NABLUS: Palestine Development and Investment Inc, a holding company with investments in everything from construction to telecoms, is weighing the idea of expanding into Arab states including Iraq, Chairman Munib Al-Masri said on Monday.
Masri said he expected political change brought about by uprisings against authoritarian rule in the Arab world eventually to yield more transparent governments favorable to investment.
"What does the investor want? He wants ethics in business, stability and democracy and that is what they are calling for. There will be better laws, less corruption," he told the Reuters Middle East Investment Summit.
On PADICO’s outlook, Masri said he expected the firm, set up in 1993 to develop the Palestinian economy in preparation for independence, to make more net profit this year than last.
He attributed a 20 percent fall in first half profit before tax to delays in construction projects undertaken by real estate firm PRICO, which is 71 percent owned by PADICO.
"At the end of the year, we will do better," Masri, 76, said. "As a whole I think we will do a little better than 2010, I’m talking about net profit," he said, declining to give further details.
PADICO’s net profit before tax was $16.7 million in the first half compared with $20.9 million in the first half of 2010, according to a statement on the Palestinian stock exchange website. It posted net profit after tax of $38.8 million in 2010, according to a statement on the PADICO website.
PADICO was founded at the outset of the Palestinian-Israeli peace process with the aim of developing the Palestinian economy ready for the independence the Palestinians had hoped to achieve from the negotiations.
Eighteen years later, the peace process has yet to produce a Palestinian state. Negotiations have been frozen for more than a year and both sides’ faith in the peace process is at a low.
A ‘national cause’
"If we had invested anywhere else, we could have done much more, but of course there is a price you pay. There is a national cause," Masri said. The firm is now looking to harness its expertise to invest regionally, he said.
"Probably we will have the capacity next year to spend some of our efforts — 10 or 15 or 20 percent of our efforts — in rebuilding Iraq, for example, in participating in doing things in Iraq," Masri said.
"We did a little bit in Jordan, and we’d like to do something in Iraq, something in Egypt … It is a blueprint on the drawing board. It’s something the CEO and myself have talked about. We want to bring it to the board to see if they’d buy it," he said.
PADICO’s investments in the West Bank and the Gaza Strip — the territories where the Palestinians aim to found their state alongside Israel — include luxury hotels. One was recently opened in the Hamas-controlled Gaza Strip.
According to its website, PADICO also has a majority stake in the Palestinian stock exchange and holds 32 percent of Paltel Group, a telecoms firm which controls one of two mobile phone operators in the Palestinian territories.
PADICO earlier this year completed the first corporate bond issue in the Palestinian territories.
"We are going to use this money for desalination, renewable energy, power plants, infrastructure projects," Masri said.
Doing business in the West Bank and Gaza Strip is complicated by restrictions imposed by Israel, which captured the territories in the 1967 Middle East war, investors complain.
Israel, for example, controls the border between the West Bank and neighboring Jordan and imposes tight restrictions on the Gaza Strip, which it defines as an enemy entity due to the fact it is run by Islamist group Hamas.
Masri said only four or five of PADICO’s investments were doing well. "About 27 companies are not doing well because of the occupation," he said.
