GCC health spending expected to soar


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DUBAI // Healthcare spending in the GCC is expected to quadruple by 2025, mainly due to an ageing population and a rapid rise in the number of people with diabetes. According to McKinsey and Company, a New York-based management consulting firm, spending on health care in the region is expected to increase from US$15 billion (Dh55.05bn) to $60bn over the period. Viktor Hediger, a health care consultant with McKinsey, told the MEED Middle East Health Care Conference here yesterday that the UAE in particular faced a "cost explosion" in 20 years because of its diabetes epidemic.

He warned that other ailments expected to affect the ageing population, such as cardiovascular disease, would also drive up costs and place a greater strain on the healthcare system. However, the system would be able to cope with such problems as long as money was invested in the right areas, he said. "With all the expatriates and Emiratis living in the UAE, we already have pockets of oversupply and fundamental undersupply in other areas, such as preventative medicine, primary care and rehabilitation," Mr Hediger said. "We need to focus on providing what is needed in every area."

Faisal Belhoul, managing director of the Dubai-based Healthcare Network, said the Government needed to create a better forum for the private sector to forge partnerships and take a more active role in the healthcare industry. "Co-operation is the key word - and the ability for the Government to recognise the importance of the private sector and engage it in a way that is truly favourable to all parties is very important.

"When it comes to health care we are not in the top five in the world, or the top 10 or the top 50, and the question is, 'Why? And what can we do to change this?' Quadrupling health spending is not something to be taken lightly." Currently, health authorities across the Emirates are implementing reforms to improve their standards of care. The Health Authority Abu Dhabi (HAAD) recently introduced new standards to which all medical staff and facilities must adhere. The new Dubai Health Authority is overhauling its regulatory system and introducing a new body to take charge of changing laws, licensing processes and standards.

Speaking at the conference, Sarper Tanli, the executive director for Europe, Middle East and Africa in the Methodist International hospital group, said the UAE's healthcare system was improving but there was still much to do. munderwood@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Dubai Creek Open in numbers
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The President's Cake

Director: Hasan Hadi

Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem 

Rating: 4/5

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