tools in dealing with the B.O.T system violations", he added 

Shares and Real estates, two faces of the same medallion 

Mahmoud El-Jafar considered that the relation between the Stock Exchange and the Real Estate Market is a reverse relation, adding that the new projects were designed with a different understanding and adopt new ideas that go along with the wish and the need of the consumer; thus companies have succeeded in building recreation sites on highways, popular markets and complexes in addition to the chalets and residence complexes, which were greatly welcomed.

"I hope that this real estate activity will not entail an increase in the prices of plots when assessed and priced. The increase of the lease value is caused by the increase of land price, in addition to the rise in the construction materials prices," he said.

Jiblah: Real Estate and Environmental Projects

According to Mahmoud Al-Jafar, Jiblah Holding is ready to be listed in the stock Exchange, whether in terms of the conditions imposed, the number of shareholders, the capital adequacy and the profitability ratio. "The Board of Directors decided to carry out all works in compliance with the Islamic Sharia'a, knowing that the company seeks to expand its activities in the environmental fields", he added. "Jiblah plans to establish an environment laboratory after creating a company specialized in this field, then move to setting up plant and laboratories, conduct studies and grant environment related certificates in collaboration and cooperation with world entities", he explained.

Al-Jafar expected high yields from the environmental works, asserting that Jiblah intends to undertake real estate projects in Lebanon and Egypt, in addition to its participation in a fund specialized in developing real estates with ADAC Bank located in Bahrain having a capital of USD 1 Million.  

Al Jaafar revealed the intention of the company to create a company in Egypt with a capital of EGP 200 Million in collaboration with Kuwaiti and Egyptian strategic partners to execute industrial projects related to the environment, waste treatment, water salinity and organic fertilizers recirculation.

We are currently studying a project in Egypt to build a plant to produce meat and a recreation facility, he added.